0001628280-23-005376 | 10-K | XBRL Viewer

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Cover - USD ($)	12 Months Ended
Cover - USD ($)	Dec. 31, 2022	Feb. 24, 2023	Jun. 30, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-38129
Entity Registrant Name	Mersana Therapeutics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	04-3562403
Entity Address, Address Line One	840 Memorial Drive
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02139
City Area Code	617
Local Phone Number	498-0020
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	MRSN
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	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 403,311,770
Entity Common Stock, Shares Outstanding		108,026,074
Documents Incorporated by Reference	Portions of the registrant’s definitive proxy statement that will be filed for the 2023 Annual Meeting of Stockholders within 120 days of the end of the registrant’s fiscal year ended December 31, 2022 are incorporated by reference in Part III of this Annual Report on Form 10-K to the extent stated herein.
Entity Central Index Key	0001442836
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false

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

Consolidated Balance Sheets - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 128,885,000	$ 177,947,000
Short-term marketable securities	151,827,000	0
Accounts receivable	30,000,000	0
Prepaid expenses and other current assets	8,507,000	10,951,000
Total current assets	319,219,000	188,898,000
Property and equipment, net	3,985,000	1,968,000
Operating lease right-of-use assets	10,475,000	12,889,000
Other assets, noncurrent	661,000	2,356,000
Total assets	334,340,000	206,111,000
Current liabilities:
Accounts payable	13,951,000	12,321,000
Accrued expenses	43,184,000	28,716,000
Deferred revenue	30,610,000	3,944,000
Operating lease liabilities	2,798,000	2,303,000
Other current liabilities	990,000	239,000
Total current liabilities	91,533,000	47,523,000
Operating lease liabilities, noncurrent	8,575,000	11,247,000
Long-term debt, net	24,929,000	24,626,000
Deferred revenue, noncurrent	117,043,000	0
Other liabilities, noncurrent	203,000	974,000
Total liabilities	242,283,000	84,370,000
Commitments (Note 15)
Stockholders' equity
Preferred stock, $0.0001 par value; 25,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively	0	0
Common stock, $0.0001 par value; 350,000,000 and 175,000,000 shares authorized at December 31, 2022 and December 31, 2021, respectively; 105,144,864 and 73,709,056 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively	11,000	7,000
Additional paid-in capital	746,889,000	572,213,000
Accumulated other comprehensive loss	(152,000)	0
Accumulated deficit	(654,691,000)	(450,479,000)
Total stockholders’ equity	92,057,000	121,741,000
Total liabilities and stockholders’ equity	$ 334,340,000	$ 206,111,000
Common stock, shares authorized (in shares)	350,000,000	175,000,000

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Stockholders' equity
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	25,000,000	25,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	350,000,000	175,000,000
Common stock, shares issued (in shares)	105,144,864	73,709,056
Common stock, shares outstanding (in shares)	105,144,864	73,709,056

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Collaboration revenue	$ 26,581	$ 43	$ 828
Operating expenses:
Research and development	173,385	132,013	67,036
General and administrative	56,963	36,888	21,902
Total operating expenses	230,348	168,901	88,938
Other income (expense):
Interest income	2,883	65	424
Interest expense	(3,328)	(1,267)	(359)
Total other income (expense), net	(445)	(1,202)	65
Net loss	(204,212)	(170,060)	(88,045)
Other comprehensive loss:
Unrealized loss on marketable securities	(152)	0	(25)
Comprehensive loss	(204,364)	(170,060)	(88,070)
Net loss attributable to common stockholders - basic	(204,212)	(170,060)	(88,045)
Net loss attributable to common stockholders - diluted	$ (204,212)	$ (170,060)	$ (88,045)
Net loss per share attributable to common stockholders — basic (in dollars per share)	$ (2.18)	$ (2.41)	$ (1.43)
Net loss per share attributable to common stockholders — diluted (in dollars per share)	$ (2.18)	$ (2.41)	$ (1.43)
Weighted-average number of shares of common stock used in net loss per share attributable to common stockholders — basic (in shares)	93,654,243	70,580,949	61,485,205
Weighted-average number of shares of common stock used in net loss per share attributable to common stockholders — diluted (in shares)	93,654,243	70,580,949	61,485,205

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Public Stock Offering	At Market Equity Offering Program	Common Stock	Common Stock Public Stock Offering	Common Stock At Market Equity Offering Program	Additional Paid-in Capital	Additional Paid-in Capital Public Stock Offering	Additional Paid-in Capital At Market Equity Offering Program	Accumulated Other Comprehensive Loss	Accumulated Deficit
Balance at beginning of period (in shares) at Dec. 31, 2019				45,388,023
Balance at beginning of period at Dec. 31, 2019	$ 78,318			$ 5			$ 270,662			$ 25	$ (192,374)
Increase (Decrease) in Stockholders' Equity
Issuance of stock (in shares)					9,200,000	10,900,599
Issuance of stock		$ 163,991	$ 62,977		$ 1	$ 1		$ 163,990	$ 62,976
Exercise of common stock warrant in exchange for common stock (in shares)				2,574,971
Exercise of stock options (in shares)				697,428
Exercise of stock options	3,138						3,138
Purchase of common stock under ESPP (in shares)				80,267
Purchase of common stock under ESPP	561						561
Stock-based compensation expense	7,172						7,172
Other comprehensive loss	(25)									(25)
Net loss	(88,045)										(88,045)
Balance at end of period (in shares) at Dec. 31, 2020				68,841,288
Balance at end of period at Dec. 31, 2020	228,087			$ 7			508,499			0	(280,419)
Increase (Decrease) in Stockholders' Equity
Issuance of stock (in shares)						3,961,074
Issuance of stock			43,087						43,087
Exercise of stock options (in shares)				421,381
Exercise of stock options	1,837						1,837
Vesting of restricted stock units, net of employee tax obligation (in shares)				407,060
Vesting of restricted stock units, net of employee tax obligation	(259)						(259)
Purchase of common stock under ESPP (in shares)				78,253
Purchase of common stock under ESPP	640						640
Stock-based compensation expense	18,409						18,409
Net loss	(170,060)										(170,060)
Balance at end of period (in shares) at Dec. 31, 2021				73,709,056
Balance at end of period at Dec. 31, 2021	$ 121,741			$ 7			572,213			0	(450,479)
Increase (Decrease) in Stockholders' Equity
Issuance of stock (in shares)						30,497,875
Issuance of stock			$ 150,762			$ 4			$ 150,758
Exercise of stock options (in shares)	414,914			414,914
Exercise of stock options	$ 1,331						1,331
Exercise of common stock warrant (in shares)				16,654
Vesting of restricted stock units, net of employee tax obligation (in shares)				235,591
Purchase of common stock under ESPP (in shares)				270,774
Purchase of common stock under ESPP	1,065						1,065
Stock-based compensation expense	21,522						21,522
Other comprehensive loss	(152)									(152)
Net loss	(204,212)										(204,212)
Balance at end of period (in shares) at Dec. 31, 2022				105,144,864
Balance at end of period at Dec. 31, 2022	$ 92,057			$ 11			$ 746,889			$ (152)	$ (654,691)

Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Exercise of stock options (in shares)	414,914
Exercise of stock options	$ 1,331	$ 1,837	$ 3,138
At Market Equity Offering Program
Issuance costs	$ 3,476	$ 988	2,176
Public Stock Offering
Issuance costs			$ 10,809

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities
Net loss	$ (204,212)	$ (170,060)	$ (88,045)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	927	855	1,010
Net amortization of premiums and discounts on marketable securities	(1,462)	0	(86)
Stock-based compensation	21,522	18,409	7,172
Other non-cash items	763	723	148
Changes in operating assets and liabilities:
Accounts receivable	(30,000)	0	0
Prepaid expenses and other current assets	3,863	(2,734)	(1,950)
Other assets	0	(718)	(700)
Accounts payable	947	483	942
Accrued expenses	13,594	12,570	7,280
Operating lease right-of-use assets	2,777	1,829	1,642
Operating lease liabilities	(2,539)	(1,827)	(1,281)
Deferred revenue	143,709	(43)	(828)
Other liabilities	748	525	0
Net cash used in operating activities	(49,363)	(139,988)	(74,696)
Cash flows from investing activities
Maturities of marketable securities	97,000	0	37,500
Purchase of marketable securities	(247,519)	0	0
Purchase of property and equipment	(2,197)	(648)	(473)
Net cash used in investing activities	(152,716)	(648)	37,027
Cash flows from financing activities
Proceeds from exercise of stock options	1,331	1,837	3,138
Proceeds from purchases of common stock under ESPP	1,065	640	561
Payment of employee tax obligations related to vesting of restricted stock units	0	(259)	0
Proceeds from issuance of debt, net of issuance costs	0	24,042	(197)
Repayment of debt	0	(5,486)	0
Payments under finance lease obligations	(272)	(215)	(116)
Net cash provided by financing activities	153,017	63,646	230,412
Increase (decrease) in cash, cash equivalents and restricted cash	(49,062)	(76,990)	192,743
Cash, cash equivalents and restricted cash, beginning of period	178,425	255,415	62,672
Cash, cash equivalents and restricted cash, end of period	129,363	178,425	255,415
Supplemental disclosures of non-cash activities:
Purchases of property and equipment in accounts payable and accrued expenses	753	0	102
Debt financing costs in accrued expenses	150	0	0
Common stock issuance costs in accounts payable and accrued expenses	131	0	0
Cash paid for interest	2,463	429	234
Right-of-use assets obtained in exchange for operating lease liabilities	298	3,783	9,980
Right-of-use assets obtained in exchange for financing lease liabilities	0	609	0
Public Stock Offering
Cash flows from financing activities
Net proceeds from issuance of common stock	0	0	163,990
At Market Equity Offering Program
Cash flows from financing activities
Net proceeds from issuance of common stock	$ 150,893	$ 43,087	$ 63,036

Nature of Business and Basis of Presentation	12 Months Ended
Nature of Business and Basis of Presentation	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business and Basis of Presentation	Nature of Business and Basis of Presentation Mersana Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing antibody-drug conjugates ("ADCs") that offer a clinically meaningful benefit for cancer patients with significant unmet need. The Company has leveraged over 20 years of industry learning in the ADC field to develop three proprietary and differentiated platforms that enable it to develop ADCs that are designed to have improved efficacy, safety and tolerability relative to existing ADCs and other approved therapies. The Company’s platforms include Dolaflexin and Dolasynthen, each of which deliver the novel and proprietary auristatin DolaLock payload, as well as Immunosynthen, which delivers the novel stimulator of interferon genes ("STING") agonist ImmunoLock payload. The Company's lead product candidate, upifitamab rilsodotin ("UpRi"), is a first-in-class Dolaflexin ADC targeting NaPi2b, an antigen broadly expressed in ovarian cancer and other cancers. The Company is currently evaluating UpRi in platinum-resistant ovarian cancer in a single-arm registrational trial, referred to as UPLIFT. The Company is also conducting a placebo-controlled Phase 3 clinical trial, referred to as UP-NEXT, to investigate UpRi as a monotherapy maintenance treatment following treatment with platinum doublets in recurrent platinum-sensitive ovarian cancer. Additionally, the Company is conducting a Phase 1 combination trial, referred to as UPGRADE-A. UPGRADE-A is exploring the combination of UpRi with carboplatin, a standard platinum chemotherapy broadly used in the treatment of platinum-sensitive ovarian cancer. The Company is also investigating XMT-1660, a B7-H4-directed Dolasynthen ADC, in a Phase 1 clinical trial enrolling patients with solid tumors, including in breast, endometrial and ovarian cancers, and XMT-2056, an Immunosynthen STING-agonist ADC that is designed to target a novel epitope of human epidermal growth factor receptor 2 ("HER2"), in a Phase 1 clinical trial enrolling previously treated patients with advanced/recurrent solid tumors expressing HER2, including breast, gastric, colorectal and non-small cell lung cancers. The Company also has two additional earlier stage preclinical candidates, XMT-2068 and XMT-2175, that leverage the Company's Immunosynthen platform. The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, the need for additional capital, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval and reimbursement for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development of technological innovations by competitors, reliance on third party manufacturers and the ability to transition from pilot-scale production to large-scale manufacturing of products. The Company has incurred cumulative net losses since inception. The Company’s net loss was $204.2 million, $170.1 million and $88.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company expects to continue to incur operating losses for at least the next several years. As of December 31, 2022, the Company had an accumulated deficit of $654.7 million. The future success of the Company is dependent on, among other factors, its ability to identify and develop its product candidates and ultimately upon its ability to attain profitable operations. The Company has devoted substantially all of its financial resources and efforts to research and development and general and administrative expense to support such research and development. Net losses and negative operating cash flows have had, and will continue to have, an adverse effect on the Company’s stockholders’ equity and working capital. The Company believes that its currently available funds will be sufficient to fund the Company’s operations through at least the next twelve months from the issuance of this Annual Report on Form 10-K. Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC"). Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates ("ASU") of the Financial Accounting Standards Board ("FASB").

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include those of the Company and its wholly owned subsidiary, Mersana Securities Corp. All intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of the Company's consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenue, expenses and related disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company's management evaluates its estimates which include, but are not limited to, management's judgments with respect to the identification of performance obligations and standalone selling prices of those performance obligations within its revenue arrangements, accrued preclinical, manufacturing and clinical expenses, valuation of stock-based awards and income taxes. Actual results could differ from those estimates.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker, or decision making group, in deciding how to allocate resources and assess performance. The Company views its operations and manages its business as a single operating segment, which is the business of discovering and developing ADCs.

Research and Development

Research and development costs are expensed as incurred and include:

•employee-related expenses, including salaries, bonuses, benefits, travel and stock-based compensation expense;

•fees and expenses incurred under agreements with contract research organizations, investigative sites and other entities in connection with the conduct of preclinical studies, clinical trials and related services;

•the cost of acquiring, developing and manufacturing ADC product candidates, clinical trial materials and other research and development materials;

•fees and costs related to regulatory filings and activities;

•costs associated with collaboration agreements and license fees and milestone payments related to license agreements;

•costs associated with creating and obtaining approval for the NaPi2b companion or complementary diagnostic biomarker;

•facilities, depreciation and other expenses, which include direct and allocated expenses for rent, utilities, maintenance of facilities, insurance and other supplies; and

•other costs associated with clinical, preclinical, discovery and other research activities.

Costs for certain development activities, such as preclinical studies, clinical trials and manufacturing development activities, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, and information provided to the Company by its vendors on their actual costs incurred or level of effort expended. 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 on the consolidated balance sheets as prepaid or accrued preclinical, manufacturing and clinical expenses.

Revenue Recognition

The Company enters into collaboration agreements which are within the scope of ASC 606, Revenue from Contracts with Customers ("ASC 606"), under which the Company licenses rights to its technology and certain of the Company’s product candidates and performs research and development services for third parties. The terms of these arrangements typically include payment of one or more of the following: non-refundable, up-front fees; reimbursement of research and development costs; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of ASC 606, the Company performs the following five steps: (i) identification of contract(s) with a customer; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

The promised good or services in the Company’s arrangements typically consist of license rights to the Company’s intellectual property and research and development services. The Company also has optional additional items in contracts, which are considered marketing offers and are accounted for as separate contracts with the customer if such option is elected by the customer, unless the option provides a material right which would not be provided without entering into the contract. Performance obligations are promised goods or services in a contract to transfer a distinct good or service to the customer. Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources or (ii) the promised good or service is separately identifiable from other promises in the contract. In assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of the customer to develop the intellectual property on their own and the availability of the required expertise.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include both fixed consideration and variable consideration. At the inception of each arrangement that includes variable consideration and at each reporting period, the Company evaluates the amount of potential payment and the likelihood that the payments will be received. The Company utilizes either the most likely amount method or expected value method to estimate the amount expected to be received based on which method better predicts the amount of consideration to which the Company will be entitled. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price. We assessed each of our revenue generating arrangements in order to determine whether a significant financing component exists and concluded that a significant financing component does not exist in any of our arrangements because: (a) the promised consideration approximates the cash selling price of the promised goods and services; and (b) timing of payment approximates the transfer of goods and services and performance is over a relatively short period of time within the context of the entire term of the contract.

The Company’s contracts often include development and regulatory milestone payments. At contract inception and at each reporting period, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are not included in the transaction price. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in the period of adjustment.

For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of the Company’s collaboration arrangements.

The Company allocates the transaction price based on the estimated standalone selling price of the underlying performance obligations or in the case of certain variable consideration to one or more performance obligations. The Company must develop assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. The Company utilizes key assumptions to determine the standalone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the respective performance obligation. Certain variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amounts the Company would expect to receive for each performance obligation.

For performance obligations consisting of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company will recognize revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

The Company receives payments from its customers based on billing schedules established in each contract. Such billings generally have 30-day terms. Up-front payments and fees are recorded as a contract liability (deferred revenue) upon receipt or when due until the Company performs its obligations under these arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional and only the passage of time is required before payment is due. If the right to consideration is subject to a condition other than the passage of time, then the amount is recorded as a contract asset until the right to payment becomes unconditional. In accordance with ASC 606, the Company presents contract assets and contract liabilities on a net basis by customer contract.

Collaborative Arrangements

The Company records the elements of its collaboration agreements that represent joint operating activities in accordance with ASC 808, Collaborative Arrangements ("ASC 808"). Accordingly, the elements of the collaboration agreements that represent activities in which both parties are active participants and to which both parties are exposed to the significant risks and rewards that are dependent on the commercial success of the activities, are recorded as collaborative arrangements. The Company also considers the guidance in ASC 606 by analogy in determining the appropriate treatment for the transactions between the Company and its collaborators and the transactions between the Company and third parties. Generally, the classification of transactions under the collaborative arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. To the extent revenue is generated from a collaboration, the Company will recognize its share of the net sales on a gross basis if it is deemed to be the principal in the transactions with customers, or on a net basis if it is instead deemed to be the agent in the transactions with customers, consistent with the guidance in ASC 606.

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 820, Fair Value Measurement, 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 three levels are defined as follows:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Marketable Securities

The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the credit quality standards outlined in the Company’s investment policy. Short-term marketable securities consist of investments in debt securities with maturities greater than three months and less than one year from the balance sheet date. The Company classifies all of its marketable securities as available-for-sale. Accordingly, these investments are recorded at fair value. Fair value is determined based on quoted market prices. Amortization and accretion of discounts and premiums are recorded as interest income within other income (expense), net. Realized gains and losses are included in other income (expense), net.

The Company assesses its available-for-sale debt securities under the available-for-sale debt security impairment model in ASC 326, Financial Instruments - Credit Losses, as of each reporting date in order to determine if a portion of any decline in fair value below carrying value recognized on its available-for-sale debt securities is the result of a credit loss. The Company records credit losses in the consolidated statements of operations and comprehensive loss as a component of other income (expense), net, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit losses on its available-for-sale debt securities.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity, or a remaining maturity at the time of purchase, of three months or less to be cash equivalents. The Company invests excess cash primarily in money market funds, commercial paper and government agency securities, which are highly liquid and have strong credit ratings. These investments are subject to minimal credit and market risks. Cash and cash equivalents are stated at cost, which approximates market value.

Accounting for Stock-based Compensation

The Company accounts for its stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation ("ASC 718"). ASC 718 requires all stock-based payments to employees, directors and non-employees to be recognized as expense in the statements of operations based on their grant date fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. The expected stock price volatility is calculated based on a period of time commensurate with the expected term assumption. Historically, due to the lack of a public market for the Company's common stock prior to completion of its initial public offering and a lack of company-specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to the Company, including stage of product development and life science industry focus. The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. During 2022, the Company began to estimate its volatility by using a blend of its stock price history for the length of time it has market data for its stock and the historical volatility of similar public companies for the expected term of each grant. For option grants with an expected term for which sufficient stock price history for the Company exists, expected stock price volatility is calculated using the average of volatilities for the period of the expected term prior to the grant date. For options granted to non-employees, the Company utilizes the contractual term of the option arrangement as the basis for the expected term assumption. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to do so.

The Company determines the fair value of each restricted stock unit ("RSU") at its grant date based on the closing market price of the Company’s common stock on that date or, if the date of grant is not a day on which the Company's primary trading market was open, the immediately preceding trading day. For stock-based compensation subject to service-based vesting conditions, the Company recognizes stock-based compensation expense equal to the grant date fair value of stock-based compensation on a straight-line basis over the requisite service period.

The Company records forfeitures as a cumulative adjustment in the period in which they occur.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of each asset as follows:


Computer equipment, office equipment and software			3 years
Laboratory equipment			5 years
Leasehold improvements			Shorter of useful life or life of lease

Upon retirement or sale, the cost of the disposed assets and the related accumulated depreciation are eliminated from the balance sheet, and related gains or losses are reflected in the statement of operations. There were no material sales of assets during the years ended December 31, 2022, 2021 and 2020.

The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. If the Company performs an impairment review to evaluate an asset for recoverability, the Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the asset to its carrying value. If the carrying amount of the asset exceeds its estimated undiscounted future net cash flows, the Company recognizes an impairment charge in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The Company did not recognize impairment charges during the years ended December 31, 2022, 2021 and 2020.

Leases

Consistent with ASC 842, Leases, the Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use lease assets ("ROU assets"), current portion of lease obligations and long-term lease obligations on the Company’s consolidated balance sheets. Assets subject to finance leases are included in property and equipment, and the related lease obligation is included in other current liabilities and other long-term liabilities on the Company’s consolidated balance sheets. Lease assets are tested for impairment in the same manner as long-lived assets used in operations. Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while expense for financing leases is recognized as depreciation expense and interest expense using the effective interest method. The Company has elected the short-term lease recognition exemption for short-term leases, which allows the Company not to recognize lease liabilities and ROU assets on the consolidated balance sheets for leases with an original term of twelve months or less.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities and their corresponding ROU assets are initially recorded based on the present value of lease payments over the expected remaining lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Certain adjustments to the ROU asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments. The incremental borrowing rate reflects the fixed rate at which the Company could borrow, on a collateralized basis, the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. Prospectively, the Company will adjust the ROU assets for straight-line rent expense, or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

The Company accounts for lease agreements with lease and non-lease components separately.

Patent Costs

The Company expenses patent application and related legal costs as incurred and classifies such costs as general and administrative expenses in the accompanying consolidated statements of operations.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740, Accounting for Income Taxes, which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. The Company determines its deferred tax assets and liabilities based on differences between financial reporting and tax bases of assets and liabilities, which are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is more likely than not to be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

Comprehensive Income (Loss)

Comprehensive income (loss) comprises net loss and other comprehensive loss. For the years ended December 31, 2022 and 2020, other comprehensive income (loss) consisted of changes in unrealized income and loss on marketable securities. For the year ended December 31, 2021, comprehensive loss equaled net loss.

Concentration of Credit Risk and Off-balance Sheet Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash equivalents and marketable securities. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company does not believe that it is subject to any significant concentrations of credit risk from these financial instruments. The Company has no financial instruments with off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies, and the Company adopts such pronouncements as of the specified effective date. Unless otherwise discussed below, the Company does not believe that the adoption of recently issued standards has had or may have a material impact on the Company's consolidated financial statements or disclosures.

Collaboration Agreements

12 Months Ended

Dec. 31, 2022

Collaboration agreements

Collaboration Agreements

GSK

On August 6, 2022, the Company entered into a Collaboration, Option and License Agreement (the "GSK Agreement") with GlaxoSmithKline Intellectual Property (No. 4) Limited ("GSK"), pursuant to which the Company granted GSK an exclusive option to obtain an exclusive license (the “Option”) to co-develop and to commercialize products containing XMT-2056 (the "Licensed Products"), exercisable within a specified time period (the “Option Period”) after the Company delivers to GSK data resulting from completion of dose escalation with enrichment for breast cancer patients in a Phase 1 single-agent clinical trial of XMT-2056. GSK’s exercise of the Option may require clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Clearance” and GSK’s exercise of the Option following any applicable HSR Clearance, the “GSK Option Exercise”). Prior to the GSK Option Exercise, the Company will lead and will be responsible for the costs of manufacturing, research, and early clinical development related to its XMT-2056 program. After the GSK Option Exercise, if any, GSK may elect to manufacture XMT-2056, and GSK and the Company will co-develop XMT-2056 aimed at the approval of Licensed Product(s) in the United States and the European Union, with GSK being responsible for the majority of the development costs. GSK will be responsible for all development costs aimed solely at gaining approval outside the United States and European Union.

Pursuant to the GSK Agreement, following the GSK Option Exercise and subject to certain exceptions and specified payment obligations, the Company’s aggregate shared development costs are capped at a fixed amount, with any amounts in excess to be borne by GSK unless and until the Company exercises its option to receive (or bear) a specified share of U.S. profits (or losses) for any Licensed Products (“Profit Share Election”). The excess development costs will accrue interest as specified in the GSK Agreement and will later either be repaid by the Company or offset against future regulatory and sales milestones or royalty payments that may become due to the Company. If the Company exercises its Profit Share Election, the cap on the Company’s share of development costs shall no longer apply, and the Company must pay any then-outstanding excess plus accrued interest costs. Additionally, if the Company exercises its Profit Share Election, it may also simultaneously elect to co-promote any Licensed Products in the United States.

Pursuant to the GSK Agreement, GSK paid the Company a non-refundable, upfront fee of $100.0 million in August 2022. Following the GSK Option Exercise, if any, GSK is obligated to pay the Company an option exercise payment of $90.0 million (the "Option Payment"). The Company is eligible to receive future development, regulatory, and commercial milestone payments up to approximately $1.3 billion and, if the Company does not exercise its Profit Share Election, tiered royalties up to the mid-twenty percent range based on global sales of Licensed Products. Included in the aggregate milestone payments amount is $30 million that the Company is eligible to earn upon the satisfaction of early clinical development milestones that may occur prior to the GSK Option Exercise. If the Company exercises its Profit Share Election, the Company will be eligible to receive reduced development, regulatory, and commercial milestone payments and reduced royalty rates on sales outside of the United States. Whether or not the Company exercises its Profit Share Election, GSK will be responsible for certain milestone payments or royalties due to specified third parties with which the Company currently has agreements that relate to the XMT-2056 program.

The GSK Agreement will terminate at the end of the Option Period if GSK does not exercise its Option. In the event of the GSK Option Exercise, unless earlier terminated, the GSK Agreement will continue in effect until the date on which the royalty term and all payment obligations with respect to all Licensed Products in all countries have expired.

Accounting Analysis

The Company assessed the GSK Agreement in accordance with ASC 606 and concluded that the contract counterparty, GSK, is a customer. The Company identified the following two material performance obligations under the GSK Agreement: (i) development activities, including manufacturing, research and early clinical development activities, necessary to deliver the package of data, information and materials specified in the GSK agreement (the "Development Activities") and (ii) the Option to co-develop and to commercialize Licensed Products (the "License Option").

The Company concluded that the Development Activities are one distinct performance obligation, as the underlying activities are not distinguishable in the context of the contract and are inputs to an integrated development program that will generate data and information providing value to GSK in determining whether to exercise the Option. The License Option is considered a material right as the value of the license exceeds the Option Payment, and is therefore a distinct performance obligation.

In accordance with ASC 606, the Company determined that the initial transaction price under the GSK Agreement equals $100.0 million, consisting of the upfront, non-refundable and non-creditable payment paid by GSK. None of the early clinical development milestones that may occur prior to the GSK Option Exercise have been included in the initial transaction price, as all milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including stage of development and the remaining risks associated with the development required to achieve the milestones, as well as whether the achievement of the milestones is outside the control of the Company or GSK. The GSK Option payment is excluded from the initial transaction price at contract inception along with any future development, regulatory, and commercial milestone payments (including royalties) following the GSK Option Exercise.

Consistent with the allocation objective under ASC 606, the Company allocated the $100.0 million fixed upfront payment in the transaction price to the Development Activities and the License Option based on each performance obligation’s relative standalone selling price. The standalone selling price for the Development Activities was calculated using a cost-plus margin approach for the estimated pre-option development timeline. For the standalone selling price of the License Option, the Company utilized an income-based approach which included the following key assumptions: post-option development timeline and costs, revenue forecast, discount rates and probabilities of technical and regulatory success.

The Company is recognizing revenue related to the Development Activities performance obligation over the estimated period of the pre-option development using a proportional performance model as the underlying activities are performed. The Company measures proportional performance based on the costs incurred relative to the total costs expected to be incurred.

The Company will defer revenue recognition related to the License Option. If the License Option is exercised and GSK obtains an exclusive license, the Company will recognize revenue as it fulfills its obligations under the GSK Agreement. If the Option is not exercised, the Company will recognize the entirety of the revenue in the period when the Option expires.

During the year ended December 31, 2022, the Company recorded collaboration revenue of $2.0 million related to its efforts under the GSK Agreement. As of December 31, 2022, the Company had recorded $98.0 million in deferred revenue related to the unsatisfied performance obligations under the GSK Agreement. This deferred revenue will be recognized over the remaining performance period and classified as current or noncurrent on the consolidated balance sheets based upon the expected timing of satisfaction of the performance obligations.

Janssen

In February 2022, the Company entered into a research collaboration and license agreement with Janssen Biotech, Inc. ("Janssen" and such agreement, the "Janssen Agreement") focused on the research, development and commercialization of novel ADCs for three oncology targets by leveraging Mersana’s ADC expertise and Dolasynthen platform with Janssen’s proprietary antibodies. Upon execution of the Janssen Agreement, the Company received a non-refundable upfront payment of $40.0 million from Janssen. Pursuant to the Janssen Agreement, the Company granted Janssen two exclusive, nontransferable, worldwide licenses - a research license and a commercialization license (together, the "Janssen Licenses"). The research license that forms a part of the Janssen Licenses provides Janssen, on a target-by-target basis, rights under the Company’s technology and the Company’s interest in the technology developed jointly through the collaboration solely to conduct Janssen’s activities under the research and Chemistry, Manufacturing and Controls ("CMC") plans with respect to each target. The commercialization license that forms a part of the Janssen Licenses is a royalty-bearing license granted on a target-by-target basis under the Company’s technology and the Company’s interest in the technology developed jointly through the collaboration to develop, manufacture, commercialize and otherwise exploit licensed ADCs and any licensed products containing licensed ADCs directed toward a target. Janssen may select up to three targets and may substitute each target once prior to a substitution deadline. Janssen is not required to pay a fee for its first substitution right, but must pay a one-time fee for access to the subsequent substitution rights following its exercise of its second substitution right.

Pursuant to mutually agreed research and CMC plans, the Company will perform bioconjugation, production development, preclinical manufacturing, and certain related research and preclinical development activities, in order to progress the targets through investigational new drug application ("IND") submission for further development, manufacture and commercialization by Janssen. Janssen will have sole responsibility for IND-enabling studies, IND submission, clinical development, regulatory activities and commercialization of the licensed ADCs. Both the Company and Janssen will have equal representation on a Joint Research Committee and Joint Manufacturing Committee to oversee the research and CMC activities. The Company estimates that its activities under the research plans for the targets will be performed through 2024.

The Company's CMC activities will be compensated by Janssen at agreed upon rates. Assuming successful development and commercialization of all three targets by Janssen, the Company could receive up to an additional $505 million in development and regulatory milestones and $530 million in sales milestones as well as tiered mid single-digit to low double-digit royalties on aggregate net sales of the ADC products.

Unless earlier terminated, the Janssen Agreement will expire upon the expiration of the last royalty term for a product under the Janssen Agreement. The Janssen Agreement contains customary provisions for termination by either party, including in the event of breach of the Janssen Agreement, subject to cure, by Janssen for convenience and by Mersana upon a challenge of the licensed patents, and customary provisions regarding the effects of termination.

Janssen may request that the Company perform clinical manufacturing services under a separate clinical supply agreement. Janssen may also request that the Company perform a technology transfer of bioconjugation and manufacturing process technology, at Janssen's cost, at an agreed upon rate.

Accounting Analysis

The Company assessed the Janssen Agreement in accordance with ASC 606 and concluded that the contract counter party, Janssen, is a customer. The Company identified the following seven material performance obligations under the Janssen Agreement: (i) exclusive Janssen Licenses and research activities for each of the three designated targets, (ii) CMC activities for each of the three designated targets and (iii) the first target substitution right.

The Company concluded that the Janssen Licenses and research activities are one combined performance obligation for each target as the Janssen Licenses are not capable of being distinct from the research activities given their proprietary nature. The CMC activities are considered a distinct performance obligation for each target as the activities could be performed by a third-party provider. The first target substitution right is considered a material right as there is no option exercise fee and, as such, is a distinct performance obligation.

In accordance with ASC 606, the Company determined that the initial transaction price under the Janssen Agreement equals $40.0 million, consisting of the upfront, non-refundable and non-creditable payment. None of the development and the regulatory milestones were included in the initial transaction price, as all milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including stage of development and the remaining risks associated with the development required to achieve the milestones, as well as whether the achievement of the milestones is outside the control of the Company or Janssen. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as such milestones were determined to relate predominantly to the license granted to Janssen and therefore have also been excluded from the transaction price. As of December 31, 2022, the revised total transaction price for the Janssen Agreement was $42.0 million. During 2022, the Company revised the estimated transaction price by $2.0 million based on the reassessment of the constraint of certain development milestones and the remaining risks associated with the development required to achieve the milestones.

The Company determined that the consideration for CMC activities represents variable consideration. The Company has not included potential cost reimbursements within the transaction price as no CMC activities for any of the three targets have been initiated. The Company elected to apply the Right to Invoice practical expedient under ASC 606. As such, the Company will recognize revenue related to the CMC activities when the services are performed.

Consistent with the allocation objective under ASC 606, the Company allocated the total transaction price to the Janssen Licenses and research activities and first substitution right based on each performance obligation’s relative standalone selling price. Each of the standalone selling prices for the Janssen Licenses and research activities and for the first substitution right were estimated utilizing an income approach, along with the likelihood of exercise for the substitution right and included the following key assumptions: the development timeline, revenue forecast, discount rate and probabilities of technical and regulatory success.

The Company is recognizing revenue related to the Janssen Licenses and research services performance obligation over the estimated period of the research services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total costs expected to be incurred.

The Company will recognize revenue related to the first target substitution right over time in congruence with the Janssen Licenses and research activities, upon the exercise of the option. If the first target substitution option is not exercised, the Company will recognize the entirety of the revenue in the period when the option expires.

During the year ended December 31, 2022, the Company recorded collaboration revenue of $24.2 million related to its performance obligations under the Janssen Agreement. As of December 31, 2022, the Company had recorded $15.8 million in deferred revenue related to the Janssen Agreement that will be recognized over the remaining performance period and classified as current or noncurrent on the consolidated balance sheets based upon the expected timing of satisfaction of respective performance obligations.

Merck KGaA and affiliates

Immunosynthen Agreement

In December 2022, the Company entered into a research collaboration and license agreement with Ares Trading S.A. ("MRKDG" and such agreement, the "2022 Merck KGaA Agreement"), a wholly owned subsidiary of Merck KGaA, Darmstadt, Germany, focused on the research, development and commercialization of novel ADCs for up to two specific target antigens by leveraging Mersana’s ADC expertise and Immunosynthen platform with MRKDG’s proprietary antibodies. Within 45 days of execution of the 2022 Merck KGaA Agreement, the Company received a non-refundable upfront payment of $30.0 million. Pursuant to the 2022 Merck KGaA Agreement, the Company granted MRKDG two exclusive, non-transferable, worldwide licenses - a research license and a commercialization license (together, the "MRKDG Licenses"). The research license that forms a part of the MRKDG Licenses provides MRKDG, on a target-by-target basis, rights under the Company’s technology and the Company’s interest in the technology developed jointly through the collaboration solely to conduct MRKDG’s activities under the research and CMC plans with respect to each target. The commercialization license that forms a part of the MRKDG Licenses is a royalty-bearing license granted on a target-by-target basis under the Company’s technology and the Company’s interest in the technology developed jointly through the collaboration to develop, manufacture, commercialize and otherwise exploit licensed ADCs and any licensed products containing licensed ADCs directed toward a target.

Pursuant to mutually agreed research and CMC plans, the Company will perform bioconjugation, production development, preclinical manufacturing, and certain related research and preclinical development activities, in order to progress the targets through IND (or foreign equivalent) submission for further development, manufacture and commercialization by MRKDG. MRKDG will have sole responsibility for IND-enabling studies, IND submission, clinical development, regulatory activities and commercialization of the licensed ADCs. Both the Company and MRKDG will have equal representation on a Joint Research Committee and Joint Manufacturing Committee to oversee the research and CMC activities. The Company estimates that its activities under the research plans for the targets will be performed through 2026.

The Company's CMC activities will be compensated by MRKDG at agreed upon rates. Assuming successful development and commercialization of the two targets by MRKDG, the Company could receive up to an additional $200 million in development and regulatory milestones and $600 million in sales milestones as well as tiered single-digit to low double-digit royalties on aggregate net sales of the ADC products. To date, the Company has not achieved any of the specified milestones.

Unless earlier terminated, the 2022 Merck KGaA Agreement will expire upon the expiration of the last royalty term for a product under the 2022 Merck KGaA Agreement. The 2022 Merck KGaA Agreement contains customary provisions for termination by either party, including in the event of breach of the 2022 Merck KGaA Agreement, subject to cure, by MRKDG for convenience and by Mersana upon a challenge of the licensed patents, and customary provisions regarding the effects of termination.

MRKDG may request that the Company perform clinical manufacturing services under a separate clinical supply agreement. MRKDG may also request that the Company perform a technology transfer of bioconjugation technology, at MRKDG's cost, at an agreed upon rate.

Accounting Analysis

The Company assessed the 2022 Merck KGaA Agreement in accordance with ASC 606 and concluded that the contract counter party, MRKDG, is a customer. The Company identified the following four material performance obligations under the 2022 Merck KGaA Agreement: (i) exclusive MRKDG Licenses and research activities for each of the two designated targets and (ii) CMC activities for each of the two designated targets.

The Company concluded that the MRKDG Licenses and research activities are one combined performance obligation for each target as the MRKDG Licenses are not capable of being distinct from the research activities given their proprietary nature. The CMC activities are considered a distinct performance obligation for each target as the activities could be performed by a third-party provider.

In accordance with ASC 606, the Company determined that the initial transaction price under the 2022 Merck KGaA Agreement equals $32.0 million, consisting of the $30.0 million upfront, non-refundable and non-creditable fee and certain near-term discovery milestones. As the $30.0 million upfront fee was not received by the Company as of December 31, 2022, the Company recorded an accounts receivable for $30.0 million with a corresponding deferred revenue liability. The Company subsequently received this payment in February 2023. The development and the regulatory milestones not included in the transaction price were constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including stage of development and the remaining risks associated with the development required to achieve the milestones, as well as whether the achievement of the milestones is outside the control of the Company or MRKDG. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as such milestones were determined to relate predominantly to the license granted to MRKDG and therefore have also been excluded from the transaction price.

The Company determined that the consideration for CMC activities represents variable consideration. The Company has not included potential cost reimbursements within the transaction price as no CMC activities for either of the two targets have been initiated. The Company elected to apply the Right to Invoice practical expedient under ASC 606. As such, the Company will recognize revenue related to the CMC activities when the services are performed.

Consistent with the allocation objective under ASC 606, the Company allocated the $32.0 million estimated transaction price to the MRKDG Licenses and research activities based on each performance obligation’s relative standalone selling price. Each of the standalone selling prices for the MRKDG Licenses and research activities were estimated utilizing an adjusted market assessment approach, which was established based on comparable transactions.

The Company is recognizing revenue related to the MRKDG Licenses and research services performance obligation over the estimated period of the research services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total costs expected to be incurred.

The Company did not record collaboration revenue related to the 2022 Merck KGaA Agreement during the year ended December 31, 2022. As of December 31, 2022, the Company had recorded $30.0 million in deferred revenue related to the unsatisfied performance obligations under the 2022 Merck KGaA Agreement. This deferred revenue will be recognized over the remaining performance period and classified as current or noncurrent on the consolidated balance sheets based upon the expected timing of satisfaction of respective performance obligations.

Dolaflexin Platform Agreement

In June 2014, the Company entered into a collaboration and commercial license agreement with Merck KGaA (the "2014 Merck KGaA Agreement"). Upon the execution of the 2014 Merck KGaA Agreement, Merck KGaA paid the Company a non-refundable technology access fee of $12.0 million for the right to develop ADCs directed to six exclusive targets over a specified period of time. No additional fees are due when a target is designated and the commercial license to the target is granted. Merck KGaA will be responsible for the product development and marketing of any products resulting from this collaboration.

Under the terms of the 2014 Merck KGaA Agreement, the Company and Merck KGaA develop research plans to evaluate Merck KGaA's antibodies as ADCs incorporating the Company's technology. The Company receives reimbursement for its efforts under the research plans. The goal of the research plans is to provide Merck KGaA with sufficient information to formally nominate a development candidate and begin IND-enabling studies.

In addition to the payments received for research and development activities performed on behalf of Merck KGaA, the Company could be eligible to receive up to a total of $780.0 million in future milestones related to all targets under the 2014 Merck KGaA Agreement, plus low to mid-single digit royalties on the commercial sales of any resulting products during the applicable royalty term. The total milestones are categorized as follows: development milestones $84.0 million; regulatory milestones $264.0 million; and sales milestones $432.0 million. There are six individual development milestones per target, payable upon the completion of various activities, from the delivery of ADCs meeting defined specifications, through the dosing in a Phase 3 clinical trial. There are five regulatory milestones, which are payable upon regulatory approvals for a first indication in each of the U.S., European Union and Japanese markets and regulatory approvals for both a second and a third indication in the United States. There are three individual commercial milestones, which are payable upon the attainment of certain defined thresholds for annual net sales.

All six targets were designated prior to 2018. The Company has previously received $3.0 million related to development milestones under the 2014 Merck KGaA Agreement. There have been no additional milestone payments in the years ended December 31, 2022 or 2021.

Unless earlier terminated, the 2014 Merck KGaA Agreement will expire upon the expiration of the last royalty term for a product under the 2014 Merck KGaA Agreement, after which time, Merck KGaA will have a perpetual, royalty-free license, or if Merck KGaA does not designate any ADC product candidates produced by the Company under the 2014 Merck KGaA Agreement as preclinical development candidates, upon the expiration of the last to expire research program. Merck KGaA may terminate the 2014 Merck KGaA Agreement in its entirety or with respect to any target for convenience upon 60 days' prior written notice. Each party may terminate the 2014 Merck KGaA Agreement in its entirety upon bankruptcy or similar proceedings of the other party or upon an uncured material breach of the 2014 Merck KGaA Agreement by the other party. However, if such breach only relates to one target, the agreement may only be terminated with respect to such target.

In May 2018, the Company entered into a Supply Agreement with Merck KGaA (the "2018 Merck KGaA Supply Agreement"). Under the terms of the 2018 Merck KGaA Supply Agreement, the Company will provide Merck KGaA preclinical non-good manufacturing practice ("non-GMP") ADC drug substance and clinical good manufacturing practice ("GMP") drug substance for use in clinical trials associated with one of the antibodies designated under the 2014 Merck KGaA Agreement. The Company receives fees for its efforts under the 2018 Merck KGaA Supply Agreement and reimbursement equal to the supply cost. The Company may also enter into future supply agreements to provide clinical supply material should Merck KGaA pursue clinical development of any other candidates nominated under the 2014 Merck KGaA Agreement.

Accounting Analysis

The Company concluded that Merck KGaA is a customer and accounted for the 2014 Merck KGaA Agreement in accordance with ASC 606. The Company identified the following performance obligations under the 2014 Merck KGaA Agreement: (i) exclusive license and research services for six designated targets, (ii) rights to future technological improvements and (iii) participation of project team leaders and providing joint research committee services.

The Company has concluded that each license for a designated target is not distinct from the research services performed related to the designated target as Merck KGaA cannot obtain the benefit of the license without the related research services. Each license for a designated target and the related services performance obligation is considered distinct from every other license for a designated target and related services performance obligation as each research plan is pursued independent of every other research plan for other designated targets.

The Company utilizes the expected value approach to estimate the amount of consideration related to the payment of fees associated with development and research services. The Company utilizes the most likely amount approach to estimate any development and regulatory milestone payments to be received. As of the date of initial application of ASC 606, there were no milestones payments that had not already been received, included in the estimated transaction price. The Company considered the stage of development and the remaining risks associated with the remaining development required to achieve the milestone, as well as whether the achievement of the milestone is outside the control of the Company or Merck KGaA. The milestone payment amounts were fully constrained, as a result of the uncertainty whether any of the associated milestones would be achieved. The Company has determined that any commercial milestones and sales based royalties will be recognized when the related sales occur as they were determined to relate predominantly to the license granted and therefore have also been excluded from the transaction price.

The transaction price was allocated to the performance obligations based on the relative estimated standalone selling prices of each performance obligation or in the case of certain variable consideration to one or more performance obligations. The estimated standalone selling prices for performance obligations, that include a license and research services, were developed using the estimated selling price of the license and an estimate of the overall effort to perform the research service and an estimated market rate for research services. The estimated standalone selling price of the licenses was established based on comparable transactions. The estimated standalone selling price for the rights to future technological improvements was developed based on the estimated selling prices of a license or rights received, as well as considering the probability that additional technology would be made available or the probability the counterpart would utilize the technology. The estimated standalone selling price for the joint research committee services was developed using an estimate of the time and costs incurred to participate in the committees.

The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. As of December 31, 2022 and 2021, the total estimated transaction price for the 2014 Merck KGaA Agreement was $21.3 million.

The Company is recognizing revenue related to the exclusive license and research and development services performance obligation over the estimated period of the research and development services using a proportional performance model. The Company measures proportional performance based on the costs incurred relative to the total costs expected to be incurred. To the extent that the Company receives fees for the research services as they are performed, these amounts are recorded as deferred revenue. Revenue related to future technological improvements and joint research committee services will be recognized ratably over the performance period (which in the case of the joint research committee services approximate the time and cost incurred each period), which are 10 and 5 years, respectively. The Company is continuing to reassess the estimated remaining term at each subsequent reporting period.

As of December 31, 2022, the Company has completed its research service obligations associated with four of the six designated targets and the joint research committee services. Collaboration revenue recognized during the years ended December 31, 2022 and 2021 was immaterial. During the year ended December, 31 2020, the Company recorded collaboration revenue of $0.8 million related to its efforts under the 2014 Merck KGaA Agreement. There was no collaboration revenue or corresponding research and development expense recognized during the years ended December 31, 2022, 2021, and 2020 related to the 2018 Merck KGaA Supply Agreement.

As of each of December 31, 2022 and 2021, the Company had recorded $3.9 million in deferred revenue related to the 2014 Merck KGaA Agreement and 2018 Merck KGaA Supply Agreement, in the aggregate, that will be recognized over the remaining performance period.

Summary of Contract Assets and Liabilities

The following table presents changes in the balances of the Company's contract liabilities:


	Balance at Beginning of Period		Additions		Deductions		Balance at End of Period
Year ended December 31, 2022

Contract liabilities:





Total deferred revenue	$	3,944	$	170,000	$	26,291	$	147,653

Year ended December 31, 2021
Contract liabilities:

Total deferred revenue	$	3,987	$	—	$	43	$	3,944

The Company did not record any contract assets associated with its collaboration agreements as of December 31, 2022 and December 31, 2021.

During the years ended December 31, 2022 and 2021 the Company recognized the following revenues as a result of changes in the contract liability balances in the respective periods:


	Year ended December 31,
	2022		2021
Revenue recognized in the period from:




Amounts included in the contract liability at the beginning of the period	$	43	$	43




Performance obligations satisfied in previous periods	$	—	$	—

Other Revenue

The Company has provided limited services for a collaborator, Asana BioSciences, LLC ("Asana Biosciences"). During the year ended December 31, 2022, the Company recognized revenue of $0.3 million related to these services and did not recognize revenue related to these services during the years ended 2021 and 2020. The next potential milestone the Company is eligible to receive is $2.5 million upon dosing the fifth patient in a Phase 1 clinical trial by Asana BioSciences. While the first patient was dosed in April 2022, as of December 31, 2022, the Company considered this next milestone to be fully constrained as there was considerable judgment involved in determining whether it is probable that a significant revenue reversal would occur. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestone is outside the control of the Company and there was a high level of uncertainty in achieving this milestone, as the collaborator continues to evaluate its candidate in the Phase 1 trial.

Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

The following table presents information about the Company's assets measured at fair value on a recurring basis and indicates the level within fair value hierarchy of the valuation techniques utilized to determine such value. The Company had no marketable securities as of December 31, 2021.


	December 31, 2022
(in thousands)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents
Money market funds	$	50,471	$	50,471	$	—	$	—
U.S. government agency securities	9,993		—		9,993		—
	$	60,464	$	50,471	$	9,993	$	—
Marketable securities
U.S. treasury securities	$	107,810	$	107,810	$	—	$	—
U.S government agency securities	44,017		—		44,017		—
	$	151,827	$	107,810	$	44,017	$	—

There were no changes in valuation techniques or transfers between fair value measurement levels during the year ended December 31, 2022.

Investments classified as Level 1 within the valuation hierarchy generally consist of U.S. treasury securities and money market funds, as the fair value is readily determinable based on active daily markets for identical securities. Investments classified as Level 2 within the valuation hierarchy generally consists of U.S. government agency securities, as the fair value is readily determinable based on active daily markets for similar securities and other observable inputs. The Company estimates the fair values of investments by taking into consideration valuations obtained from third-party pricing sources.

The carrying amounts reflected in the consolidated balance sheets for prepaid expenses and other current assets, accounts receivable, accounts payable and accrued expenses approximate their fair values due to their short-term nature.

As of December 31, 2022 and 2021, the carrying value of the Company’s outstanding borrowing under the New Credit Facility (as defined in Note 8) approximated fair value (a Level 2 fair value measurement), reflecting interest rates currently available to the Company. The New Credit Facility is discussed in more detail in Note 8, Debt.

Cash, Cash Equivalents, and Short-Term marketable securities

12 Months Ended

Dec. 31, 2022

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents, and Short-Term marketable securities

Cash and cash equivalents

The following table summarizes the Company's cash, cash equivalents, and restricted cash as of December 31, 2022 and 2021.


(in thousands)	Year Ended December 31, 2022				Year ended December 31, 2021
	Beginning of period		End of period		Beginning of period		End of period
Cash and cash equivalents	$	177,947	$	128,885	$	255,094	$	177,947
Restricted cash included in other assets, noncurrent	478		478		321		478
Total cash, cash equivalents and restricted cash per statement of cash flows	$	178,425	$	129,363	$	255,415	$	178,425

Marketable securities

The following table summarizes the Company's marketable securities held at December 31, 2022. The Company had no marketable securities as of December 31, 2021.


	December 31, 2022
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value


Marketable securities


U.S. treasury securities	$	107,964	$	7	$	(161)	$	107,810
U.S. government agency securities	44,016		24		(23)		44,017
	$	151,980	$	31	$	(184)	$	151,827

All of the Company's marketable securities are due within one year or less. The Company did not realize any gains or losses recognized on the sale of marketable securities during the year ended December 31, 2022, and, as a result, the Company did not reclassify any amounts out of accumulated comprehensive loss.

As of December 31, 2022, the Company's debt security portfolio consisted of 17 securities that were in an unrealized loss position and had an aggregate fair value of $92.8 million. There were no securities in an unrealized loss position for greater than 12 months as of December 31, 2022. The unrealized losses on the Company's marketable securities were caused by market interest rate increases. The Company has the intent and ability to hold such securities until recovery. As a result, the Company did not record any charges for credit-related impairments for its marketable securities during the year ended December 31, 2022.

Property and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and equipment consists of the following as of December 31, 2022 and 2021:


(in thousands)	December 31, 2022		December 31, 2021
Laboratory equipment	$	7,960	$	6,725
Leasehold improvements	1,943		1,906
Computers, software, and office equipment	1,824		1,019

Total property and equipment at cost	11,727		9,650
Less: Accumulated depreciation	(7,742)		(7,682)
	$	3,985	$	1,968

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $0.9 million, $0.9 million and $1.0 million, respectively.

Accrued Expenses

12 Months Ended

Dec. 31, 2022

Accrued Liabilities, Current [Abstract]

Accrued Expenses

Accrued expenses consist of the following as of December 31, 2022 and 2021:


(in thousands)	December 31, 2022		December 31, 2021
Accrued clinical expenses	$	14,822	$	7,879
Accrued manufacturing expenses	11,536		8,476
Accrued payroll and related expenses	11,558		7,319
Accrued research and non-clinical expenses	2,767		3,848
Accrued professional fees	1,865		909
Accrued other	636		285
	$	43,184	$	28,716

Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

On May 8, 2019, the Company entered into a loan and security agreement (the "Prior Credit Facility") with Silicon Valley Bank ("SVB"), pursuant to which the Company borrowed $5.0 million. The Prior Credit Facility accrued interest at a floating per annum rate equal to the greater of (i) 4.0% and (ii) 1.50% below the Prime Rate. The Prior Credit Facility had an interest-only period through August 31, 2020.

On August 28, 2020, the Company entered into a second amendment (the "Second Amendment") to the Prior Credit Facility. Pursuant to the Second Amendment, the Company drew $5.2 million upon execution of the Second Amendment, the proceeds of which were used to repay the Company’s existing balance under the Prior Credit Facility and satisfy its obligations to SVB. The Prior Credit Facility, as amended by the Second Amendment, accrued interest at a floating per annum rate equal to the greater of (i) 4.25% and (ii) 1.00% above the Prime Rate.

On October 29, 2021, the Company entered into a loan and security agreement (the "New Credit Facility") with SVB and Oxford ("Oxford" and, together with SVB and the other lenders from time to time a party thereto, the "Lenders"). Pursuant to the New Credit Facility, as amended on February 17, 2022, October 17, 2022, and December 27, 2022, the Company can borrow term loans in an aggregate amount of $100.0 million, which includes (i) $40.0 million available at the option of the Company in up to four principal advances through June 30, 2023, (ii) an additional $40.0 million in one principal advance, if the Company reaches certain development milestone events, through September 30, 2023 and (iii) an additional tranche of $20.0 million, subject to conditional approval from the Lenders. The New Credit Facility is secured by substantially all of the Company's personal property owned or later acquired, excluding intellectual property (but including the rights to payments and proceeds from intellectual property), and a negative pledge on intellectual property. The Company drew $25.0 million upon execution of the New Credit Facility, of which $5.5 million of the proceeds was used to repay the existing balance under the Prior Credit Facility and satisfy its obligations to SVB. Upon entering into the New Credit Facility, the Company terminated all commitments by SVB to extend further credit under the Prior Credit Facility and all guarantees and security interests granted by the Company to SVB under the Prior Credit Facility.

The New Credit Facility bears interest at a floating per annum rate equal to the greater of (i) 8.50% and (ii) 5.25% above the Prime Rate. Interest is payable monthly in arrears on the first day of each month. The Company is obligated to make interest-only payments through November 1, 2024, followed by equal monthly principal payments and applicable interest through the maturity date of October 1, 2026 (the Maturity Date). If certain development milestones are met, then the interest-only period will be extended to November 1, 2025.

The Company is also required to make a final payment to the Lenders equal to 4.25% of the principal amount of the term loans then extended to the Company. This final payment is accreted under the effective interest method over the life of each term loan. The term loans are secured by substantially all of the Company’s assets, except for its intellectual property which is subject to a negative pledge, and certain other customary exclusions.

At the Company’s option, it may prepay the outstanding principal balance of any term loans in whole but not in part, subject to a prepayment fee of: (a) 3.0% of the term loans then extended to the Company if the prepayment occurs on or prior to the first anniversary of the funding date of such term loan, (b) 2.0% of the term loans then extended to the Company if the prepayment occurs after the first anniversary of the funding date of such term loan but on or prior to the second anniversary of the funding date of such term loan, or (c) 1.0% of the term loans then extended to the Company if the prepayment occurs after the second anniversary of the funding date of such term loan but before the Maturity Date. The New Credit Facility includes customary affirmative and restrictive covenants applicable to the Company. Affirmative covenants include, among others, covenants requiring the Company to maintain its corporate existence and governmental approvals, deliver certain financial reports, maintain insurance coverage and satisfy certain requirements regarding deposit accounts. The restrictive covenants include, among others, requirements relating to the Company’s ability to transfer collateral, incur additional indebtedness, engage in mergers or acquisitions, pay dividends or make other distributions, make investments, create liens, sell assets and agree to a change in control, in each case subject to certain customary exceptions.

The Company’s payment obligations under the New Credit Facility are subject to acceleration upon the occurrence of specified events of default, which include, but are not limited to, the occurrence of a material adverse change in the Company’s business, operations, or financial or other condition. Amounts outstanding upon the occurrence of an event of default are payable upon the Lenders' demand and shall accrue interest at an additional rate of 5.0% per annum of the past due amount outstanding. As of December 31, 2022, the Company was in compliance with all covenants under the New Credit Facility. As such, as of December 31, 2022, the classification of the loan balance as stated on the balance sheet was based on the timing of defined future payment obligations.

The following is a summary of obligations under the New Credit Facility as of December 31, 2022:


(in thousands)	December 31, 2022
Total debt	$	25,000
Less: Current portion of long-term-debt	—
Total debt, net of current portion	25,000
Debt financing costs, net of accretion	(324)
Accretion related to final payment	253
Long-term debt, net	$	24,929

As of December 31, 2022, the estimated future principal payments due are as follows:


(in thousands)
2023	$	—
2024	2,083
2025	12,500
2026	10,417

Total debt	$	25,000

Interest expense related to the New Credit Facility for the year ended December 31, 2022 was $3.2 million. The Company did not recognize any interest expense related to the New Credit Facility during the year ended December 31, 2021. Interest expense related to the Prior Credit Facility for the year ended December 31, 2021 was $0.8 million. The Company did not recognize any interest expense related to the Prior Credit Facility during the year ended December 31, 2022.

- Definition

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

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+ Details

Stockholders' Equity

12 Months Ended

Dec. 31, 2022

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Preferred stock

As of December 31, 2022, the Company had 25,000,000 shares of authorized preferred stock. No shares of preferred stock have been issued.

At-the-market ("ATM") equity offering program

In May 2020, the Company established an ATM equity offering program (the "2020 ATM"), pursuant to which it was able to offer and sell up to $100.0 million of its common stock from time to time at prevailing market prices. During the year ended December 31, 2021, the Company sold 3,961,074 shares of common stock, resulting in net proceeds of $43.1 million. During the first quarter of 2022, the Company sold 11,740,210 shares of common stock resulting in net proceeds of $54.8 million under the 2020 ATM. As of March 31, 2022, the 2020 ATM had been fully utilized.

In February 2022, the Company established a new ATM equity offering program (the "February 2022 ATM"), pursuant to which it was able to offer and sell up to $100.0 million of its common stock from time to time at prevailing market prices. During the year ended December 31, 2022, the Company sold 18,757,665 shares of common stock, resulting in net proceeds of $96.4 million under the February 2022 ATM. As of December 31, 2022, approximately $1.6 million remained unsold and available for sale under the February 2022 ATM.

In November 2022, the Company established an additional ATM equity offering program (the "November 2022 ATM"), pursuant to which it is able to offer and sell up to $150.0 million of its common stock from time to time at prevailing market prices. As of December 31, 2022, the Company had not sold any shares of common stock under the November 2022 ATM.

Follow-on offering

In June 2020, the Company sold 9,200,000 shares of common stock in an underwritten public offering at a price to the public of $19.00 per share. Net proceeds to the Company after deducting fees, commissions and other expenses related to the offering were $164.0 million.

Warrants

In connection with a 2013 Series A-1 Preferred Stock issuance, the Company granted to certain investors warrants to purchase 129,491 shares of common stock. The warrants have a $0.05 per share exercise price and a contractual life of 10 years. The fair value of these warrants was recorded as a component of equity at the time of issuance. As of December 31, 2022 and 2021 there were outstanding warrants to purchase 22,590 and 39,474 shares of common stock, respectively. During the year ended December 31, 2022, the Company issued 16,654 shares of common stock upon the net exercise of warrants.

Exchange warrants

On November 26, 2019, the Company entered into an exchange agreement with entities affiliated with Biotechnology Value Fund, L.P. (the "Exchanging Stockholders"), pursuant to which the Exchanging Stockholders exchanged an aggregate of 2,575,000 shares of common stock for warrants (the "Exchange Warrants") to purchase an aggregate of 2,575,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, merger or consolidation, change of control, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $0.0001 per share.

In accordance with ASC Topic 505, Equity, the Company recorded the retirement of the common stock exchanged as a reduction of common shares outstanding and a corresponding debit to additional paid-in-capital at the fair value of the Exchange Warrants on the issuance date. While outstanding, the Exchange Warrants were classified as equity in accordance with ASC Topic 480, Distinguishing Liabilities from Equity, and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in capital and is not subject to remeasurement. The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants. On March 2, 2020, the Exchanging Stockholders exercised the Exchange Warrants in full on a net cashless exercise basis, resulting in the issuance of 2,574,971 shares of common stock.

Common Stock

At the Company's 2022 Annual Meeting of Stockholders on June 9, 2022, the Company's stockholders approved an amendment to the Company’s Fifth Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock, $0.0001 par value per share, from 175,000,000 to 350,000,000. This increase became effective upon filing of a Certificate of Amendment with the Secretary of State of the State of Delaware on June 9, 2022.

The holders of the common stock are entitled to one vote for each share held. Common stockholders are not entitled to receive dividends, unless declared by the Board of Directors of the Company (the "Board").

As of December 31, 2022 and 2021 there were 11,944,664 and 9,199,512, respectively, shares of common stock reserved for the exercise of outstanding stock options, restricted stock units ("RSUs") and warrants.


	December 31, 2022	December 31, 2021
Stock options	10,051,283	8,342,429
Restricted stock units	1,870,791	817,609
Warrants	22,590	39,474
	11,944,664	9,199,512

- Definition

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

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-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: 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(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Stock-based compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock-based compensation

Stock-based Compensation

Stock incentive plans

As of June 30, 2017, there were 3,141,625 stock options outstanding under the Company’s 2007 Stock Incentive Plan (the "2007 Plan") The 2007 Plan expired in June 2017. Any cancellations or forfeitures of options granted under the 2007 Plan will increase the options available under the 2017 Stock Incentive Plan (the "2017 Plan"), as described below.

In June 2017 the Company’s stockholders approved the 2017 Plan. Under the 2017 Plan initially, up to 2,255,000 shares of common stock could be granted to the Company's employees, officers, directors, consultants and advisors in the form of options, RSUs or other stock-based awards. The number of shares of common stock issuable under the 2017 Plan will be cumulatively increased annually on January 1 by the lesser of (a) 4% of the outstanding shares on the immediately preceding December 31 or (b) such other amount specified by the Board. The terms of the awards are determined by the Board, subject to the provisions of the 2017 Plan. Any cancellations or forfeitures of options granted under the 2007 Plan, which expired in June 2017, would increase the number of shares that could be granted under the 2017 Plan. On January 1, 2022, the number of shares of common stock issuable under the 2017 Plan was increased by 2,948,362 shares. During the year ended December 31, 2022, the Company granted 3,541,558 RSUs and options to purchase shares of common stock to employees and non-employee directors under the 2017 Plan. As of December 31, 2022 there were 1,501,829 shares available for future issuance under the 2017 Plan.

Under the 2017 Plan, both with respect to incentive stock options and nonqualified stock options, the exercise price per share will not be less than the fair market value of the common stock on the date of grant, and the vesting period for options granted to employees is generally four years. Options granted under the 2017 Plan expire no later than 10 years from the date of grant. Options under the 2007 Plan were granted at an exercise price established by the Board (or an authorized committee thereof) that was not less than the fair market value of the underlying common stock on the date of grant and subject to such vesting provisions determined by the Board (or an authorized committee thereof). The Board may accelerate vesting or otherwise adjust the terms of granted options in the case of a merger, consolidation, dissolution, or liquidation of the Company.

Inducement awards

From time to time, the Company grants to its employees, upon approval by the Board or an authorized committee thereof, options to purchase shares of common stock and/or RSUs as an inducement to employment in accordance with Nasdaq Listing Rule 5635(c)(4). Prior to February 2022, only options were granted, and they were granted outside of an existing equity incentive plan. These options are subject to terms substantially the same as the 2017 Plan.

In February 2022, the Board adopted the Company's 2022 Inducement Stock Incentive Plan (the "Inducement Plan"), which provides for the grant of nonstatutory options, stock appreciation rights, restricted stock, RSUs and other stock-based awards, with respect to an aggregate of 2,000,000 shares of the Company's common stock (subject to adjustment as provided in the Inducement Plan). During the year ended December 31, 2022, the Company granted 713,025 RSUs and options to purchase shares of common stock to newly hired employees under the Inducement Plan. As of December 31, 2022, there were 1,342,175 shares available for future issuance under the Inducement Plan.

As of December 31, 2022 there were options to purchase 757,500 shares of common stock outstanding which were granted as inducement awards prior to establishment of the Inducement Plan.

Stock option activity

A summary of stock option activity is as follows:


	Number of Shares	Weighted- Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2022	8,342,429	$	11.25	7.2	$	8,458
Granted	2,793,659	$	5.43
Exercised	(414,914)	$	3.21
Cancelled	(669,891)	$	13.09
Outstanding at December 31, 2022	10,051,283	$	9.84	7.2	$	8,197

Exercisable at December 31, 2022	5,410,541	$	9.45	6.1	$	6,076

The weighted-average grant date fair value of options granted during the years ended December 31, 2022, 2021 and 2020, was $3.97, $11.71 and $7.99 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020, was $1.5 million, $4.3 million, and $11.1 million, respectively. The aggregate intrinsic value represents the difference between the exercise price and the selling price received by option holders upon the exercise of stock options during the period.

Cash received from the exercise of stock options was $1.3 million, $1.8 million and $3.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Restricted stock units

The Company periodically issues RSUs with a service condition to certain officers and other employees that typically vest between one year and four years from the grant date.

A summary of the RSU activity is as follows:


	Number of Shares	Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2022	817,609	1.5	$	5,086	$	15.68
Granted	1,460,924	—			$	5.70
Vested	(235,591)	—			$	15.62
Forfeited	(172,151)	—			$	8.54
Unvested at December 31, 2022	1,870,791	1.5	$	10,963	$	8.55

The total fair value of RSUs vested during the years ended December 31, 2022, 2021 was $1.5 million and $5.8 million, respectively. No RSUs vested during the year ended December 31, 2020.

Employee stock purchase plan

During the year ended December 31, 2017, the Board adopted, and the Company's stockholders approved the 2017 employee stock purchase plan (the "2017 ESPP"). The Company initially reserved 225,000 shares of common stock for issuance under the 2017 ESPP, plus an annual increase, to be added as of January 1st of each year, equal to the least of (i) 450,000 shares of common stock; (ii) one percent of the number of shares of common stock outstanding as of the close of business on the immediately preceding December 31st; and (iii) the number of shares of common stock determined by the Board on or prior to such date for such year, up to maximum of 4,725,000 shares of common stock in the aggregate. On January 1, 2022, no shares were added to the 2017 ESPP. During the years ended December 31, 2022 and 2021 the Company issued 270,774 and 78,253 shares, respectively, under the 2017 ESPP. As of December 31, 2022, there were 295,791 shares available for issuance under the 2017 ESPP.

Stock-based compensation expense

The Company uses the provisions of ASC 718 to account for all stock-based awards to employees and non-employees.

Stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period, using the straight-line method.

The following table presents stock-based compensation expense by award type included within the Company’s consolidated statements of operations and comprehensive loss:


	Year ended December 31,
(in thousands)	2022		2021		2020
Stock options	$	15,814	$	14,528	$	5,725
Restricted stock units	5,175		3,522		1,187
Employee stock purchase plan	533		359		260
Stock-based compensation expense included in total operating expenses	$	21,522	$	18,409	$	7,172

The following table presents stock-based compensation expense as reflected in the Company’s consolidated statements of operations and comprehensive loss:


	Year ended December 31,
(in thousands)	2022		2021		2020
Research and development	$	11,386	$	9,984	$	3,841
General and administrative	10,136		8,425		3,331
Stock-based compensation expense included in total operating expenses	$	21,522	$	18,409	$	7,172

As of December 31, 2022, there was $30.4 million and $11.6 million of unrecognized stock-based compensation expense related to unvested stock options and unvested RSUs, respectively, that is expected to be recognized over a weighted average period of 2.0 years and 2.6 years, respectively.

The fair value of each option award is estimated on the date of grant using the Black–Scholes option pricing model with the following weighted average assumptions:


	December 31,
	2022		2021		2020
Risk-free interest rate	2.1	%	0.9	%	1.2	%
Expected dividend yield	—	%	—	%	—	%
Expected term (years)	5.99		6.06		6.05
Expected stock price volatility	88	%	82	%	74	%

Expected volatility for the Company’s common stock is determined based on a blended rate of its historical volatility combined with the historical volatility of comparable publicly traded companies. The risk-free interest rate is based on the yield of U.S. Treasury securities consistent with the expected term of the option. No dividend yield was assumed as the Company has not historically and does not expect to pay dividends on its common stock. The expected term of the options granted is based on the use of the simplified method, in which the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term.

The fair value of RSUs is determined based on the closing price of the Company’s common stock on the date of grant.

Net Loss per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Net Loss per Share

Basic net loss per share of common stock is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without further consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period determined using the treasury stock method.

For purposes of the diluted net loss per share calculation, stock options, unvested RSUs and warrants to purchase common stock are considered to be potentially 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 table sets forth the outstanding 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
Stock options	10,051,283	8,342,429	6,112,948
Unvested restricted stock units	1,870,791	817,609	716,767
Warrants	22,590	39,474	39,474
	11,944,664	9,199,512	6,869,189

Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

The Company has an operating lease for its office and lab space in Cambridge, Massachusetts and operating and finance leases for certain equipment. In March 2020, the Company entered into the Seventh Amendment to the office and lab space lease ("the Office Lease") to extend the term of the lease through March 2026. The Company has an option to extend the lease term of the Office Lease for an additional five years.

On April 5, 2021, the Company entered into an Eighth Amendment to the Office Lease, which granted the Company additional office space in its existing building for five years, beginning July 1, 2021, and committed the Company to lease payments of $5.0 million over that period (the "Expansion Lease"). Independent from the option under the Office Lease, the Company has an option to extend the lease term of the Expansion Lease for an additional five years. The Company’s exercise of the options to extend the lease terms of both the Office Lease and Expansion Lease were not considered reasonably certain as of December 31, 2022.

The Expansion Agreement is a lease modification accounted for as a separate contract, because it expands the scope of the Office Lease and the additional lease payments are commensurate with market rents. The Company assessed the lease classification of the Expansion Lease as of the date of signing and determined that the Expansion Lease should be accounted for as an operating lease. The right-of-use asset and corresponding operating lease liability have been calculated based on the present value of lease payments over the lease term. The Company determined the appropriate incremental borrowing rate to utilize as a discount rate by using a synthetic credit rating which was estimated based on an analysis of outstanding debt of companies with similar credit and financial profiles. Since the operating lease is a net lease, as the non-lease components (i.e., common area maintenance) are paid separately from rent based on actual costs incurred, such non-lease components were not included in the ROU asset and liability and are reflected as an expense in the period incurred.

The Company had a standby letter of credit agreement for the benefit of its landlord in the amount of $0.5 million in connection with the Office Lease and Expansion Lease as of December 31, 2022 and 2021.

The Company has remaining finance lease terms of one year to five years for certain equipment, some of which include options to purchase at fair value.

The components of lease expense included in research and development and general and administrative expenses in the statement of operations were as follows:


	Years ended December 31,
(in thousands)	2022		2021		2020
Operating lease cost	$	3,793	$	3,502	$	2,755

Finance lease cost:
Amortization of right-of-use assets	$	194	$	169	$	101
Interest on lease liabilities	28		28		21
	$	222	$	197	$	122

Supplemental balance sheet information related to leases was as follows:


	Year ended December 31,
	2022			2021
Operating leases:
Operating lease right-of-use assets	$	10,475		$	12,889
Operating lease liabilities, current	$	2,798		$	2,303
Operating lease liabilities	$	8,575		$	11,247

Finance leases:
Property and equipment, gross	$	1,038		$	1,038
Property and equipment, accumulated depreciation	$	(539)		$	(345)
Other liabilities, current	$	240		$	239
Other liabilities	$	203		$	449

Weighted-average remaining lease term:
Operating leases	3.3 years			4.3 years
Finance leases	2.0 years			4.0 years

Weighted-average discount rate:
Operating leases	10.8		%	10.8		%
Finance leases	5.4		%	5.4		%

Supplemental cash flow information related to leases was as follows:


	Year ended December 31,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,865	$	3,241
Operating cash flows from finance leases	$	28	$	28
Financing cash flows from finance leases	$	272	$	215

Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows:


(in thousands)	Operating leases		Finance leases
2023	$	3,857	$	262
2024	4,146		141
2025	4,187		48
2026	1,310		8
2027 and thereafter	—		—
Total lease payments	13,500		459
Present value adjustment	(2,127)		(15)
Present value of lease liabilities	$	11,373	$	444

Leases

The Company has remaining finance lease terms of one year to five years for certain equipment, some of which include options to purchase at fair value.

The components of lease expense included in research and development and general and administrative expenses in the statement of operations were as follows:


	Years ended December 31,
(in thousands)	2022		2021		2020
Operating lease cost	$	3,793	$	3,502	$	2,755

Finance lease cost:
Amortization of right-of-use assets	$	194	$	169	$	101
Interest on lease liabilities	28		28		21
	$	222	$	197	$	122

Supplemental balance sheet information related to leases was as follows:


	Year ended December 31,
	2022			2021
Operating leases:
Operating lease right-of-use assets	$	10,475		$	12,889
Operating lease liabilities, current	$	2,798		$	2,303
Operating lease liabilities	$	8,575		$	11,247

Finance leases:
Property and equipment, gross	$	1,038		$	1,038
Property and equipment, accumulated depreciation	$	(539)		$	(345)
Other liabilities, current	$	240		$	239
Other liabilities	$	203		$	449

Weighted-average remaining lease term:
Operating leases	3.3 years			4.3 years
Finance leases	2.0 years			4.0 years

Weighted-average discount rate:
Operating leases	10.8		%	10.8		%
Finance leases	5.4		%	5.4		%

Supplemental cash flow information related to leases was as follows:


	Year ended December 31,
(in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,865	$	3,241
Operating cash flows from finance leases	$	28	$	28
Financing cash flows from finance leases	$	272	$	215

Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows:


(in thousands)	Operating leases		Finance leases
2023	$	3,857	$	262
2024	4,146		141
2025	4,187		48
2026	1,310		8
2027 and thereafter	—		—
Total lease payments	13,500		459
Present value adjustment	(2,127)		(15)
Present value of lease liabilities	$	11,373	$	444

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

For the years ended December 31, 2022, 2021 and 2020, the Company recorded no income tax benefit for the net operating losses ("NOLs") incurred in each year, due to the Company’s operating losses and a full valuation allowance on deferred tax assets.

A reconciliation of the effective tax rate for the years ended December 31, 2022 and 2021 is as follows:


	2022		2021
Statutory US Federal Rate	21.0	%	21.0	%
State taxes, net of federal benefit	5.7	%	6.3	%
Permanent differences	(0.1)	%	(0.2)	%

General business credits	4.4	%	3.8	%
Stock compensation	(1.4)	%	0.1	%

Change in valuation allowance	(29.6)	%	(31.0)	%
	—	%	—	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets as of December 31, 2022 and 2021 are as follows:


(in thousands)	2022		2021
Deferred tax assets:
Net operating losses	$	113,981	$	106,055
R&D capitalization	40,380		—
Tax credit carryforwards	21,429		12,424
Stock-based compensation	6,522		5,018
Accrued expenses	3,340		1,874
Lease liabilities	3,096		3,698
Capitalized licenses	3,077		2,775
Deferred revenue	1,062		1,076
Depreciation	437		493

Other	116		71
Total gross deferred tax assets	193,440		133,484
Valuation allowance	(190,588)		(130,051)
Net deferred tax assets less valuation allowance	2,852		3,433
Deferred tax liabilities
Right-of-use assets	(2,852)		(3,433)
Total gross deferred tax liabilities	(2,852)		(3,433)
Net deferred taxes	$	—	$	—

The Company has incurred NOLs since inception. At December 31, 2022, the Company had federal and state NOL carryforwards of approximately $432.8 million and $365.3 million, respectively. Of the $432.8 million of federal NOL carryforwards, $34.1 million expire at various dates through 2037. The remaining $398.7 million of federal NOL carryforwards do not expire. The state NOL carryforwards expire at various dates through 2042. At December 31, 2022, the Company had federal and state research and development tax credit carryforwards of approximately $17.4 million and $5.1 million, respectively, which expire at various dates through 2042.

As required by ASC 740, management of the Company has evaluated the evidence bearing upon the reliability of its deferred tax assets. Based on the weight of available evidence, both positive and negative, management has determined that it is more likely than not that the Company will not realize the benefits of all of these assets. Accordingly, the Company recorded a valuation allowance of $190.6 million and $130.1 million at December 31, 2022 and December 31, 2021, respectively. The valuation allowance increased by $60.5 million during the year ended December 31, 2022, primarily a result of the Company's current year NOL.

Utilization of the NOLs and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 due to ownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382, as well as similar state provisions. These ownership changes may limit the amount of NOLs and research and development tax credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. If a change in control as defined by Section 382 has occurred at any time since the Company’s formation, utilization of its NOLs or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, which could then be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOLs or research and development tax carryforwards before their utilization. The Company has determined that ownership changes have occurred in the past and that certain NOLs and research and development tax credit carryforwards will be subject to limitation. The amounts presented do not include NOLs or research and development tax credit carryforwards that will expire unused due to ownership changes.

The Company applies the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes. The Company’s reserves related to taxes are based on a determination of whether, and how much of, a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies present related to the tax benefit. As of December 31, 2022 and 2021, the Company had no unrecognized tax benefits.

The Company has not conducted a study of its research and development credit carryforwards. This study may result in an adjustment to research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the balance sheets or statements of operations if an adjustment were required.

Interest and penalties related to uncertain tax positions would be classified as income tax expense in the accompanying statements of operations. As of December 31, 2022 and 2021, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the United States federal tax jurisdiction and eight state jurisdictions. The Company did not have any foreign operations during the years ended December 31, 2022, 2021 and 2020. The statute of limitations for assessment by the Internal Revenue Service and state tax authorities is closed for tax years prior to 2018, although carryforward attributes that were generated prior to tax year 2018 may still be adjusted upon examination to the extent utilized in a future period. There are no federal or state audits currently in progress.

- 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
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-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2022
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit PlanThe Company has a defined contribution plan established under Section 401(k) of the Internal Revenue Code ("401(k) Plan"), which covers substantially all employees. Employees who have attained the age of 21 and have worked more than 1,000 hours are eligible to participate in the 401(k) Plan. Employees may contribute up to 95% of eligible pay on a pre–tax basis up to the federal annual limits. For the years ended December 2022, 2021, and 2020, the Company made matching contributions equal to 100% of the employee’s contributions, subject to a maximum of 4% of eligible compensation. For the years ended December 31, 2022, 2021 and 2020, the Company recorded expense of $1.1 million, $0.8 million and $0.5 million, respectively, related to its contribution to its 401(k) Plan.

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
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+ Details

Commitments	12 Months Ended
Commitments	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments	Commitments License agreements During the years ended December 31, 2022, 2021 and 2020, the Company recorded research and development expense related to non-refundable license payments of $1.5 million, $3.1 million, and $0.3 million, respectively. During the years ended December 31, 2022, 2021 and 2020, the Company recorded research and development expense related to development milestones of $0.7 million, $2.1 million and $0.8 million, respectively. The 2022, 2021, and 2020 development milestones were associated with XMT-1660, UpRi, and XMT-1592, respectively. See Note 12, Leases, for the Company’s future obligations related to leases as of December 31, 2022.

Summary of Significant Accounting Policies (Policies)