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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission File Number 001-36570

ZOSANO PHARMA CORPORATION
(Exact name of registrant as specified in its charter)
____________________________
Delaware 45-4488360
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
34790 Ardentech Court
Fremont, CA 94555
(Address of principal executive offices) (Zip Code)
(510) 745-1200
(Registrant’s telephone number, including area code)
___________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par valueZSANThe Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes     No  x
As of November 5, 2021, the registrant had a total of 118,346,993 shares of its common stock, $0.0001 par value per share, outstanding.


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Zosano Pharma Corporation
Quarterly Report on Form 10-Q
INDEX
 
Page




Table of Contents

Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “intend,” “seek,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” or the negative of those terms, and similar expressions and comparable terminology intended to reference future periods. Forward-looking statements include, but are not limited to, statements about:
our expectations regarding our expenses and revenue, the sufficiency of our cash resources and needs for additional financing;
our plans for, strategy for, and the anticipated timing with respect to the resubmission of our 505(b)(2) New Drug Application (“NDA”) for M207 to the U.S. Food and Drug Administration (the “FDA”);
our expectations regarding the clinical effectiveness and safety of our product candidates;
the ability to obtain and maintain regulatory approval of our product candidates, and the labeling for any approved product;
our manufacturing capabilities and strategy, and our ability to establish and maintain relationships with contract manufacturing organization(s) (“CMOs”) to expand our manufacturing capacity;
the anticipated timing, costs and conduct of our planned clinical trials and preclinical studies;
our intellectual property position and our ability to obtain and maintain intellectual property protection for our product candidates;
our expectations regarding competition;
the anticipated trends and challenges in our business and the markets in which we operate;
the scope, progress, expansion, and costs of developing and commercializing our product candidates;
the size and growth of the potential markets for our product candidates and the ability to serve those markets;
the rate and degree of market acceptance of our product candidates;
our ability to establish and maintain development partnerships;
our ability to attract or retain key personnel;
our expectations regarding federal, state and foreign regulatory requirements; and
regulatory developments in the United States and foreign countries.
These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties, including those set forth below in Part II, Item 1A, “Risk Factors,” and in our other reports filed with the U.S. Securities Exchange Commission. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q and, except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Quarterly Report.

1

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Risk Factors Summary
The following is a summary of the principal risks that could materially adversely affect our business, results of operations, and financial condition, all of which are more fully described in Part II, Item 1A, “Risk Factors.” This summary should be read in conjunction with Item 1A, “Risk Factors” and should not be relied upon as an exhaustive summary of the material risks we face.
Below is a summary of some of the principal risks we face.
We will need substantial additional funding to fund our operations, and we may not be able to continue as a going concern if we are unable to do so. We could also be forced to delay, reduce or terminate our product development, other operations or commercialization effort.
We have a history of operating losses. We expect to continue to incur losses over the next several years and may never become profitable.
We have generated only limited revenues and will need additional capital to develop and commercialize our product candidates, which may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or lead product candidates.
Our build-to-suit arrangement with Trinity Funding 1, LLC (successor to Trinity Capital Fund III, L.P.) (Trinity”), imposes restrictions on our business, and if we default on our obligations, Trinity would have a right to request payment in full of the build-to-suit obligation.
We have limited operating history and capabilities.
The development and commercialization of our product candidates are subject to many risks. For example, we received a complete response letter from the FDA in response to our NDA for M207, and based on feedback from the FDA, we conducted an additional pharmacokinetic ("PK") study for inclusion in an NDA resubmission package. However, there is no guarantee that we will be able to adequately address the issues raised to the FDA’s satisfaction. If we do not successfully develop, receive approval for, and commercialize our product candidates, our business will be adversely affected.
If the FDA does not conclude that our product candidates satisfy the requirements for the 505(b)(2) regulatory approval pathway, or if the requirements for approval of our product candidates under Section 505(b)(2) are not as we expect, the approval pathway for our product candidates will likely take significantly longer, cost significantly more and encounter significantly greater complications and risks than anticipated, and in any case may not be successful.
If the FDA does not agree with our M207 NDA resubmission strategy to submit PK data primarily comparing Zomig® nasal spray and patches produced on manufacturing equipment at our Fremont, California facility that produced patches for our long-term safety study, then the approval pathway for M207 will likely take significantly longer than expected, cost significantly more than anticipated, and may not be successful.
If M207 is approved utilizing our current NDA resubmission strategy, we will only be able to produce limited quantities of M207 at our Fremont, CA location and we will not be able to produce M207 drug product on our manufacturing equipment at our third-party CMOs without FDA approval, which may require us to conduct additional clinical studies and incur significant time and cost, and we may not be successful. If we are unable to manufacture M207 on our manufacturing lines at our CMOs, it will limit our product availability and materially adversely impact our business.
Clinical trials are very expensive, time-consuming and difficult to design and implement.
The COVID-19 pandemic could adversely impact our business, including our clinical trials.
The results of our clinical trials may not support the intended use of M207 or any other product candidates we may develop.
Clinical failure can occur at any stage of clinical development. Because the results of earlier clinical trials are not necessarily predictive of future results, any product candidate we advance through clinical trials may not have favorable results in later clinical trials or receive regulatory approval.
We use customized equipment to manufacture, coat and package our transdermal microneedle system; any production or equipment performance failures could negatively impact the clinical trials of our product candidates that we may develop or sales of our product candidate(s), if approved.
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We currently depend on third-party suppliers for manufacture of certain components of our product candidates. If these manufacturers fail to provide us or our collaborators with adequate supplies of materials for clinical trials or commercial product or fail to comply with the requirements of regulatory authorities, we may be unable to develop or commercialize M207 or any other product candidates we may develop.
We rely on CMOs for various components of our transdermal microneedle system, and our business could be harmed if those third parties fail to provide us with sufficient quantities of those components at acceptable quality levels and prices or fail to maintain or achieve satisfactory regulatory compliance.
We rely on third parties to conduct our clinical trials and those third parties may not perform satisfactorily, including failing to comply with applicable regulatory requirements or to meet deadlines for the completion of such trials.
We have no experience selling, marketing or distributing approved product candidates and currently have no internal capabilities to do so, and will rely on Eversana and other third parties for the commercialization of M207 or may need to develop an internal sales organization, and we and they may not be able to effectively market, sell and distribute M207, if approved. In addition, Eversana may terminate our master services agreement under certain circumstances, including if FDA approval of M207 is not received by December 31, 2021. Also, we and Eversana have agreed that if the NDA is approved, the deferral mechanism, payment terms and loan terms in the master services agreement will be adjusted as mutually agreed by both parties. There is no guarantee that we and Eversana will reach an agreement on the deferral mechanism, payment terms and loan terms.
If we fail to comply with our obligations to our licensor in our intellectual property license, we could lose license rights that are important to our business.
Our failure to obtain and maintain patent protection for our technology and our product candidates could permit our competitors to develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be adversely affected.
We are highly dependent on key executive officers and the research and development, clinical, manufacturing, financial and business development expertise of our executive officers and other employees at our Fremont, CA facility with extensive knowledge of our technology and manufacturing processes. If we are not able to adequately retain our officers or train and retain staff at our Fremont, CA facility, our ability to resubmit our NDA, obtain FDA approval and commercialize M207, if approved, would be impacted and our business would be materially adversely affected.
The trading price of our common stock has been volatile with substantial price fluctuations on heavy volume, which could result in substantial losses for purchasers of our common stock and existing stockholders.
If we are unable to maintain listing of our securities on the Nasdaq Capital Market or another reputable stock exchange, it may be more difficult for our stockholders to sell their securities.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements

ZOSANO PHARMA CORPORATION
BALANCE SHEETS
(in thousands, except par value and share amounts)
September 30,
2021
December 31,
2020
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$17,147 $35,263 
Prepaid expenses and other current assets983 453 
Total current assets18,130 35,716 
Restricted cash455 455 
Property and equipment, net32,337 30,909 
Operating lease right-of-use assets4,073 4,928 
Other long-term assets 3 
Total assets$54,995 $72,011 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$1,551 $1,884 
Accrued compensation1,916 2,294 
Build-to-suit obligation, current portion, net of debt issuance costs and discount4,528 4,779 
Operating lease liabilities, current portion1,552 1,378 
Paycheck Protection Program loan, current portion 809 
Other accrued liabilities2,092 3,367 
Total current liabilities11,639 14,511 
Build-to-suit obligation, long-term portion, net of debt issuance costs and discount1,424 4,359 
Operating lease liabilities, long-term portion3,502 4,687 
Paycheck Protection Program loan, long-term portion 812 
Other long-term liabilities226 127 
Total liabilities16,791 24,496 
Commitments and contingencies (see note 10)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
  
Common stock, $0.0001 par value; 250,000,000 shares authorized as of September 30, 2021 and December 31, 2020, respectively; 118,114,793 and 102,066,218 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
12 10 
Additional paid-in capital393,336 379,695 
Accumulated deficit(355,144)(332,190)
Total stockholders’ equity
38,204 47,515 
Total liabilities and stockholders’ equity$54,995 $72,011 


The accompanying notes are an integral part of these financial statements.
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ZOSANO PHARMA CORPORATION
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except per share amounts)
(unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Service revenue$252 $ $698 $ 
Operating expenses:
Cost of service revenue340  704  
Research and development5,985 5,824 16,315 16,270 
General and administrative2,522 2,704 8,294 8,552 
Total operating expenses
8,847 8,528 25,313 24,822 
Loss from operations(8,595)(8,528)(24,615)(24,822)
Other income (expense):
Interest income1 2 2 17 
Interest expense(17)(165)(136)(561)
Other income (expense), net(57)4 1,795 95 
Loss before provision for income taxes
(8,668)(8,687)(22,954)(25,271)
Provision for income taxes
    
Net loss and comprehensive loss$(8,668)$(8,687)$(22,954)$(25,271)
Net loss per common share – basic and diluted$(0.07)$(0.11)$(0.21)$(0.45)
Weighted-average common shares used in computing net loss per common share – basic and diluted115,765 77,883 109,730 56,437 


The accompanying notes are an integral part of these financial statements.
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ZOSANO PHARMA CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share amounts)
(unaudited)
 
 Common StockAdditional
Paid-In Capital
Accumulated
Deficit
Total
Stockholders’
Equity
 SharesAmount
Balance at January 1, 2021102,066,218 $10 $379,695 $(332,190)$47,515 
Issuance of common stock upon exercise of Series E warrants4,078,667 1 3,273 — 3,274 
Issuance of common stock upon exercise of Series C warrants145,000 — 94 — 94 
Issuance of common stock in connection with at-the-market offering, net82,935 — — — — 
Stock-based compensation— — 410 — 410 
Net loss— — — (8,142)(8,142)
Balance at March 31, 2021106,372,820 11 383,472 (340,332)43,151 
Issuance of common stock in connection with at-the-market offering, net6,848,672 — 5,531 — 5,531 
Release of restricted stock units107,799 — — — — 
Stock-based compensation— — 528 — 528 
Net loss— — — (6,144)(6,144)
Balance at June 30, 2021113,329,291 11 389,531 (346,476)43,066 
Issuance of common stock in connection with at-the-market offering, net4,785,502 1 3,308 — 3,309 
Stock-based compensation— — 497 — 497 
Net loss— — — (8,668)(8,668)
Balance at September 30, 2021118,114,793 $12 $393,336 $(355,144)$38,204 




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ZOSANO PHARMA CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (continued)
(in thousands, except share amounts)
(unaudited)

Common StockAdditional
Paid-In Capital
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance at January 1, 202023,503,214 $2 $308,211 $(298,821)$9,392 
Issuance of common stock and Series E warrants in connection with registered direct offering, net11,903,506 1 10,210 — 10,211 
Issuance of common stock and Series C and Series D pre-funded warrants in connection with public offering, net11,992,307 2 8,262 — 8,264 
Issuance of common stock upon exercise of Series D pre-funded warrants2,161,539 — — — — 
Issuance of common stock upon exercise of Series C warrants2,649,723 — 1,722 — 1,722 
Issuance of common stock in connection with at-the-market offering, net2,151,346 — 2,706 — 2,706 
Stock-based compensation— — 364 — 364 
Net loss— — — (8,689)(8,689)
Balance at March 31, 202054,361,635 5 331,475 (307,510)23,970 
Issuance of common stock in connection with at-the-market offering, net1,550,231 1 1,160 — 1,161 
Issuance of common stock upon exercise of Series C warrants1,333,385 — 867 — 867 
Stock-based compensation— — 361 — 361 
Net loss— — — (7,895)(7,895)
Balance at June 30, 202057,245,251 6 333,863 (315,405)18,464 
Issuance of common stock in connection with public offering, net15,937,130 1 20,386 — 20,387 
Issuance of common stock in connection with at-the-market offering, net11,686,795 1 12,365 — 12,366 
Issuance of common stock upon exercise of Series C warrants10,003,038 1 6,501 — 6,502 
Issuance of common stock upon exercise of Series E warrants7,194,004 1 5,772 — 5,773 
Stock-based compensation— — 439 — 439 
Net loss— — — (8,687)(8,687)
Balance at September 30, 2020102,066,218 $10 $379,326 $(324,092)$55,244 


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

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ZOSANO PHARMA CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Nine Months Ended September 30,
 20212020
Cash flows from operating activities:
Net loss$(22,954)$(25,271)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation1,435 1,164 
Change in operating lease right-of-use assets855 712 
Depreciation and amortization1,323 993 
Effective interest on financing obligations363 560 
Capitalized effective interest(306)(353)
Gain on forgiveness of Paycheck Protection Program loan(1,629) 
Loss on disposal of fixed assets62  
Change in operating assets and liabilities:
Prepaid expenses and other assets(527)(179)
Accounts payable198 (1,915)
Accrued compensation and other accrued liabilities432 (312)
Operating lease liabilities(1,011)(835)
Net cash used in operating activities(21,759)(25,436)
Cash flows from investing activities:
Purchases of property and equipment(5,015)(7,711)
Net cash used in investing activities(5,015)(7,711)
Cash flows from financing activities:
Proceeds from offering of securities, net of commissions and offering costs 20,728 
Proceeds from issuance of securities in connection with at-the-market offering program, net of commissions and offering costs8,840 16,266 
Proceeds from exercise of Series E warrants3,274 5,773 
Proceeds from exercise of Series C warrants94 9,091 
Proceeds from registered direct offering of securities, net of commissions and offering costs 10,135 
Proceeds from public offering of securities and exercise of pre-funded Series D warrants, net of commissions and offering costs 8,264 
Proceeds from Paycheck Protection Program loan 1,610 
Principal payments on financing obligations(3,550)(1,482)
Net cash provided by financing activities8,658 70,385 
Net (decrease) increase in cash, cash equivalents and restricted cash(18,116)37,238 
Cash, cash equivalents and restricted cash at beginning of period35,718 6,771 
Cash, cash equivalents and restricted cash at end of period$17,602 $44,009 
Supplemental cash flow information:
Cash paid for interest$509 $738 
Non-cash investing and financing activities:
Forgiveness of Paycheck Protection Program loan$1,629 $ 
Acquisition of property and equipment under accounts payable and other accrued liabilities$914 $3,237 
Accrued offering costs$ $425 
Asset retirement obligation $89 $97 


The accompanying notes are an integral part of these financial statements.
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Zosano Pharma Corporation
Notes to Financial Statements
(unaudited)
 
1.    Organization
The Company
Zosano Pharma Corporation (the “Company”) is a clinical-stage biopharmaceutical company focused on providing rapid systemic administration of therapeutics and other bioactive molecules to patients using its proprietary transdermal microneedle system (“System”).
The Company submitted a 505(b)(2) New Drug Application (“NDA”) for M207 to the U.S. Food and Drug Administration (the “FDA”) on December 20, 2019, and on October 20, 2020, the Company received a Complete Response Letter (“CRL”) from the FDA with respect to the NDA. The CRL cited inconsistent zolmitriptan exposure levels observed across clinical pharmacology studies, which had been previously identified in the FDA’s discipline review letter received by the Company on September 29, 2020. Specifically, the CRL noted differences in zolmitriptan exposures observed between subjects receiving different lots of M207 in the Company’s trials and inadequate pharmacokinetic (“PK”) bridging between the lots that made interpretation of some safety data unclear. The CRL referenced unexpected high plasma concentrations of zolmitriptan observed in five study subjects enrolled in the Company’s PK studies. The FDA recommended that the Company conduct a repeat bioequivalence study comparing lots manufactured with the equipment used during development. The CRL noted that additional product quality validation data, which were planned to be submitted following approval, if received, were required to be submitted with the application. In addition, the CRL mentioned that due to U.S. Government and/or Agency-wide restrictions on travel, inspections of the Company’s contract manufacturing facilities were not able to be conducted but would be required before the application may be approved.
On January 29, 2021, the Company held a Type A meeting with the FDA Division of Neurology II (the “Division”) regarding the requirements for resubmission of the M207 NDA and, on February 19, 2021, the Company received the final minutes from the FDA. The Type A meeting minutes were generally consistent with the Company's expectations to conduct an additional PK study for inclusion in an NDA resubmission package. In a post-meeting comment, the FDA recommended a skin assessment on patients in the PK study to generate additional safety information which was included in the proposed study protocol submitted to the FDA for review.
On April 12, 2021, the Company received FDA comments and recommendations to the Company’s proposed PK study protocol for M207. The Company made the recommended changes to the study protocol and established an agreement with a contract research organization to conduct the PK study required to support the resubmission of the M207 505(b)(2) NDA.
On October 4, 2021, the Company announced that it had received preliminary top-line results from the PK study and had been granted a Type C written response-only meeting with the FDA regarding the resubmission of the M207 NDA.
On October 25, 2021, the Company received full data tables from its PK study, which were consistent with the preliminary top-line results announced on October 4, 2021.
On October 27, 2021, the Company submitted a briefing package to the FDA in advance of the Type C written-response-only meeting previously granted by the FDA to obtain feedback on the Company's strategy for resubmitting the M207 505(b)(2) NDA.
If FDA approval is received, the Company expects that commercialization of M207 would initially occur using drug product produced in the Fremont, California facility, on a timeline yet to be determined. The Company does not anticipate realizing product revenues unless and until the FDA approves the M207 NDA and the Company begins commercializing M207, which events may never occur.
Liquidity and Substantial Doubt about Going Concern
Since inception, the Company has incurred recurring operating losses and negative cash flows from operating activities, and as of September 30, 2021, had an accumulated deficit of approximately $355.1 million. As of September 30, 2021, the Company had approximately $17.1 million in cash and cash equivalents. Presently, the Company does not have sufficient cash and cash equivalents to enable it to fund its anticipated level of operations and meet its obligations as they become due within twelve months following the date of filing of this Quarterly Report on Form 10-Q. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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2021 Shelf Registration
The Company filed a shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission (the “SEC”), which was declared effective by the SEC on July 14, 2021 (“2021 Shelf Registration Statement”). The 2021 Shelf Registration Statement provides the Company with the ability to issue common stock and other securities as described in the registration statement from time to time up to an aggregate amount of $150.0 million.
2020 Shelf Registration
The Company filed a shelf registration statement on Form S-3 with the SEC, which was declared effective by the SEC on April 16, 2020 (“2020 Shelf Registration Statement”). The 2020 Shelf Registration Statement provides the Company with the ability to issue common stock and other securities as described in the registration statement from time to time up to an aggregate amount of $74.5 million, of which approximately $3.7 million was available at September 30, 2021.
At-the-Market Offering Program - 2021
On June 28, 2021, the Company entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (together, the “Sales Agents”) to establish an at-the-market offering program (“2021 ATM”), under which the Company may sell from time to time, at its option, up to an aggregate of $30.0 million of shares of its common stock. Shares sold under the 2021 ATM are issued pursuant to the Company’s 2020 Shelf Registration Statement and a prospectus supplement dated June 28, 2021. The Company is required to pay the Sales Agents a commission of 3% of the gross proceeds from the sale of shares and has also agreed to provide the Sales Agents with customary indemnification rights. During the three and nine months ended September 30, 2021, the Company issued and sold 4,785,502 shares of its common stock at an average price of $0.76 per share under the 2021 ATM for aggregate net proceeds of $3.3 million after deducting commissions and offering expenses payable by the Company. From October 1, 2021 through November 5, 2021, the Company issued and sold 232,200 shares of its common stock at an average price of $0.67 per share under the 2021 ATM for aggregate proceeds of $0.2 million after deducting commissions. As of the date of this Quarterly Report on Form 10-Q, the Company has approximately $26.2 million available to be offered and sold under the 2021 ATM.
At-the-Market Offering Program - 2020
On June 8, 2020, the Company entered into a sales agreement with BTIG, LLC (“BTIG”) as sales agent to establish an at-the-market offering program (“2020 ATM”), under which the Company was permitted to offer and sell, from time to time, shares of common stock having a maximum aggregate offering price of up to $20.0 million. The Company was required to pay BTIG a commission of 3% of the gross proceeds from the sale of shares and also agreed to provide BTIG with customary indemnification rights. During the nine months ended September 30, 2021, the Company issued and sold 6,931,607 shares of its common stock at an average price of $0.84 per share under the 2020 ATM for aggregate net proceeds of $5.5 million after deducting commissions and offering expenses payable by the Company. The shares were sold pursuant to the Company’s 2020 Shelf Registration Statement and a prospectus supplement dated June 8, 2020. As of June 30, 2021, no shares remained available for sale under the 2020 ATM.
Registered Direct Offering - March 2020
On March 4, 2020, the Company entered into a securities purchase agreement with certain institutional investors for the issuance and sale in a registered direct offering (the “March 2020 Offering”) of (i) 11,903,506 shares of the Company’s common stock and (ii) Series E Warrants to purchase up to a total of 11,903,506 shares of common stock at an offering price of $0.9275 per share and accompanying warrant. The Series E Warrants have an exercise price of $0.8025 per share, were immediately exercisable and expire five years from the date of issuance. During the nine months ended September 30, 2021, Series E Warrants to purchase 4,078,667 shares of common stock were exercised at an exercise price of $0.8025 per share for aggregate proceeds of approximately $3.3 million. No Series E Warrants were exercised during the three months ended September 30, 2021. The shares were sold pursuant to an effective shelf registration statement and a prospectus supplement dated March 4, 2020. As of the date of this Quarterly Report on Form 10-Q, the Company has Series E Warrants to purchase 630,835 shares of common stock outstanding.
Public Offering - February 2020
On February 14, 2020, the Company closed an underwritten offering (the “February 2020 Offering”) for the issuance and sale of (i) 10,146,154 Class A Units, each consisting of one share of common stock and one Series C Warrant to purchase one share of common stock, at a public offering price of $0.65 per Class A Unit, and (ii) 2,161,539 Class B Units, each consisting of one Series D Pre-Funded Warrant to purchase one share of common stock and one Series C Warrant to purchase one share of common stock, at a public offering price of $0.6499 per Class B Unit. The Series C Warrants have an exercise price of $0.65 per share, were immediately exercisable and expire five years from the date of issuance. The Series D Pre-Funded Warrants had an exercise price of $0.0001 per share and were fully exercised in connection with the closing of the offering. The Company
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granted the underwriter a 30-day option to purchase up to an additional 1,846,153 shares of common stock and/or additional Series C Warrants to purchase up to 1,846,153 shares of common stock. The underwriter fully exercised its option to purchase the shares and the Series C Warrants. During the nine months ended September 30, 2021, Series C Warrants to purchase 145,000 shares of common stock were exercised at an exercise price of $0.65 per share for aggregate proceeds of approximately $0.1 million. No Series C Warrants were exercised during the three months ended September 30, 2021. The shares were sold pursuant to an effective shelf registration statement and a prospectus supplement dated February 12, 2020. As of the date of this Quarterly Report on Form 10-Q, the Company has Series C Warrants to purchase 22,700 shares of common stock outstanding.
The Company intends to raise additional capital through the issuance of additional equity through public or private offerings, debt financings or strategic alliances with pharmaceutical partners, or any combination of the above. However, there can be no assurances that, if the Company attempts to raise additional capital, it will be successful in doing so on terms acceptable to the Company, or at all. The Company’s inability to obtain required funding in the near future or its inability to obtain funding on favorable terms will have a material adverse effect on its operations and strategic development plan for future growth. If the Company cannot successfully raise additional capital and implement its strategic development plan, its liquidity, financial condition and business prospects will be materially and adversely affected, and it may have to cease its operations.
Further, there can be no assurance that it will be able to gain access and/or be able to execute on securing new sources of funding, new development opportunities, successfully obtain regulatory approvals for and commercialize new products, achieve significant product revenues from its products (if approved), or achieve or sustain profitability in the future. The Company will continue to evaluate its timelines, strategic needs and working capital requirements.
COVID-19 Pandemic
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Due to the COVID-19 pandemic, there has been uncertainty in the global financial markets and economic conditions. The Company is closely monitoring the impact of the COVID-19 pandemic on its business, including how it will impact its employees, clinical trials and third-party service providers who perform critical services for the Company's business. The pandemic did appear to negatively impact enrollment and conduct of the Company's cluster headache study. In addition, the impact of the COVID-19 pandemic on the global financial markets and economic conditions could impact the Company's ability to raise capital through an equity financing, debt financing, a license or collaboration or a combination of such sources of capital, and as a result, its ability to continue as a going concern. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it. As of the date of issuance of this Quarterly Report on Form 10-Q, management is not aware of any specific event or circumstances that would require an update to its estimates or a revision of the carrying value of its assets or liabilities. These estimates may change, as new events occur, and additional information is obtained.
2.    Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Regulation S-X. They do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal and recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any other subsequent period. These financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2020, included in the Company’s annual report on Form 10-K and filed with the United States Securities and Exchange Commission (“SEC”) on March 11, 2021. The preparation of the accompanying financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of expenses during the periods reported. Actual results could differ from those estimates or assumptions.
Significant Accounting Policies
There have been no significant changes to the Company’s accounting policies during the nine months ended September 30, 2021, as compared to the significant accounting policies described in Note 2 of the "Notes to the Financial Statements" in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
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Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments purchased with an original maturity of 90 days or less to be cash equivalents.
As of September 30, 2021 and December 31, 2020, the Company had restricted cash of approximately $0.5 million consisting primarily of deposits of $0.3 million to secure its building lease until the end of the lease term and a deposit of approximately $0.1 million to a utility provider.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the balance sheets and as presented as cash, cash equivalents and restricted cash in the statements of cash flows:
September 30, 2021September 30, 2020
(unaudited; in thousands)
Cash and cash equivalents$17,147 $43,554 
Restricted cash455 455 
Total$17,602 $44,009 
Fair Value Instruments
The Company records its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:
    Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities.
    Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
    Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying values of certain assets and liabilities of the Company, such as cash and cash equivalents and accounts payable, approximate fair value due to their relatively short maturities. The carrying value of the Company’s short-term financial obligations approximates their fair value as the terms of the borrowing are consistent with current market rates and the duration to maturity is short. The carrying value of the Company's long-term financial obligations approximates fair value as interest rates approximate market rates that the Company could obtain for debt with similar terms and maturities.
Net Loss Per Common Share
Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, common stock warrants, stock options and restricted stock units (“RSUs”) are considered to be potential dilutive securities but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for all periods presented.
The following outstanding common stock equivalents were excluded from the computations of diluted net loss per common share for the periods presented as the effect of including such securities would be antidilutive:
September 30, 2021September 30, 2020
(unaudited; shares)
Options to purchase common stock4,613,658 2,673,444 
RSUs872,236 342,317 
Warrants to purchase common stock728,535 5,148,108 
Total6,214,429 8,163,869 
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Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This new guidance simplifies the accounting for income taxes by removing certain exceptions to general principles, clarifying requirements and including amendments to improve consistent application of the guidance. The guidance specifically removes the exception to the incremental approach for intra period tax allocation when there is a loss from continuing operations and income or a gain from other items, such as discontinued operations or other comprehensive income. The guidance also requires an entity to recognize a franchise tax that is partially based on income as an income-based tax and to account for any other amounts incurred as a non-income based tax. The Company adopted the guidance beginning January 1, 2021 using a prospective approach. The adoption of the guidance did not have a material impact on its financial statements.
3.    Master Services Agreement with Eversana
On August 6, 2020, the Company entered into a master services agreement (the “Eversana Agreement”) with Eversana Life Science Services, LLC (“Eversana”) for the commercialization of M207 in the United States, if approved by the FDA. Under the terms of the Eversana Agreement, Eversana and the Company will cooperate to conduct activities over the term of the Eversana Agreement. The Company maintains ownership of the M207 NDA as well as all legal, regulatory and manufacturing responsibilities for M207. Eversana receives an exclusive right to conduct agreed commercialization activities and will utilize its internal sales organization along with its other commercial capabilities for market access, marketing, distribution and patient support services for M207. Eversana will receive reimbursement of certain commercialization costs pursuant to a commercialization budget estimated at approximately $250.0 million and a low double digit to mid-teen percentage of product profits if and when Company net sales of M207 surpass certain costs incurred by the parties pursuant to the commercialization budget.
The term of the Eversana Agreement is five years following the date, if any, that the FDA approves the M207 NDA. Upon expiration or termination of the Eversana Agreement, the Company will retain all profits from product sales consummated after expiration or termination and assume all future corresponding commercialization responsibilities. The Company may terminate the Eversana Agreement if Eversana fails to provide pre-commercial or commercial plans and budgets by specified dates, if the Company decides to discontinue development or commercialization efforts for M207 in the United States (subject to a termination payment if such termination occurs within a specified time period), or upon a change of control of the Company. Under the original terms, either party could terminate the Eversana Agreement if FDA approval was not received by July 31, 2021, if net profits are not realized within a specified time period following commercial launch, for material breach of the Eversana Agreement by the other party that is not cured within a defined time period, for insolvency of the other party, if M207 is subject to a safety recall in the United States or if M207 is not commercially launched within a specified time period after FDA approval of the NDA (other than by reason of the terminating party’s failure to perform its obligations under the Eversana Agreement).
In addition, under the Eversana Agreement, following FDA approval of the M207 NDA, Eversana has agreed to provide a revolving credit facility of up to $5.0 million (the “Credit Facility”) to the Company pursuant to a loan agreement to be entered into between Eversana and the Company on a subsequent date. The loan will bear interest at an annual rate equal to 10.0%, to be paid monthly, and the Company will be able to prepay any amounts borrowed under the Credit Facility at any time without penalty or premium. The Credit Facility will be secured by substantially all of the Company’s assets, subject to prior liens and security interests.
On September 28, 2021, the Company entered into Amendment No. 1, effective as of September 29, 2021 (the “Eversana Amendment”), to the Eversana Agreement, which modified the provision in the Eversana Agreement that provided for termination by either party of the Eversana Agreement if FDA approval was not received by July 31, 2021 to December 31, 2021, with written notice within sixty days of such date. In addition, the Eversana Amendment provides that if the NDA is approved, the deferral mechanism, payment terms and loan terms in the Eversana Agreement will be adjusted as mutually agreed by both parties.
The Company is accounting for the Eversana Agreement as a collaborative arrangement. As of September 30, 2021, no material accruals, expenses, payments, or revenues were recorded by the Company in connection with the Eversana Agreement.
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4.    Cash Equivalents and Investments in Marketable Securities
The following table summarizes the Company's cash equivalents and investments in marketable securities at fair value on a recurring basis:
As of September 30, 2021:Fair Value Measurements
 TotalQuoted prices in active market
Level 1
Significant other observable inputs
Level 2
Significant unobservable inputs
Level 3
 (unaudited; in thousands)
Money market funds classified as cash equivalents$15,420 $15,420 $ $ 

As of December 31, 2020:Fair Value Measurements
 TotalQuoted prices in active market
Level 1
Significant other observable inputs
Level 2
Significant unobservable inputs
Level 3
 (in thousands)
Money market funds classified as cash equivalents$33,918 $33,918 $ $ 

5.    Balance Sheet Components
Prepaid Expenses and Other Current Assets
The following table summarizes the Company’s prepaid expenses and other current assets for each of the periods presented:
September 30, 2021December 31, 2020
 
(unaudited; in thousands)(in thousands)
Prepaid insurance$315 $66 
Prepaid software and subscriptions159 118 
Prepaid services142 97 
Other receivables115  
Unbilled revenue81 124 
Deferred offering costs75 48 
Other96  
Total$983 $453 

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Property and Equipment
The following table summarizes the Company’s property and equipment for each of the periods presented:
September 30, 2021December 31, 2020
(unaudited; in thousands)(in thousands)
Leasehold improvements$24,301 $24,212 
Manufacturing equipment15,013 14,893 
Laboratory and office equipment1,641 1,641 
Computer equipment and software181 172 
Construction-in-progress20,750 18,239 
Property and equipment at cost61,886 59,157 
Less: accumulated depreciation(29,549)(28,248)
Total$32,337 $30,909 
Depreciation expense was approximately $0.4 million and $0.5 million for the three months ended September 30, 2021 and 2020, respectively. Depreciation expense was approximately $1.3 million and $1.0 million for the nine months ended September 30, 2021 and 2020, respectively.
Construction-in-progress (“CIP”) included $16.4 million and $14.6 million of an asset relating to the build-to-suit arrangement for construction of the Company's commercial coating and primary packaging system as of September 30, 2021 and December 31, 2020, respectively, of which capitalized construction period interest was $3.2 million and $2.4 million as of September 30, 2021 and December 31, 2020, respectively (See Note 7. Debt Financing).
Other Accrued Liabilities
The following table summarizes the Company’s other accrued liabilities for each of the periods presented:
September 30, 2021December 31, 2020
(unaudited; in thousands)(in thousands)
Contract manufacturing services$655 $71 
Professional service fees575 175 
Pre-clinical and clinical studies326 22 
Construction-in-progress obligations305 2,993 
Deferred revenue47  
Other184 106 
Total$2,092 $3,367 

6.    Leases
Operating Leases
The Company has a non-cancelable operating lease for office, research and development, and manufacturing facilities in Fremont, California through August 31, 2024, with an option to further extend the lease for an additional 60 months subject to certain terms and conditions. The Company also has operating leases for manufacturing space at two of its contract manufacturing organizations (“CMOs”). The operating leases are embedded in agreements with these CMOs that include lease and non-lease components.
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The following table summarizes the impact of the Company's operating leases on its financial statements for each of the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(unaudited; in thousands)
Statements of Operations and Comprehensive Loss
Operating lease costs$439 $422 $1,317 $1,266 
Nine Months Ended September 30,
20212020
(Unaudited; in thousands)
Statements of Cash Flows
Operating cash flows from operating leases - cash paid for operating leases$1,473 $1,388 

The following table summarizes the lease terms and discount rates for the Company's leases as of September 30, 2021:
(unaudited)
Weighted-average remaining lease term (in years)2.89
Weighted-average discount rate11 %
The following table summarizes the maturities of the Company's lease liabilities for each year ending December 31, as of September 30, 2021:
(unaudited; in thousands)
2021$502 
20222,043 
20232,017 
20241,371 
Total undiscounted cash flows5,933 
Less: amount representing interest(879)
Present value of lease liabilities$5,054 
Current portion$1,552 
Long-term portion3,502 
Total$5,054 
7.    Debt Financing
Build-to-Suit Obligation with Trinity
The Company has a build-to-suit arrangement (the “Agreement”) with Trinity Funding 1, LLC (successor to Trinity Capital Fund III, L.P.) (“Trinity”) to finance the third-party construction of the Company's commercial coating and primary packaging system (the “Equipment”), which was delivered in the first quarter of 2021 and is currently being installed and qualified at the Company's CMO. Under the Agreement, Trinity provided the Company $14.0 million for equipment costs and associated soft costs (“Total Cost”), with an initial drawdown of $5.0 million and additional drawdowns in increments of not less than $0.5 million. Under the Agreement, each individual drawdown represents a separate financing arrangement with its own term and stated interest rate. Each drawdown is non-cancelable, with no prepayment options. In consideration of the financing arrangement, as collateral, the Company granted Trinity a first-priority lien and security interest in substantially all of the Company's assets.
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On May 27, 2020, the Company entered into the First Amendment to Lease Documents (the “Trinity Amendment”). The Trinity Amendment, among other things, extended each individual drawdown term from 36 months to 42 months by providing for an interest-only period from May 2020 through October 2020. Principal payments recommenced November 1, 2020. Additionally, the Trinity Amendment removed all end-of-term options other than the option to purchase the equipment at 12% of the Total Cost, which is equal to the drawdown amount (“Purchase Option Fee”), which the Company intends to exercise at the end of each 42-month-term. The transfer of title from Trinity to the Company will occur at the end of the final 42-month-term, provided that the purchase option was executed, and the Purchase Option Fee was paid in full at the end of each 42-month-term. The security interest will terminate on the earlier to occur of (i) the date that falls six (6) months after the delivery and installation of the Equipment or (ii) payment in full of all amounts owed. The Company accounted for the Trinity Amendment as a debt modification under ASC 470-50, as the amended terms were not substantially different from the terms of the Agreement.
The Company determined that it controls the Equipment during the construction period due to its involvement in and its obligations related to the construction of the Equipment. Accordingly, construction costs incurred were recorded as construction-in-progress, a component of property and equipment on the balance sheet, and the Trinity financing obligation was recorded as a build-to-suit obligation on the balance sheet. As of September 30, 2021, the Company had an aggregate commercial coating and primary packaging system CIP balance of $16.4 million, that included $3.2 million of interest related to its build-to-suit obligation.
In connection with the build-to-suit arrangement, the Company issued common stock warrants (“Trinity Warrants”) for a total of 75,000 shares of common stock at an exercise price of $3.5928 per share. The Trinity Warrants expire on September 25, 2025. Proceeds allocated to the Trinity Warrants based on their relative fair value approximated $243,000 and were recorded as a discount to the initial $5.0 million drawdown under the Trinity financing arrangement and are being amortized as interest over the term of the September 2018 drawdown.
The Trinity build-to-suit arrangement requires compliance with various affirmative and restrictive covenants in regard to making certain investments and other restricted payments, engaging in mergers or consolidations, and the sale or transfer of certain assets. Failure to comply with any of these covenants, or pay principal, interest or other amounts when due, would constitute an event of default under the applicable agreement. The Company was in compliance with its covenants with respect to the Trinity build-to-suit arrangement as of September 30, 2021.
The following table summarizes the debt obligations as of September 30, 2021:
Drawdown DateDrawdown AmountPrincipal Balance Purchase Option FeeDiscount on Purchase Option FeeUnamortized Discounts and Issuance CostsMonthly PaymentStated Interest RateAmended Effective Interest RateMaturity Date
(unaudited; in thousands)
09/25/2018$5,000 $775 $600 $(4)$(24)$160 9.43 %24.38 %04/01/2022
12/11/20182,800 689 336 (5)(15)90 9.68 %18.25 %07/01/2022
06/06/20192,300 968 276 (11)(35)74 9.93 %18.08 %01/01/2023
09/13/20192,300 1,162 276 (15)(51)74 9.93 %18.04 %04/01/2023
11/27/20191,600 896 192 (13)(45)52 9.93 %18.16 %06/01/2023
Total$14,000 $4,490 $1,680 $(48)$(170)$450 
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The following table summarizes the Company's build-to-suit obligation as of September 30, 2021 (unaudited; in thousands):
Build-to-suit obligation principal amount$4,490 
Build-to-suit obligation Purchase Option Fees at present value1,632 
Less: unamortized Purchase Option Fees(140)
unamortized warrants, discounts and issuance costs(30)
Build-to-suit obligation, net of debt issuance costs and discount$5,952 
Build-to-suit obligation, current portion, net of debt issuance costs and discount$4,528 
Build-to-suit obligation, long-term portion, net of debt issuance costs and discount1,424 
Build-to-suit obligation, net of debt issuance costs and discount$5,952 
The following table summarizes future minimum payments on the Company’s build-to-suit obligation, including payments of principal and interest and Purchase Option Fees for each year ending December 31 as of September 30, 2021:
PrincipalInterestPurchase Option FeesTotal
(unaudited; in thousands)
2021$1,239 $111 $ $1,350 
20222,979 189 936 4,104 
2023272 8 744 1,024 
Total$4,490 $308 $1,680 $6,478 
The following table summarizes interest incurred on the Company's build-to-suit obligation for each of the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(unaudited; in thousands)
Build-to-suit obligation, cash interest expense$140 $225 $507 $705 
Build-to-suit obligation, effective interest expense99 147 355 560 
Less: build-to-suit obligation, interest capitalized(223)(217)(735)(746)
Build-to-suit obligation interest expense$16 $155 $127 $519 
PPP Loan
On April 21, 2020, the Company executed a promissory note (the “PPP Note”) evidencing an unsecured loan in the amount of $1.6 million under the Paycheck Protection Program (the “PPP Loan”). The Paycheck Protection Program (“PPP”) was established under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration (“SBA”). On June 10, 2021, the Company was notified by its lender, Silicon Valley Bank, that its PPP Loan, in the amount of $1,610,000 in principal and $18,515 in accrued interest, was forgiven in its entirety by the SBA. The forgiveness of the PPP Loan and accrued interest was recorded as a gain in other income (expense), net in the Company's statement of operations in the second quarter of 2021.
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8.    Common Stock Warrants
The following table summarizes the Company's issued and outstanding common stock warrants:
Warrants Outstanding as ofIssuedExercisedExpiredWarrants Outstanding as ofExercise Price per ShareExpiration Date
December 31, 2020September 30, 2021
unaudited
Series E - March 20204,709,502  (4,078,667) 630,835 $0.8025 03/06/25
Series C - February 2020167,700  (145,000) 22,700 $0.6500 02/14/25
Trinity - September 201875,000    75,000 $3.5928 09/25/25
Series B - August 2016195,906   (195,906) 
Total5,148,108  (4,223,667)(195,906)728,535 
Each warrant grants the holder the right to purchase one share of common stock. Equity warrants are recorded at their relative fair market value in the stockholders’ equity section of the balance sheet. The Company’s equity warrants can only be settled through the issuance of shares and do not have any anti-dilution or price reset provision.
9.    Stock-Based Compensation
The following table summarizes activity under the Amended and Restated 2014 Equity and Incentive Plan (“2014 Plan”), the 2012 Stock Incentive Plan and inducement grants issued to new employees outside of the 2014 Plan in accordance with Nasdaq Listing Rule 5635(c)(4) for the nine months ended September 30, 2021 (unaudited):
Number of Shares Subject to Outstanding Stock OptionsWeighted-Average Exercise Price per ShareNumber of RSUs OutstandingWeighted-Average Grant Date Fair Value per Share
Outstanding at January 1, 20212,724,537 $3.31 335,004 $0.84 
Granted2,112,500 $1.17 670,250