0001558370-21-015528 | 10-Q | XBRL Viewer

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Stock Based Compensation - Equity Incentive Plans (Details)	Sep. 30, 2021 plan shares
Stock Based Compensation
Number of equity compensation plans \| plan	2
2020 Employee Stock Purchase Plan
Stock Based Compensation
Number of shares available for grant	614,649
2020 Equity Incentive Plan
Stock Based Compensation
Number of shares available for grant	2,015,877

Debt - Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Estimated future principal payments due
2022	$ 1,666
2023	6,667
2024	6,667
2025	5,000
Long-term debt, net of current portion	$ 20,000	$ 20,000

Related Party Transactions (Details) $ in Thousands	3 Months Ended		9 Months Ended
Related Party Transactions (Details) $ in Thousands	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($) item	Sep. 30, 2021 USD ($) shares	Sep. 30, 2020 USD ($) item	Jun. 30, 2021 item	Dec. 31, 2020 USD ($) item
Related Party Transactions
Number of co-cofounders \| item		5		5
Accounts payable to related party	$ 0		$ 0
Revenue from related party	1,947	$ 7,550	4,201	$ 9,618
Maximum
Related Party Transactions
Accounts payable to related party						$ 100
Lilly License and Collaboration Agreement
Related Party Transactions
Revenue from related party	1,900	$ 4,100	7,600	$ 9,300
Deferred revenue from related party	24,000		24,000			31,800
Accounts receivable	100		100			$ 100
Flagship Pioneering Inc.
Related Party Transactions
Other income	100		300
Cash payments received	100		$ 300
MIT
Related Party Transactions
Shares issued \| shares			333,333
Number Of Board Of Directors \| item		2		2
Number of board of directors employed by related party \| item					1	2
Expenses with related party	$ 100	$ 100	$ 200	$ 400
Amount of transaction		$ 100		$ 300

Summary of Significant Accounting Policies (Details) - Accounts receivable - Customer Concentration Risk - customer	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Dec. 31, 2020
Summary of Significant Accounting Policies
Number of customers	1	2
Lilly
Summary of Significant Accounting Policies
Concentrations of credit risk	100.00%	36.00%

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Current assets:
Cash	$ 140,393	$ 202,229
Accounts receivable (inclusive of $27 and $63 from a related party at September 30, 2021 and December 31, 2020, respectively)	27	177
Prepaid expenses and other current assets	3,531	1,729
Restricted cash-current	75	75
Total current assets	144,026	204,210
Property and equipment, net	3,910	2,991
Right-of-use assets	14,568	16,731
Restricted cash	1,293	1,118
Total assets	163,797	225,050
Current liabilities:
Accounts payable	3,226	1,988
Accrued expenses and other current liabilities	7,657	7,892
Lease liabilities, current portion	5,673	5,361
Deferred revenue from related party	24,310	31,777
Total current liabilities	40,866	47,018
Lease liability, net of current portion	9,442	11,893
Long-term debt, net of discount	20,009	19,807
Other liabilities	176	176
Total liabilities	70,493	78,894
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, par value $0.001 per share; 175,000,000 shares authorized at September 30, 2021 and December 31, 2020; 32,201,338 and 31,464,989 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	32	31
Preferred stock, par value $0.001 per share; 25,000,000 shares authorized at September 30, 2021 and December 31, 2020; no shares issued and outstanding at September 30, 2021 and December 31, 2020
Additional paid-in capital	288,766	282,053
Accumulated deficit	(195,494)	(135,928)
Total stockholders' equity	93,304	146,156
Total liabilities, convertible preferred stock and stockholders' equity	$ 163,797	$ 225,050

License and Collaboration Agreement

9 Months Ended

Sep. 30, 2021

License and Collaboration Agreement

License and Collaboration Agreement

8. License and Collaboration Agreement

Lilly License and Collaboration Agreement

On April 2, 2018, the Company entered into a License and Collaboration Agreement with Lilly (the “2018 Lilly Agreement”). Under the 2018 Lilly Agreement, the Company granted Lilly an exclusive worldwide, royalty-bearing license, including the right to grant sublicenses, to the Company’s encapsulation technology applied to islet cells. The Company is responsible for research and development activities, including supply and manufacturing activities, through investigational new drug (“IND”) filing readiness for the first product candidate, including costs up to $47.5 million and certain supply and manufacturing of products and materials in Phase 1 clinical trials and for clinical and commercial use following Phase 1 clinical trials. Lilly will be responsible for development and commercialization of any licensed product post-IND filing readiness and research and development costs for the IND product candidate above the $47.5 million cost threshold. Lilly is also responsible for all research, development and commercialization related to any subsequent product candidate. The parties are collaborating with the intent of developing encapsulated cell therapies for the potential treatment of type 1 diabetes. The activities under the agreement are governed by a joint research committee (“JRC”), which meets quarterly and consists of at least three members each from the Company and Lilly.

Under the 2018 Lilly Agreement, Lilly was obligated to pay the Company a one-time, non-refundable and non-creditable license issuance fee of $62.5 million. Lilly is also obligated to make aggregate milestone payments to the Company of up to $165.0 million upon achievement of certain regulatory milestones for the first licensed product and regulatory milestones up to $160.0 million for additional licensed products. Lilly is also obligated to pay the company sales-based milestones of up to $250.0 million for each licensed product and tiered (from mid-single-to-low-double digit) sales-based royalties for each licensed product. The 2018 Lilly Agreement will expire upon the expiration of the last royalty term, on a product-by-product and country-for country basis. The royalty term, by product and country, commences

upon the first commercial sale and ends upon the later to occur of (i) the expiration of the Company’s patent rights of a product candidate developed under the Lilly Agreement, (ii) the expiration of any data exclusivity period in a country or (iii) 10 years after the first commercial sale.

The Company will have the right, and the obligation, to supply Lilly’s requirements for the material to be used in the manufacture of licensed products for clinical and commercial use. In connection with the supply responsibilities, the parties may enter into supply and quality agreements for both clinical and commercial supply.

The Company evaluated the 2018 Lilly Agreement under ASC 606 as the transactions underlying the agreement were considered transactions with a customer. The Company identified the following material promises under the arrangement: (i) exclusive license to research, develop, manufacture and commercialize licensed products, (ii) initial technology transfer, (iii) research activities (including pre-IND supply), (iv) cell line development and supply, (v) product trademark election, (vi) requirement to supply Lilly with the licensed product related to Phase 1 clinical trial (“Phase 1 Supply”) and (vii) participation in the JRC.

The Company determined that the exclusive license to research, develop, manufacture and commercialize the licensed product was not distinct from the related research and manufacturing activities to be provided by the Company as a result of Lilly being unable to benefit on its own or with other resources reasonably available in the marketplace because the license to the Company’s intellectual property requires significant specialized capabilities in order to be further developed, the research services necessary to develop the product are highly specialized and the Company’s proprietary technology is a key capability of that development. The cell line development and supply and research activities were determined not to be distinct because they are performed in conjunction with the research activities to further develop the underlying technology. The product trademark was determined not to be distinct because the benefit that Lilly receives from the Company’s trademark license only exists when combined with the right to commercialize the licensed product. In addition, the Company determined that the impact of the participation in the JRC was insignificant and had an immaterial impact on the accounting model. Therefore, the Company determined that the first five promises should be combined into a single performance obligation (the “Combined Performance Obligation”). The Company determined the sixth promise, the Phase 1 Supply promise, is distinct in the contract. As this is at no cost to Lilly, the right to receive this supply represents a material right and a distinct performance obligation. As such, the Company determined there were two distinct performance obligations at the outset of the 2018 Lilly Agreement.

The Company determined that the $62.5 million upfront payment represents the entirety of the consideration to be included in the transaction price as of the outset of the arrangement. The potential milestone payments that the Company may have been eligible to receive were initially excluded from the transaction price at the outset of the arrangement because (i) all development and regulatory milestone payments did not meet the criteria for inclusion using the most-likely-amount method and (ii) the Company recognizes as revenue sales-based milestones and royalties when the related sales occur. As of September 30, 2021 no milestones or royalties have been deemed likely to be achieved or have been achieved.

The Company recognizes revenue for the Combined Performance Obligation as the research, development and manufacturing services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy the Combined Performance Obligation. The transfer of control to the customer occurs over the time period that the research and development services are to be provided by the Company, and this cost-to-cost method is, in management’s judgement, the best measure of progress toward satisfying this performance obligation. The Company allocated $56.6 million of the transaction price to the Combined Performance Obligation at the outset of the arrangement.

The Phase 1 Supply was determined to be a material right, and the standalone selling price was estimated using the expected cost-plus margin approach. The Company allocated $5.9 million of the transaction price to the Phase 1 Supply at the outset of the arrangement. The Company has determined that the Phase 1 Supply will be satisfied at a point in time when the customer obtains control of each unit of product. Therefore, the Company will recognize revenue as shipments of the Phase 1 Supply are made to Lilly.

The Company reevaluates the transaction price and the total estimated costs expected to be incurred to satisfy the performance obligations at the end of each reporting period and as uncertain events, such as changes to the expected timing and cost of certain research, development and manufacturing activities that the Company is responsible for, are resolved or other changes in circumstances occur, and, if necessary, the Company will adjust its estimate of the transaction price and total estimated costs expected to be incurred.

During the nine months ended September 30, 2021, consistent with the Company’s presentation to the JRC, the Company revised its estimate of total costs to complete the activities under the 2018 Lilly Agreement to reflect the Company’s experiences to date and the impact this has on its expected future research and development activities to satisfy the Combined Performance Obligation. During the nine months ended September 30, 2021, there has been an increase to the total estimated costs expected to be incurred of $8.8 million verse the estimate as of December 31, 2020. The increase in total estimated costs impacted both the Company’s estimated transaction price for the 2018 Lilly Agreement, as Lilly is obligated to reimburse the Company if the costs exceed $47.5 million to complete the services, and the Company’s input method used to recognize revenue, as this measure compares the Company’s cumulative costs incurred to the Company’s total estimated costs expected to be incurred. During the three and nine months ended September 30, 2021, based on the allocation of total transaction price to each performance obligation using the relative stand-alone selling price of each performance obligation under the 2018 Lilly Agreement, the transaction price for the Combined Performance Obligation increased by $5.2 million and $8.0 million, respectively, and the Phase 1 supply performance obligation increased by $0.5 million and $0.8 million, respectively.

During the three months and nine months ended September 30, 2021 and 2020, the Company recognized $1.9 million, $7.5 million, $4.1 million and $9.3 million, respectively, of collaboration revenue. As of September 30, 2021 and December 31, 2020, the Company recorded as a contract liability deferred revenue of $24.3 million and $31.8 million, respectively, all of which were classified as current liabilities in the accompanying balance sheet. As of September 30, 2021 and December 31, 2020, the research and development services related to the Combined Performance Obligation were expected to be performed over a remaining period of approximately 1.75 years and 1.5 years, respectively.

Contract Liability

The changes in the total contract liability (deferred revenue) balances related to the Company’s license and collaboration agreements with Lilly were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Deferred revenues at beginning of period	$	26,229	$	39,530	$	31,777	$	44,690
Revenues deferred during the period		—		—		—		—
Revenues recognized during the period		(1,919)		(4,147)		(7,467)		(9,307)
Deferred revenues at end of period	$	24,310	$	35,383	$	24,310	$	35,383

Stock Based Compensation - Stock Option activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Number of options
Beginning balances			3,872,457
Options granted			1,387,086
Options cancelled			(1,004,343)
Options exercised			(736,349)
Ending balances	3,518,851		3,518,851		3,872,457
Vested and expected to vest	3,518,851		3,518,851
Exercisable	1,711,131		1,711,131
Weighted average exercise price
Beginning balances			$ 4.98
Options granted			30.61
Options cancelled			18.58
Options exercised			2.06
Ending balances	$ 11.81		11.81		$ 4.98
Vested and expected to vest	11.81		11.81
Exercisable	$ 4.47		$ 4.47
Weighted average remaining contractual term
Balances			7 years 10 months 24 days		7 years 6 months
Vested and expected to vest			7 years 10 months 24 days
Exercisable			7 years
Aggregate intrinsic value
Balances	$ 3,795		$ 3,795		$ 166,728
Vested and expected to vest	3,795		3,795
Exercisable	2,963		2,963
Aggregate intrinsic value of stock options exercised	$ 1,100		$ 5,800	$ 1,000
Weighted average grant date fair value of stock options (in dollars per share)	$ 8.22	$ 7.11	$ 30.61	$ 6.69
Maximum
Aggregate intrinsic value
Aggregate intrinsic value of stock options exercised		$ 100

Nature of the Business and Basis of Presentation

9 Months Ended

Sep. 30, 2021

Nature of the Business and Basis of Presentation

Nature of the Business and Basis of Presentation

1. Nature of the Business and Basis of Presentation

Sigilon Therapeutics, Inc. (the “Company” or “Sigilon”) is a biopharmaceutical company with a platform of biomedical technologies and cell therapies created to avoid host detection and foreign body responses with a goal of providing functional cures to patients with chronic diseases. The Company was incorporated on May 14, 2015 under the laws of the State of Delaware.

On December 8, 2020, the Company closed its initial public offering (“IPO”) of 8,050,000 shares of its common stock, including the exercise in full by the underwriters of their option to purchase up to 1,050,000 additional shares of common stock, at a public offering price of $18.00 per share. The aggregate net proceeds to the Company from the offering was $131.8 million.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, the successful completion of research and development, development by competitors of new technological innovations, dependence on key personnel, protection of technology, compliance with government regulations, and the ability to secure additional capital to fund operations and commercial success of its product candidates.

Since its inception, the Company has devoted substantially all of its efforts to raising capital, obtaining financing, and incurring research and development costs related to advancing its biomedical platform. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with (i) U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and (ii) the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, such financial statements do not include all the information and footnotes required by U.S. GAAP for a complete set of financial statements. In the opinion of management, the Unaudited Condensed Financial Statements include all adjustments, consisting of normal recurring accruals and other adjustments, considered necessary for a fair statement of the Company’s financial position, results of operations, stockholders’ equity (deficit) and cash flows as of and for the periods presented. The accompanying Condensed Consolidated Balance Sheet as of December 31, 2020 was derived from the Company’s audited financial statements at that date but does not include all of the footnote disclosures required by U.S. GAAP.

The Unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Company’s audited financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”). The Company’s significant accounting policies are described in Note 2 to the Notes to Financial Statements in the 2020 Form 10-K and are updated, as necessary, in subsequent Form 10-Q filings.

Reverse Stock Split

On November 25, 2020, the Company effected a 1-for-2.25 reverse stock split of the Company’s common stock and the conversion ratio for the preferred stock. All shares, stock options, warrants and per share information presented in the financial statements have been adjusted to reflect the reverse stock split on a retroactive basis for all periods presented. There was no change in the par value and authorized number of shares of the Company’s common stock or preferred stock as part of the reverse stock split.

Going Concern

The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

From its inception through September 30, 2021, the Company has funded its operations primarily with proceeds from its IPO, sales of convertible preferred stock, payments received under its collaboration agreement and proceeds from borrowings under loan and security agreements. The Company has incurred recurring losses since inception, including net losses of $20.2 million and $59.6 million for the three and nine months ended September 30, 2021, respectively, and $54.6 million for the year ended December 31, 2020. In addition, as of September 30, 2021, the Company had an accumulated deficit of $195.5 million. The Company expects to generate significant losses and negative cash flows from operations for the foreseeable future.

Based on its current operating plans, the Company believes its cash of $140.4 million as of September 30, 2021 will be sufficient to fund its anticipated level of operations, capital expenditures and satisfy debt repayments for a period of at least 12 months from the issuance date of this Quarterly Report. The Company expects to generate operating losses for the foreseeable future. Accordingly, the Company will seek additional funding through equity financings, debt financing, or additional collaboration agreements. If the Company is unable to raise additional funds through equity financing, debt financings or additional collaboration agreements the Company may be required to delay, limit, reduce or terminate product development or future commercialization efforts or grant rights to develop and market products or product candidates that the Company would otherwise prefer to develop and market itself.

Impact of COVID-19

In December 2019, a novel strain of coronavirus, which causes the disease known as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 coronavirus has spread globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic and the U.S. government-imposed travel restrictions on travel between the United States, Europe and certain other countries. The outbreak and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce, as certain worker shortages have occurred, supply chains have been disrupted, and facilities and production have been suspended. The future progression of the pandemic and its effects on the Company’s business and operations are uncertain.

The COVID-19 pandemic has impacted and may continue to impact the clinical sites and startup activities for the Company’s Phase 1/2 clinical trials, including third-party manufacturing and logistics providers, which would disrupt its clinical supply chain or the availability or cost of materials, and it may affect the Company’s ability to timely complete our clinical trials and delay the initiation and/or enrollment of any future clinical trials, disrupt regulatory activities or have other adverse effects on its business and operations.

The Company is monitoring the potential impact of COVID-19 on its business and financial statements. The effects of the public health directives and the Company’s work-from-home policies may negatively impact productivity, disrupt its business and delay clinical programs and timelines and future clinical trials, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on its ability to conduct business in the ordinary course. These and similar, and perhaps more severe, disruptions in the Company’s operations could negatively impact business, results of operations and financial condition, including its ability to obtain financing.

To date, the Company has not incurred impairment losses in the carrying values of its assets as a result of the pandemic and are not aware of any specific related event or circumstance that would require the Company to revise its estimates reflected in financial statements.

The Company cannot be certain what the overall impact of the COVID-19 pandemic will be on its business and prospects. The extent to which the COVID-19 pandemic will directly or indirectly impact its business, results of operations, financial condition and liquidity, including planned and future clinical trials and research and development costs, will

depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19, the actions taken to contain or treat it, and the duration and intensity of the related effects.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Convertible Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance at Dec. 31, 2019	$ 90,206	$ 5	$ 3,553	$ (81,320)	$ (77,762)
Beginning balance (in shares) at Dec. 31, 2019	31,836,001	5,221,628
Issuance of convertible preferred stock, net of issuance costs	$ 26,946
Issuance of convertible preferred stock, net of issuance costs (in shares)	4,500,000
Issuance of common stock upon exercise of stock options			121		121
Issuance of common stock upon exercise of stock options (in shares)		93,109
Stock-based compensation expense			667		667
Net loss				(12,735)	(12,735)
Ending balance at Mar. 31, 2020	$ 117,152	$ 5	4,341	(94,055)	(89,709)
Ending balance (in shares) at Mar. 31, 2020	36,336,001	5,314,737
Beginning balance at Dec. 31, 2019	$ 90,206	$ 5	3,553	(81,320)	(77,762)
Beginning balance (in shares) at Dec. 31, 2019	31,836,001	5,221,628
Net loss					(39,419)
Ending balance at Sep. 30, 2020	$ 117,149	$ 5	5,814	(120,739)	(114,920)
Ending balance (in shares) at Sep. 30, 2020	36,336,001	5,341,090
Beginning balance at Dec. 31, 2019	$ 90,206	$ 5	3,553	(81,320)	(77,762)
Beginning balance (in shares) at Dec. 31, 2019	31,836,001	5,221,628
Net loss					(54,600)
Ending balance at Dec. 31, 2020		$ 31	282,053	(135,928)	146,156
Ending balance (in shares) at Dec. 31, 2020		31,464,989
Beginning balance at Mar. 31, 2020	$ 117,152	$ 5	4,341	(94,055)	(89,709)
Beginning balance (in shares) at Mar. 31, 2020	36,336,001	5,314,737
Issuance of common stock upon exercise of stock options			26		26
Issuance of common stock upon exercise of stock options (in shares)		21,817
Stock-based compensation expense			696		696
Net loss				(13,490)	(13,490)
Payment of deferred offering costs	$ (3)
Ending balance at Jun. 30, 2020	$ 117,149	$ 5	5,063	(107,545)	(102,477)
Ending balance (in shares) at Jun. 30, 2020	36,336,001	5,336,554
Issuance of common stock upon exercise of stock options			17		17
Issuance of common stock upon exercise of stock options (in shares)		4,536
Stock-based compensation expense			734		734
Net loss				(13,194)	(13,194)
Ending balance at Sep. 30, 2020	$ 117,149	$ 5	5,814	(120,739)	(114,920)
Ending balance (in shares) at Sep. 30, 2020	36,336,001	5,341,090
Beginning balance at Dec. 31, 2020		$ 31	282,053	(135,928)	146,156
Beginning balance (in shares) at Dec. 31, 2020		31,464,989
Issuance of common stock upon exercise of stock options		$ 1	144		145
Issuance of common stock upon exercise of stock options (in shares)		36,963
Stock-based compensation expense			1,704		1,704
Net loss				(18,973)	(18,973)
Ending balance at Mar. 31, 2021		$ 32	283,901	(154,901)	129,032
Ending balance (in shares) at Mar. 31, 2021		31,501,952
Beginning balance at Dec. 31, 2020		$ 31	282,053	(135,928)	$ 146,156
Beginning balance (in shares) at Dec. 31, 2020		31,464,989
Issuance of common stock upon exercise of stock options (in shares)					736,349
Net loss					$ (59,566)
Ending balance at Sep. 30, 2021		$ 32	288,766	(195,494)	93,304
Ending balance (in shares) at Sep. 30, 2021		32,201,338
Beginning balance at Mar. 31, 2021		$ 32	283,901	(154,901)	129,032
Beginning balance (in shares) at Mar. 31, 2021		31,501,952
Issuance of common stock upon exercise of stock options			486		486
Issuance of common stock upon exercise of stock options (in shares)		362,068
Stock-based compensation expense			1,986		1,986
Net loss				(20,437)	(20,437)
Ending balance at Jun. 30, 2021		$ 32	286,373	(175,338)	111,067
Ending balance (in shares) at Jun. 30, 2021		31,864,020
Issuance of common stock upon exercise of stock options			888		888
Issuance of common stock upon exercise of stock options (in shares)		337,318
Stock-based compensation expense			1,505		1,505
Net loss				(20,156)	(20,156)
Ending balance at Sep. 30, 2021		$ 32	$ 288,766	$ (195,494)	$ 93,304
Ending balance (in shares) at Sep. 30, 2021		32,201,338

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References + Details

Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020	Dec. 31, 2020
Property and Equipment, Net
Property and equipment, gross	$ 6,770		$ 6,770		$ 5,035
Less: Accumulated depreciation and amortization	(2,860)		(2,860)		(2,044)
Total property and equipment, net	3,910		3,910		2,991
Depreciation and amortization expense	300	$ 200	816	$ 628
Laboratory equipment
Property and Equipment, Net
Property and equipment, gross	5,940		5,940		4,325
Leasehold improvements
Property and Equipment, Net
Property and equipment, gross	78		78		60
Furniture and fixtures
Property and Equipment, Net
Property and equipment, gross	620		620		620
Computers and software
Property and Equipment, Net
Property and equipment, gross	$ 132		$ 132		$ 30

Stock Based Compensation - Restricted Stock (Details) - Restricted Stock - Nonemployee and employee founders - USD ($) $ / shares in Units, $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 29, 2016	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Stock Based Compensation
Restricted stock issued, shares	4,633,331
Share Price	$ 0.0003
Aggregate intrinsic value, vested		$ 0.0	$ 0.0	$ 0.0	$ 2.6
25% Vesting
Stock Based Compensation
Vesting percentage	25.00%
6.25% Vesting
Stock Based Compensation
Vesting percentage	6.25%

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Estimates and assumptions reflected in these financial statements include, but are not limited to, revenue recognition, research and development expenses, the valuations of common stock, stock-based awards and the preferred stock warrant liability. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.

Concentration of Credit Risk and of Significant Suppliers

The financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. As of September 30, 2021 and December 31, 2020, all of the Company’s accounts receivable were related to one and two customers, respectively. As of September 30, 2021 and December 31, 2020, 100% and 36%, respectively, of the Company’s total receivables were related to the Company’s collaboration agreements with Eli Lilly and Company (Note 8).

The Company is dependent on third-party manufacturers to supply certain products for research and development activities in its programs. The Company currently has a supplier of certain raw materials that would be considered a sole supplier. If the Company cannot access additional suppliers, its programs could be adversely affected by an interruption in the availability of these raw materials.

Net Income (Loss) per Share

The Company follows the two-class method when computing net income (loss) per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents. For purposes of this calculation, outstanding stock options, unvested restricted common stock, and convertible preferred stock are considered potential dilutive common stock and are excluded from the computation of diluted net income (loss) per share attributable to common stockholders if their effect is anti-dilutive.

The Company’s convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating

securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the three and nine months ended September 30, 2021 and 2020.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 362): Measurement of Credit Losses on Financial Statements (“ASU 2016-13”). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The targeted transition relief standard allows filers an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments. For public entities that are Securities and Exchange Commission (“SEC”) filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this standard to have a material impact on its financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective for public business entities, for fiscal years beginning after December 15, 2020, and for all other entities, for fiscal years beginning after December 15, 2021. The Company is currently evaluating the potential impact ASU 2019-12 may have on its financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform if contract modifications are made on or before December 31, 2022. The amendments in this update are effective for all entities as of March 12, 2020 and do not apply to contract modifications made, and hedging relationships entered into or evaluated, after December 31, 2022. The Company is currently evaluating the potential impact ASU 2020-04 may have on its financial statements.

Debt (Tables)

9 Months Ended

Sep. 30, 2021

Debt

Schedule of long-term debt

As of September 30, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):


	September 30,		December 31,
	2021		2020
Principal amount of long‑term debt	$	20,000	$	20,000
Less: Current portion of long‑term debt		—		—
Long‑term debt, net of current portion		20,000		20,000
Final debt payment liability		700		700
Debt discount, net of accretion		(691)		(893)
Long‑term debt, net of discount and current portion	$	20,009	$	19,807

Schedule of estimated future principal payments

The estimated future principal payments due were as follows (in thousands):


	September 30,
	2021
2021 (Remaining three months)	$	—
2022		1,666
2023		6,667
2024		6,667
2025		5,000
	$	20,000

Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2021

Accrued Expenses and Other Current Liabilities

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30,		December 31,
	2021		2020
Employee compensation and benefits	$	2,852	$	2,910
External research and development costs		3,932		3,584
Legal and professional fees		514		1,155
Other		359		243
Total accrued expenses and other current liabilities	$	7,657	$	7,892

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Parenthetical) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($)
Convertible Preferred Stock
Stock issuance costs	$ 54

Net Loss per Share (Tables)

9 Months Ended

Sep. 30, 2021

Net Loss per Share

Schedule of Basic and diluted net loss per share attributable to common stockholders

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net loss	$	(20,156)	$	(13,194)	$	(59,566)	$	(39,419)
Net loss attributable to common stockholders	$	(20,156)	$	(13,194)	$	(59,566)	$	(39,419)
Denominator:
Weighted average common stock outstanding—basic and diluted		32,055,551		5,338,177		31,707,068		5,214,818
Net loss per share attributable to common stockholders—basic and diluted	$	(0.63)	$	(2.47)	$	(1.88)	$	(7.56)

Schedule of potential dilutive securities excluded from the computation of diluted net loss per share


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Series A Convertible preferred stock (as converted to common stock)	—	10,201,185	—	10,201,185
Series B Convertible preferred stock (as converted to common stock)	—	5,948,143	—	5,948,143
Warrants to purchase Series A‑1 convertible preferred stock (as converted to common stock)	—	37,036	—	37,036
Warrants to purchase Series B convertible preferred stock (as converted to common stock)	—	33,331	—	33,331
Warrants to purchase common stock	19,044	—	19,044	—
Stock options to purchase common stock	3,783,351	4,109,728	3,783,351	4,109,728
Shares issuable under the ESPP	16,891	—	16,891	—
Unvested restricted stock	264,500	—	264,500	—
	4,083,786	20,329,423	4,083,786	20,329,423

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Accrued Expenses and Other Current Liabilities
Employee compensation and benefits	$ 2,852	$ 2,910
External research and development costs	3,932	3,584
Legal and professional fees	514	1,155
Other	359	243
Total accrued expenses and other current liabilities	$ 7,657	$ 7,892

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2021	Dec. 31, 2020
Condensed Consolidated Balance Sheets
Accounts receivable from a related party	$ 27	$ 63
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	175,000,000	175,000,000
Common stock, shares issued (in shares)	32,201,338	31,464,989
Common stock, shares outstanding (in shares)	32,201,338	31,464,989
Preferred Stock par value (Dollars per share)	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	25,000,000	25,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0

Nature of the Business and Basis of Presentation (Details) $ / shares in Units, $ in Thousands			3 Months Ended						9 Months Ended		12 Months Ended
	Dec. 08, 2020 USD ($) $ / shares shares	Nov. 25, 2020	Sep. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Sep. 30, 2020 USD ($)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Nature of the Business and Basis of Presentation
Reverse stock split		0.44
Net loss			$ 20,156	$ 20,437	$ 18,973	$ 13,194	$ 13,490	$ 12,735	$ 59,566	$ 39,419	$ 54,600
Accumulated deficit			195,494						195,494		135,928
Cash			$ 140,393						$ 140,393		$ 202,229
IPO
Nature of the Business and Basis of Presentation
Shares issued \| shares	8,050,000
Offering price \| $ / shares	$ 18.00
Aggregate net proceeds	$ 131,800
Over-Allotment Option
Nature of the Business and Basis of Presentation
Shares issued \| shares	1,050,000

Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2021

Stock Based Compensation

Schedule of weighted average assumption for grant date fair value of stock options


	Three months ended						Nine months ended
	September 30,						September 30,
	2021			2020			2021			2020
Risk-free interest rate		0.96	%		0.42	%		0.76	%		0.42	%
Expected dividend yield		0.00	%		0.00	%		0.00	%		0.00	%
Expected term (in years)		6.0			6.0			6.1			6.0
Expected volatility		78.36	%		86.06	%		78.34	%		86.06	%

Schedule of stock option activity


				Weighted
				average
		Weighted		remaining	Aggregate
	Number of	average		contractual term	intrinsic value
	options	exercise price		(in years)	(in thousands)
Balances at December 31, 2020	3,872,457	$	4.98	7.5	$	166,728
Options granted	1,387,086		30.61
Options cancelled	(1,004,343)		18.58
Options exercised	(736,349)		2.06
Balances at September 30, 2021	3,518,851		11.81	7.9		3,795
Vested and expected to vest at September 30, 2021	3,518,851	$	11.81	7.9	$	3,795
Exercisable at September 30, 2021	1,711,131	$	4.47	7.0	$	2,963

Schedule of stock-based compensation expense


	Three months ended				Nine months ended
	September 30,				September 30,
	2021		2020		2021		2020
Research and development	$	318	$	319	$	2,028	$	839
General and administrative		1,187		415		3,167		1,258
	$	1,505	$	734	$	5,195	$	2,097

Net Loss per Share - Potential dilutive securities excluded from the computation of diluted net loss per share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Net loss per share
Warrants to purchase stock	19,044		19,044
Stock options to purchase common stock	3,783,351	4,109,728	3,783,351	4,109,728
Shares issuable under the ESPP	16,891		16,891
Unvested restricted stock	264,500		264,500
Total	4,083,786	20,329,423	4,083,786	20,329,423
Series A Preferred Stock
Net loss per share
Convertible preferred stock (as converted to common stock)		10,201,185		10,201,185
Series B Convertible Preferred Stock
Net loss per share
Convertible preferred stock (as converted to common stock)		5,948,143		5,948,143
Warrants to purchase stock		33,331		33,331
Series A-1 Convertible preferred stock
Net loss per share
Warrants to purchase stock		37,036		37,036

License and Collaboration Agreement - Contract Liability (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
License and Collaboration Agreement
Deferred revenues at beginning of period	$ 26,229	$ 39,530	$ 31,777	$ 44,690
Revenues recognized during the period	(1,919)	(4,147)	(7,467)	(9,307)
Deferred revenues at end of period	$ 24,310	$ 35,383	$ 24,310	$ 35,383

Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Fair Value Measurements

Fair Value Measurements

3. Fair Value Measurements

As of September 30, 2021 and December 31, 2020 the Company did not have any financial assets and liabilities that were measured at fair value on a recurring basis.

The carrying value of the Company’s long-term debt approximates its fair value at September, 30 2021 and December 31, 2020 because the debt bears interest at a variable market rate and the Company’s credit risk has not materially changed since the inception of the agreement.

- 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

Net Loss per Share

9 Months Ended

Sep. 30, 2021

Net Loss per Share

Net Loss per Share

10. Net Loss per Share

Net Loss per Share

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Numerator:
Net loss	$	(20,156)	$	(13,194)	$	(59,566)	$	(39,419)
Net loss attributable to common stockholders	$	(20,156)	$	(13,194)	$	(59,566)	$	(39,419)
Denominator:
Weighted average common stock outstanding—basic and diluted		32,055,551		5,338,177		31,707,068		5,214,818
Net loss per share attributable to common stockholders—basic and diluted	$	(0.63)	$	(2.47)	$	(1.88)	$	(7.56)

The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Series A Convertible preferred stock (as converted to common stock)	—	10,201,185	—	10,201,185
Series B Convertible preferred stock (as converted to common stock)	—	5,948,143	—	5,948,143
Warrants to purchase Series A‑1 convertible preferred stock (as converted to common stock)	—	37,036	—	37,036
Warrants to purchase Series B convertible preferred stock (as converted to common stock)	—	33,331	—	33,331
Warrants to purchase common stock	19,044	—	19,044	—
Stock options to purchase common stock	3,783,351	4,109,728	3,783,351	4,109,728
Shares issuable under the ESPP	16,891	—	16,891	—
Unvested restricted stock	264,500	—	264,500	—
	4,083,786	20,329,423	4,083,786	20,329,423

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2021
Summary of Significant Accounting Policies
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Estimates and assumptions reflected in these financial statements include, but are not limited to, revenue recognition, research and development expenses, the valuations of common stock, stock-based awards and the preferred stock warrant liability. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions.
Concentration of Credit Risk and of Significant Suppliers	Concentration of Credit Risk and of Significant Suppliers The financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. As of September 30, 2021 and December 31, 2020, all of the Company’s accounts receivable were related to one and two customers, respectively. As of September 30, 2021 and December 31, 2020, 100% and 36%, respectively, of the Company’s total receivables were related to the Company’s collaboration agreements with Eli Lilly and Company (Note 8). The Company is dependent on third-party manufacturers to supply certain products for research and development activities in its programs. The Company currently has a supplier of certain raw materials that would be considered a sole supplier. If the Company cannot access additional suppliers, its programs could be adversely affected by an interruption in the availability of these raw materials.
Net Income (Loss) per Share	Net Income (Loss) per Share The Company follows the two-class method when computing net income (loss) per share as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents. For purposes of this calculation, outstanding stock options, unvested restricted common stock, and convertible preferred stock are considered potential dilutive common stock and are excluded from the computation of diluted net income (loss) per share attributable to common stockholders if their effect is anti-dilutive. The Company’s convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the three and nine months ended September 30, 2021 and 2020.
Recently Adopted Accounting Pronouncements	Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 362): Measurement of Credit Losses on Financial Statements (“ASU 2016-13”). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The targeted transition relief standard allows filers an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments. For public entities that are Securities and Exchange Commission (“SEC”) filers, excluding entities eligible to be smaller reporting companies, ASU 2016-13 is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this standard to have a material impact on its financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective for public business entities, for fiscal years beginning after December 15, 2020, and for all other entities, for fiscal years beginning after December 15, 2021. The Company is currently evaluating the potential impact ASU 2019-12 may have on its financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform if contract modifications are made on or before December 31, 2022. The amendments in this update are effective for all entities as of March 12, 2020 and do not apply to contract modifications made, and hedging relationships entered into or evaluated, after December 31, 2022. The Company is currently evaluating the potential impact ASU 2020-04 may have on its financial statements.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Condensed Consolidated Statements of Operations and Comprehensive Loss
Revenue from related party	$ 1,947	$ 7,550	$ 4,201	$ 9,618

License and Collaboration Agreement (Tables)

9 Months Ended

Sep. 30, 2021

Lilly License and Collaboration Agreement

License and Collaboration Agreement

Schedule of the changes in the total contract liability (deferred revenue) balances related to the Company's license and collaboration agreements

The changes in the total contract liability (deferred revenue) balances related to the Company’s license and collaboration agreements with Lilly were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Deferred revenues at beginning of period	$	26,229	$	39,530	$	31,777	$	44,690
Revenues deferred during the period		—		—		—		—
Revenues recognized during the period		(1,919)		(4,147)		(7,467)		(9,307)
Deferred revenues at end of period	$	24,310	$	35,383	$	24,310	$	35,383

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2021	Nov. 01, 2021
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2021
Document Transition Report	false
Entity Registrant Name	Sigilon Therapeutics, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-39746
Entity Tax Identification Number	47-4005543
Entity Address, Address Line One	100 Binney Street, Suite 600
Entity Address State Or Province	MA
Entity Address, City or Town	Cambridge
Entity Address, Postal Zip Code	02142
City Area Code	617
Local Phone Number	336-7540
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	SGTX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,309,309
Entity Central Index Key	0001821323
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Amendment Flag	false

Commitments and Contingencies

9 Months Ended

Sep. 30, 2021

Commitments and Contingencies.

Commitments and Contingencies

9. Commitments and Contingencies

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and certain of its executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

Legal Proceedings

The Company is not a party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.

Related Party Transactions

9 Months Ended

Sep. 30, 2021

Related Party Transactions

Related Party Transactions

11. Related Party Transactions

As described in Note 11 of the Company’s 2020 Form 10-K, the Company has a patent license agreement with MIT and issued 333,333 shares of its common stock to MIT as part of the consideration for this patent license. Through the completion of the Company’s initial public offering in December 2020, two members of the Company’s board of directors were employed by MIT. Subsequent to the initial public offering and until June 2021 one member of the Company’s board of directors was employed by MIT. The Company incurs charges for the use of certain MIT equipment and facilities. For the three and nine months ended September 30, 2021 and 2020, the Company incurred expenses of less than $0.1 million, $0.2 million, $0.1 million and $0.4 million related to business with MIT, respectively.

The Company paid five of its co-founders, two of whom were members of the board of directors employed by MIT, $0.1 million and $0.3 million for the three and nine months ended September 30, 2020, respectively, for ongoing consulting services. As of September 30, 2021 and December 31, 2020, there was $0 and less than $0.1 million recorded in accounts payable as due to these related parties, respectively.

As described in Note 8 above, the Company entered into the 2018 Lilly Agreement with Lilly in April 2018. During the three and nine months ended September 30, 2021 and 2020, the Company recognized $1.9 million, $7.6 million, $4.1 million and $9.3 million, respectively, of related party revenue associated with Lilly collaboration agreements. As of September 30, 2021 and December 31, 2020, the Company had deferred revenue related to the collaboration agreements with Lilly of $24.0 million and $31.8 million, respectively. At September 30, 2021 and December 31, 2020, the Company had less than $0.1 million and $0.1 million of outstanding receivables with Lilly, respectively.

In January 2021, the Company entered into a shared space arrangement with a portfolio company of Flagship Pioneering, one of the Company’s significant stockholders, to sublease a portion of its office and laboratory space in Cambridge, Massachusetts. The term of the shared space arrangement commenced in January 2021 and the initial term ends on December 31, 2021 and shall automatically renew for successive one-month periods until either party terminates the agreement. Under this agreement, the Company recorded other income of $0.1 million and $0.3 million during the three and nine months ended September 30, 2021. The Company received cash payments of $0.1 million and $0.3 million during the three months and nine months ended September 30, 2021.

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020
Cash flows from operating activities:
Net loss	$ (59,566)	$ (39,419)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization expense	816	628
Stock-based compensation expense	5,195	2,097
Non-cash lease expense	3,562	2,141
Non-cash interest expense	202	36
Loss on debt extinguishment		343
Change in fair value of preferred stock warrant liability		44
Changes in operating assets and liabilities:
Accounts receivable	150	69
Prepaid expenses and other current assets	(1,802)	(183)
Accounts payable	1,560	(1,304)
Accrued expenses and other current liabilities	(138)	2,253
Other liabilities		233
Lease liabilities	(3,538)	(2,156)
Deferred revenue	(7,467)	(9,307)
Net cash used in operating activities	(61,026)	(44,525)
Cash flows from investing activities:
Purchase of property and equipment	(1,532)	(477)
Net cash used in investing activities	(1,532)	(477)
Cash flows from financing activities:
Proceeds from issuance of convertible preferred stock, including deemed dividend, net of issuance costs		26,943
Payments of deferred offering costs	(622)	(19)
Proceeds from long term debt		19,788
Debt repayment		(15,000)
Payment of debt extinguishment fees		(226)
Proceeds from the exercise of common stock options	1,519	164
Net cash provided by financing activities	897	31,650
Net decrease in cash and restricted cash	(61,661)	(13,352)
Cash and restricted cash at beginning of period	203,422	76,645
Cash and restricted cash at end of period	141,761	63,293
Supplemental disclosure of cash flow information:
Cash paid for interest	1,274	659
Supplemental disclosures of noncash investing and financing activities:
Lease assets obtained in exchange for lease liabilities	1,399	1,183
Deferred offering costs included in accounts payable	622	1,542
Issuance of preferred stock warrant in connection with loan and security agreement		69
Purchases of property and equipment included in accounts payable	$ 238	$ 75

Stock Based Compensation - Stock Option Valuation (Details) - Employee and directors	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Assumptions used
Risk free interest rate	0.96%	0.42%	0.76%	0.42%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%
Expected term (in years)	6 years	6 years	6 years 1 month 6 days	6 years
Expected volatility	78.36%	86.06%	78.34%	86.06%

Debt

9 Months Ended

Sep. 30, 2021

Debt

Debt

6. Debt

The following discussion of the Company’s debt should be read in conjunction with Note 8 to the Notes to the Consolidated Financial Statements in the 2020 Form 10-K.

As of September 30, 2021 and December 31, 2020, long-term debt consisted of the following (in thousands):


	September 30,		December 31,
	2021		2020
Principal amount of long‑term debt	$	20,000	$	20,000
Less: Current portion of long‑term debt		—		—
Long‑term debt, net of current portion		20,000		20,000
Final debt payment liability		700		700
Debt discount, net of accretion		(691)		(893)
Long‑term debt, net of discount and current portion	$	20,009	$	19,807

As of September 30, 2021 and December 31, 2020, the interest rate applicable to borrowings under the 2020 Credit Facility was 8.40%.

The estimated future principal payments due were as follows (in thousands):


	September 30,
	2021
2021 (Remaining three months)	$	—
2022		1,666
2023		6,667
2024		6,667
2025		5,000
	$	20,000

As of September 30, 2021, the Company was in full compliance with all financial covenants of the Loan Agreement.

Property and Equipment, Net

9 Months Ended

Sep. 30, 2021

Property and Equipment, Net

Property and Equipment, Net

4. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	September 30,		December 31,
	2021		2020
Laboratory equipment	$	5,940	$	4,325
Leasehold improvements		78		60
Furniture and fixtures		620		620
Computers and software		132		30
		6,770		5,035
Less: Accumulated depreciation and amortization		(2,860)		(2,044)
Total property and equipment, net	$	3,910	$	2,991

Depreciation and amortization expense for the three and nine months ended September 30, 2021 and 2020 was $0.3 million, $0.8 million, $0.2 million and $0.6 million, respectively.

Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2021

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	September 30,		December 31,
	2021		2020
Employee compensation and benefits	$	2,852	$	2,910
External research and development costs		3,932		3,584
Legal and professional fees		514		1,155
Other		359		243
Total accrued expenses and other current liabilities	$	7,657	$	7,892

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2021	Sep. 30, 2020
Revenue
Collaboration revenue (inclusive of $1,947, $7,550, $4,201 and $9,618 from a related party for the three and nine months ended September 30, 2021 and 2020, respectively)	$ 1,947	$ 4,201	$ 7,609	$ 9,618
Operating expenses:
Research and development	16,645	13,425	50,381	39,151
General and administrative	5,041	3,334	15,572	9,023