0001558370-23-005126 | 10-K | XBRL Viewer

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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2022	Mar. 28, 2023	Jun. 30, 2022
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	001-39069
Entity Registrant Name	Aprea Therapeutics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	84-2246769
Entity Address, Address Line One	3805 Old Easton Road
Entity Address, City or Town	Doylestown
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	18902
City Area Code	617
Local Phone Number	463-9385
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	APRE
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 Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 14.0
Entity Common Stock, Shares Outstanding		3,731,570
Entity Central Index Key	0001781983
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Name	Ernst & Young LLP
Auditor Firm ID	42
Auditor Location	Iselin, New Jersey

Consolidated Balance Sheets - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 28,786,647	$ 53,076,052
Prepaid expenses and other current assets	1,366,859	3,508,358
Total current assets	30,153,506	56,584,410
Property and equipment, net	2,321	23,870
Right of use lease asset		185,811
Other noncurrent assets		29,372
Total assets	30,155,827	56,823,463
Current liabilities:
Accounts payable	842,754	1,773,032
Accrued expenses	2,358,332	5,352,996
Lease liability-current		190,471
Total current liabilities	3,201,086	7,316,499
Total liabilities	3,201,086	7,316,499
Commitments and contingencies (Note 11)
Stockholders' equity:
Common stock, $0.001 par value, 400,000,000 shares authorized, 2,655,269 and 1,092,967 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively	2,655	1,092
Additional paid-in capital	330,060,836	240,999,206
Accumulated other comprehensive loss	(10,623,408)	(10,358,956)
Accumulated deficit	(293,796,405)	(181,134,378)
Total stockholders' equity	25,643,678	49,506,964
Total liabilities and stockholders' equity	30,155,827	$ 56,823,463
Series A Convertible Preferred Stock
Convertible preferred stock:
Series A convertible preferred stock, $0.001 par value, 40,000,000 shares authorized; 56,227 and 0 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively	$ 1,311,063

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	400,000,000	400,000,000
Common stock, shares issued	2,655,269	1,092,967
Common stock, shares outstanding	2,655,269	1,092,967
Series A Convertible Preferred Stock
Convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Convertible preferred stock, shares authorized	40,000,000	40,000,000
Convertible preferred stock, shares issued	56,227	0
Convertible preferred stock, shares outstanding	56,227	0

Consolidated Statements of Operations and Comprehensive Loss - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Operating expenses:
Research and development	$ 16,402,273	$ 23,895,875	$ 37,879,325
General and administrative	20,969,771	13,550,478	14,931,887
Acquired in-process research and development	76,020,184
Total operating expenses	113,392,228	37,446,353	52,811,212
Other income (expense):
Interest income (expense), net	448,667	1,648	222,652
Foreign currency gain (loss)	281,534	317,402	(890,252)
Total other income (loss)	730,201	319,050	(667,600)
Net loss	(112,662,027)	(37,127,303)	(53,478,812)
Other comprehensive loss:
Foreign currency translation	(264,452)	(321,695)	1,496,517
Total comprehensive loss	$ (112,926,479)	$ (37,448,998)	$ (51,982,295)
Net loss per share attributable to common stockholders, basic (in dollars per share)	$ (67.99)	$ (34.88)	$ (50.61)
Net loss per share attributable to common stockholders, diluted (in dollars per share)	$ (68.16)	$ (34.88)	$ (50.61)
Weighted-average common shares outstanding, basic (in shares)	1,657,055	1,064,325	1,056,681
Weighted-average common shares outstanding, diluted (in shares)	1,657,055	1,064,325	1,056,681

Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($)	Series A Convertible Preferred Stock	Common Stock	Additional Paid-in capital	Other comprehensive loss	Accumulated deficit	Total
Equity, beginning balance at Dec. 31, 2019		$ 1,051	$ 226,304,519	$ (11,533,778)	$ (90,528,263)	$ 124,243,530
Equity, beginning balance (in shares) at Dec. 31, 2019		1,051,137
Increase (Decrease) in Stockholders' Equity
Exercise of stock options		$ 8	150,941			150,949
Exercise of stock options (in shares)		8,203
Stock based compensation			4,983,023			4,983,023
Foreign currency translation				1,496,517		1,496,517
Net loss					(53,478,812)	(53,478,812)
Equity, ending balance at Dec. 31, 2020		$ 1,059	231,438,483	(10,037,261)	(144,007,075)	77,395,207
Equity, ending balance (in shares) at Dec. 31, 2020		1,059,340
Temporary equity, ending balance (in shares) at Dec. 31, 2021	0
Increase (Decrease) in Stockholders' Equity
Issuance of common stock pursuant to at-the-market stock sales, net		$ 18	1,538,627			1,538,645
Issuance of common stock pursuant to at-the-market stock sales, net (in shares)		18,338
Exercise of stock options		$ 11	208,356			208,367
Exercise of stock options (in shares)		11,319
Vesting of restricted stock units		$ 4	(4)
Vesting of restricted stock units (in shares)		3,970
Stock based compensation			7,813,743			7,813,743
Foreign currency translation				(321,695)		(321,695)
Net loss					(37,127,303)	(37,127,303)
Equity, ending balance at Dec. 31, 2021		$ 1,092	240,999,206	(10,358,956)	(181,134,378)	49,506,964
Equity, ending balance (in shares) at Dec. 31, 2021		1,092,967
Increase (Decrease) in Temporary Equity
Issuance of preferred stock upon acquisition of Atrin	$ 68,777,468
Issuance of preferred stock upon acquisition of Atrin (in shares)	2,949,630
Conversion of preferred stock into common stock	$ (67,466,405)
Conversion of preferred stock into common stock (in shares)	(2,893,403)
Temporary equity, ending balance (in shares) at Dec. 31, 2022	56,227
Temporary equity, ending balance at Dec. 31, 2022	$ 1,311,063
Increase (Decrease) in Stockholders' Equity
Issuance of common stock pursuant to at-the-market stock sales, net		$ 39	682,934			682,973
Issuance of common stock pursuant to at-the-market stock sales, net (in shares)		38,481
Issuance of stock upon acquisition of Atrin		$ 56	1,329,643			1,329,699
Issuance of stock upon acquisition of Atrin (in shares)		55,869
Value of assumed stock options			2,602,850			2,602,850
Vesting of restricted stock units		$ 21	(21)
Vesting of restricted stock units (in shares)		21,251
Stock based compensation			16,981,266			16,981,266
Foreign currency translation				(264,452)		(264,452)
Conversion of preferred stock into common stock		$ 1,447	67,464,958			67,466,405
Conversion of preferred stock into common stock (in shares)		1,446,701
Net loss					(112,662,027)	(112,662,027)
Equity, ending balance at Dec. 31, 2022		$ 2,655	$ 330,060,836	$ (10,623,408)	$ (293,796,405)	$ 25,643,678
Equity, ending balance (in shares) at Dec. 31, 2022		2,655,269

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities:
Net loss	$ (112,662,027)	$ (37,127,303)	$ (53,478,812)
Adjustments to reconcile net loss to net cash used in operating activities:
Acquired in-process research and development	72,523,293
Depreciation and amortization	4,403	12,829	28,834
Stockbased compensation	16,981,266	7,813,743	4,983,023
Amortization of right of use lease asset	182,042	258,848	200,776
Foreign currency (gain) loss	(281,534)	(317,402)	890,252
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	2,190,086	(109,338)	(472,402)
Accounts payable	(858,513)	(2,730,587)	2,326,767
Accrued expenses and other liabilities	(2,903,450)	(5,218,241)	3,928,684
Lease liability	(186,702)	(268,728)	(209,794)
Net cash used in operating activities	(25,011,136)	(37,686,179)	(41,802,672)
Cash flows from investing activities:
Purchases of property and equipment			(25,709)
Net cash used in investing activities			(25,709)
Cash flows from financing activities:
Proceeds from the exercise of stock options		208,367	150,949
Proceeds from at-the-market sales of common stock, net	682,973	1,538,645
Net cash provided by financing activities	682,973	1,747,012	150,949
Decrease in cash and cash equivalents	(24,328,163)	(35,939,167)	(41,677,432)
Effect of exchange rate changes on cash	38,758	(2,467)	606,249
Cash and cash equivalents-beginning of year	53,076,052	89,017,686	130,088,869
Cash and cash equivalents-end of period	28,786,647	53,076,052	$ 89,017,686
Non-cash investing and financing activities:
Operating lease liabilities arising from obtaining right-of-use assets	123,786	$ 124,043
Issuance of convertible preferred stock and common stock in connection with acquisition	$ 70,107,167

Nature of business and basis of presentation

12 Months Ended

Dec. 31, 2022

Nature of business and basis of presentation

Nature of business and basis of presentation

1. Nature of business and basis of presentation

Nature of business—Aprea Therapeutics, Inc. (or the “Company”) is a clinical-stage biopharmaceutical company focused on developing and commercializing novel cancer therapeutics targeting DNA damage response pathways. The Company began principal operations in 2006 and is headquartered in Doylestown, Pennsylvania. Prior to the acquisition of Atrin Pharmaceuticals Inc. (“Atrin”), the Company was engaged in the clinical development of cancer therapeutics that reactivate the mutant p53 tumor suppressor protein. In December 2020, the Company announced that its pivotal Phase 3 myelodysplastic syndromes trial failed to meet its predefined primary endpoint of complete remission (CR) rate. Given these results, FDA feedback and the costs of continuing the APR-246 development program, the Company shifted focus of its activities to the assets acquired in the May 16, 2022 acquisition of Atrin (see Note 3). The Company’s lead product candidate, which was acquired in the Atrin acquisition, is ATRN-119, a Phase 1-ready small molecule ATR inhibitor being developed for solid tumor indications.

Agreement and plan of merger—On May 16, 2022, the Company acquired Atrin (the “Atrin Acquisition”). Under the terms of the Agreement and Plan or Merger dated May 16, 2022 (the “Merger Agreement”), the Company issued to the stockholders of Atrin 55,869 shares of the Company’s common stock, par value $0.001 per share, and 2,949,630 shares of Series A Non-Voting Convertible Preferred Stock (“Series A Preferred Stock”) (as described below). The Series A Preferred Stock had a conversion value on the closing date of $68.8 million. In addition, the Company assumed options granted under the Atrin stock option plan, which became options to purchase 163,757 shares of the Company’s common stock. See Note 3 for additional information.

Series A Preferred Stock—In connection with the Atrin Acquisition, the Company issued 2,949,630 shares of Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into 10 shares of common stock.

The Company held a stockholders’ meeting on July 28, 2022 where approval of the conversion of the Series A Preferred Stock into shares of the Company’s common stock in accordance with Nasdaq Listing Rule 5635(a) was received. A majority of the Series A Preferred Stockholders elected to convert their Series A Preferred Stock into common stock during the second half of 2022 (see Note 9).

Basis of presentation and management plans—The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of convertible preferred stock and common stock.

The Company is subject to risks common to companies in the biopharmaceutical industry. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be maintained, that any therapeutic products developed will obtain required regulatory approval or that any approved or consumer products will be commercially viable. Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will generate significant product sales.

The Company believes that the December 31, 2022 cash balance of approximately $28.8 million combined with the net proceeds received from the Company’s public offering of common stock in February 2023 (see Note 12) will be sufficient to fund the Company’s operations into the third quarter of 2024. In the event that additional funds are not available thereafter, management would expect to significantly reduce expenditures to conserve cash, which would involve scaling back or curtailing new development activity.

Summary of significant accounting policies

12 Months Ended

Dec. 31, 2022

Summary of significant accounting policies

Summary of significant accounting policies

2. Summary of significant accounting policies

Principles of consolidation—The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Aprea Therapeutics AB, which was incorporated in May 2009, Aprea US, Inc., which was incorporated in June 2016 and ATR Merger Sub II LLC which was incorporated in May 2022. Management has concluded it has a single reporting segment for purposes of reporting financial condition and results of operations. All intercompany transactions and balances have been eliminated.

Use of estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses as of and during the reporting period. The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. The Company assesses estimates on an ongoing basis; however, actual results could materially differ from those estimates. Significant items subject to such estimates and assumptions, are used for, but not limited to, include stock-based compensation and accounting for research and development costs.

Foreign currency and currency translation—The functional currency for Aprea Therapeutics AB is the Swedish Krona. Assets and liabilities of Aprea Therapeutics AB are translated into United States dollars at the exchange rate in effect on the balance sheet date. Operating expenses are translated at the average exchange rate in effect during the period. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of stockholders’ equity as a component of accumulated other comprehensive loss. Adjustments that arise from exchange rate changes on transactions denominated in a currency other than the local currency are included in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss as incurred.

Concentrations of credit risk—Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash. Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at financial institutions that management believes to be of high credit quality, and the Company has not experienced any losses on these deposits.

Cash and cash equivalents— The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Property and equipment—Property and equipment are recorded at cost. Expenditures for repairs and maintenance are expensed as incurred. When assets are retired or disposed of, the assets and related accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in the determination of net income or loss. Fixed assets acquired for research and development purposes are assessed for alternative future use. Depreciation is provided using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset.


Asset category		Estimated useful life
Computer equipment and software		3 years
Furniture and fixtures		7 years
Laboratory equipment and office furniture		7 years
Leasehold improvements		Remainder of lease term

Impairment of long-lived assets—Periodically, the Company evaluates its long-lived assets, which consist primarily of property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. To date, no impairments have occurred.

Fair value of financial instruments—The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability between market participants at measurement dates. ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a three-level valuation hierarchy for instruments measured at fair value. The hierarchy is based on the transparency of inputs to the valuation of an asset or liability as of the measurement date. The hierarchy defines three levels of valuation inputs, of which the first two are considered observable and the last is considered unobservable:

●	Level 1 inputs: Quoted prices in active markets for identical assets or liabilities.

●	Level 2 inputs: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

●	Level 3 inputs: Unobservable inputs developed using estimates or assumptions developed by the Company, which reflect those that a market participant would use in pricing the asset or liability.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s financial instruments consist of cash and cash equivalents and accounts payable. The carrying amount of accounts payable is considered a reasonable estimate of fair value due to the short-term maturity.

Accounting for leases—The Company adopted the Lease standard (ASC 842) effective January 1, 2019, using the modified retrospective method. The new standard provided a number of optional practical expedients in transition. The Company elected to apply the ‘package of practical expedients’ which allowed them to not reassess (i) whether existing or expired arrangements contain a lease, (ii) the lease classification of existing or expired leases, or (iii) whether previous initial direct costs would qualify for capitalization under the new lease standard. The Company also elected to apply (i) the practical expedient which allows them to not separate lease and non-lease components, for new leases entered into after adoption and (ii) the short-term lease exemption for all leases with an original term of less than 12 months, for purposes of applying the recognition and measurements requirements in the new standard.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on specific facts and circumstances, the existence of an identified asset(s), if any, and the Company’s control over the use of the identified asset(s), if applicable. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of future lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company’s incremental borrowing rate ranged from approximately 3.0% to 4.3% based on the remaining lease term of the applicable leases.

The Company has elected not to separate lease and non-lease components as a single component. Operating leases are recognized on the balance sheet as right of use (ROU) lease assets, lease liabilities current and lease liabilities non-current. Fixed rents are included in the calculation of the lease balances while variable costs paid for certain

operating and pass-through costs are excluded. Lease expense is recognized over the expected term on a straight-line basis.

Research and development costs—Research and development costs are charged to expense as incurred. Research and development expenses incurred in performing research and development activities, include salaries and benefits, materials and supplies, preclinical expenses, stock-based compensation expense, depreciation of equipment, contract services, and other outside expenses. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using or information provided to the Company by its vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development.

Stock-based compensation—The Company measures stock options and other stock-based awards granted to employees and directors based on their fair value on the date of the grant and recognize compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. The Company applies the straight-line method of expense recognition to all awards with only service based vesting conditions.

For stock-based awards granted to non-employees, compensation expense is recognized over the period during which services are rendered by such non-employees until completed in accordance with the FASB issued ASU No. 2018-07, Compensation Stock Compensation (Topic 718): Improvements to Nonemployee Share Based Payment Accounting. The new standard largely aligns the accounting for share based payment awards issued to employees and nonemployees by expanding the scope of ASC 718 to apply to nonemployee share based transactions, as long as the transaction is not effectively a form of financing.

The Company estimates the fair value of each stock option grant on the date of grant using the Black Scholes option pricing model, which uses as inputs the fair value of the Company’s common stock and assumptions the Company makes for the volatility of its common stock, the expected term of its stock options, the risk-free interest rate for a period that approximates the expected term of its stock options and its expected dividend yield. The Company elects to account for forfeitures when they occur.

The Company also awards restricted stock units (“RSUs”) to employees and directors. RSUs are generally subject to forfeiture if employment terminates prior to the completion of the vesting restrictions. The Company expenses the cost of the RSUs, which is determined to be the fair market value of the shares of common stock underlying the RSUs at the date of grant, ratably over the period during which the vesting restrictions lapse.

Income taxes—The Company accounts for income tax in accordance with ASC 740-10, Income Taxes (“ASC 740-10”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the Company’s financial statements and tax returns. Deferred tax assets and liabilities are determined based upon the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and for loss and credit carryforwards, using enacted tax rates expected to be in effect in the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that these assets may not be realized. The Company determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized. The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for income taxes.

Net loss per share—The Company has reported losses since inception and has computed basic net loss per share attributable to common stockholders by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. The Company computes diluted net loss per common share after giving consideration to all potentially dilutive common shares, including options to purchase common stock, outstanding during the period determined using the treasury-stock

and if-converted methods, except where the effect of including such securities would be antidilutive. Because the Company has reported net losses since inception, these potential common shares have been anti-dilutive and basic and diluted loss per share have been the same.

The following table sets forth the potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to include them would be anti-dilutive (in common stock equivalent shares):


	Year ended December 31,
	2022	2021	2020
Convertible preferred stock	56,227	—
Options to purchase common stock	480,274	229,308	188,552
Unvested restricted stock units	12,734	19,985	—
Total shares of common stock equivalents	549,235	249,293	188,552

Acquired in-process research and development---The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, including transaction costs. In an asset acquisition, the cost allocated to acquire in-process research and development (“IPR&D) with no alternative future use is charged to expense at the allocation date. See Note 3 – “Acquisition of Atrin” for additional information.

Recently issued accounting pronouncements---From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying financial statements.

Acquisition of Atrin Pharmaceuticals

12 Months Ended

Dec. 31, 2022

Acquisition of Atrin Pharmaceuticals

Acquisition of Atrin Pharmaceuticals

3. Acquisition of Atrin Pharmaceuticals

On May 16, 2022, the Company completed its acquisition of Atrin in accordance with the terms of the Merger Agreement as described in Note 1 – “Nature of business and basis of presentation”. Under the terms of the Merger Agreement, the Company issued 55,869 shares of common stock and 2,949,630 shares of Series A Preferred Stock. Each share of Series A Preferred Stock is convertible into 10 shares of Common Stock. A majority of the Series A Preferred Stockholders elected to convert their Series A Preferred Stock into common stock during the second half of 2022 (see Note 9).

The Company concluded the Atrin acquisition was not the acquisition of a business, as substantially all of the fair value of the non-monetary assets acquired was concentrated in a single identifiable asset, ATRN-119.

The Company determined that the cost to acquire the Atrin assets was $76.2 million, based on the fair value of the equity consideration issued and including direct costs of the acquisition of $3.5 million. The net assets acquired in connection with the Atrin acquisition were recorded at their estimated fair values as of May 16, 2022, which is the date the Atrin acquisition was completed. The following table summarizes the net assets acquired based on their estimated fair values as of May 16, 2022:


Acquired IPR&D	$	76,020,184
Cash and cash equivalents		2,489,745
Prepaid expenses and other assets		34,579
Accounts payable and accrued liabilities		(2,336,462)
Total Acquisition Value	$	76,208,046

The Atrin acquisition was accounted for as an asset acquisition as Atrin was not considered to be a business under ASC 805 or SEC Rule 11-01(d). In the estimation of fair value of the asset purchase consideration, the Company used the carrying value of the cash and cash equivalents, prepaid expenses, accounts payable, and accrued liabilities as the most

reliable indicator of fair value based on the associated short-term nature of the balances. The remaining fair value was attributable to the acquired IPR&D. Since Atrin was in preclinical development and no clinical trials had commenced at the time of the acquisition, the cost attributable to the IPR&D was expensed in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2022, as the acquired IPR&D had no alternative future use, as determined by the Company in accordance with U.S. GAAP.

As a result of the Atrin acquisition, the Company announced in May 2022 it was closing its research facility in Sweden and reducing its related workforce in Sweden. The closure of the Swedish research facility and the reduction in workforce resulted in total expenses for employee severance and employee benefits of approximately $1.1 million, of which was recorded as of May 16, 2022. As of December 31, 2022, the remaining liability is approximately $0.1 million.

In connection with the Atrin acquisition, a non-transferable contingent value right (a “CVR”) was distributed to the Aprea stockholders of record as of the close of business on May 13, 2022. Holders of the CVR will be entitled to receive certain stock and/or cash payments from proceeds received by the Company, if any, related to the disposition of its legacy assets in the 2 year period following the closing of the transaction. The CVR had a deminimis value as of both May 16, 2022 and December 31, 2022.

Property and equipment

12 Months Ended

Dec. 31, 2022

Property and equipment

Property and equipment

4. Property and equipment

Property and equipment consist of the following:


	December 31,
	2022		2021
Lab equipment	$	40,133	$	90,770
Furniture & Fixtures		—		31,152
Computer equipment		5,258		18,955
Property and equipment, at cost		45,391		140,877
Less accumulated depreciation and amortization		(43,070)		(117,007)
Property and equipment—net	$	2,321	$	23,870

Depreciation expense for years ended December 31, 2022, 2021 and 2020 was $4,403, $12,829, $28,834, respectively.

Fair value measurements

12 Months Ended

Dec. 31, 2022

Fair value measurements

Fair value measurements

5. Fair value measurements

The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the proceeds that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.

All fair value measurements are classified in the three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These categories include (in descending order of priority) Level 1, defined as observable inputs, such as quoted prices in active markets for identical securities; Level 2, defined as inputs other than quoted prices included in Level 1 that are either directly or indirectly observable; and Level 3, defined as significant unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.

- 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

Leases

12 Months Ended

Dec. 31, 2022

Leases

Leases

6. Leases

During 2022, the Company was party to three operating leases for office and laboratory space. The Company’s finance leases are immaterial both individually and in the aggregate. The Company has elected to apply the short-term lease exception to all leases of one year or less. Rent expense for years ended December 31, 2022, 2021 and 2020 was $329,673, $342,550 and $327,205, respectively, which are included in operating expenses.

The Company had an operating lease in Boston, Massachusetts for office space which expired in December 2022. The Company also had an operating lease for office and laboratory space in Solna, Sweden which was terminated effective November 30, 2022. The Company also has an annual operating lease for office and laboratory space in Doylestown, Pennsylvania which was renewed for 2023 and is currently set to expire on December 31, 2023. Rent expense under this lease is $101,000 annually and the company has applied the short-term exception to this lease. The Company has no lease obligations beyond 2023.

Quantitative information regarding the Company’s leases for the years ended December 31, 2022, 2021 and 2020 is as follows:



	Year ended December 31,
Lease Cost	2022		2021			2020
Operating lease cost	$	233,628	$	236,364	$	226,275
Other Information
Operating cash flows paid for amounts included in the measurement of lease liabilities	$	245,584	$	255,078	$	251,636
Operating lease liabilities arising from obtaining right‑of‑use assets	$	123,786	$	124,043	$	-
Weighted average remaining lease term (years)		—		0.50-1.00		1.00-1.50
Weighted average discount rate		3.0 - 4.3%		3.0 - 4.3%		3.0 - 4.3%

As most of the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the incremental borrowing rate on January 1, 2019 for operating leases that commenced prior to that date.

Accrued expenses

12 Months Ended

Dec. 31, 2022

Accrued expenses

Accrued expenses

7. Accrued expenses

Accrued expenses consist of the following:


	December 31,		December 31,
	2022		2021
Professional fees	$	75,012	$	247,123
Compensation and benefits		1,397,977		1,418,309
Research and development		688,858		3,504,375
Other		196,485		183,189
Total accrued expenses	$	2,358,332	$	5,352,996

Income taxes

12 Months Ended

Dec. 31, 2022

Income taxes

Income Taxes

8. Income taxes

Components of income taxes consist of the following:


	Year ended December 31,
	2022		2021		2020
Foreign	$	(6,377,901)	$	(13,229,828)	$	(27,215,385)
Domestic		(106,284,126)		(23,897,475)		(26,263,427)
Net loss	$	(112,662,027)	$	(37,127,303)	$	(53,478,812)

A reconciliation of the effect of applying the federal statutory rate to the net loss and the effective income tax rate:


	Year ended December 31,
	2022		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate	—	%	(0.1)	%	0.2	%
Permanent differences	(0.6)	%	—	%	1.7	%
Section 162(m) limitation	(2.5)	%	—	%	—	%
In-process research and development	(13.5)	%	—	%	—	%
Changes in valuation allowance	(3.7)	%	(18.2)	%	(22.5)	%
Other	(0.7)	%	(2.7)	%	(0.4)	%
Effective income tax rate	—	%	—	%	—	%

Significant components of the Company’s deferred taxes as of December 31, 2022 and 2021 are as follows:


	December 31,
	2022		2021
Deferred tax assets:
Net operating loss carryforward	$	38,839,281	$	38,773,870
Stock compensation		2,309,828		3,341,338
Amortization		118,259		—
Capitalized R&D costs		2,362,347
Lease liability		—		47,677
Gross deferred tax assets		43,629,715		42,162,885
Valuation allowance		(43,629,689)		(42,115,543)
Total deferred tax assets		26		47,342
Deferred tax liabilities:
Fixed assets		(26)		(818)
Right of use asset		—		(46,524)
Total deferred tax liabilities		(26)		(47,342)
Net deferred tax assets (liabilities)	$	—	$	—

The Company has no income tax expense due to operating losses incurred for the years ended December 31, 2022, 2021 and 2020, respectively. The Company has provided a valuation allowance for the full amount of the net deferred tax assets as, based on all available evidence, it is considered more likely than not that all the recorded deferred tax assets will not be realized in a future period. At December 31, 2022, the Company has $117.2 million, $53.8 million, and $53.5 million of foreign, federal and state net operating loss carryforwards, respectively, that expire at various dates through 2037. Certain of these foreign, federal and state net operating loss carryforwards may be subject to Internal Revenue Code Section 382 or similar provisions, which impose limitations on their utilization.

The valuation allowance increased in 2022 and 2021 by $1.5 million and $8.6 million, respectively due to the increase in the deferred tax assets by the same amounts; primarily due to net operating loss carryforwards. Realization of the future tax benefits is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Under the provisions of the U.S. Internal Revenue Code and Sweden tax law, certain changes in the Company’s ownership, including a sale of the Company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards that could be used annually to offset future taxable income. For U.S. and Swedish income tax purposes, the Company has not completed a study to assess whether a change of control has occurred or whether there have been changes of control since the Company’s formation due to the complexity and cost associated with such study and because there could be additional changes in control in the future. As a result, the Company is not able to estimate the effect of the change in control, if any, on the Company’s ability to utilize U.S. or Swedish net operating losses or other tax attribute carryforwards in the

future. For Swedish income tax purposes, the Company’s net operating losses may be subject to limitations in accordance with the country’s group contribution restriction laws.

The Company files tax returns in Sweden, the United States, Massachusetts and Pennsylvania. Income tax returns prior to 2019 in the United States and Massachusetts are no longer subject to examination and income tax returns prior to 2016 are no longer subject to examination in Sweden. The Company is not currently under examination by the IRS or any other jurisdictions for any tax years.

In June 2018, Sweden passed laws on changes to the Swedish regulations on corporate income taxation. The law applies from January 1, 2019. Among other things, the changes decrease the corporate income tax rate in two steps from 22% to 21.4% as of January 1, 2019 and 20.6% as of January 1, 2020. U.S. GAAP requires companies to revalue their deferred tax assets and deferred tax liabilities as of the date of enactment, with the resulting tax effects accounted for in the reporting period of enactment. The Company previously accounted for the change in rate in 2020 which resulted in offsetting changes to tax expense and the valuation allowance.

As tax law is complex and often subject to varied interpretations, it is uncertain whether some of the Company’s tax positions will be sustained upon examination. Tax liabilities associated with uncertain tax positions represent unrecognized tax benefits, which arise when the estimated benefit recorded in the Company’s financial statements differs from the amounts taken or expected to be taken in a tax return because of the uncertainties described above. Substantially all of these unrecognized tax benefits, if recognized, would benefit the Company’s effective income tax rate.

As of December 31, 2022, 2021 and 2020, the Company had approximately $0.1 million, $0.1 million and $0.8 million of liabilities, respectively, related to uncertain tax positions. As the Company’s uncertain tax positions can be offset by available net operating losses, the Company did not recognize interest and penalties for 2022, 2021 and 2020.

For tax years beginning after January 1, 2022, U.S. Corporations are now mandated to capitalize direct research and development costs and costs deemed incidental to research under Section 174 of the tax code. For the year ended December 31, 2022 the Company has capitalized approximately $8.6 million of costs deemed direct or incidental to research and development.

- 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

12 Months Ended

Dec. 31, 2022

Stockholders' equity

Stockholders' equity

9. Stockholders’ equity

The total number of shares of all classes of capital stock that the Company is authorized to issue is 440,000,000 shares, consisting of 400,000,000 shares of common stock, par value $0.001 per share and 40,000,000 shares of preferred stock, par value $0.001 per share.

Reverse Stock Split

See Note 12 – Subsequent events for further information.

Conversion of Series A Preferred Stock

As discussed in Note 1 and Note 3, the Company issued to the shareholders of Atrin 2,949,630 shares of Series A Preferred Stock as partial consideration of the Atrin acquisition. Each share of Series A Preferred Stock is convertible into 10 shares of common stock. The Company held a stockholders’ meeting on July 28, 2022 where approval of the conversion of the Series A Preferred Stock into shares of the Company’s common stock in accordance with Nasdaq Listing Rule 5635(a) was received. As of December 31, 2022, a total of 2,893,403 shares of Series A Preferred Stock was converted into 1,446,701 shares of common stock. As of December 31, 2022, a total of 56,227 shares of Series A Preferred Stock remained outstanding.

Common Stock

The holders of common stock are entitled to one vote for each share of common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after the payment or provision for payment of all debts and liabilities of the Company, the holders of common stock shall be entitled to share in the remaining assets of the Company available for distribution, if any.

Shelf Registration Statement

On November 12, 2020, the Company filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units up to an aggregate of $350.0 million. On November 30, 2020, the Shelf Registration Statement was declared effective by the SEC. The universal shelf registration statement includes an at-the-market (“ATM”) offering program and the Company filed a Prospectus Supplement dated September 2, 2022, for the sale of up to $14,744,728 of shares of the Company’s common stock pursuant to its ATM offering program. The Company agreed to pay a commission of 3% of the gross proceeds of any common stock sold in connection with the ATM offering program. During the year ended December 31, 2022, the Company issued and sold 38,481 shares of common stock under the ATM offering program resulting in net proceeds to the Company of approximately $0.7 million. During the year ended December 31, 2021, the Company issued and sold 18,338 shares of common stock under the ATM offering program resulting in net proceeds to the Company of approximately $1.5 million. The Company did not sell any common stock under the ATM offering program during the year ended December 31, 2020.

Stock option plans

12 Months Ended

Dec. 31, 2022

Stock option plan

Stock option plans

10. Stock option plans

In September 2019, the Company’s Board of Directors approved the 2019 Equity Incentive Plan (the “2019 Plan) and each outstanding option to purchase Aprea AB ordinary shares pursuant to a previous plan was cancelled and the Company issued to each holder of such Aprea AB option, a substitute option to purchase, on the same terms and conditions as were applicable to such Aprea AB option, shares of the Company’s common stock pursuant to the 2019 Plan.

The Board of Directors has the discretion to provide for accelerated vesting under the 2019 Plan. At December 31, 2022, there were 87,856 shares available for future grant under the 2019 Plan.

The Company recorded stock-based compensation expense of $16,981,266, $7,813,743 and $4,983,023 during the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, there was $487,730 of unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2019 Plan, which is expected to be recognized over a weighted-average period of approximately 3.6 years.

The fair value of each option award is estimated on the date of grant using Black-Scholes, with the assumptions noted in the table below. Expected volatility for the Company’s common stock was determined based on an average of the historical volatility of a peer group of similar public companies. The expected term of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The contractual life of the option was used for the expected life of options granted to non-employee. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate for periods within the expected life of the option is based upon the Swedish Government Bond Rate in effect at the time of grant.

The assumptions used in Black-Scholes are as follows:


	Year ended December 31,
	2022	2021	2020
Expected volatility	84.4%-89.6%	88.1%-90.2%	78.9% ‑83.8%
Risk‑free rate	1.95%-2.69%	0.96%-1.04%	0.36% ‑1.43%
Expected dividend yield	0%	0%	0%
Expected term in years	6.08-10.00	5.50 - 6.08	5.50 - 6.08

A summary of option activity under the Plan during the years ended December 31, 2022, 2021 and 2020 are as follows:


			Weighted‑		Weighted
			average		average
			exercise		remaining	Aggregate
	Number of		price per		contractual	intrinsic
	options		share		term (in years)	value
Outstanding at January 1, 2020		174,975	$	109.80	7.5
Granted		22,340		710.13
Exercised		(8,203)		18.33
Cancelled/Forfeited		(560)		775.60
Outstanding at December 31, 2020		188,552	$	182.00	6.8
Granted		58,980		117.40
Exercised		(11,319)		18.40
Cancelled/Forfeited		(6,905)		330.60
Outstanding at December 31, 2021		229,308	$	169.00	6.6
Granted		96,798		31.40
Options assumed in Atrin merger		163,733		14.21
Exercised		—		—
Cancelled/Forfeited		(9,565)		118.60
Outstanding at December 31, 2022		480,274	$	89.49	6.8	$
Exercisable at December 31, 2022		447,721	$	94.41	6.1	$
Vested or expected to vest at December 31, 2022		480,274	$	89.49	6.8	$

The weighted-average grant date fair value of options granted during the years ended December 31, 2022, 2021 and 2020, was $23.68, $85.82 and $484.02, per share, respectively.

Restricted Stock Units

During the year ended December 31, 2022, the Company granted a total of 9,320 RSUs to executive officers of the Company which vest ratably on the 1^st, 2^nd and 3^rd anniversaries of the grant date. During the year ended December 31, 2022, the Company granted a total of 3,418 RSUs to non-employee directors of the Company. These RSUs vest on the one-year anniversary of the grant date. During the year ended December 31, 2022, the Company granted a total of 11,330 RSUs to executive officers and certain other employees of the Company which vest ratably on the 1^st, 2^nd and 3^rd anniversaries of the grant date. These RSUs vested on May 16, 2022 in connection with the acquisition of Atrin.

During the year ended December 31, 2021, the Company granted a total of 25,000 RSUs to executive officers and certain other employees of the Company, 800 of which were canceled prior to vesting. The remaining RSUs vested on May 16, 2022 in connection with the acquisition of Atrin. During the year ended December 31, 2021, the Company granted a total of 1,152 RSUs to non-employee directors of the Company. These RSUs vested on May 16, 2022 in connection with the acquisition of Atrin.

As of December 31, 2022, there was $243,709 of unrecognized compensation cost related to RSUs granted under the 2019 Plan, which is expected to be recognized over a weighted-average period of approximately 2.6 years.

The following table shows restricted stock unit activity during the year ended December 31, 2022:



		Weighted‑
		average
		grant date
	Shares	fair value
Restricted stock units outstanding at December 31, 2020	—	$	—
Granted	26,150		118.20
Vested	(5,365)		118.80
Cancelled/Forfeited	(800)		120.00
Outstanding at December 31, 2021	19,985	$	118.20
Granted	24,064		28.68
Vested	(30,981)		88.21
Cancelled/Forfeited	(334)		114.60
Outstanding at December 31, 2022	12,734	$	21.80

Commitments and contingencies

12 Months Ended

Dec. 31, 2022

Commitments and contingencies.

Commitments and contingencies

11. Commitments and contingencies

The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of December 31, 2022, the Company has not recorded a provision for any contingent losses.

Subsequent events

12 Months Ended

Dec. 31, 2022

Subsequent events

Subsequent events

12. Subsequent events

Reverse Stock Split

On February 10, 2023, the Company effectuated a one-for-twenty reverse stock split of its outstanding shares of common stock (the “Reverse Stock Split”). The Reverse Stock Split reduces the Company’s shares of outstanding common stock, stock options and RSU’s. Fractional shares of common stock that would have otherwise resulted from the Reverse Stock Split were rounded down to the nearest whole share and cash in lieu of payments were made to stockholders. All share and per share data for all periods presented in the accompanying financial statements and the related disclosures have been adjusted retrospectively to reflect the Reverse Stock Split. The number of authorized shares of common stock and the par value per share remains unchanged.

Common Stock Offering

On February 27, 2023, the Company completed an underwritten public offering of 1,050,000 shares of its common stock at a public offering price of $5.25 per share. Gross proceeds from the offering before deducting underwriting discounts and commissions and offering expenses are approximately $5.5 million before deducting underwriting discounts and offering expenses.

Summary of significant accounting policies (Policies)

12 Months Ended

Dec. 31, 2022

Summary of significant accounting policies

Principles of consolidation

Use of estimates

Foreign currency and currency translation

Concentrations of credit risk

Cash and cash equivalents

Cash and cash equivalents— The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

Property and equipment


Asset category		Estimated useful life
Computer equipment and software		3 years
Furniture and fixtures		7 years
Laboratory equipment and office furniture		7 years
Leasehold improvements		Remainder of lease term

Impairment of long lived assets

Fair value of financial instruments

●	Level 1 inputs: Quoted prices in active markets for identical assets or liabilities.

●	Level 2 inputs: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

●	Level 3 inputs: Unobservable inputs developed using estimates or assumptions developed by the Company, which reflect those that a market participant would use in pricing the asset or liability.

Accounting for leases

operating and pass-through costs are excluded. Lease expense is recognized over the expected term on a straight-line basis.

Research and development costs

Stock-based compensation

Income taxes

Net loss per share


	Year ended December 31,
	2022	2021	2020
Convertible preferred stock	56,227	—
Options to purchase common stock	480,274	229,308	188,552
Unvested restricted stock units	12,734	19,985	—
Total shares of common stock equivalents	549,235	249,293	188,552

Acquired in-process research and development

Recently issued accounting pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material impact on the accompanying financial statements.

Summary of significant accounting policies (Tables)

12 Months Ended

Dec. 31, 2022

Summary of significant accounting policies

Summary of useful lives of property and equipment


Asset category		Estimated useful life
Computer equipment and software		3 years
Furniture and fixtures		7 years
Laboratory equipment and office furniture		7 years
Leasehold improvements		Remainder of lease term

Schedule of potentially dilutive securities excluded from calculation of diluted net loss per share


	Year ended December 31,
	2022	2021	2020
Convertible preferred stock	56,227	—
Options to purchase common stock	480,274	229,308	188,552
Unvested restricted stock units	12,734	19,985	—
Total shares of common stock equivalents	549,235	249,293	188,552

Acquisition of Atrin Pharmaceuticals (Tables)

12 Months Ended

Dec. 31, 2022

Acquisition of Atrin Pharmaceuticals

Schedule of net assets acquired based on the estimated fair values


Acquired IPR&D	$	76,020,184
Cash and cash equivalents		2,489,745
Prepaid expenses and other assets		34,579
Accounts payable and accrued liabilities		(2,336,462)
Total Acquisition Value	$	76,208,046

Property and equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property and equipment

Schedule of property and equipment


	December 31,
	2022		2021
Lab equipment	$	40,133	$	90,770
Furniture & Fixtures		—		31,152
Computer equipment		5,258		18,955
Property and equipment, at cost		45,391		140,877
Less accumulated depreciation and amortization		(43,070)		(117,007)
Property and equipment—net	$	2,321	$	23,870

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases

Summary of quantitative information regarding the Company's leases



	Year ended December 31,
Lease Cost	2022		2021			2020
Operating lease cost	$	233,628	$	236,364	$	226,275
Other Information
Operating cash flows paid for amounts included in the measurement of lease liabilities	$	245,584	$	255,078	$	251,636
Operating lease liabilities arising from obtaining right‑of‑use assets	$	123,786	$	124,043	$	-
Weighted average remaining lease term (years)		—		0.50-1.00		1.00-1.50
Weighted average discount rate		3.0 - 4.3%		3.0 - 4.3%		3.0 - 4.3%

Accrued expenses (Tables)

12 Months Ended

Dec. 31, 2022

Accrued expenses

Schedule of accrued expenses


	December 31,		December 31,
	2022		2021
Professional fees	$	75,012	$	247,123
Compensation and benefits		1,397,977		1,418,309
Research and development		688,858		3,504,375
Other		196,485		183,189
Total accrued expenses	$	2,358,332	$	5,352,996

Income taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income taxes

Schedule of components of income taxes


	Year ended December 31,
	2022		2021		2020
Foreign	$	(6,377,901)	$	(13,229,828)	$	(27,215,385)
Domestic		(106,284,126)		(23,897,475)		(26,263,427)
Net loss	$	(112,662,027)	$	(37,127,303)	$	(53,478,812)

Summary of reconciliation of the effect of applying federal statutory rate to the net loss and the effective income tax rate


	Year ended December 31,
	2022		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate	—	%	(0.1)	%	0.2	%
Permanent differences	(0.6)	%	—	%	1.7	%
Section 162(m) limitation	(2.5)	%	—	%	—	%
In-process research and development	(13.5)	%	—	%	—	%
Changes in valuation allowance	(3.7)	%	(18.2)	%	(22.5)	%
Other	(0.7)	%	(2.7)	%	(0.4)	%
Effective income tax rate	—	%	—	%	—	%

Summary of significant components of deferred taxes


	December 31,
	2022		2021
Deferred tax assets:
Net operating loss carryforward	$	38,839,281	$	38,773,870
Stock compensation		2,309,828		3,341,338
Amortization		118,259		—
Capitalized R&D costs		2,362,347
Lease liability		—		47,677
Gross deferred tax assets		43,629,715		42,162,885
Valuation allowance		(43,629,689)		(42,115,543)
Total deferred tax assets		26		47,342
Deferred tax liabilities:
Fixed assets		(26)		(818)
Right of use asset		—		(46,524)
Total deferred tax liabilities		(26)		(47,342)
Net deferred tax assets (liabilities)	$	—	$	—

Stock option plans (Tables)

12 Months Ended

Dec. 31, 2022

Stock option plan

Schedule of assumptions used in valuation of stock options


	Year ended December 31,
	2022	2021	2020
Expected volatility	84.4%-89.6%	88.1%-90.2%	78.9% ‑83.8%
Risk‑free rate	1.95%-2.69%	0.96%-1.04%	0.36% ‑1.43%
Expected dividend yield	0%	0%	0%
Expected term in years	6.08-10.00	5.50 - 6.08	5.50 - 6.08

Summary of stock option activity


			Weighted‑		Weighted
			average		average
			exercise		remaining	Aggregate
	Number of		price per		contractual	intrinsic
	options		share		term (in years)	value
Outstanding at January 1, 2020		174,975	$	109.80	7.5
Granted		22,340		710.13
Exercised		(8,203)		18.33
Cancelled/Forfeited		(560)		775.60
Outstanding at December 31, 2020		188,552	$	182.00	6.8
Granted		58,980		117.40
Exercised		(11,319)		18.40
Cancelled/Forfeited		(6,905)		330.60
Outstanding at December 31, 2021		229,308	$	169.00	6.6
Granted		96,798		31.40
Options assumed in Atrin merger		163,733		14.21
Exercised		—		—
Cancelled/Forfeited		(9,565)		118.60
Outstanding at December 31, 2022		480,274	$	89.49	6.8	$
Exercisable at December 31, 2022		447,721	$	94.41	6.1	$
Vested or expected to vest at December 31, 2022		480,274	$	89.49	6.8	$

Summary of restricted stock units activity



		Weighted‑
		average
		grant date
	Shares	fair value
Restricted stock units outstanding at December 31, 2020	—	$	—
Granted	26,150		118.20
Vested	(5,365)		118.80
Cancelled/Forfeited	(800)		120.00
Outstanding at December 31, 2021	19,985	$	118.20
Granted	24,064		28.68
Vested	(30,981)		88.21
Cancelled/Forfeited	(334)		114.60
Outstanding at December 31, 2022	12,734	$	21.80

Nature of business and basis of presentation (Details) $ / shares in Units, $ in Millions	May 16, 2022 USD ($) $ / shares shares	Dec. 31, 2022 USD ($) $ / shares	Dec. 31, 2021 $ / shares
Common stock, par value (in dollars per share) \| $ / shares		$ 0.001	$ 0.001
Cash balance \| $		$ 28.8
Atrin Pharmaceuticals, Inc
Number of shares to purchase under option	163,757
Common Stock \| Atrin Pharmaceuticals, Inc
Issuance of stock upon acquisition of Atrin (in shares)	55,869
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001
Series A Convertible Preferred Stock \| Atrin Pharmaceuticals, Inc
Issuance of stock upon acquisition of Atrin (in shares)	2,949,630
Conversion value \| $	$ 68.8
Preferred stock conversion ratio	10

Summary of significant accounting policies - Leases and Property and equipment (Details)	12 Months Ended
	Dec. 31, 2022
Leases
Leases, election of practical expedients package	true
Minimum
Leases
Incremental borrowing rate (as a percent)	3.00%
Maximum
Leases
Incremental borrowing rate (as a percent)	4.30%
Computer equipment and software
Property and equipment
Useful life	3 years
Furniture and fixtures
Property and equipment
Useful life	7 years
Laboratory equipment and office furniture
Property and equipment
Useful life	7 years

Summary of significant accounting policies - Potentially dilutive securities (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Potentially dilutive securities
Total shares of common stock equivalents	549,235	249,293	188,552
Convertible preferred stock
Potentially dilutive securities
Total shares of common stock equivalents	56,227
Options to purchase common stock
Potentially dilutive securities
Total shares of common stock equivalents	480,274	229,308	188,552
Restricted stock units
Potentially dilutive securities
Total shares of common stock equivalents	12,734	19,985

Acquisition of Atrin Pharmaceuticals (Details) - Atrin Pharmaceuticals, Inc $ in Millions	May 16, 2022 USD ($) shares
Acquisition of Atrin
Cost to acquire Atrin assets \| $	$ 76.2
Direct costs of acquisition of Atrin assets \| $	$ 3.5
Common Stock
Acquisition of Atrin
Issuance of stock upon acquisition of Atrin (in shares) \| shares	55,869
Series A Convertible Preferred Stock
Acquisition of Atrin
Issuance of stock upon acquisition of Atrin (in shares) \| shares	2,949,630
Preferred stock conversion ratio	10

Acquisition of Atrin Pharmaceuticals - Summary of net assets acquired (Details) - USD ($)	Dec. 31, 2022	May 16, 2022	Dec. 31, 2021
Acquisition of Atrin
Cash and cash equivalents	$ 28,786,647		$ 53,076,052
Prepaid expenses and other assets	$ 1,366,859		$ 3,508,358
Atrin Pharmaceuticals, Inc
Acquisition of Atrin
Acquired IPR&D		$ 76,020,184
Cash and cash equivalents		2,489,745
Prepaid expenses and other assets		34,579
Accounts payable and accrued liabilities		(2,336,462)
Total Acquisition Value		$ 76,208,046

Acquisition of Atrin Pharmaceuticals - Additional information (Details) - Atrin Pharmaceuticals, Inc - USD ($) $ in Millions		1 Months Ended
	May 16, 2022	May 31, 2022	Dec. 31, 2022
Acquisition of Atrin
Employee severance		$ 1.1
Employee severance liability			$ 0.1
Term of contingent value right	2 years

Property and equipment (Details) - USD ($)	12 Months Ended
Property and equipment (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Property and equipment
Property and equipment, at cost	$ 45,391	$ 140,877
Less accumulated depreciation and amortization	(43,070)	(117,007)
Property and equipment-net	2,321	23,870
Depreciation expense	4,403	12,829	$ 28,834
Lab equipment
Property and equipment
Property and equipment, at cost	40,133	90,770
Furniture and fixtures
Property and equipment
Property and equipment, at cost		31,152
Computer equipment
Property and equipment
Property and equipment, at cost	$ 5,258	$ 18,955

Leases - Summary (Details)	12 Months Ended
Leases - Summary (Details)	Dec. 31, 2022 USD ($) lease	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Leases
Number of operating leases \| lease	3
Annual base rent	$ 101,000
Operating Expenses.
Leases
Rent expense	$ 329,673	$ 342,550	$ 327,205

Leases - Quantitative Information (Details) - USD ($)	12 Months Ended
Leases - Quantitative Information (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Quantitative information regarding the Company's leases
Operating lease cost	$ 233,628	$ 236,364	$ 226,275
Other Information
Operating cash flows paid for amounts included in the measurement of lease liabilities	245,584	255,078	$ 251,636
Operating lease liabilities arising from obtaining right-of-use assets	$ 123,786	$ 124,043
Minimum
Other Information
Weighted average remaining lease term (years)		6 months	1 year
Weighted average discount rate	3.00%	3.00%	3.00%
Maximum
Other Information
Weighted average remaining lease term (years)		1 year	1 year 6 months
Weighted average discount rate	4.30%	4.30%	4.30%

Accrued expenses (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Accrued expenses
Professional fees	$ 75,012	$ 247,123
Compensation and benefits	1,397,977	1,418,309
Research and development	688,858	3,504,375
Other	196,485	183,189
Total accrued expenses	$ 2,358,332	$ 5,352,996

Income taxes - Components of Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income taxes
Net loss	$ (112,662,027)	$ (37,127,303)	$ (53,478,812)
Foreign
Income taxes
Net loss	(6,377,901)	(13,229,828)	(27,215,385)
Federal
Income taxes
Net loss	$ (106,284,126)	$ (23,897,475)	$ (26,263,427)

- 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

Income taxes - Income Taxes Rate Reconciliation (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Reconciliation of effect of applying the federal statutory rate to the net loss and the effective income tax rate
Statutory federal income tax rate	21.00%	21.00%	21.00%
Earnings in jurisdictions taxed at rates different from the statutory U.S. federal tax rate		(0.10%)	0.20%
Permanent differences	(0.60%)		1.70%
Section 162(m) limitation	(2.50%)
In-process research and development	(13.50%)
Changes in valuation allowance	3.70%	18.20%	22.50%
Other	(0.70%)	(2.70%)	(0.40%)
Effective income tax rate	0.00%	0.00%	0.00%

Income taxes - Components of Deferred Taxes (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
Net operating loss carryforward	$ 38,839,281	$ 38,773,870
Stock compensation	2,309,828	3,341,338
Amortization	118,259
Capitalized R&D costs	2,362,347
Lease liability		47,677
Gross deferred tax assets	43,629,715	42,162,885
Valuation allowance	(43,629,689)	(42,115,543)
Total deferred tax assets	26	47,342
Deferred tax liabilities:
Fixed assets	(26)	(818)
Right of use asset		(46,524)
Total deferred tax liabilities	(26)	(47,342)
Net deferred tax assets (liabilities)	$ 0	$ 0

Income taxes - Narrative (Details) - USD ($) $ in Millions			12 Months Ended
Income taxes - Narrative (Details) - USD ($) $ in Millions	Jan. 01, 2020	Jan. 01, 2019	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2018
Income taxes
Income tax expense			$ 0.0	$ 0.0	$ 0.0
Valuation allowance increase due to increase in the deferred tax assets			$ 1.5	$ 8.6
Corporate income tax rate			21.00%	21.00%	21.00%
Uncertain tax positions			$ 0.1	$ 0.1	$ 0.8
Costs deemed direct or incidental to research and development capitalized			8.6
Foreign
Income taxes
Operating loss carryforwards			117.2
Federal
Income taxes
Operating loss carryforwards			53.8
State
Income taxes
Operating loss carryforwards			$ 53.5
Sweden.
Income taxes
Corporate income tax rate	20.60%	21.40%				22.00%

Stockholders' equity (Details)			12 Months Ended
Stockholders' equity (Details)	Sep. 02, 2022 USD ($)	May 16, 2022 $ / shares shares	Dec. 31, 2022 USD ($) Vote $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 shares	Nov. 12, 2020 USD ($)
Common stock
Stock, shares authorized			440,000,000
Common stock, shares authorized			400,000,000	400,000,000
Common stock, par value (in dollars per share) \| $ / shares			$ 0.001	$ 0.001
Preferred stock, shares authorized			40,000,000
Preferred stock, par value (in dollars per share) \| $ / shares			$ 0.001
Proceeds from at-the-market sales of common stock, net \| $			$ 682,973	$ 1,538,645
Number of voting rights per common share \| Vote			1
Shelf Registration Statement
Maximum amount to be issued under universal shelf registration statement \| $						$ 350,000,000.0
Common Stock
Common stock
Conversion of preferred stock into common stock (in shares)			1,446,701
Series A Convertible Preferred Stock
Common stock
Conversion of preferred stock into common stock (in shares)			2,893,403
Number of shares remained to be converted into common stock			56,227
Atrin Pharmaceuticals, Inc \| Common Stock
Common stock
Common stock, par value (in dollars per share) \| $ / shares		$ 0.001
Issuance of stock upon acquisition of Atrin (in shares)		55,869
Atrin Pharmaceuticals, Inc \| Series A Convertible Preferred Stock
Common stock
Issuance of stock upon acquisition of Atrin (in shares)		2,949,630
Preferred stock conversion ratio		10
ATM offering
Common stock
Number of shares issued			38,481	18,338	0
Commission payable as a percentage of gross proceeds from sale of common stock under ATM offering	3.00%
Proceeds from at-the-market sales of common stock, net \| $			$ 700,000	$ 1,500,000
Shelf Registration Statement
Maximum amount to be issued under at-the-market offering program \| $	$ 14,744,728

Stock option plans - Summary (Details) - 2019 Equity Incentive Plan - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stock option plan
Options outstanding	480,274	229,308	188,552	174,975
Shares available for grant	87,856
Stock based compensation expense	$ 16,981,266	$ 7,813,743	$ 4,983,023
Unrecognized compensation cost	$ 487,730
Recognition period for unrecognized compensation cost	3 years 7 months 6 days

Stock option plans - Valuation assumptions (Details) - 2019 Equity Incentive Plan	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Stock option plan
Expected volatility, minimum	84.40%	88.10%	78.90%
Expected volatility, maximum	89.60%	90.20%	83.80%
Risk-free rate, minimum	1.95%	0.96%	0.36%
Risk-free rate, maximum	2.69%	1.04%	1.43%
Expected dividend yield	0.00%	0.00%	0.00%
Minimum
Stock option plan
Expected term in years	6 years 29 days	5 years 6 months	5 years 6 months
Maximum
Stock option plan
Expected term in years	10 years	6 years 29 days	6 years 29 days

Stock option plans - Stock option activity (Details) - 2019 Equity Incentive Plan - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Number of options
Outstanding, beginning of period	229,308	188,552	174,975
Granted	96,798	58,980	22,340
Options assumed in Atrin merger	163,733
Exercised		(11,319)	(8,203)
Cancelled/Forfeited	(9,565)	(6,905)	(560)
Outstanding, end of period	480,274	229,308	188,552	174,975
Exercisable	447,721
Vested or expected to vest	480,274
Weighted average exercise price per share
Outstanding, beginning of period (in dollars per share)	$ 169.00	$ 182.00	$ 109.80
Granted (in dollars per share)	31.40	117.40	710.13
Options assumed in Atrin merger (in dollars per share)	14.21
Exercised (in dollars per share)		18.40	18.33
Cancelled/Forfeited (in dollars per share)	118.60	330.60	775.60
Outstanding, end of period (in dollars per share)	89.49	$ 169.00	$ 182.00	$ 109.80
Exercisable (in dollars per share)	94.41
Vested or expected to vest (in dollars per share)	$ 89.49
Weighted average remaining contractual term (in years)
Outstanding	6 years 9 months 18 days	6 years 7 months 6 days	6 years 9 months 18 days	7 years 6 months
Exercisable	6 years 1 month 6 days
Vested or expected to vest	6 years 9 months 18 days
Additional Disclosures
Weighted average grant date fair value of options granted	$ 23.68	$ 85.82	$ 484.02

Stock option plans - Restricted stock units (Details) - Restricted stock units - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Unrecognized compensation cost related to RSU	$ 243,709
Recognition period for unrecognized compensation cost	2 years 7 months 6 days
Restricted stock units
Beginning balance (in shares)	19,985
Granted (in shares)	24,064	26,150
Vested (in shares)	(30,981)	(5,365)
Cancelled/Forfeited (in shares)	(334)	(800)
Ending balance (in shares)	12,734	19,985
Weighted average grant date fair value
Beginning balance, Weighted average grant date fair value	$ 118.20
Granted, Weighted average grant date fair value	28.68	$ 118.20
Vested, Weighted average grant date fair value	88.21	118.80
Cancelled/Forfeited, Weighted average grant date fair value	114.60	120.00
Ending balance, Weighted average grant date fair value	$ 21.80	$ 118.20
Executive officers
Restricted stock units
Granted (in shares)	9,320
Executive officers and certain other employees
Restricted stock units
Granted (in shares)	11,330	25,000
Cancelled/Forfeited (in shares)		(800)
Non employee directors
Restricted stock units
Granted (in shares)	3,418	1,152
Vesting period	1 year
Vesting On One Year Anniversary Of Grant Date \| Executive officers
Restricted stock units
Vesting period	1 year
Vesting On One Year Anniversary Of Grant Date \| Executive officers and certain other employees
Restricted stock units
Vesting period	1 year
Vesting On Two Year Anniversary Of Grant Date \| Executive officers
Restricted stock units
Vesting period	2 years
Vesting On Two Year Anniversary Of Grant Date \| Executive officers and certain other employees
Restricted stock units
Vesting period	2 years
Vesting On Three Year Anniversary Of Grant Date \| Executive officers
Restricted stock units
Vesting period	3 years
Vesting On Three Year Anniversary Of Grant Date \| Executive officers and certain other employees
Restricted stock units
Vesting period	3 years

Commitments and contingencies (Details)	12 Months Ended
Commitments and contingencies (Details)	Dec. 31, 2021 USD ($)
Commitments and contingencies.
Provision for contingent losses	$ 0

Subsequent Events (Details)			12 Months Ended
Subsequent Events (Details)	Feb. 27, 2023 USD ($) $ / shares shares	Feb. 10, 2023	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Subsequent events
Gross proceeds from issuance			$ 682,973	$ 1,538,645
Subsequent Event
Subsequent events
Shares issued \| shares	1,050,000
Offering price per share \| $ / shares	$ 5.25
Gross proceeds from issuance	$ 5,500,000
Reverse stock split ratio		0.05