0001819790-23-000007 | 10-K | XBRL Viewer | Tarsus Pharmaceuticals INC

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Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 13,460	$ 8,455
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	3,736	1,843
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 9,724	$ 6,612

Summary of Significant Accounting Policies and Use of Estimates	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Summary of Significant Accounting Policies and Use of Estimates	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (i) Basis of Presentation The accompanying Financial Statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States ("U.S.") and with the rules and regulations of the Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with GAAP and with the rules and regulations of the SEC requires management to make informed estimates and assumptions that affect the amounts reported in these accompanying Financial Statements and Notes. These estimates and assumptions are based upon historical experience, knowledge of current events and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources and involve judgments with respect to numerous factors that are difficult to predict and may materially differ from the amounts ultimately realized and reported due to the inherent uncertainty of any estimate or assumption. Actual results could differ materially from those estimates. The Company’s financial statements as of and for the year ended December 31, 2022 reflect the Company’s estimates of the impact of the macroeconomic environment, including the impact of inflation, higher interest rates, foreign exchange rate fluctuations and the COVID-19 pandemic. The duration and the scope of these conditions cannot be predicted; therefore, the extent to which these conditions will directly or indirectly impact the Company’s business, results of operations and financial condition, is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates, judgments and assumptions or a revision of the carrying value of the Company’s assets or liabilities as of the issuance date of the accompanying Financial Statements. The accounting policies and estimates that most significantly impact the presented amounts within these accompanying Financial Statements are further described below: (ii) Cash and Cash Equivalents Cash and cash equivalents consist of bank deposits and highly liquid investments, including money market fund accounts, that are readily convertible into cash without penalty, with original maturities of three months or less from the purchase date. The carrying amounts reported in the accompanying Balance Sheets for cash and cash equivalents are valued at cost, which approximate their fair value. (iii) Marketable Securities and Long-Term Investments As of December 31, 2022, marketable securities consist of short-term fixed income investments carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities (see Note 7). Management determines the appropriate classification of its investments in fixed income securities at the time of purchase. Available-for-sale securities are classified as current assets on the accompanying Balance Sheets due to their highly liquid nature and availability for use in current operations. Marketable securities are recorded at fair value with unrealized losses and gains reported as a component of accumulated other comprehensive loss within the accompanying Statements of Stockholders' Equity until realized. The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, as well as interest and dividends, are included in interest income. Realized losses and gains as well as credit losses, if any, on marketable securities identified on a specific identification basis and are included in other income (expense), net on the accompanying Statements of Operations and Comprehensive Loss. The Company evaluated the underlying credit quality and credit ratings of the issuers during the period. To date, the Company has not identified any other than temporary declines in fair value of its investments and no credit losses associated with credit risk have occurred or have been recorded. Interest earned on marketable securities is included in interest income within the accompanying Statement of Operations and Comprehensive Loss. As of December 31, 2021, marketable securities consisted of holdings of LianBio Ophthalmology Limited ("LianBio") common stock. These shares are classified within long-term investments on the accompanying Balance Sheet as of December 31, 2022, reflecting the intent to hold these shares for at least one year from the balance sheet date, with associated gains or losses reported in other income (expense), net within the accompanying Statements of Operations and Comprehensive Loss for each reported period. (iv) Fair Value Measurements Assets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: •Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are publicly accessible at the measurement date. •Level 2: Observable prices that are based on inputs not quoted on active markets, but that are corroborated by market data. These inputs may include quoted prices for similar assets or liabilities or quoted market prices in markets that are not active to the general public. •Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts for financial instruments consisting of cash, cash equivalents, short-term marketable securities, long-term investments, accounts payable and accrued liabilities approximate fair value due to the short maturities for each. The Company's equity warrant holdings disclosed as other assets are carried at fair value based on unobservable market inputs (see Note 7). Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value hierarchy during the years presented. (v) Property and Equipment, Net Property and equipment, net are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets that range from three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful lives of related improvements. The Company evaluates the recoverability of its property and equipment, net whenever events or changes in circumstances of the business indicate that the asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the sum of the future undiscounted cash flows the assets are expected to generate over the remaining useful lives of the assets. If a long-lived asset fails a recoverability test, the Company measures the amount by which the carrying value of the asset exceeds its fair value. There were no impairments recognized during the years ended December 31, 2022 and 2021. (vi) Concentration of Credit Risk and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains cash held in deposit at financial institutions in the U.S., including at Silicon Valley Bank ("SVB"). These deposits are insured by the Federal Deposit Insurance Corporation (FDIC) in an amount up to $250,000 for any depositor, and with respect to SVB are fully insured per recent correspondence from the FDIC. To the extent the Company holds cash deposits in amounts that exceed the FDIC insurance limitation, it may incur a loss in the event of a failure of any of the financial institutions where it maintains deposits. Management believes the Company is not exposed to significant risk due to the financial position of the depository institution, but will continue to monitor regularly and adjust, if needed, to mitigate risk. The Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. To date, the Company has not experienced any losses associated with this credit risk and continues to believe that this exposure is not significant. (vii) Revenue Recognition for Out-License Arrangements Overview The Company currently has no product revenue. Reported revenue in the accompanying Statements of Operations and Comprehensive Loss is associated with one out-license agreement (the “China Out-License”) that allows the third-party licensee to market the Company’s TP-03 product candidate (representing functional intellectual property) in the People's Republic of China, Hong Kong, Macau, and Taiwan (the "China Territory") - see Note 9. The accounting and reporting of revenue for out-license arrangements requires significant judgment for: (a) identification of the number of performance obligations within the contract, (b) the contract’s transaction price for allocation (including variable consideration), (c) the stand-alone selling price for each identified performance obligation, and (d) the timing and amount of revenue recognition in each period. The China Out-License was analyzed under GAAP to determine whether the promised goods or services are distinct or must be accounted for as part of a combined performance obligation. In making these assessments, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own, and/or whether the required expertise is readily available. If the license is not distinct, the license is combined with other promised goods or services as a combined performance obligation for revenue recognition. The China Out-License arrangement included the following forms of consideration: (i) non-refundable upfront license payment, (ii) equity-based consideration, (iii) sales-based royalties, (iv) sales-based threshold milestones, (v) drug supply agreement milestone, (vi) development milestone payments, and (vii) regulatory milestone payments. Revenue is recognized in proportion to the allocated transaction price when (or as) the respective performance obligation is satisfied. The Company evaluates the progress related to each milestone at each reporting period and, if necessary, adjusts the probability of achievement and related revenue recognition. The measure of progress, and thereby periods over which revenue is recognized, is subject to estimates by management and may change over the course of the agreement. Contractual Terms for Receipt of Payments A performance obligation is a promise in a contract to transfer a distinct good or service and is the unit of accounting. A contract’s transaction price is allocated among each distinct performance obligation based on relative standalone selling price and recognized when, or as, the applicable performance obligation is satisfied. The contractual terms that establish the Company’s right to collect specified amounts from its customers and that require contemporaneous evaluation and documentation under GAAP for the corresponding timing and amount of revenue recognition, are as follows: (1) Upfront License Fees: The Company determines whether non-refundable license fee consideration is recognized at the time of contract execution (i.e., when the license is transferred to the customer and the customer is able to use and benefit from the license) or over the actual (or implied) contractual period of the China Out-License. The Company also evaluates whether it has any other requirements to provide substantive services that are inseparable from the performance obligation of the license transfer to determine whether any combined performance obligation is satisfied over time or at a point in time. Upfront payments may require deferral of revenue recognition to a future period until the Company performs obligations under these arrangements. (2) Development Milestones: The Company utilizes the most likely amount method to estimate the amount of consideration to which it will be entitled for achievement of development milestones as these represent variable consideration. For those payments based on development milestones (e.g., patient dosing in a clinical study or the achievement of statistically significant clinical results), the Company assesses the probability that the milestone will be achieved, including its ability to control the timing or likelihood of achievement, and any associated revenue constraint. Given the high degree of uncertainty around the occurrence of these events, the Company determines the milestone and other contingent amounts to be constrained until the uncertainty associated with these payments is resolved. At each reporting period, the Company re-evaluates this associated revenue recognition constraint. Any resulting adjustments are recorded to revenue on a cumulative catch-up basis, and reflected in the financial statements in the period of adjustment. (3) Regulatory Milestones: The Company utilizes the most likely amount method to estimate the consideration to which it will be entitled and recognizes revenue in the period regulatory approval occurs (the performance obligation is satisfied) as these represent variable consideration. Amounts constrained as variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company evaluates whether the milestones are considered probable of being reached and not otherwise constrained. Accordingly, due to the inherent uncertainty of achieving regulatory approval, associated milestones are deemed constrained for revenue recognition until achievement. (4) Royalties: Under the sales-or-usage-based royalty exception the Company recognizes revenue based on the contractual percentage of the licensee’s sale of products to its customers at the later of (i) the occurrence of the related product sales or (ii) the date upon which the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue from the China Out-License. (5) Sales Threshold Milestones: Similar to royalties, applying the sales-or-usage-based royalty exception, the Company recognizes revenue from sales threshold milestones at the later of (i) the period the licensee achieves the one-time annual product sales levels in their territories for which the Company is contractually entitled to a specified lump-sum receipt, or (ii) the date upon which the performance obligation to which some or all of the milestone has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any sales threshold milestone revenue from out-licensing arrangements. The Company re-evaluates the measure of progress to each performance obligation in each reporting period as uncertain events are resolved and other changes in circumstances occur. (viii) Research and Development Costs Research and development costs are expensed as incurred or as certain upfront or milestone payments become contractually due to licensors upon the achievement of clinical or regulatory events. Research and development expenses include internal costs directly attributable to in-development programs, including costs of certain salaries and other employee-related costs (including stock-based compensation), and costs to conduct nonclinical studies, clinical trials and contract manufacturing activities. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with third-party service providers under the service agreements. As it relates to clinical trials, the financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Such payments are evaluated for current or long-term classification based on when they will be realized. The Company's objective is to reflect the appropriate expense in its financial statements by matching those expenses with the period in which the services and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial taking into consideration discussions with applicable personnel and outside service providers. The clinical trial accrual is dependent in part upon the timely and accurate reporting of progress and efforts incurred from CROs, contract manufacturers and other third-party vendors. Although estimates are expected to be materially consistent with actual amounts incurred, the Company's understanding of the status and timing of services performed relative to the actual status and timing of services performed can vary and may result in changes in estimates in any particular period. The Company makes significant judgments and estimates in determining the accrued liabilities balance at each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred. (ix) Stock-Based Compensation The Company recognizes stock-based compensation expense for equity awards granted to employees, consultants, and members of its Board of Directors. Stock option awards are at an exercise price of not less than 100% of the fair market value of common stock on the respective date of grant. The grant date is the date the terms of the award are formally approved by the Company’s Board of Directors or its designee. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards as of the date of grant. The fair value of restricted stock units is representative of the closing market price of the Company's common stock on the date preceding the award grant-date. Stock awards granted typically have one to four-year service conditions and a contractual term of 10 years. Any performance conditions for vesting are explicitly stated in each award agreement and are associated with clinical, business development, or operational milestones. For stock-based awards that vest subject to the satisfaction of a service requirement, the related expense is recognized on a straight-line basis over each award’s actual or implied vesting period. For stock-based awards that vest subject to a performance condition, the Company recognizes related expense on an accelerated attribution method, if and when it concludes that it is highly probable that the performance condition will be achieved. At each reporting period, the Company reassesses the probability of the achievement of the performance vesting conditions. As applicable, the Company reverses previously recognized expense for unvested awards in the same period of forfeiture. The measurement of the fair value of stock option awards and recognition of stock-based compensation expense requires assumptions to be estimated by management that involve inherent uncertainties and the application of management’s judgment, including (a) the fair value of the Company’s common stock on the date of the option grant for all awards granted prior to the IPO, (b) the expected term of the stock option until its exercise by the recipient, (c) stock price volatility over the expected term, (d) the prevailing risk-free interest rate over the expected term, and (e) expected dividend payments over the expected term. Management estimates the expected term of awarded stock options utilizing the simplified method for awards since the Company does not yet have sufficient exercise history since its November 2016 corporate formation and also lacks specific historical and implied stock volatility information. Accordingly, management estimates this expected volatility based on a designated peer-group of publicly-traded companies for a look-back period (from the date of grant), that corresponds with the expected term of the awarded stock option. The Company estimates the risk-free interest rate based upon the U.S. Department of the Treasury yield curve in effect at award grant for the time period that corresponds with the expected term of the awarded stock option. The Company’s expected dividend yield is zero because it has never paid cash dividends and does not expect to for the foreseeable future. Subsequent to the IPO, the fair value of the Company’s common stock is based on the closing quoted market price of its common stock as reported by the Nasdaq Global Select Market on the date of grant. (x) Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recorded based on the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the financial statements, as well as operating losses and tax credit carry forwards using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain due to the Company’s historical operating performance and recorded cumulative net losses in prior fiscal periods. A valuation allowance is recorded to reduce deferred tax assets, because based upon a weighting of positive and negative factors, it is more likely than not that these deferred tax assets will not be realized. If/when the Company were to determine that deferred tax assets are realizable, an adjustment to the corresponding valuation allowance would increase the net income in the period that such determination was made. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Interest and penalties related to unrecognized tax benefits, if any, are recorded as a component of income tax expense. (xi) Net Loss per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method and if-converted method as applicable. The Company’s participating securities include unvested common stock awards issued upon early exercise of certain stock options, as early exercised unvested common stock awards have a non-forfeitable right to dividends. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses, so in periods of net losses, the two-class method of calculating basic and diluted earnings per share is not required. In periods of net income, basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Also, net income is attributed to both common stockholders and participating security holders, and therefore, net income is allocated to shares of common stock and participating securities, as if all of the earnings for the period had been distributed. Diluted earnings per share under the two-class method is calculated using the more dilutive of the treasury stock or the two-class method. Due to net losses in all periods presented, all otherwise potentially dilutive securities are antidilutive, and accordingly, the reported basic net loss per share equals diluted net loss per share. (xii) Comprehensive Loss Comprehensive loss represents (i) net loss for the periods presented, and (ii) unrealized gains or losses on our reported available-for-sale debt securities. (xiii) Recently Issued or Effective Accounting Standards Recently issued or effective accounting pronouncements that impact, or may have an impact, on the Company’s financial statements have been discussed within the footnote to which each relates. Other recent accounting pronouncements not disclosed in these Financial Statements have been determined by the Company’s management to have no impact, or an immaterial impact, on its current financial position, results of operations, or cash flows.

Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Net operating loss carry forwards	$ 6,679	$ 4,934
Research and development credit carryforwards	4,723	2,969
Capitalized research and development	7,634	0
Intangible assets	2,970	2,984
Stock-based compensation	2,119	1,136
Other, net	1,199	712
Total deferred tax assets before valuation allowance	25,324	12,735
Less: valuation allowance	(25,201)	(12,059)
Total deferred tax assets	123	676
Deferred tax liabilities, net:
Operating lease right-of-use assets	(123)	(234)
Deferred revenue	0	(442)
Net deferred tax asset	$ 0	$ 0

Cover - USD ($) $ in Millions	12 Months Ended
Cover - USD ($) $ in Millions	Dec. 31, 2022	Mar. 09, 2023	Jun. 30, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-396147
Entity Registrant Name	TARSUS PHARMACEUTICALS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-4717861
Entity Address, Address Line One	15440 Laguna Canyon Road, Suite 160
Entity Address, City or Town	Irvine
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92618
City Area Code	949
Local Phone Number	409-9820
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	TARS
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Smaller Reporting Company	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 180.5
Entity Common Stock, Shares Outstanding		26,731,663
Documents Incorporated by Reference	Portions of the information called for by Part III of this Annual Report on Form 10-K is hereby incorporated by reference to portions of the registrant’s definitive proxy statement for its 2023 annual meeting of stockholders, which will be filed with the Securities and Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2022.
Amendment Flag	false
Entity Central Index Key	0001819790
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY

Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

Stock-Based Compensation Expense

Stock-based compensation expense was recognized in the accompanying Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021 as follows:


	Year Ended December 31,
	2022		2021
Research and development	$	3,736	$	1,843
General and administrative	9,724		6,612
Total stock-based compensation	$	13,460	$	8,455

The fair value of granted stock options was estimated as of the date of grant using the Black-Scholes option-pricing model, based on the following inputs:


	Year Ended December 31,
	2022		2021
Exercise price	$12.89 to $20.64		$21.40 to $47.25
Expected term (in years)	6.25		6.25
Risk-free interest rate	1.63% to 4.21%		0.66% to 1.37%
Expected volatility	77.3% to 83.0%		64.8% to 69.4%
Expected dividend yield	—		—
Weighted-average grant-date fair value per stock option	$	18.37	$	38.06

Stock Option Activity

Stock option activity during the years ended December 31, 2022 and 2021 was as follows:


	Number of Shares	Weighted- Average Exercise Price/Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (1)
Outstanding - December 31, 2020	1,836,739	$	3.77	9.15	$	68,981
Granted	1,005,512	38.06
Exercised	(24,959)	4.14
Forfeited	(57,462)	22.18
Expired	—	—
Outstanding - December 31, 2021	2,759,830	15.88		8.54	$	33,641
Granted	1,227,123	18.37
Exercised	(40,979)	3.01
Forfeited	(46,632)	24.60
Expired	—	—
Outstanding - December 31, 2022	3,899,342	$	16.69	8.07	$	19,196
Vested - December 31, 2022	1,669,139	$	13.43	7.32	$	13,706
Unvested - December 31, 2022	2,223,536	$	19.12	8.63	$	5,490

____________

(1)Represents the total difference between the stock price fair value as of December 31, 2022 and the stock option exercise price, multiplied by the number of in-the-money options as of December 31, 2022. The amount of any intrinsic value will change in relation to any increases or decreases in the then-determined fair value of the Company’s common stock.

The total grant-date fair value of options that vested during the years ended December 31, 2022 and 2021 was $13.7 million and $16.3 million, respectively.

For the year ended December 31, 2022, the Company recorded stock-based compensation expense for stock options of $10.7 million. As of December 31, 2022, there was unrecognized compensation expense of $25.5 million related to unvested stock options, which the Company expects to recognize over a weighted average period of 2.3 years.

Restricted Stock Unit Activity

Restricted stock unit activity during the year ended December 31, 2022 was as follows:


	Number of Shares	Weighted Average Value per Share
Outstanding - December 31, 2021	17,251	$	27.53
Granted	573,009	17.87
Vested	(32,914)	24.17
Forfeited	(6,088)	19.40
Outstanding - December 31, 2022	551,258	$	17.78

For the year ended December 31, 2022, the Company recorded stock-based compensation expense for restricted stock units of $2.5 million. As of December 31, 2022, there was approximately $8.0 million of unrecorded expense that will be recognized over a weighted average period of 3.0 years.

Fair Value Measurements - Additional Information (Details) $ in Thousands	1 Months Ended
	Mar. 31, 2021 tranche	Dec. 31, 2022 USD ($) warrant security shares	Jun. 30, 2021 warrant shares
Debt Securities, Available-for-Sale [Line Items]
Warrant tranches \| tranche	3
Number of vested warrants \| warrant		2	1
Number of warrants \| warrant			3
Equity securities (shares) \| shares		78,373	78,373
Number of securities with contractual maturity between one and five years \| security		3
Corporate debt securities		$ 145,366
Amortized cost		145,440
Available-for-sale, Contractual Maturity Less Than 12 Months
Debt Securities, Available-for-Sale [Line Items]
Corporate debt securities		4,600
Amortized cost		$ 4,600
Available-for-sale, Contractual Maturity Less Than 12 Months \| Minimum
Debt Securities, Available-for-Sale [Line Items]
Contractual maturity		1 year
Available-for-sale, Contractual Maturity Less Than 12 Months \| Maximum
Debt Securities, Available-for-Sale [Line Items]
Contractual maturity		5 years

Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTSFinancial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type are presented in the following table (see Note 2(iv)):


	Year Ended December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	64,685	$	—	$	—	$	64,685
U.S. Treasury securities	69,644		—		—		69,644
Commercial paper	—		60,355		—		60,355
Corporate debt securities	—		11,521		—		11,521
Government-related debt securities	—		10,821		—		10,821
Common stock in LianBio	371		—		—		371
Equity warrants (for LianBio shares)	—		—		108		108
Total assets measured at fair value	$	134,700	$	82,697	$	108	$	217,505


	Year Ended December 31, 2021
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	171,332	$	—	$	—	$	171,332
Common stock in LianBio	483		—		—		483
Equity warrants (for LianBio shares)	—		—		663		663
Total assets measured at fair value	$	171,815	$	—	$	663	$	172,478

Money Market Funds and U.S. Treasury Securities

Money market funds and U.S. Treasury securities are highly liquid investments and are actively traded with readily-available market prices that are publicly observable and independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

Commercial Paper, Corporate Debt Securities, and Government-related Debt Securities

Commercial paper, corporate debt securities and government-related debt securities were valued using Level 2 inputs that utilized industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. The Company reviews trading activity and pricing for these investments as of each measurement date.

LianBio Common Stock and Equity Warrants

In March 2021, contemporaneous with the China Out-License transaction (see Note 9), the Company and LianBio (a pharmaceutical company focused on the Greater China and other Asian markets; NASDAQ: LIAN), executed a warrant agreement for the Company to purchase, in three tranches, common shares in LianBio. The first two tranches are vested and exercised as of December 31, 2022 and the third warrant tranche will vest upon the achievement of a regulatory event; each has an exercise price at common stock par value.

In June 2021, one of these three warrant tranches was vested and then-converted to 78,373 shares of LianBio common stock, and recognized at fair value within marketable securities as of December 31, 2021, and within long-term investments on the accompanying Balance Sheets as of December 31, 2022. In May 2022, the second warrant tranche was vested and in December 2022, it was exercised and converted into 78,373 shares of LianBio common stock as recognized at fair value within long-term investments on the Balance Sheets as of December 31, 2022. LianBio common stock is classified within Level 1 of the fair value hierarchy, given its publicly reported price on the NASDAQ Global Market.

The third warrant tranche remains classified as Level 3 in the fair value hierarchy and is presented within other assets on the accompanying Balance Sheets as of December 31, 2022 and 2021 (see Note 3(d)). The most significant assumptions used in the option pricing valuation model as of each balance sheet date to determine its fair value included

observable and unobservable inputs: LianBio common stock volatility (based on the historical volatility of similar companies), the probability of regulatory milestone achievement for vesting, and the application of an assumed discount rate.

The estimated fair value of the equity warrant will be remeasured each reporting period with adjustments reported within other income (expense), net on the accompanying Statements of Operations and Comprehensive Loss, until exercised or expired, and is valued in the accompanying Financial Statements as follows:


	Value of equity warrants (see Note 3(d))
Fair value as of December 31, 2021	$	663
Remeasurement of equity warrants	(501)
Recognition of equity warrants	103
Exercise of the second tranche of equity warrants into LianBio common stock	(157)
Fair value as of December 31, 2022	$	108


	Value of equity warrants (see Note 3(d))
Fair value as of December 31, 2020	$	—
Initial fair value estimate of equity warrants	1,233
Recognition of equity warrants	1,491
Remeasurement of equity warrants	(987)
Exercise of the first tranche of equity warrants into LianBio common stock	(1,074)
Fair value as of December 31, 2021	$	663

The fair value and amortized cost of cash and cash equivalents and available-for-sale investments by major security type are presented in the following table:


	December 31, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds	$	64,685	$	—	$	—	$	64,685

Government-related securities	4,978		—		—		4,978
Commercial paper	1,997		—		—		1,997
Total cash equivalents	$	71,660	$	—	$	—	$	71,660

Marketable securities:
U.S. Treasury securities	$	69,720	$	5	$	(81)	$	69,644
Commercial paper	58,358		—		—		58,358
Corporate debt securities	11,524		8		(11)		11,521
Government-related securities	5,838		5		—		5,843
Total marketable securities	$	145,440	$	18	$	(92)	$	145,366

Long-term investments:
Common stock in LianBio	639		—		(268)		371
Total long-term investments	$	639	$	—	$	(268)	$	371


	December 31, 2021
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds	171,332		—		—		171,332
Total cash equivalents	$	171,332	$	—	$	—	$	171,332

Marketable securities:
Common stock in LianBio	1,074		—		(591)		483
Total marketable securities	$	1,074	$	—	$	(591)	$	483

As of December 31, 2022, substantially all available-for-sale debt securities have a maturity of 12 months or less. Three securities have a contractual maturity between one and five years, with an estimated fair market value of $4.6 million and amortized cost of $4.6 million. All available-for-sale debt securities have gross unrealized losses in a continuous loss position for less than one year. The Company did not recognize any other-than-temporary impairment losses on these securities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Balance Sheet Account Detail - Other Long-Term Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Operating lease liability, non-current	$ 52	$ 585
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other long-term liabilities	Other long-term liabilities
Lotilaner licensor liability	$ 48	$ 114
Other long-term liabilities	$ 100	$ 699

Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
Statements of Cash Flows - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Cash Flows From Operating Activities:
Net loss	$ (62,091)	$ (13,827)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	325	312
Stock-based compensation	13,460	8,455
Accretion of term loan-related costs	309	0
Non-cash lease expense	464	294
Loss on lease termination	0	2
Loss on disposal of property and equipment	0	70
Amortization of discount on available-for-sale debt securities	(1,316)	0
Unrealized loss on equity investment	268	591
Change in fair value of equity warrants issued by licensee	501	987
Unrealized gain from transactions denominated in a foreign currency	1	(2)
Issuance of common stock upon in-license agreement milestone achievement	0	5,494
Changes in operating assets and liabilities:
Other receivables	(3,490)	(73)
Prepaid expenses	(721)	(2,043)
Other non-current assets	(215)	(2,265)
Accounts payable and other accrued liabilities	821	3,880
Accrued payroll and benefits	2,721	1,758
Other long-term liabilities	(67)	115
Net cash (used in) provided by operating activities	(49,030)	3,748
Cash Flows From Investing Activities:
Proceeds from sales of marketable securities	5,315	0
Purchases of marketable securities	(149,438)	0
Purchases of property and equipment	(506)	(586)
Net cash used in investing activities	(144,629)	(586)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock upon follow-on public offering, net of paid issuance costs	74,352	0
Proceeds from term loan	20,000	0
Proceeds from sale of common stock under employee stock purchase plan	462	221
Proceeds from exercise of vested stock options	123	103
Payment of deferred offering costs	(75)	(303)
Payment of term loan issuance costs	(875)	0
Net cash provided by financing activities	93,987	21
Net (decrease) increase in cash and cash equivalents	(99,672)	3,183
Cash and cash equivalents — beginning of year	171,332	168,149
Cash and cash equivalents — end of year	71,660	171,332
Supplemental Disclosures Noncash Investing and Financing Activities:
Interest expense paid in cash	1,675	0
Additions of property and equipment included within accounts payable and other accrued liabilities	21	2
Stock issued for in-license agreements included within research and development expense	0	5,494
Operating lease right-of-use asset obtained in exchange for operating lease liability	0	741
Expense of right-of-use asset upon lease termination	0	(38)
Deferred offering costs included in accounts payable and accrued liabilities	$ 0	$ 60

Summary of Significant Accounting Policies and Use of Estimates (Policies)	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Operating Segment	Operating SegmentTo date, the Company has operated, managed and organized its business and financial information on an aggregate basis for the purpose of evaluating financial performance and the allocation of capital and personnel resources. The Company’s chief operating decision-maker (CODM), its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. Accordingly, the Company’s management determined that it operates one reportable operating segment.
Basis of Presentation	Basis of PresentationThe accompanying Financial Statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States ("U.S.") and with the rules and regulations of the Securities and Exchange Commission (“SEC”). The preparation of financial statements in conformity with GAAP and with the rules and regulations of the SEC requires management to make informed estimates and assumptions that affect the amounts reported in these accompanying Financial Statements and Notes. These estimates and assumptions are based upon historical experience, knowledge of current events and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources and involve judgments with respect to numerous factors that are difficult to predict and may materially differ from the amounts ultimately realized and reported due to the inherent uncertainty of any estimate or assumption. Actual results could differ materially from those estimates. The Company’s financial statements as of and for the year ended December 31, 2022 reflect the Company’s estimates of the impact of the macroeconomic environment, including the impact of inflation, higher interest rates, foreign exchange rate fluctuations and the COVID-19 pandemic. The duration and the scope of these conditions cannot be predicted; therefore, the extent to which these conditions will directly or indirectly impact the Company’s business, results of operations and financial condition, is uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates, judgments and assumptions or a revision of the carrying value of the Company’s assets or liabilities as of the issuance date of the accompanying Financial Statements.
Cash and Cash Equivalents	Cash and Cash EquivalentsCash and cash equivalents consist of bank deposits and highly liquid investments, including money market fund accounts, that are readily convertible into cash without penalty, with original maturities of three months or less from the purchase date. The carrying amounts reported in the accompanying Balance Sheets for cash and cash equivalents are valued at cost, which approximate their fair value.
Marketable Securities and Long Term Investments	Marketable Securities and Long-Term Investments As of December 31, 2022, marketable securities consist of short-term fixed income investments carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities (see Note 7). Management determines the appropriate classification of its investments in fixed income securities at the time of purchase. Available-for-sale securities are classified as current assets on the accompanying Balance Sheets due to their highly liquid nature and availability for use in current operations. Marketable securities are recorded at fair value with unrealized losses and gains reported as a component of accumulated other comprehensive loss within the accompanying Statements of Stockholders' Equity until realized. The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization and accretion, as well as interest and dividends, are included in interest income. Realized losses and gains as well as credit losses, if any, on marketable securities identified on a specific identification basis and are included in other income (expense), net on the accompanying Statements of Operations and Comprehensive Loss. The Company evaluated the underlying credit quality and credit ratings of the issuers during the period. To date, the Company has not identified any other than temporary declines in fair value of its investments and no credit losses associated with credit risk have occurred or have been recorded. Interest earned on marketable securities is included in interest income within the accompanying Statement of Operations and Comprehensive Loss. As of December 31, 2021, marketable securities consisted of holdings of LianBio Ophthalmology Limited ("LianBio") common stock. These shares are classified within long-term investments on the accompanying Balance Sheet as of December 31, 2022, reflecting the intent to hold these shares for at least one year from the balance sheet date, with associated gains or losses reported in other income (expense), net within the accompanying Statements of Operations and Comprehensive Loss for each reported period.
Fair Value Measurements	Fair Value MeasurementsAssets and liabilities recorded at fair value on a recurring basis in the balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows: •Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that are publicly accessible at the measurement date. •Level 2: Observable prices that are based on inputs not quoted on active markets, but that are corroborated by market data. These inputs may include quoted prices for similar assets or liabilities or quoted market prices in markets that are not active to the general public. •Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amounts for financial instruments consisting of cash, cash equivalents, short-term marketable securities, long-term investments, accounts payable and accrued liabilities approximate fair value due to the short maturities for each. The Company's equity warrant holdings disclosed as other assets are carried at fair value based on unobservable market inputs (see Note 7). Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value hierarchy during the years presented.
Property and Equipment, Net	Property and Equipment, NetProperty and equipment, net are stated at historical cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets that range from three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of the remaining lease term or the estimated useful lives of related improvements. The Company evaluates the recoverability of its property and equipment, net whenever events or changes in circumstances of the business indicate that the asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the sum of the future undiscounted cash flows the assets are expected to generate over the remaining useful lives of the assets. If a long-lived asset fails a recoverability test, the Company measures the amount by which the carrying value of the asset exceeds its fair value. There were no impairments recognized during the years ended December 31, 2022 and 2021.
Concentration of Credit Risk and Other Risks and Uncertainties	Concentration of Credit Risk and Other Risks and UncertaintiesFinancial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains cash held in deposit at financial institutions in the U.S., including at Silicon Valley Bank ("SVB"). These deposits are insured by the Federal Deposit Insurance Corporation (FDIC) in an amount up to $250,000 for any depositor, and with respect to SVB are fully insured per recent correspondence from the FDIC. To the extent the Company holds cash deposits in amounts that exceed the FDIC insurance limitation, it may incur a loss in the event of a failure of any of the financial institutions where it maintains deposits. Management believes the Company is not exposed to significant risk due to the financial position of the depository institution, but will continue to monitor regularly and adjust, if needed, to mitigate risk. The Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. To date, the Company has not experienced any losses associated with this credit risk and continues to believe that this exposure is not significant.
Revenue Recognition for Out-License Arrangements	Revenue Recognition for Out-License ArrangementsOverview The Company currently has no product revenue. Reported revenue in the accompanying Statements of Operations and Comprehensive Loss is associated with one out-license agreement (the “China Out-License”) that allows the third-party licensee to market the Company’s TP-03 product candidate (representing functional intellectual property) in the People's Republic of China, Hong Kong, Macau, and Taiwan (the "China Territory") - see Note 9. The accounting and reporting of revenue for out-license arrangements requires significant judgment for: (a) identification of the number of performance obligations within the contract, (b) the contract’s transaction price for allocation (including variable consideration), (c) the stand-alone selling price for each identified performance obligation, and (d) the timing and amount of revenue recognition in each period. The China Out-License was analyzed under GAAP to determine whether the promised goods or services are distinct or must be accounted for as part of a combined performance obligation. In making these assessments, the Company considers factors such as the stage of development of the underlying intellectual property and the capabilities of the customer to develop the intellectual property on their own, and/or whether the required expertise is readily available. If the license is not distinct, the license is combined with other promised goods or services as a combined performance obligation for revenue recognition. The China Out-License arrangement included the following forms of consideration: (i) non-refundable upfront license payment, (ii) equity-based consideration, (iii) sales-based royalties, (iv) sales-based threshold milestones, (v) drug supply agreement milestone, (vi) development milestone payments, and (vii) regulatory milestone payments. Revenue is recognized in proportion to the allocated transaction price when (or as) the respective performance obligation is satisfied. The Company evaluates the progress related to each milestone at each reporting period and, if necessary, adjusts the probability of achievement and related revenue recognition. The measure of progress, and thereby periods over which revenue is recognized, is subject to estimates by management and may change over the course of the agreement. Contractual Terms for Receipt of Payments A performance obligation is a promise in a contract to transfer a distinct good or service and is the unit of accounting. A contract’s transaction price is allocated among each distinct performance obligation based on relative standalone selling price and recognized when, or as, the applicable performance obligation is satisfied. The contractual terms that establish the Company’s right to collect specified amounts from its customers and that require contemporaneous evaluation and documentation under GAAP for the corresponding timing and amount of revenue recognition, are as follows: (1) Upfront License Fees: The Company determines whether non-refundable license fee consideration is recognized at the time of contract execution (i.e., when the license is transferred to the customer and the customer is able to use and benefit from the license) or over the actual (or implied) contractual period of the China Out-License. The Company also evaluates whether it has any other requirements to provide substantive services that are inseparable from the performance obligation of the license transfer to determine whether any combined performance obligation is satisfied over time or at a point in time. Upfront payments may require deferral of revenue recognition to a future period until the Company performs obligations under these arrangements. (2) Development Milestones: The Company utilizes the most likely amount method to estimate the amount of consideration to which it will be entitled for achievement of development milestones as these represent variable consideration. For those payments based on development milestones (e.g., patient dosing in a clinical study or the achievement of statistically significant clinical results), the Company assesses the probability that the milestone will be achieved, including its ability to control the timing or likelihood of achievement, and any associated revenue constraint. Given the high degree of uncertainty around the occurrence of these events, the Company determines the milestone and other contingent amounts to be constrained until the uncertainty associated with these payments is resolved. At each reporting period, the Company re-evaluates this associated revenue recognition constraint. Any resulting adjustments are recorded to revenue on a cumulative catch-up basis, and reflected in the financial statements in the period of adjustment. (3) Regulatory Milestones: The Company utilizes the most likely amount method to estimate the consideration to which it will be entitled and recognizes revenue in the period regulatory approval occurs (the performance obligation is satisfied) as these represent variable consideration. Amounts constrained as variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company evaluates whether the milestones are considered probable of being reached and not otherwise constrained. Accordingly, due to the inherent uncertainty of achieving regulatory approval, associated milestones are deemed constrained for revenue recognition until achievement. (4) Royalties: Under the sales-or-usage-based royalty exception the Company recognizes revenue based on the contractual percentage of the licensee’s sale of products to its customers at the later of (i) the occurrence of the related product sales or (ii) the date upon which the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any royalty revenue from the China Out-License. (5) Sales Threshold Milestones: Similar to royalties, applying the sales-or-usage-based royalty exception, the Company recognizes revenue from sales threshold milestones at the later of (i) the period the licensee achieves the one-time annual product sales levels in their territories for which the Company is contractually entitled to a specified lump-sum receipt, or (ii) the date upon which the performance obligation to which some or all of the milestone has been allocated has been satisfied or partially satisfied. To date, the Company has not recognized any sales threshold milestone revenue from out-licensing arrangements. The Company re-evaluates the measure of progress to each performance obligation in each reporting period as uncertain events are resolved and other changes in circumstances occur.
Research and Development Costs	Research and Development CostsResearch and development costs are expensed as incurred or as certain upfront or milestone payments become contractually due to licensors upon the achievement of clinical or regulatory events. Research and development expenses include internal costs directly attributable to in-development programs, including costs of certain salaries and other employee-related costs (including stock-based compensation), and costs to conduct nonclinical studies, clinical trials and contract manufacturing activities. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with third-party service providers under the service agreements. As it relates to clinical trials, the financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Such payments are evaluated for current or long-term classification based on when they will be realized. The Company's objective is to reflect the appropriate expense in its financial statements by matching those expenses with the period in which the services and efforts are expended. The Company accounts for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial taking into consideration discussions with applicable personnel and outside service providers. The clinical trial accrual is dependent in part upon the timely and accurate reporting of progress and efforts incurred from CROs, contract manufacturers and other third-party vendors. Although estimates are expected to be materially consistent with actual amounts incurred, the Company's understanding of the status and timing of services performed relative to the actual status and timing of services performed can vary and may result in changes in estimates in any particular period. The Company makes significant judgments and estimates in determining the accrued liabilities balance at each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. To date, there have been no material differences between estimates of such expenses and the amounts actually incurred.
Stock-Based Compensation	Stock-Based Compensation The Company recognizes stock-based compensation expense for equity awards granted to employees, consultants, and members of its Board of Directors. Stock option awards are at an exercise price of not less than 100% of the fair market value of common stock on the respective date of grant. The grant date is the date the terms of the award are formally approved by the Company’s Board of Directors or its designee. The Company uses the Black-Scholes option pricing model to estimate the fair value of stock option awards as of the date of grant. The fair value of restricted stock units is representative of the closing market price of the Company's common stock on the date preceding the award grant-date. Stock awards granted typically have one to four-year service conditions and a contractual term of 10 years. Any performance conditions for vesting are explicitly stated in each award agreement and are associated with clinical, business development, or operational milestones. For stock-based awards that vest subject to the satisfaction of a service requirement, the related expense is recognized on a straight-line basis over each award’s actual or implied vesting period. For stock-based awards that vest subject to a performance condition, the Company recognizes related expense on an accelerated attribution method, if and when it concludes that it is highly probable that the performance condition will be achieved. At each reporting period, the Company reassesses the probability of the achievement of the performance vesting conditions. As applicable, the Company reverses previously recognized expense for unvested awards in the same period of forfeiture. The measurement of the fair value of stock option awards and recognition of stock-based compensation expense requires assumptions to be estimated by management that involve inherent uncertainties and the application of management’s judgment, including (a) the fair value of the Company’s common stock on the date of the option grant for all awards granted prior to the IPO, (b) the expected term of the stock option until its exercise by the recipient, (c) stock price volatility over the expected term, (d) the prevailing risk-free interest rate over the expected term, and (e) expected dividend payments over the expected term. Management estimates the expected term of awarded stock options utilizing the simplified method for awards since the Company does not yet have sufficient exercise history since its November 2016 corporate formation and also lacks specific historical and implied stock volatility information. Accordingly, management estimates this expected volatility based on a designated peer-group of publicly-traded companies for a look-back period (from the date of grant), that corresponds with the expected term of the awarded stock option. The Company estimates the risk-free interest rate based upon the U.S. Department of the Treasury yield curve in effect at award grant for the time period that corresponds with the expected term of the awarded stock option. The Company’s expected dividend yield is zero because it has never paid cash dividends and does not expect to for the foreseeable future. Subsequent to the IPO, the fair value of the Company’s common stock is based on the closing quoted market price of its common stock as reported by the Nasdaq Global Select Market on the date of grant.
Income Taxes	Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recorded based on the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the financial statements, as well as operating losses and tax credit carry forwards using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain due to the Company’s historical operating performance and recorded cumulative net losses in prior fiscal periods. A valuation allowance is recorded to reduce deferred tax assets, because based upon a weighting of positive and negative factors, it is more likely than not that these deferred tax assets will not be realized. If/when the Company were to determine that deferred tax assets are realizable, an adjustment to the corresponding valuation allowance would increase the net income in the period that such determination was made. The Company’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes it has appropriate support for the positions taken on its tax returns, the Company regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of its provision for income taxes. The Company continually assesses the likelihood and amount of potential revisions and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known. Interest and penalties related to unrecognized tax benefits, if any, are recorded as a component of income tax expense.
Net Loss per Share	Net Loss per Share Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period, without consideration for potential dilutive shares of common stock. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock method and if-converted method as applicable. The Company’s participating securities include unvested common stock awards issued upon early exercise of certain stock options, as early exercised unvested common stock awards have a non-forfeitable right to dividends. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses, so in periods of net losses, the two-class method of calculating basic and diluted earnings per share is not required. In periods of net income, basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities. Also, net income is attributed to both common stockholders and participating security holders, and therefore, net income is allocated to shares of common stock and participating securities, as if all of the earnings for the period had been distributed. Diluted earnings per share under the two-class method is calculated using the more dilutive of the treasury stock or the two-class method. Due to net losses in all periods presented, all otherwise potentially dilutive securities are antidilutive, and accordingly, the reported basic net loss per share equals diluted net loss per share.
Comprehensive Loss	Comprehensive LossComprehensive loss represents (i) net loss for the periods presented, and (ii) unrealized gains or losses on our reported available-for-sale debt securities.
Recently Issued or Effective Accounting Standards	Recently Issued or Effective Accounting StandardsRecently issued or effective accounting pronouncements that impact, or may have an impact, on the Company’s financial statements have been discussed within the footnote to which each relates. Other recent accounting pronouncements not disclosed in these Financial Statements have been determined by the Company’s management to have no impact, or an immaterial impact, on its current financial position, results of operations, or cash flows.

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 71,660	$ 171,332
Marketable securities	145,366	483
Other receivables	3,582	92
Prepaid expenses	4,767	4,045
Total current assets	225,375	175,952
Property and equipment, net	957	755
Operating lease right-of-use assets	575	1,074
Long-term investments	371	0
Other assets	585	1,126
Total assets	227,863	178,907
Current liabilities:
Accounts payable and other accrued liabilities	9,910	8,680
Accrued payroll and benefits	5,519	2,798
Total current liabilities	15,429	11,478
Term loan, net	19,434	0
Other long-term liabilities	100	699
Total liabilities	34,963	12,177
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding	0	0
Common stock, $0.0001 par value; 200,000,000 shares authorized; 26,727,458 shares issued and outstanding at December 31, 2022; 20,726,580 shares issued and 20,698,737 outstanding, which excludes 27,840 shares subject to repurchase at December 31, 2021	5	4
Additional paid-in capital	301,732	213,398
Accumulated other comprehensive loss	(74)	0
Accumulated deficit	(108,763)	(46,672)
Total stockholders’ equity	192,900	166,730
Total liabilities and stockholders’ equity	$ 227,863	$ 178,907

Commitments & Contingencies - Facility Leases (Details)	Dec. 31, 2022 contract
Commitments and Contingencies Disclosure [Abstract]
Number of leases	4
Weighted average remaining lease term	1 year 1 month 6 days
Estimated incremental borrowing rate	10.00%

Balance Sheet Account Detail - Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Trade accounts payable and other	$ 5,269	$ 2,856
Accrued clinical studies	3,691	4,407
Operating lease liability, current	$ 721	$ 609
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accounts payable and other accrued liabilities	Accounts payable and other accrued liabilities
Accrued interest, current	$ 215	$ 0
Income taxes payable	14	55
Contract liability	0	697
Employee stock option pre-vesting exercise liability	0	56
Accounts payable and other accrued liabilities	$ 9,910	$ 8,680

Credit Facility Agreement (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Summary of Interest Expense

During the year ended December 31, 2022, the Company recognized interest expense on the accompanying Statement of Operations and Comprehensive Loss in connection with the Credit Facility as follows:


	Year Ended December 31, 2022
Interest expense for term loan	$	1,890
Accretion of end of term charge	174
Amortization of debt issuance costs	135
Total interest expense related to term loan	$	2,199

Balances of Credit Facility and Related Accretion and Amortization

The principal balance of this Credit Facility and related accretion and amortization as of December 31, 2022 is reported on a combined basis as term loan, net on the accompanying Balance Sheet as follows:


	December 31, 2022
Term loan, gross	$	20,000
Debt issuance costs	(875)
Accretion of end of term charge	174
Accumulated amortization of debt issuance costs	135
Term loan, net	19,434

Income Taxes - Reconciliation of Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Expected tax benefit at statutory rate	$ (13,040)	$ (2,891)
State income tax, net of federal benefit	(212)	(92)
Permanent items	(22)	(12)
Stock-based compensation	606	760
Executive compensation	988	0
Research and development credits	(1,753)	(2,408)
Change in fair value of equity warrants and equity securities	91	331
Other	212	(50)
Change in valuation allowance	13,126	4,417
Income tax (benefit) provision	$ (4)	$ 55

Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Current:
Federal	$ (4)	$ 42
State	0	13
Current Income Tax Expense (Benefit)	(4)	55
Deferred:
Federal	0	0
State	0	0
Deferred Income Tax Expense (Benefit)	0	0
Income tax (benefit) provision	$ (4)	$ 55

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance (shares) at Dec. 31, 2020	0
Beginning balance at Dec. 31, 2020	$ 0
Ending balance (shares) at Dec. 31, 2021	0
Ending balance at Dec. 31, 2021	$ 0
Beginning balance (shares) at Dec. 31, 2020		20,323,201
Beginning balance at Dec. 31, 2020	165,980	$ 4	$ 198,821	$ 0	$ (32,845)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(13,827)				(13,827)
Recognition of stock-based compensation expense	8,455		8,455
Lapse of repurchase rights related to common stock issued pursuant to early exercises (shares)		151,535
Lapse of repurchase obligation for stock option exercises, prior to vesting	$ 304		304
Exercise of vested stock options (shares)	24,959	24,959
Exercise of vested stock options	$ 103		103
Shares issued as consideration for in-license rights (shares)		187,500
Shares issued as consideration for in-license rights	5,494		5,494
Shares issued in connection with the employee stock purchase plan (shares)		11,542
Shares issued in connection with the employee stock purchase plan	$ 221		221
Ending balance (shares) at Dec. 31, 2021	20,698,737	20,698,737
Ending balance at Dec. 31, 2021	$ 166,730	$ 4	213,398	0	(46,672)
Ending balance (shares) at Dec. 31, 2022	0
Ending balance at Dec. 31, 2022	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(62,091)				(62,091)
Recognition of stock-based compensation expense	13,460		13,460
Lapse of repurchase rights related to common stock issued pursuant to early exercises (shares)		27,840
Lapse of repurchase obligation for stock option exercises, prior to vesting	$ 56		56
Exercise of vested stock options (shares)	40,979	40,979
Exercise of vested stock options	$ 123		123
Shares issued as consideration for in-license rights (shares)		32,914
Shares issued as consideration for in-license rights	0		0
Shares issued in connection with the employee stock purchase plan (shares)		37,156
Shares issued in connection with the employee stock purchase plan	462		462
Issuance of common stock upon initial public offering, net of issuance costs of $5,280 (in shares)		5,889,832
Issuance of common stock upon follow-on public offering, net of issuance costs of $5,280	74,234	$ 1	74,233
Other comprehensive loss	$ (74)
Ending balance (shares) at Dec. 31, 2022	26,727,458	26,727,458
Ending balance at Dec. 31, 2022	$ 192,900	$ 5	$ 301,732	$ (74)	$ (108,763)

Credit Facility Agreement (Details) - USD ($) $ in Thousands				12 Months Ended
	Mar. 15, 2023	Dec. 31, 2022	Feb. 02, 2022	Dec. 31, 2022	Jan. 05, 2023	Dec. 31, 2021
Debt Instrument [Line Items]
Term loan, gross		$ 20,000		$ 20,000
Debt issuance costs		875		875
Line of Credit
Debt Instrument [Line Items]
Credit facility, aggregate principal amount		$ 135,000		135,000
Draw on credit facility			$ 20,000
Increments to draw on credit facility at company's election			$ 5,000
Interest rate			8.45%
Interest rate		7.50%	3.25%
End of term charge				1,000
End of term charge, interest rate			4.75%
Term loan, gross		$ 20,000		20,000		$ 0
Debt issuance costs		$ 900		$ 900
Debt instrument, effective interest rate		13.61%		13.61%
Line of Credit \| Subsequent Event
Debt Instrument [Line Items]
Draw on credit facility	$ 5,000
Line of Credit \| Prime Rate
Debt Instrument [Line Items]
Variable rate			4.45%
Line of Credit \| Prime Rate \| Maximum
Debt Instrument [Line Items]
Variable rate			11.45%
Line of Credit \| Credit Facility, Tranche One
Debt Instrument [Line Items]
Credit facility, aggregate principal amount		$ 25,000		$ 25,000
Line of Credit \| Credit Facility, Tranche One \| Subsequent Event
Debt Instrument [Line Items]
Credit facility, aggregate principal amount					$ 25,000
Line of Credit \| Credit Facility, Tranche Two
Debt Instrument [Line Items]
Credit facility, aggregate principal amount		35,000		35,000
Line of Credit \| Credit Facility, Tranche Three
Debt Instrument [Line Items]
Credit facility, aggregate principal amount		50,000		50,000
Line of Credit \| Credit Facility, Tranche Four
Debt Instrument [Line Items]
Credit facility, aggregate principal amount		$ 25,000		$ 25,000
Line of Credit \| Credit Facility, First Amendment, Tranche One \| Subsequent Event
Debt Instrument [Line Items]
Increments to draw on credit facility at company's election					5,000
Line of Credit \| Credit Facility, First Amendment, Tranche Two \| Subsequent Event
Debt Instrument [Line Items]
Increments to draw on credit facility at company's election					$ 5,000
Line of Credit \| Credit Facility, Silicon Valley Bank Commitment \| Subsequent Event
Debt Instrument [Line Items]
Draw on credit facility	$ 1,250

Net Loss Per Share - Outstanding Potentially Dilutive Securities (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	4,450,600,000	2,804,921,000
Stock options, unexercised—vested and unvested
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	3,899,342,000	2,759,830,000
Restricted stock units—unvested
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	551,258,000	17,251,000
Stock options exercised prior to vesting— remaining unvested
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	0	27,840,000

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The components of loss from operations before provision for income taxes were as follows:


	Year Ended December 31,
	2022		2021
United States	$	(62,095)	$	(13,772)
Total	$	(62,095)	$	(13,772)

The provision for income taxes from operations were as follows:


	Year Ended December 31,
	2022		2021
Current:
Federal	$	(4)	$	42
State	—		13
	$	(4)	$	55

Deferred:
Federal	—		—
State	—		—
	—		—
Total income tax (benefit) provision	$	(4)	$	55

A reconciliation of income taxes was computed by applying the federal statutory income tax rate in each period to the pretax loss for the years ended December 31, 2022 and 2021, and adjusted for certain classes of transactions, as summarized below:


	Year Ended December 31,
	2022		2021
Expected tax benefit at statutory rate	$	(13,040)	$	(2,891)
State income tax, net of federal benefit	(212)		(92)
Permanent items	(22)		(12)
Stock-based compensation	606		760
Executive compensation	988		—
Research and development credits	(1,753)		(2,408)
Change in fair value of equity warrants and equity securities	91		331
Other	212		(50)
Change in valuation allowance	13,126		4,417
Income tax (benefit) provision	$	(4)	$	55

Significant components of the deferred tax assets and liabilities were as follows:


	Year Ended December 31,
	2022		2021
Deferred tax assets:
Net operating loss carry forwards	$	6,679	$	4,934
Research and development credit carryforwards	4,723		2,969
Capitalized research and development	7,634		—
Intangible assets	2,970		2,984
Stock-based compensation	2,119		1,136
Other, net	1,199		712
Total deferred tax assets before valuation allowance	25,324		12,735
Less: valuation allowance	(25,201)		(12,059)
Total deferred tax assets	$	123	$	676
Deferred tax liabilities, net:
Operating lease right-of-use assets	(123)		(234)
Deferred revenue	—		(442)
Net deferred tax asset	$	—	$	—

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company maintains a valuation allowance against its net deferred tax assets due to the uncertainty that such assets will be realized and evaluates the recoverability of its deferred tax assets on at least an annual basis. The Company has determined that its deferred tax assets, with the exception of amounts supported by the reversal of taxable temporary differences, are not realizable. Consequently, the Company has recorded a valuation allowance on deferred tax assets of $25.2 million and $12.1 million at December 31, 2022 and 2021, respectively.

At December 31, 2022, the Company has federal and state net operating loss carryforwards of approximately $31.1 million and $25.9 million, respectively. As a result of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), for U.S. income tax purposes, net operating losses generated prior to December 31, 2017 can be carried forward for up to 20 years, while net operating losses generated after December 31, 2017 can be carried forward indefinitely, but are limited to 80% utilization against taxable income. The Company’s total federal net operating loss of $31.1 million will not expire but will only be able to be offset 80% of future taxable income within each year. The other state net operating losses will begin to expire in 2037. At December 31, 2022, the Company had federal and other state research and development tax credits of $4.7 million and $1.6 million, respectively. The federal research and development tax credits begin to expire in 2040 unless previously utilized, and the other state credit carryforwards begin to expire in 2037.

The Internal Revenue Code ("IRC") Sections 382 and 383 limit annual use of NOL and research and development credit carryforwards in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not yet completed an ownership change analysis. If a requisite ownership change occurs, the amount of remaining tax attribute carryforwards available to offset taxable income and income tax expense in future years may be restricted or eliminated. If eliminated, the related asset would be removed from deferred tax assets with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate.

Uncertain tax positions are evaluated based upon the facts and circumstances that exist at each reporting period. Subsequent changes in judgement based upon new information may lead to changes in recognition, derecognition, and measurement. Adjustment may result, for example, upon resolution of an issue with the taxing authorities or expiration of a statute of limitations barring an assessment for an issue. The Company recognizes a tax benefit from an uncertain tax position when it is more-likely-than-not that it will be sustained upon examination by tax authorities. As of December 31, 2022, the Company had gross unrecognized tax benefits of $3.4 million, none of which would affect the effective tax rate if recognized. The Company does not anticipate any significant changes in its unrecognized tax benefits over the next 12 months. The Company's policy is to recognize the interest expense and/or penalties related to income tax matters as a component of income tax expense. The Company had no accrual for interest or penalties on the accompanying Balance Sheets at December 31, 2022

and has not recognized interest and/or penalties on the accompanying Statements of Operations for the years ended December 31, 2022 or 2021.

The following table summarizes the changes to the gross unrecognized tax benefits:


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	3,045	$	488
Additions related to current year positions	349		658
Additions related to prior year positions	—		1,899
Decreases related to prior year positions	(1)		—
Balance at end of year	$	3,393	$	3,045

The Company is subject to taxation in the U.S. Federal jurisdiction and various states. All tax years from inception are subject to examination by federal and state tax authorities. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. No interest or penalties related to income tax matters have been incurred at December 31, 2022 and 2021 and the years then ended. Further, the Company is not currently under examination by any federal, state, or local tax authority.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Stockholders' Equity - Additional Information (Details)	1 Months Ended		3 Months Ended	12 Months Ended
Stockholders' Equity - Additional Information (Details)	Jun. 30, 2022 shares	May 31, 2022 $ / shares shares	Sep. 30, 2022 USD ($) $ / shares	Dec. 31, 2022 USD ($) vote $ / shares shares	Dec. 31, 2021 $ / shares	Oct. 08, 2020 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock voting rights, number of votes \| vote				1
Common stock dividends declared (usd per share) \| $ / shares				$ 0	$ 0
Employee stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance, increase percentage				1.00%
ESPP discount percentage from market price, beginning of purchase period				15.00%
ESPP, maximum number of shares available for purchase by employee (shares)				3,000
Offering period				6 months
ESPP, maximum number of shares available for purchase \| $				$ 25,000
Common stock reserved for future issuance, annual increase (shares)				2,500,000
2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock available for issuance (shares)						9,000,000
Common stock reserved for issuance, increase percentage				4.00%
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock available for issuance (shares)						2,432,980
Follow-On Public Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (shares)		5,600,000
Price per share (usd per share) \| $ / shares		$ 13.50
Total gross proceeds \| $			$ 79,500,000
Stock issued, net proceeds \| $			$ 74,300,000
Underwriters' option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued (shares)	289,832	840,000
Price per share (usd per share) \| $ / shares			$ 13.50

China Out-License (Details) - LianBo - License agreement - USD ($) $ in Millions		1 Months Ended	3 Months Ended		21 Months Ended
	Mar. 26, 2021	Feb. 28, 2023	Dec. 31, 2022	Jun. 30, 2021	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront payment	$ 15.0		$ 10.0	$ 25.0	$ 80.0
Sales milestone
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Maximum milestone payments			100.0		100.0
Clinical Development Milestones
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaborative arrangement, milestone payment	$ 65.0
Maximum milestone payments			$ 25.0		$ 25.0
Clinical Development Milestones \| Subsequent Event
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Collaborative arrangement, milestone payment		$ 2.5
Maximum milestone payments		$ 2.5

Statements of Stockholders' Equity (Parenthetical)	12 Months Ended
Statements of Stockholders' Equity (Parenthetical)	Dec. 31, 2022 USD ($)
Statement of Stockholders' Equity [Abstract]
Stock issued, issuance costs	$ 5,280

Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.0001	$ 0.0001
Preferred stock, authorized (shares)	10,000,000	10,000,000
Preferred stock, issued (shares)	0	0
Preferred stock, outstanding (shares)	0	0
Common stock, par value (usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized (shares)	200,000,000	200,000,000
Common stock, issued (shares)	26,727,458	20,726,580
Common stock, outstanding (shares)	26,727,458	20,698,737
Common stock, subject to repurchase (shares)		27,840

Description of Business and Presentation of Financial Statements	12 Months Ended
	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of Business and Presentation of Financial Statements	DESCRIPTION OF BUSINESS AND PRESENTATION OF FINANCIAL STATEMENTS Description of Business Tarsus Pharmaceuticals, Inc. (“Tarsus” or the “Company”) is a biopharmaceutical company focused on the development and commercialization of therapeutics, starting with eye care. The Company’s operations currently consist of its preclinical and clinical studies, corporate administration and commercial leadership supporting planned business growth. Liquidity The Company has a limited operating history, no product sales and has accumulated losses and negative cash flows from operations since inception. The Company has funded its inception-to-date operations through equity capital raises; including the Company's initial public offering in 2020 and the follow-on public offering completed in May 2022 (see Note 4), proceeds from an out-license agreement, and a draw on its credit facility. The Company estimates that its existing capital resources will be sufficient to meet projected operating expense requirements for at least 12 months from the issuance date of the Financial Statements that have been prepared on a going-concern basis. Management expects the Company to continue to incur operating losses for the foreseeable future and may be required to raise additional capital to fund its ongoing operations. However, no assurance can be given as to whether financing will be available on terms acceptable to the Company, or at all. If the Company is unable to raise additional funds as required, it may need to delay, reduce, or terminate some or all of its development programs and clinical trials. The Company may also be required to sell or license its rights to product candidates in certain territories or indications that it would otherwise prefer to develop and commercialize on its own and/or enter into collaborations and other arrangements to address its liquidity needs, which could materially and adversely affect its business and financial prospects, or even its ability to remain a going concern. Operating Segment To date, the Company has operated, managed and organized its business and financial information on an aggregate basis for the purpose of evaluating financial performance and the allocation of capital and personnel resources. The Company’s chief operating decision-maker (CODM), its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. Accordingly, the Company’s management determined that it operates one reportable operating segment. Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has irrevocably elected to not take this exemption. As a result, it will adopt new or revised accounting standards on the relevant effective dates on which adoption of such standards is required for other public companies that are not emerging growth companies.

Audit Information	12 Months Ended
Audit Information	Dec. 31, 2022
Audit Information [Abstract]
Auditor Name	Ernst & Young LLP
Auditor Location	Irvine, California
Auditor Firm ID	42

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-based compensation

Stock-based compensation expense was recognized in the accompanying Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021 as follows:


	Year Ended December 31,
	2022		2021
Research and development	$	3,736	$	1,843
General and administrative	9,724		6,612
Total stock-based compensation	$	13,460	$	8,455

Valuation assumptions of stock options

The fair value of granted stock options was estimated as of the date of grant using the Black-Scholes option-pricing model, based on the following inputs:


	Year Ended December 31,
	2022		2021
Exercise price	$12.89 to $20.64		$21.40 to $47.25
Expected term (in years)	6.25		6.25
Risk-free interest rate	1.63% to 4.21%		0.66% to 1.37%
Expected volatility	77.3% to 83.0%		64.8% to 69.4%
Expected dividend yield	—		—
Weighted-average grant-date fair value per stock option	$	18.37	$	38.06

Stock option activity

Stock option activity during the years ended December 31, 2022 and 2021 was as follows:


	Number of Shares	Weighted- Average Exercise Price/Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (1)
Outstanding - December 31, 2020	1,836,739	$	3.77	9.15	$	68,981
Granted	1,005,512	38.06
Exercised	(24,959)	4.14
Forfeited	(57,462)	22.18
Expired	—	—
Outstanding - December 31, 2021	2,759,830	15.88		8.54	$	33,641
Granted	1,227,123	18.37
Exercised	(40,979)	3.01
Forfeited	(46,632)	24.60
Expired	—	—
Outstanding - December 31, 2022	3,899,342	$	16.69	8.07	$	19,196
Vested - December 31, 2022	1,669,139	$	13.43	7.32	$	13,706
Unvested - December 31, 2022	2,223,536	$	19.12	8.63	$	5,490

____________

Restricted stock unit activity

Restricted stock unit activity during the year ended December 31, 2022 was as follows:


	Number of Shares	Weighted Average Value per Share
Outstanding - December 31, 2021	17,251	$	27.53
Granted	573,009	17.87
Vested	(32,914)	24.17
Forfeited	(6,088)	19.40
Outstanding - December 31, 2022	551,258	$	17.78

Net Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Net loss per share, basis and diluted

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


	Year Ended December 31,
	2022		2021
Net loss	$	(62,091)	$	(13,827)
Weighted-average shares—basic and diluted	24,619,700		20,554,086
Net loss per share—basic and diluted	$	(2.52)	$	(0.67)

Outstanding potentially dilutive securities

The following outstanding and potentially dilutive securities were excluded from the calculation of diluted net loss per share because their impact under the treasury stock method and if-converted method would have been anti-dilutive for each period presented:


	Year Ended December 31,
	2022	2021
Stock options, unexercised—vested and unvested	3,899,342	2,759,830
Restricted stock units—unvested	551,258	17,251
Stock options exercised prior to vesting— remaining unvested	—	27,840
Total	4,450,600	2,804,921

China Out-License	12 Months Ended
China Out-License	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Out-License Agreement	OUT-LICENSE AGREEMENTOut-License of TP-03 Commercial Rights in Greater China in March 2021 On March 26, 2021, the Company entered into The China Out-License agreement with LianBio for its exclusive development and commercialization rights of TP-03 (lotilaner ophthalmic solution, 0.25%) in the China Territory, as defined in the agreement, for the treatment of Demodex blepharitis and Meibomian Gland Disease. LianBio is contractually responsible for all clinical development and commercialization activities and costs within the China Territory. Through December 31, 2022, the Company received payments from LianBio totaling $80.0 million comprised of an upfront payment of $15.0 million and $65.0 million for the achievement of specified milestone events. In February 2023, a development milestone was triggered resulting in expected cash proceeds of $2.5 million. The Company is eligible to receive further consideration from LianBio upon the achievement of additional TP-03 events, including (i) additional development milestone payments of up to an aggregate of $25.0 million (includes $2.5 million for a milestone triggered in February 2023), (ii) China-based TP-03 sales threshold milestone payments of up to an aggregate of $100.0 million, (iii) tiered low-to-high-teen royalties for China Territory TP-03 product sales, and (iv) vesting of a LianBio equity warrant upon certain regulatory milestones. Revenue recognized in the accompanying Statements of Operations and Comprehensive Loss relates to the satisfaction of performance obligations including (i) the transfer of TP-03 license rights in the China Territory to LianBio and (ii) the completion of U.S. clinical activities and then providing LianBio with the related data to supplement its local pivotal trial package for TP-03 in the treatment of Demodex blepharitis.

Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share [Abstract]
Net loss	$ (62,091)	$ (13,827)
Weighted-average common shares outstanding, basic (shares)	24,619,700	20,554,086
Weighted-average common shares outstanding, diluted (shares)	24,619,700	20,554,086
Net loss per share, basic (in USD per share)	$ (2.52)	$ (0.67)
Net loss per share, diluted (in USD per share)	$ (2.52)	$ (0.67)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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+ Details

Commitments & Contingencies - Future Contractual Lease Payments (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2023	$ 874
2024	61
2025	0
2026	0
2027	0
Total future lease payments, undiscounted	935
(Less): Imputed interest	(46)
Present value of operating lease payments	$ 889

Commitments & Contingencies - Employment Agreements (Details) $ / shares in Units, $ in Millions	1 Months Ended
	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2022 arrangement
Related Party Transaction [Line Items]
Number of employment arrangements with executive officers \| arrangement		8
Minimum
Related Party Transaction [Line Items]
Exercise price range (in dollars per share)	$ 2.01
Director
Related Party Transaction [Line Items]
Annual cash compensation \| $	$ 0.2
Option grants to purchase (in shares) \| shares	45,134
Director \| Maximum
Related Party Transaction [Line Items]
Exercise price range (in dollars per share)	$ 34.72

- Definition

Receivables to be collected from (obligations owed to) related parties, net as of the balance sheet date where one party can exercise control or significant influence over another party; including affiliates, owners or officers and their immediate families, pension trusts, and so forth.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(C))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(5))
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Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(k)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
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-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iv))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1A
-Subparagraph (SX 210.13-01(a)(4)(iii)(B))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

+ Details

Balance Sheet Account Detail (Tables)

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Prepaid expenses

Prepaid expenses consists of the following:


	December 31,
	2022		2021
Prepaid insurance	$	1,177	$	1,213
Prepaid research and development expenses	757		671
Prepaid computer software fees	444		56
Other prepaid expenses	2,389		2,105
Prepaid expenses	$	4,767	$	4,045

Other receivables

Other receivables consists of the following:


	December 31,
	2022		2021
Regulatory fee reimbursement (1)	$	3,117	$	—
Interest receivable	178		2
Research and development service receivables	161		—
Payroll tax receivable	90		90
Income tax receivable	36		—
Other receivables	$	3,582	$	92

(1) This amount represents the required FDA filing fee upon the Company's submission of its New Drug Application ("NDA") for TP-03 and was fully refundable based on the Company's status as a qualified "Small Business" as defined in the relevant Federal statute; it was received from the FDA in January 2023.

Property and equipment, net

Property and equipment, net consists of the following:


	December 31,
	2022		2021
Furniture and fixtures	$	714	$	596
Office equipment	197		84
Laboratory equipment	167		167
Leasehold improvements	425		129
Property and equipment, at cost	1,503		976
(Less): Accumulated depreciation and amortization	546		221
Property and equipment, net	$	957	$	755

Other assets

Other assets consists of the following:


	December 31,
	2022		2021
Equity warrants issued by licensee (Note 7)	$	108	$	663
Deposits	82		71
Other non-current assets	395		392
Other Assets	$	585	$	1,126

Accounts payable and accrued liabilities

Accounts payable and other accrued liabilities consists of the following:


	December 31,
	2022		2021
Trade accounts payable and other	$	5,269	$	2,856
Accrued clinical studies	3,691		4,407
Operating lease liability, current	721		609
Accrued interest, current	215		—
Income taxes payable	14		55
Contract liability	—		697
Employee stock option pre-vesting exercise liability	—		56
Accounts payable and other accrued liabilities	$	9,910	$	8,680

Other long-term liabilities

Other long-term liabilities consists of the following:


	December 31,
	2022		2021
Operating lease liability, non-current	$	52	$	585
Lotilaner licensor liability	48		114
Other long-term liabilities	$	100	$	699

Stockholders' Equity - Shares Reserved for Issuance (Details) - shares	Dec. 31, 2022	Dec. 31, 2021
Equity [Abstract]
Common stock awards reserved for future issuance (shares)	8,346,738	9,266,200
Common stock reserved for future issuance under the 2020 Employee Stock Purchase Plan (shares)	2,663,319	2,493,488
Stock options issued and outstanding (shares)	3,899,342	2,759,830
Restricted stock units outstanding (shares)	551,258	17,251
Total shares of common stock reserved (shares)	15,460,657	14,536,769

Commitment and Contingencies - Components of Lease Cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Operating lease expense	$ 569	$ 385
Variable lease expense	244	144
Short-term lease expense (lease with 12-month term or less)	0	116
Total lease expense	$ 813	$ 645

Commitments & Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments & Contingencies

COMMITMENTS & CONTINGENCIES

(a) Operating Leases

In the ordinary course of business, the Company enters into lease agreements with unaffiliated third parties for its facilities and office equipment. As of December 31, 2022, the Company had four active leases for adjacent office and laboratory suites in Irvine, California.

Right-of-Use assets (“ROU assets”) represent the Company’s right to control an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the initial non-cancelable lease term, unless there is a renewal option that is reasonably certain to be exercised. The Company uses its incremental borrowing rate at the lease commencement date in determining the discount rate utilized to present value the future minimum lease payments since an implicit interest rate in each at-market lease agreement was not determinable. The Company has lease agreements with both lease and non-lease components, which are accounted for as a single component for all asset classes.

The Company's variable lease costs, consisting primarily of real estate taxes, insurance costs, and common area maintenance, are expensed as incurred and excluded from the reported ROU asset and lease liability amounts presented in the accompanying Balance Sheets. Rent expense is allocated to research and development and general and administrative expenses in the accompanying Statements of Operations and Comprehensive Loss. The below table summarizes the components of total lease expense:


	Year Ended December 31,
	2022		2021
Operating lease expense	$	569	$	385
Variable lease expense	244		144
Short-term lease expense (lease with 12-month term or less)	—		116
Total lease expense	$	813	$	645

As of December 31, 2022, the Company's facility leases had a weighted average remaining lease term of 1.1 years and a weighted-average incremental borrowing rate of 10%.

The below table summarizes the (i) minimum lease payments over the next five years and thereafter, (ii) lease arrangement imputed interest, and (iii) present value of future lease payments:


Operating Leases - Future Payments	December 31, 2022
2023	$	874
2024	61
2025	—
2026	—
2027	—
Total future lease payments, undiscounted	$	935
(Less): Imputed interest	(46)
Present value of operating lease payments(1)	$	889

(1) This amount includes the future lease commitments related to a lease amendment executed as of December 31, 2022, that commences in the first quarter of 2023.

(b) In-License Agreements for Lotilaner

January 2019 Agreement for Skin and Eye Disease or Conditions in Humans

In January 2019, the Company entered into a license agreement with Elanco Tiergesundheit AG (“Elanco”) for exclusive worldwide rights to certain intellectual property for the development and commercialization of lotilaner in the treatment or cure of any eye or skin disease or condition in humans, as amended in June 2022 (the "Eye and Derm Elanco Agreement"). The Company has sole financial responsibility for related development, regulatory, and commercialization activities.

The Company paid $1.0 million upfront upon execution of the Eye and Derm Elanco Agreement in January 2019, and also paid a required $1.0 million clinical milestone in September 2020, associated with the first two U.S. pivotal trials for the treatment of Demodex blepharitis. The Company paid an additional $2.0 million for its second pivotal trial milestone in April 2021, which was recorded in research and development expense in the accompanying Statements of Operations and Comprehensive Loss for the year ended December 31, 2021.

In June 2022, the Company made a contractual prepayment of $1.5 million that can be applied towards any milestones that become due under the Eye and Derm Elanco Agreement and/or the Company’s in-license agreement with Elanco, granting it a worldwide license to certain intellectual property for the development and commercialization of lotilaner for the treatment, palliation, prevention, or cure of “all other” diseases and conditions in humans (i.e., beyond that of the eye or skin), as amended in June 2022 (the “All Human Uses Elanco Agreement”).

As part of the China Out-License, the Company made a required contractual payment in the amount of $2.5 million to Elanco following the receipt of $25 million of proceeds from LianBio during the second quarter of 2021. During the fourth quarter of 2022, the Company recognized $0.4 million of cost of license fees and collaboration revenue upon receipt of $10 million of cash proceeds from LianBio for the achievement of a clinical development milestone, which was applied against the $1.5 million prepayment.

As of December 31, 2022, the Company is obligated to make further cash payments to Elanco of $3.0 million under the Eye and Derm Elanco Agreement (that can be offset against any remaining prepaid amounts) upon achievement of certain clinical milestones in the treatment of human skin diseases using lotilaner and a maximum of $79.0 million for various commercial and sales threshold milestones for the treatment of human skin diseases and the treatment of any type of blepharitis in humans using lotilaner. In addition, the Company will be obligated to pay tiered contractual royalties to Elanco in the mid to high single digits of its net sales. If the Company receives certain types of payments from its sublicensees, it will be obligated to pay Elanco a variable percentage in the low to mid double-digits of such proceeds, except for territories in which it has achieved applicable regulatory approval.

September 2020 Agreement for All Other Diseases or Conditions in Humans

In September 2020, the Company executed an All Human Uses Elanco Agreement with Elanco and concurrently issued Elanco 222,460 shares of its common stock with an estimated fair value of $3.1 million ($14.0003 per share, approximating the issuance price of the Company's Series C preferred stock in September 2020).

The Company is required to make cash payments to Elanco under the All Human Uses Elanco Agreement upon the achievement of various clinical milestones up to an aggregate maximum of $4.0 million, and various commercial and sales threshold milestones up to an aggregate maximum of $77.0 million. In addition, the Company will be obligated to pay contractual royalties to Elanco in the single digits of its net product sales. If the Company receives certain types of payments from its sublicensees, it will also be obligated to pay Elanco a variable percentage in the low to mid double-digits of such proceeds, except for territories in which it achieved applicable regulatory approval prior to sublicense execution.

In March 2021, the Company entered into the China Out-License agreement with LianBio, that required it to grant Elanco an additional fixed 187,500 shares of the Company's common stock that otherwise would have been issuable no later than the 18-month anniversary of the All Human Uses Elanco Agreement for continued license exclusivity. These issued shares were valued at $5.5 million, based on the Company's closing stock price of $29.30 per share on the date this issuance became contractually required and is recognized within research and development expense within the accompanying Statements of Operations and Comprehensive Loss for the year ended December 31, 2021.

In December 2022, a clinical milestone was triggered to Elanco under the All Human Uses Elanco Agreement upon enrollment of the first patient in the Phase 2a Carpo trial, for the treatment of Lyme disease. The related milestone expense of $0.5 million was applied against the $1.5 million prepayment and included within research and development expense on the accompanying Statements of Operations and Comprehensive Loss for the year ended December 31, 2022.

The Company has entered into employment agreements with eight of its executive officers. These agreements provide for the payment of certain benefits upon separation of employment under specified circumstances, such as termination without cause, or termination in connection with a change in control event.

(d) Consulting Agreements

The Company has a preexisting consulting agreement with a board member that was appointed in December 2021. This consulting agreement provides for annual cash compensation of approximately $0.2 million and option grants to purchase 45,134 shares of the Company’s common stock, with exercise prices ranging from $2.01 to $34.72 per share. This consulting agreement may be terminated by either party with ten days notice and contains standard confidentiality, indemnification, and intellectual property assignment provisions in favor of the Company.

(e) Litigation Contingencies

From time to time, the Company may be subject to various litigation and related matters arising in the ordinary course of business. The Company is currently not aware of any such matters where there is at least a reasonable probability that a material loss, if any, has been or will be incurred for financial statement recognition.

(f) Indemnities and Guarantees

The Company has certain indemnity commitments, under which it may be required to make payments to its officers and directors in relation to certain transactions to the maximum extent permitted under applicable laws. The duration of these indemnities vary, and in certain cases, are indefinite and do not provide for any limitation of maximum payments. The Company has not been obligated to make any such payments to date and no liabilities have been recorded for this contingency in the accompanying Balance Sheets.

Net Loss Per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

NET LOSS PER SHARE

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


	Year Ended December 31,
	2022		2021
Net loss	$	(62,091)	$	(13,827)
Weighted-average shares—basic and diluted	24,619,700		20,554,086
Net loss per share—basic and diluted	$	(2.52)	$	(0.67)


	Year Ended December 31,
	2022	2021
Stock options, unexercised—vested and unvested	3,899,342	2,759,830
Restricted stock units—unvested	551,258	17,251
Stock options exercised prior to vesting— remaining unvested	—	27,840
Total	4,450,600	2,804,921

Commitments & Contingencies (Tables)

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Components of lease cost


	Year Ended December 31,
	2022		2021
Operating lease expense	$	569	$	385
Variable lease expense	244		144
Short-term lease expense (lease with 12-month term or less)	—		116
Total lease expense	$	813	$	645

Future contractual lease payments

The below table summarizes the (i) minimum lease payments over the next five years and thereafter, (ii) lease arrangement imputed interest, and (iii) present value of future lease payments:


Operating Leases - Future Payments	December 31, 2022
2023	$	874
2024	61
2025	—
2026	—
2027	—
Total future lease payments, undiscounted	$	935
(Less): Imputed interest	(46)
Present value of operating lease payments(1)	$	889

(1) This amount includes the future lease commitments related to a lease amendment executed as of December 31, 2022, that commences in the first quarter of 2023.

Balance Sheet Account Detail - Prepaid Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Prepaid insurance	$ 1,177	$ 1,213
Prepaid research and development expenses	757	671
Prepaid computer software fees	444	56
Other prepaid expenses	2,389	2,105
Prepaid expenses	$ 4,767	$ 4,045

Balance Sheet Account Detail - Other Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Equity warrants issued by licensee (Note 7)	$ 108	$ 663
Deposits	82	71
Other non-current assets	395	392
Other assets	$ 585	$ 1,126

Stockholders' Equity

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

2020 and 2016 Equity Incentive Plans

The Company's Board of Directors and stockholders adopted and approved the Company's 2020 Equity Incentive Plan (the “2020 Plan”) in October 2020. The 2020 Plan replaced the Company's 2016 Equity Incentive Plan that was earlier adopted in December 2016 (the "2016 Plan"). However, awards outstanding under the 2016 Plan will continue to be governed by its original terms. The number of shares of the Company's common stock that were initially available for issuance under the 2020 Plan equaled the initial sum of 9,000,000 shares plus 2,432,980 shares that were then available for issuance under the 2016 Plan. The 2020 Plan provides for the following types of awards: incentive and non-statutory stock options, stock appreciation rights, restricted shares, and restricted stock units.

The number of shares of common stock reserved for issuance under the 2020 Plan are increased automatically on the first business day of each fiscal year, commencing in 2021 and ending in 2030, by a number equal to the lesser of: (i) 4% of the shares of common stock outstanding on the last business day of the prior fiscal year; or (ii) the number of shares determined by the Company's Board of Directors. In general, to the extent that any awards under the 2020 Plan are forfeited, terminate, expire or lapse without the issuance of shares, or if the Company reacquires the shares subject to awards granted under the 2020 Plan, those shares will again become available for issuance under the 2020 Plan, as will shares applied to pay the exercise or purchase price of an award or to satisfy tax withholding obligations related to any award.

Follow-On Public Offering

In May 2022, the Company completed a follow-on public offering under its Shelf Registration Statement for an initial underwritten sale of 5,600,000 shares of its common stock at a price of $13.50 per share. The Company also granted the underwriters a 30-day option to purchase up to 840,000 additional shares of its common stock at the public offering price. In June 2022, the underwriters partially exercised this option and the Company's sale of additional 289,832 shares at $13.50 per share was concurrently completed.

Total gross proceeds from this offering were $79.5 million (before underwriting discounts, commissions and other estimated offering expenses), resulting in net proceeds of $74.3 million.

Employee Stock Purchase Plan

Under the terms of the Company's 2020 Employee Stock Purchase Plan, eligible employees can purchase common stock through scheduled payroll deductions. The purchase price is equal to the closing price of the Company's common stock on the first or last day of the offering period (whichever is less), minus a 15% discount. To determine the value of ESPP expense to be recognized during each offering period, the Black-Scholes option-pricing model is used, in combination with the discounted employee price. A participant may purchase a maximum of 3,000 shares of common stock during a six-month offering period, not to exceed $25,000 at full market value on the offering date during each ESPP year.

Beginning on January 1, 2021, and each January 1st thereafter, pursuant to the terms of the ESPP, the number of common stock available for issuance under the ESPP is automatically increased by an amount equal to the lesser of (i) one percent of the total number of shares of common stock outstanding on the last day of the year, (ii) 2.5 million shares, or (iii) a number determined by the board of directors.

Common Stock Outstanding and Reserves for Future Issuance

Common stockholders have one vote for each share of common stock held and are entitled to receive dividends declared by the Company’s Board of Directors when legally available for distribution, then-subject to the dividend rights of the holders of preferred stock. For the years ended December 31, 2022 and 2021, no dividends were declared.

The Company's outstanding equity awards and shares reserved for future issuance under its 2020 and 2016 Equity Incentive Plans and 2020 Employee Stock Purchase Plan are summarized below:


	December 31,
	2022	2021
Common stock awards reserved for future issuance under 2020 and 2016 Equity Incentive Plans	8,346,738	9,266,200
Common stock awards reserved for future issuance under the 2020 Employee Stock Purchase Plan	2,663,319	2,493,488
Stock options issued and outstanding (unvested and vested) under 2020 and 2016 Equity Incentive Plans	3,899,342	2,759,830
Restricted stock units issued and outstanding (unvested) under 2020 Equity Incentive Plan	551,258	17,251
Total shares of common stock reserved	15,460,657	14,536,769

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total grant-date fair value of options that vested during period	$ 13,700	$ 16,300
Stock-based compensation expense	13,460	$ 8,455
Unrecognized compensation expense	25,500
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 10,700
Unrecognized compensation expense, recognition period	2 years 3 months 18 days
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 2,500
Unrecognized compensation expense, recognition period	3 years
Unrecorded stock-based compensation expense	$ 8,000

Credit Facility Agreement - Balances of Credit Facility and Related Accretion and Amortization (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Debt Disclosure [Abstract]
Term loan, gross	$ 20,000
Debt issuance costs	(875)
Accretion of end of term charge	174
Accumulated amortization of debt issuance costs	135
Term loan, net	$ 19,434

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2022

Equity [Abstract]

Stock details


	December 31,
	2022	2021
Common stock awards reserved for future issuance under 2020 and 2016 Equity Incentive Plans	8,346,738	9,266,200
Common stock awards reserved for future issuance under the 2020 Employee Stock Purchase Plan	2,663,319	2,493,488
Stock options issued and outstanding (unvested and vested) under 2020 and 2016 Equity Incentive Plans	3,899,342	2,759,830
Restricted stock units issued and outstanding (unvested) under 2020 Equity Incentive Plan	551,258	17,251
Total shares of common stock reserved	15,460,657	14,536,769

- Definition

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

+ References

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+ Details

Fair Value Measurements - Financial Instruments Measured at Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Assets:
Money market funds	$ 71,660	$ 171,332
Corporate debt securities	145,366
Common stock in LianBio	371	483
Equity warrants (for LianBio shares)	108	663
Total assets measured at fair value	217,505	172,478
U.S. Treasury securities
Assets:
Debt securities, available-for sale and cash equivalents	69,644
Corporate debt securities	69,644
Commercial paper
Assets:
Money market funds	1,997
Debt securities, available-for sale and cash equivalents	60,355
Corporate debt securities	58,358
Corporate debt securities
Assets:
Corporate debt securities	11,521
Government-related debt securities
Assets:
Money market funds	4,978
Debt securities, available-for sale and cash equivalents	10,821
Corporate debt securities	5,843
Money market funds
Assets:
Money market funds	64,685	171,332
Level 1
Assets:
Common stock in LianBio	371	483
Equity warrants (for LianBio shares)	0	0
Total assets measured at fair value	134,700	171,815
Level 1 \| U.S. Treasury securities
Assets:
Debt securities, available-for sale and cash equivalents	69,644
Level 1 \| Commercial paper
Assets:
Debt securities, available-for sale and cash equivalents	0
Level 1 \| Corporate debt securities
Assets:
Corporate debt securities	0
Level 1 \| Government-related debt securities
Assets:
Debt securities, available-for sale and cash equivalents	0
Level 1 \| Money market funds
Assets:
Money market funds	64,685	171,332
Level 2
Assets:
Common stock in LianBio	0	0
Equity warrants (for LianBio shares)	0	0
Total assets measured at fair value	82,697	0
Level 2 \| U.S. Treasury securities
Assets:
Debt securities, available-for sale and cash equivalents	0
Level 2 \| Commercial paper
Assets:
Debt securities, available-for sale and cash equivalents	60,355
Level 2 \| Corporate debt securities
Assets:
Corporate debt securities	11,521
Level 2 \| Government-related debt securities
Assets:
Debt securities, available-for sale and cash equivalents	10,821
Level 2 \| Money market funds
Assets:
Money market funds	0	0
Level 3
Assets:
Common stock in LianBio	0	0
Equity warrants (for LianBio shares)	108	663
Total assets measured at fair value	108	663
Level 3 \| U.S. Treasury securities
Assets:
Debt securities, available-for sale and cash equivalents	0
Level 3 \| Commercial paper
Assets:
Debt securities, available-for sale and cash equivalents	0
Level 3 \| Corporate debt securities
Assets:
Corporate debt securities	0
Level 3 \| Government-related debt securities
Assets:
Debt securities, available-for sale and cash equivalents	0
Level 3 \| Money market funds
Assets:
Money market funds	$ 0	$ 0

Income Taxes - Components of Loss from Operations Before Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
United States	$ (62,095)	$ (13,772)
Loss from operations before income taxes	$ (62,095)	$ (13,772)

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Income Taxes - Gross Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2020
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at beginning of year	$ 3,045
Additions related to current year positions	349	$ 658
Additions related to prior year positions	0	1,899
Decreases related to prior year positions	(1)	0
Balance at end of year	$ 3,393	$ 488

Balance Sheet Account Detail - Other Receivables (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Regulatory fee reimbursement	$ 3,117	$ 0
Interest receivable	178	2
Research and development service receivables	161	0
Payroll tax receivable	90	90
Income tax receivable	36	0
Other receivables	$ 3,582	$ 92

Balance Sheet Account Detail

12 Months Ended

Dec. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Account Detail

BALANCE SHEET ACCOUNT DETAIL

The composition of selected captions within the accompanying Balance Sheets are summarized below:

(a) Prepaid Expenses

Prepaid expenses consists of the following:


	December 31,
	2022		2021
Prepaid insurance	$	1,177	$	1,213
Prepaid research and development expenses	757		671
Prepaid computer software fees	444		56
Other prepaid expenses	2,389		2,105
Prepaid expenses	$	4,767	$	4,045

(b) Other receivables

Other receivables consists of the following:


	December 31,
	2022		2021
Regulatory fee reimbursement (1)	$	3,117	$	—
Interest receivable	178		2
Research and development service receivables	161		—
Payroll tax receivable	90		90
Income tax receivable	36		—
Other receivables	$	3,582	$	92

Property and equipment, net consists of the following:


	December 31,
	2022		2021
Furniture and fixtures	$	714	$	596
Office equipment	197		84
Laboratory equipment	167		167
Leasehold improvements	425		129
Property and equipment, at cost	1,503		976
(Less): Accumulated depreciation and amortization	546		221
Property and equipment, net	$	957	$	755

Depreciation expense for the years ended December 31, 2022 and 2021 was $0.3 million and $0.3 million, respectively.

(d) Other Assets

Other assets consists of the following:


	December 31,
	2022		2021
Equity warrants issued by licensee (Note 7)	$	108	$	663
Deposits	82		71
Other non-current assets	395		392
Other Assets	$	585	$	1,126

(e) Accounts Payable and Other Accrued Liabilities

Accounts payable and other accrued liabilities consists of the following:


	December 31,
	2022		2021
Trade accounts payable and other	$	5,269	$	2,856
Accrued clinical studies	3,691		4,407
Operating lease liability, current	721		609
Accrued interest, current	215		—
Income taxes payable	14		55
Contract liability	—		697
Employee stock option pre-vesting exercise liability	—		56
Accounts payable and other accrued liabilities	$	9,910	$	8,680

(f) Other Long-Term Liabilities

Other long-term liabilities consists of the following:


	December 31,
	2022		2021
Operating lease liability, non-current	$	52	$	585
Lotilaner licensor liability	48		114
Other long-term liabilities	$	100	$	699

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Components of loss from operations before provision for income taxes

The components of loss from operations before provision for income taxes were as follows:


	Year Ended December 31,
	2022		2021
United States	$	(62,095)	$	(13,772)
Total	$	(62,095)	$	(13,772)

Components of provision for income taxes

The provision for income taxes from operations were as follows:


	Year Ended December 31,
	2022		2021
Current:
Federal	$	(4)	$	42
State	—		13
	$	(4)	$	55

Deferred:
Federal	—		—
State	—		—
	—		—
Total income tax (benefit) provision	$	(4)	$	55

Reconciliation of income taxes


	Year Ended December 31,
	2022		2021
Expected tax benefit at statutory rate	$	(13,040)	$	(2,891)
State income tax, net of federal benefit	(212)		(92)
Permanent items	(22)		(12)
Stock-based compensation	606		760
Executive compensation	988		—
Research and development credits	(1,753)		(2,408)
Change in fair value of equity warrants and equity securities	91		331
Other	212		(50)
Change in valuation allowance	13,126		4,417
Income tax (benefit) provision	$	(4)	$	55

Significant components of deferred tax assets and liabilities

Significant components of the deferred tax assets and liabilities were as follows:


	Year Ended December 31,
	2022		2021
Deferred tax assets:
Net operating loss carry forwards	$	6,679	$	4,934
Research and development credit carryforwards	4,723		2,969
Capitalized research and development	7,634		—
Intangible assets	2,970		2,984
Stock-based compensation	2,119		1,136
Other, net	1,199		712
Total deferred tax assets before valuation allowance	25,324		12,735
Less: valuation allowance	(25,201)		(12,059)
Total deferred tax assets	$	123	$	676
Deferred tax liabilities, net:
Operating lease right-of-use assets	(123)		(234)
Deferred revenue	—		(442)
Net deferred tax asset	$	—	$	—

Gross unrecognized tax benefits

The following table summarizes the changes to the gross unrecognized tax benefits:


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	3,045	$	488
Additions related to current year positions	349		658
Additions related to prior year positions	—		1,899
Decreases related to prior year positions	(1)		—
Balance at end of year	$	3,393	$	3,045

Summary of Significant Accounting Policies and Use of Estimates (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, percentage of fair market value	100.00%
Expected term	6 years 3 months	6 years 3 months
Expected dividend yield	0.00%	0.00%
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term	10 years
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated useful lives	3 years
Minimum \| 2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service condition for full vesting	1 year
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated useful lives	5 years
Maximum \| 2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Service condition for full vesting	4 years

Credit Facility Agreement

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Credit Facility Agreement

CREDIT FACILITY AGREEMENT

On February 2, 2022, the Company executed the Credit Facility with Hercules Capital, Inc. ("Hercules") and SVB that expires on February 2, 2027. Concurrent with the execution of the Credit Facility, the Company made a $20.0 million draw.

On January 5, 2023, the Company entered into an amendment to the loan and security agreement (the "First Amendment"). The First Amendment set a maximum interest rate, and updated the terms of prepayment under the Credit Facility and other certain specific conditions, including an extended period for the Company to draw down the $25.0 million tranche associated with the NDA submission, from March 15, 2023 to March 15, 2024, provided at least $5.0 million is drawn on or before March 15, 2023 and at least an additional $5 million is drawn on or before September 15, 2023. The Company did not incur any lender fees as part of this First Amendment.

As of December 31, 2022, the Credit Facility provides for a remaining aggregate principal amount of up to $135.0 million with tranched availability as follows: $25.0 million related to the New Drug Application ("NDA") submission with the FDA for TP-03, $35.0 million upon FDA approval of TP-03, $50.0 million upon achievement of product net revenue thresholds, and $25.0 million upon lender approval. On March 15, 2023, the Company made a $5.0 million draw (including SVB's commitment of $1.25 million) from the $25.0 million tranche that became available upon submission of the NDA.

Each of these tranches may be drawn down in $5.0 million increments at the Company's election. The Credit Facility requires interest-only payments through February 1, 2026, followed by 12 months of principal amortization, unless extended for one year to its maturity, upon meeting certain contractual conditions. All unpaid amounts under the Credit Facility become due on its February 2, 2027 expiry.

Under the First Amendment, the outstanding principal draws accrue interest at a floating interest rate per annum equal to the greater of either (i) The Wall Street Journal prime rate plus 4.45% with an aggregate cap of 11.45% or (ii) 8.45%. At the execution date of the Credit Facility, the Wall Street Journal prime rate was 3.25% and further increased during 2022, reaching 7.50% as of December 31, 2022.

The Company is required to pay a specified fee upon the earlier of (i) February 2, 2027 or (ii) the date the Company prepays, in full or in part, the outstanding principal balance of the Credit Facility ("End of Term Charge"). The current End of Term Charge of $1.0 million was derived at the execution of the Credit Facility by multiplying 4.75% by the $20.0 million drawn at closing and is accreted to interest expense through maturity.

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, or the FDIC, as receiver, and SVB was subsequently transferred into a new entity, Silicon Valley Bridge Bank, N.A. On March 12, 2023, the Department of the Treasury, the Federal Reserve, and the FDIC jointly released a statement that depositors at SVB would have access to their funds, even those in excess of the standard FDIC insurance limits, under a systemic risk exception. Such parties also announced, among other items, that Silicon Valley Bridge Bank has assumed the obligations and commitments of former SVB, commitments to advance under existing credit agreements will be honored in accordance with and pursuant to the terms of such credit agreements and any other duties or roles under existing credit agreements will be performed by Silicon Valley Bridge Bank in accordance with and pursuant to the terms of such credit facilities.

As of December 31, 2022, the carrying value of the Credit Facility (reported as term loan, net on the accompanying Balance Sheets) consisted of $20.0 million principal outstanding less legal and administrative issuance costs of approximately $0.9 million that were recorded as a debt discount to the term loan, net and will continue to be accreted to interest expense using the effective interest method during its term. As of December 31, 2021 the Company had no outstanding debt.

As of December 31, 2022, the effective interest rate for the full term of the Credit Facility was 13.61%. During the year ended December 31, 2022, the Company recognized interest expense on the accompanying Statement of Operations and Comprehensive Loss in connection with the Credit Facility as follows:


	Year Ended December 31, 2022
Interest expense for term loan	$	1,890
Accretion of end of term charge	174
Amortization of debt issuance costs	135
Total interest expense related to term loan	$	2,199


	December 31, 2022
Term loan, gross	$	20,000
Debt issuance costs	(875)
Accretion of end of term charge	174
Accumulated amortization of debt issuance costs	135
Term loan, net	19,434

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Description of Business and Presentation of Financial Statements (Details)	12 Months Ended
	Dec. 31, 2022 segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	1
Number of operating segments	1

Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Revenues:
Total revenues	$ 25,816	$ 57,027
Operating expenses:
Research and development	42,624	41,712
General and administrative	44,949	25,397
Total operating expenses	88,528	69,184
Loss from operations before other income (expense) and income taxes	(62,712)	(12,157)
Other income (expense):
Interest income	3,499	36
Interest expense	(2,199)	0
Other income (expense), net	86	(73)
Unrealized loss on equity investments	(268)	(591)
Change in fair value of equity warrants issued by licensee	(501)	(987)
Total other income (expense), net	617	(1,615)
Loss from operations before income taxes	(62,095)	(13,772)
Benefit (provision) for income taxes	4	(55)
Net loss	(62,091)	(13,827)
Other Comprehensive Income (Loss), Net of Tax [Abstract]
Unrealized loss on marketable securities and cash equivalents	(74)	0
Comprehensive loss	$ (62,165)	$ (13,827)
Net loss per share, basic (in USD per share)	$ (2.52)	$ (0.67)
Net loss per share, diluted (in USD per share)	$ (2.52)	$ (0.67)
Weighted-average common shares outstanding, basic (shares)	24,619,700	20,554,086
Weighted-average common shares outstanding, diluted (shares)	24,619,700	20,554,086
License Fees and Collaboration
Operating expenses:
Cost of license fees and collaboration revenue	$ 955	$ 2,075
License fees
Revenues:
Total revenues	23,893	53,067
Collaboration revenue
Revenues:
Total revenues	$ 1,923	$ 3,960

Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Operating Loss Carryforwards [Line Items]
Valuation allowance on deferred tax assets	$ 25,201,000	$ 12,059,000
Net operating loss carryforwards	31,100,000
Unrecognized tax benefits	3,393,000	3,045,000	$ 488,000
Unrecognized tax benefits that would affect effective tax rate if recognized	0
Interest or penalties	0	$ 0
Federal
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	31,100,000
California
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	25,900,000
Research and development tax credit carryforwards \| Federal
Operating Loss Carryforwards [Line Items]
Tax credit carryforwards	4,700,000
Research and development tax credit carryforwards \| California
Operating Loss Carryforwards [Line Items]
Tax credit carryforwards	$ 1,600,000

Fair Value Measurements - Estimated Fair Value of Cash, Cash Equivalents, Marketable Securities, and Equity Securities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash equivalents:
Amortized cost	$ 71,660	$ 171,332
Estimated fair value	71,660	171,332
Marketable securities:
Amortized cost	145,440
Unrealized gains	18
Unrealized losses	(92)
Estimated fair value	145,366
Long-term investments:
Amortized cost	639	1,074
Unrealized gains	0	0
Unrealized losses	(268)	(591)
Estimated fair value	371	483
Money market funds
Cash equivalents:
Amortized cost	64,685	171,332
Estimated fair value	64,685	$ 171,332
Government-related debt securities
Cash equivalents:
Amortized cost	4,978
Estimated fair value	4,978
Marketable securities:
Amortized cost	5,838
Unrealized gains	5
Unrealized losses	0
Estimated fair value	5,843
Commercial paper
Cash equivalents:
Amortized cost	1,997
Estimated fair value	1,997
Marketable securities:
Amortized cost	58,358
Unrealized gains	0
Unrealized losses	0
Estimated fair value	58,358
Corporate debt securities
Marketable securities:
Amortized cost	11,524
Unrealized gains	8
Unrealized losses	(11)
Estimated fair value	11,521
U.S. Treasury securities
Marketable securities:
Amortized cost	69,720
Unrealized gains	5
Unrealized losses	(81)
Estimated fair value	$ 69,644

Stock-Based Compensation - Valuation Assumptions of Stock Options (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Expected term	6 years 3 months	6 years 3 months
Risk-free interest rate, minimum	1.63%	0.66%
Risk-free interest rate, maximum	4.21%	1.37%
Expected volatility, minimum	77.30%	64.80%
Expected volatility, maximum	83.00%	69.40%
Expected dividend yield	0.00%	0.00%
Weighted-average grant-date fair value per stock option (usd per share)	$ 18.37	$ 38.06
Minimum
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Exercise price (estimated fair value per common share on grant date) (usd per share)	12.89	21.40
Maximum
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Exercise price (estimated fair value per common share on grant date) (usd per share)	$ 20.64	$ 47.25

Balance Sheet Account Detail - Property and Equipment, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 1,503	$ 976
(Less): Accumulated depreciation and amortization	546	221
Property and equipment, net	957	755
Depreciation	300	300
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	714	596
Office equipment
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	197	84
Laboratory equipment
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	167	167
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 425	$ 129

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Financial instruments measured at fair value

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type are presented in the following table (see Note 2(iv)):


	Year Ended December 31, 2022
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	64,685	$	—	$	—	$	64,685
U.S. Treasury securities	69,644		—		—		69,644
Commercial paper	—		60,355		—		60,355
Corporate debt securities	—		11,521		—		11,521
Government-related debt securities	—		10,821		—		10,821
Common stock in LianBio	371		—		—		371
Equity warrants (for LianBio shares)	—		—		108		108
Total assets measured at fair value	$	134,700	$	82,697	$	108	$	217,505


	Year Ended December 31, 2021
	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	171,332	$	—	$	—	$	171,332
Common stock in LianBio	483		—		—		483
Equity warrants (for LianBio shares)	—		—		663		663
Total assets measured at fair value	$	171,815	$	—	$	663	$	172,478

Changes in fair value of derivative asset


	Value of equity warrants (see Note 3(d))
Fair value as of December 31, 2021	$	663
Remeasurement of equity warrants	(501)
Recognition of equity warrants	103
Exercise of the second tranche of equity warrants into LianBio common stock	(157)
Fair value as of December 31, 2022	$	108


	Value of equity warrants (see Note 3(d))
Fair value as of December 31, 2020	$	—
Initial fair value estimate of equity warrants	1,233
Recognition of equity warrants	1,491
Remeasurement of equity warrants	(987)
Exercise of the first tranche of equity warrants into LianBio common stock	(1,074)
Fair value as of December 31, 2021	$	663

Summary of estimated value of cash, cash equivalents, marketable securities, and equity securities

The fair value and amortized cost of cash and cash equivalents and available-for-sale investments by major security type are presented in the following table:


	December 31, 2022
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds	$	64,685	$	—	$	—	$	64,685

Government-related securities	4,978		—		—		4,978
Commercial paper	1,997		—		—		1,997
Total cash equivalents	$	71,660	$	—	$	—	$	71,660

Marketable securities:
U.S. Treasury securities	$	69,720	$	5	$	(81)	$	69,644
Commercial paper	58,358		—		—		58,358
Corporate debt securities	11,524		8		(11)		11,521
Government-related securities	5,838		5		—		5,843
Total marketable securities	$	145,440	$	18	$	(92)	$	145,366

Long-term investments:
Common stock in LianBio	639		—		(268)		371
Total long-term investments	$	639	$	—	$	(268)	$	371


	December 31, 2021
	Amortized cost		Unrealized gains		Unrealized losses		Estimated fair value
Cash equivalents:
Money market funds	171,332		—		—		171,332
Total cash equivalents	$	171,332	$	—	$	—	$	171,332

Marketable securities:
Common stock in LianBio	1,074		—		(591)		483
Total marketable securities	$	1,074	$	—	$	(591)	$	483

Fair Value Measurements - Changes in Fair Value of Derivative Asset (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Fair value, beginning of period	$ 663	$ 0
Remeasurement of equity warrants	(501)	(987)
Recognition of equity warrants	103	1,491
Exercise of equity warrants into LianBio common stock	(157)	(1,074)
Initial fair value estimate of equity warrants		$ 1,233
Fair Value, Asset, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]		Other income (expense), net
Fair value, end of period	$ 108	$ 663

Credit Facility Agreement - Summary of Interest Expense (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Debt Disclosure [Abstract]
Interest expense for term loan	$ 1,890
Accretion of end of term charge	174
Amortization of debt issuance costs	135
Total interest expense related to term loan	$ 2,199

Commitments & Contingencies - In-License Agreements for Lotilaner (Details) - USD ($)		1 Months Ended						3 Months Ended		12 Months Ended		21 Months Ended
	Mar. 26, 2021	Dec. 31, 2022	Jun. 30, 2022	Apr. 30, 2021	Mar. 31, 2021	Sep. 30, 2020	Jan. 31, 2019	Dec. 31, 2022	Jun. 30, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2022
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development										$ 42,624,000	$ 41,712,000
Common stock issued for license agreement, value										0	$ 5,494,000
Clinical milestones \| Elanco
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Maximum milestone payments		$ 3,000,000						$ 3,000,000		$ 3,000,000		$ 3,000,000
License agreement \| Elanco
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development			$ 1,500,000	$ 2,000,000		$ 1,000,000	$ 1,000,000	400,000
Upfront payment									$ 2,500,000
Common stock issued for license agreement (shares)						222,460
Common stock issued for license agreement, value						$ 3,100,000
Common stock issued for license agreement, share price (usd per share)						$ 14.0003
License agreement \| LianBo
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Upfront payment	$ 15,000,000							$ 10,000,000	$ 25,000,000			$ 80,000,000
Additional fixed shares of common stock (shares)					187,500
Additional shares to be issued, value					$ 5,500,000
Additional shares to be issued (usd per share)					$ 29.30
License agreement \| Clinical milestones \| Elanco
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Research and development		$ 500,000
Maximum milestone payments						$ 4,000,000
License agreement \| Commercial and sales milestones \| Elanco
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Maximum milestone payments						$ 77,000,000	$ 79,000,000

Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Restricted stock	12 Months Ended
	Dec. 31, 2022 $ / shares shares
Number of Shares
Outstanding, beginning balance (shares) \| shares	17,251
Granted (shares) \| shares	573,009
Vested (shares) \| shares	(32,914)
Forfeited (shares) \| shares	(6,088)
Outstanding, ending balance (shares) \| shares	551,258
Weighted Average Value per Share
Outstanding, beginning balance (usd per share) \| $ / shares	$ 27.53
Granted (usd per share) \| $ / shares	17.87
Vested (usd per share) \| $ / shares	24.17
Forfeited (usd per share) \| $ / shares	19.40
Outstanding, ending balance (usd per share) \| $ / shares	$ 17.78

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Number of Shares
Beginning balance (shares)	2,759,830	1,836,739
Granted (shares)	1,227,123	1,005,512
Exercised (shares)	(40,979)	(24,959)
Forfeited (shares)	(46,632)	(57,462)
Expired (shares)	0	0
Ending balance (shares)	3,899,342	2,759,830	1,836,739
Vested (shares)	1,669,139
Unvested (shares)	2,223,536
Weighted- Average Exercise Price/Share
Beginning balance (usd per share)	$ 15.88	$ 3.77
Granted (usd per share)	18.37	38.06
Exercised (usd per share)	3.01	4.14
Forfeited (usd per share)	24.60	22.18
Expired (usd per share)	0	0
Ending balance (usd per share)	16.69	$ 15.88	$ 3.77
Vested (usd per share)	13.43
Unvested (usd per share)	$ 19.12
Weighted-Average Remaining Contractual Term
Outstanding	8 years 25 days	8 years 6 months 14 days	9 years 1 month 24 days
Vested	7 years 3 months 25 days
Unvested	8 years 7 months 17 days
Aggregate Intrinsic Value (1)
Outstanding	$ 19,196	$ 33,641	$ 68,981
Vested	13,706
Unvested	$ 5,490