Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be
read in conjunction with our audited financial statements and related notes thereto included elsewhere in this Annual Report on Form-10K for the period ended December 31, 2020. Except as otherwise
indicated herein or as the context otherwise requires, references in this Annual Report on Form 10-K to “Bolt” “the Company,” “we,” “us” and “our” refer to
Bolt Biotherapeutics, Inc.
Overview
We are a clinical-stage immuno-oncology company developing tumor-targeted therapies that leverage the power of the innate and adaptive immune
systems. Our proprietary Boltbody ISAC approach uses immunostimulants to engage and activate myeloid cells, including macrophages and dendritic cells, that directly kill tumor cells via phagocytosis and expose tumor neoantigens to the adaptive
immune system. This leads to recruitment of cytotoxic T cells and additional tumor-killing myeloid cells thereby converting immunologically “cold” tumors to “hot” tumors. We believe that this process leads to the development of
systemic immunological memory with epitope spreading to neoantigens that is critical to achieving a long-term anti-tumor response. Our lead product candidate BDC-1001 is a HER2 Boltbody ISAC comprised of a
HER2-targeting biosimilar of trastuzumab conjugated to one of our proprietary TLR7/8 agonists, for the treatment of patients with HER2-expressing solid tumors, including those with HER2-low tumors. We have
demonstrated robust single agent anti-tumor activity in multiple preclinical models, including elimination of large tumors (~500 mm3), as well as tumors that are refractory to trastuzumab or ado-trastuzumab emtansine. In our preclinical safety studies, BDC-1001 was well tolerated and no adverse safety signals were observed. We believe these findings are
encouraging for the therapeutic potential of BDC-1001. We initiated a Phase 1/2 trial of BDC-1001 in the first quarter of 2020 for the treatment of patients with
HER2-expressing solid tumors. We are currently in the dose escalation portion of the trial and expect to move into Phase 2 dose expansions in key solid tumor indications with unmet medical need in 2021. We believe that our preliminary Phase 1/2
data provide us with clinical proof of concept for our HER2 Boltbody ISAC approach. We are also advancing additional Boltbody ISAC product candidates targeting CEA and PD-L1, both of which are currently in
preclinical development. We anticipate advancing our CEA Boltbody ISAC BDC-2034 into the clinic in 2022. We expect to designate our next clinical candidate in 2021.
Since our inception in January 2015, we have focused primarily on organizing and staffing our company, business planning, licensing and
developing intellectual property, raising capital, developing our product candidates and conducting preclinical studies and early clinical trials. We have not recorded any revenue from product sales. Our only revenue has been derived from our
collaboration with Toray. In March 2019, we entered into the Toray Development Agreement, to jointly develop and commercialize a Boltbody ISAC utilizing Toray’s proprietary antibody. Prior to the completion of our initial public offering in
February 2021, we funded our operations primarily through private placements of our convertible preferred stock for gross proceeds of $173.7 million, including Toray’s purchase of 717,514 shares of Series T convertible preferred stock for
gross proceeds of $10.0 million and the January 2021 issuance and sale of 5,611,059 shares of Series C-2 preferred stock for net proceeds of $51.9 million. In February 2021, we completed our initial public offering of 13,225,000 shares of our
common stock at a price to the public of $20.00 per share, including the exercise in full by the underwriters of their option to purchase 1,725,000 additional shares of our common stock. Including the option exercise, the aggregate net proceeds to
us from the offering was approximately $241.7 million, net of underwriting discounts, commissions and other offering expenses, for aggregate expenses of approximately $22.8 million.
We have incurred operating losses since our inception. Our net losses were $60.7 million and $30.5 million in 2020 and 2019. As of
December 31, 2020, we had an accumulated deficit of $108.4 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs
associated with our operations. We expect to continue to incur
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significant expenses and increasing operating losses for the foreseeable future, and we further expect our expenses will increase substantially as we:
• conduct our ongoing and planned clinical trials;
• continue our research and development programs;
• expand our clinical, regulatory, quality and manufacturing capabilities;
• seek regulatory approvals for our product candidates; and
• operate as a public company.
Our net losses may fluctuate significantly from
quarter-to-quarter and year-to-year, depending in particular on the timing of our planned
clinical trials and preclinical studies, and our expenditures on other research and development activities.
Components of Results of Operations
Revenue
To date our only revenue has been collaboration revenue derived from our collaboration with Toray. We are collaborating with Toray to develop a
Boltbody ISAC that incorporates a proprietary Toray antibody against a novel tumor antigen target. We are jointly responsible for early stage development and for providing technical and regulatory support, and Toray will pay for all of the program
expenses through the end of Phase 1 development. In conjunction with the collaboration, Toray purchased 717,514 shares of our Series T convertible preferred stock for $10.0 million. We evaluated the collaboration together with Toray’s
purchase of Series T convertible preferred stock, and allocated $1.5 million from the stock purchase proceeds to deferred revenue, which we recognize, together with payments received from Toray for reimbursement based on agreed-upon
full-time equivalent rates and out of pocket costs, as collaboration revenue over time as we fulfill our performance obligation to Toray.
We expect that any collaboration revenue we generate from our current collaboration, and from any future collaboration partners, will
fluctuate in the future as a result of the timing and results of development activities and the timing and amount of payments, including upfront and milestone payments, and other factors.
We have not generated any revenue from product sales, and we do not expect to generate any revenue from product sales unless and until we
obtain regulatory approval of and commercialize one of our product candidates.
Operating Expenses
Research and Development
Research and development expenses have related primarily to early research and discovery activities and to preclinical and clinical development
of our product candidates. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
Research and development expenses include:
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Our direct research and development expenses consist principally of external costs, such as fees paid to
contract research organizations and consultants in connection with our preclinical and toxicology studies and costs related to manufacturing materials for our preclinical studies. Since our inception and through December 31, 2020, the vast
majority of our third-party expenses related to the research and development of BDC-1001. With the exception of our collaboration with Toray, we do not allocate employee costs and costs associated with
our discovery efforts, laboratory supplies and facilities, including other indirect costs, to specific product candidates because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal
resources primarily to conduct our research as well as for managing our preclinical development, process development, manufacturing and clinical development activities. We deploy our personnel across all of our research and development activities
and, as our employees work across multiple programs, we do not currently track our costs by product candidate.
We plan to substantially
increase our research and development expenses for the foreseeable future as we continue the development of our product candidates, particularly as product candidates in later stages of development generally have higher development costs than those
in earlier stages of development. We cannot determine with certainty the timing of initiation, the duration or the completion costs of future clinical trials and preclinical studies of our product candidates due to the inherently unpredictable
nature of clinical and preclinical development. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations.
We anticipate that we will make determinations as to which product candidates and development programs to pursue and how much funding to
direct to each product candidate or program on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s
commercial potential. We will need to raise substantial additional capital in the future. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to
what degree such arrangements would affect our development plans and capital requirements.
Our future clinical development costs may vary
significantly based on factors such as:
• the number and scope of preclinical and IND-enabling studies;
• per-patient trial costs;
• the number of trials required for approval;
• the number of sites included in the trials;
• the countries in which the trials are conducted;
• the length of time required to enroll eligible patients;
• the number of patients who participate in the trials;
• the number of doses that patients receive;
• the drop-out or discontinuation rates of patients;
• potential additional safety monitoring requested by regulatory agencies;
• the duration of patient participation in the trials and through all follow-up;
• the cost and timing of manufacturing our product candidates;
• the phase of development of our product candidates; and
• the safety and efficacy profile of our product candidates.
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General and Administrative
General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation, for personnel
in executive, finance and other administrative functions. Other significant costs include legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services and facility-related costs.
We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development
activities and increased costs of operating as a public company. These increased costs will likely include higher expenses related to audit, legal, regulatory and tax-related services associated with
maintaining compliance with Nasdaq and SEC requirements, director and officer insurance premiums and investor relations costs associated with operating as a public company.
Other Income (Expense), Net
Interest Income, Net
Interest income consists of interest on our cash, cash equivalents and short-term investments.
Change in Fair Value of Preferred Stock Purchase Right Liability
In connection with the issuance of our Series B convertible preferred stock in July 2018 and our Series
C-1 convertible preferred stock in June 2020, the investors agreed to buy, and we agreed to sell, additional shares of such preferred convertible stock at the original issue price upon the achievement of pre-defined milestones. These contractual obligations were required to be accounted for as liabilities and remeasured to fair value at each reporting date, with any change in the fair value reported as a component
of other income (expense). In July 2019, we issued such additional shares of Series B convertible preferred stock, respectively, and accordingly, this contractual obligation was settled and the preferred stock purchase right liability was remeasured
to fair value on the purchase date and reclassified to permanent equity. In January 2021, with the completion of the Series C-2 convertible preferred stock, this contractual obligation was settled and the
preferred stock purchase right liability was remeasured to fair value on the purchase date and reclassified to permanent equity.
Results of Operations
Comparison of the Years Ended December 31, 2020 and 2019
Years Ended December 31,
(In thousands)
Operating expenses:
Other income (expense), net:
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Collaboration Revenue
Revenue increased from $215,000 in 2019 to $231,000 in 2020. Revenue was generated from the execution of the Toray Development Agreement in
March 2019 and the recognition of revenue over time as we fulfill our performance obligations to Toray. We did not perform any services towards satisfying the performance obligation as defined in the Toray Development Agreement during the second
half of the year 2020. We expect to perform services to further the collaboration in the year 2021.
Research and Development Expenses
Research and development expenses increased by $14.4 million from $26.0 million in 2019 to $40.4 million in 2020. The
increase was primarily due to $5.9 million in higher personnel-related expenses due to an increase in headcount from 29 to 53 employees as of the end of the respective period, $3.2 million of higher expenses related to the ongoing BDC-1001 clinical trial, increase of $3.2 million in manufacturing expenses related to the timing of batch production of our product candidates, and $2.3 million in higher facility-related expenses.
General and Administrative Expenses
General and administrative expenses increased by $3.9 million from $5.2 million in 2019 to $9.1 million in 2020. The increase
was primarily due to $1.7 million of higher personnel-related expenses due to an increase in headcount from four to 12 employees as of the end of the respective period, $1.5 million in higher professional services expenses related to
accounting services, legal fees and other professional services, and $0.8 million in higher facility and marketing-related expenses.
Other Income (Expense), Net
Other Income (Expense), Net
Interest income was $0.5 million and $0.2 million in 2019 and 2020, respectively. The decrease of $0.3 million is primarily due
to lower yields on cash, cash equivalents and short-term investment balances.
Change in Fair Value of Convertible Preferred Stock
Purchase Right Liability
The change in fair value of convertible preferred stock purchase right liability increased $11.7 million
from a charge of $42,000 in 2019 to $11.7 million in 2020, primarily due to the increase in the fair value of the outstanding Series C-2 preferred stock purchase right liability as a result of closer time
proximity to achieving different outcome scenarios and higher probabilities of occurrence. We issued the shares associated with the Series B convertible preferred stock purchase right liability in July 2019, accordingly, this obligation no longer
exists. Upon the exercise of the preferred stock purchase right with the completion of the Series C-2 Closing in January 2021, we remeasured the Series C-2 preferred stock purchase right liability to fair value and reclassified to permanent equity
on the balance sheets.
Liquidity and Capital Resources
Sources of Liquidity
We have incurred net losses and negative cash flows from operations since our inception and anticipate we will continue to incur net losses for
the foreseeable future. As of December 31, 2020, we had an accumulated deficit of $108.4 million. Our net loss was $60.7 million and $30.5 million in 2020 and 2019, respectively, and we expect to incur additional losses in the
future. We evaluated our current cash position, historical results, forecasted cash flows and plans in regards to liquidity.
Prior to the
completion of our initial public offering in February 2021, we funded our operations primarily through the private placement of our convertible preferred stock and raised gross proceeds of $173.7 million from such sales including the sale of
5,611,059 shares of Series C-2 convertible preferred stock at $9.2575 per
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share. issuance for aggregate gross proceeds of $51.9 million in January 2021. As of December 31, 2020, we had cash, cash equivalents and short-term investments of $22.8 million.
In February 2021, we completed our initial public offering of 13,225,000 shares of our common stock, including the exercise in full by the underwriters of their option to purchase 1,725,000 additional shares of our common stock, at a price of $20.00
per share for net proceeds to us from the offering was approximately $241.7 million, net of underwriting discounts, commissions and other offering expenses, for aggregate expenses of approximately $22.8 million.
The following table sets forth a summary of our cash flows for each of the periods indicated:
Years EndedDecember 31,
(In thousands)
Net cash provided by (used in)
Operating Activities
Net cash used in operating activities was $47.3 million and $26.3 million for 2020 and 2019, respectively. Net cash used in operating
activities for 2020 was primarily due to our net loss of $60.7 million, adjusted for $15.7 million of non-cash charges and a $2.3 million change in operating assets and liabilities. The non-cash charges were primarily comprised of $11.7 million related to the change in fair value of Series C convertible preferred stock purchase right liabilities, $1.9 million of non-cash lease related expense, $1.4 million for stock-based compensation and $0.6 million for depreciation and amortization expense. The change in net operating assets was primarily due to increases
in our accounts payable and accrued expenses related to an increase in research and development expenses and the timing of vendor payments and increases in our operating lease liabilities. Net cash used in operating activities for 2019 was primarily
due to our net loss of $30.5 million, adjusted for $1.9 million of non-cash charges and a $2.3 million change in operating assets and liabilities. The change in net operating assets was
primarily due to increases in our accounts payable and accrued expenses related to an increase in research and development expenses and the timing of vendor payments, as well as an increase in our deferred revenue related to the unsatisfied
performance obligation under the Toray Development Agreement entered into in March 2019, partially offset by a decrease in our operating lease liabilities.
Investing Activities
Net cash used in investing activities in the year ended December 31, 2020 was due to purchases of property and equipment and net purchases
of short-term investments. Net cash used in investing activities in the year ended December 31, 2019 was due to purchases of other assets and property and equipment.
Financing Activities
Net cash provided by financing activities was $39.6 million for 2020 was due to net proceeds of $41.3 million for the issuance of
5,162,173 shares of our convertible preferred stock in July 2020, partially offset by payments of $1.9 million for deferred offering costs incurred in connection with our initial public offering that was completed in February 2021. Net cash
provided by financing activities was $48.6 million for 2019 was due to net proceeds of $48.6 million from the issuance of 5,701,946 shares of our convertible preferred stock.
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Funding Requirements
Based upon our current operating plans, we believe that our existing cash, cash equivalents and short-term investments and net proceeds of
$51.9 million from the sale of shares of Series C-2 convertible preferred stock in January 2021 and net proceeds of $241.7 million from our initial public offering that was completed in February
2021, will be sufficient to fund our operations for at least the next 12 months. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that
involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of testing
product candidates in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain.
Our future capital
requirements will depend on many factors, including:
• the outcome, timing and costs of regulatory review of our product candidates;
Until such time as we can generate significant revenue
from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity or debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we
may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest
of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may
involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, or other similar
arrangements with third parties, we may have to relinquish valuable
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rights to our product candidates, future revenue streams or research programs or may have to grant licenses on terms that may not be favorable to us and/or may reduce the value of our common
stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and
market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Contractual Obligations and
Commitments
Contract Supply Agreement
In March 2019, we entered into a supply agreement with EirGenix, Inc., pursuant to which EirGenix agreed to supply us, on a non-exclusive basis, bulk drug substance of EG12014, its monoclonal antibody being developed as a biosimilar of trastuzumab, which we use in the manufacture of our BDC-1001
HER2 Boltbody ISAC. Under this agreement, we are required to make milestone payments to EirGenix up to an aggregate of $2.0 million based on achievement of certain regulatory milestones by our HER2 Boltbody ISAC. For more information regarding
our supply agreement with EirGenix, please see “Business—Manufacturing.”
License and Collaboration Agreements
In May 2015 and June 2018, we entered into license agreements with Stanford, pursuant to which Stanford granted us worldwide
exclusive licenses under certain patents related to our proprietary Boltbody ISAC technology and myeloid modulation for cancer immunotherapy, respectively. Under these agreements, we are obligated to pay annual license maintenance fees, which are
nominal and will be creditable against any royalties payable to Stanford under such agreement in the applicable year. We are required in each agreement to make milestone payments up to an aggregate of $0.4 million for the first licensed product
under such agreement that meets certain patent issuance, clinical and regulatory milestones, and an additional milestone payment of $0.2 million for each additional regulatory approval. We also agreed in each agreement to pay Stanford tiered
royalties on our and our sublicensees’ net sales of licensed products, at low single-digit percentage rates, subject to certain customary reductions. Our royalty obligations continue for the term of each agreement and we are required to pay
royalties on any licensed products made, used, imported or offered for sale during the term of such agreement but sold after the term of the agreement. In addition, we are obligated in each agreement to pay Stanford a
sub-teen double digit to low teen double-digit percentage, based on the date of sublicensing, of certain consideration we receive as a result of granting sublicenses to the licensed patents. Pursuant to each
agreement, we will reimburse Stanford’s patent expenses, including reasonable costs incurred in assisting us with prosecuting and maintaining licensed patents. For more information regarding our license agreement with Stanford, please see
“Business—License and Collaboration Agreements.”
Off-Balance Sheet Arrangements
During 2020 and 2019, we did not have any off-balance sheet arrangements as defined under the rules and
regulations of the SEC.
Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
As of December 31, 2020, our cash, cash equivalents and short-term investments consist of cash in readily available checking accounts,
money market accounts and corporate debt securities with strong credit ratings. Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations in interest income have not been significant for us. Due to the
short-term maturities of our cash equivalents and short-term investments, and the low risk profile of our short-term investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our
cash equivalents and short-term investments.
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Foreign Currency Risk
We are exposed to market risk related to changes in foreign currency exchange rates. We contract with vendors that are located outside the
United States and certain invoices are denominated in foreign currencies. We are subject to fluctuations in foreign currency rates in connection with the arrangements. We do not currently hedge our foreign currency exchange risk. As of
December 31, 2020, we had liabilities of $0.7 million denominated in foreign currencies. Due to the nature of our cash and cash equivalents, an immediate hypothetical 10% change in interest rates would not have a material effect on the
fair value of our cash and cash equivalents.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which
have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and
expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions. While our significant accounting policies are described in more detail in Note 2 to our financial statements included elsewhere in this Annual Report on Form 10-K, we believe the
following accounting policies and estimates to be most critical to the preparation of our financial statements.
Revenue Recognition
For all periods presented, we recognized revenue in accordance with the provisions of ASC 606. In accordance with ASC 606,
we perform the following five steps in determining the appropriate amount of revenue to be recognized as we fulfill our obligations under each of these agreements:
• identification of the promised goods and services in the contract;
• allocation of the transaction price to the performance obligations; and
• recognition of revenue when, or as, we satisfy each performance obligation.
If an agreement includes a license to our intellectual property and that license is determined to be distinct from the other performance
obligations identified in the arrangement, we recognize revenues allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other
promises, we utilize 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. We evaluate the measure of progress each reporting period and, if necessary, adjust the
measure of performance and related revenue recognition.
With respect to our assessment of the Toray Development Agreement, we identified
multiple promises to deliver goods and services, which include at inception of the agreement: (i) a license to technology and patents, information and know-how; and (ii) development services,
including research services, technical and regulatory support provided by us. We have identified one performance obligation for all the deliverables under the agreement since the delivered elements are either not capable of being distinct or are not
distinct within the context of the contract. Accordingly, we will recognize revenue for the fixed or determinable collaboration in an
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amount proportional to the hours incurred and the total estimated hours to be incurred over the period over which we expect to deliver our performance obligations. We periodically review and
update the estimated hours, when appropriate, which adjusts the percentage of revenue that is recognized for the period. While such changes to our estimates have no impact on our reported cash flows, the amount of revenue recorded in the period
could be materially impacted.
Amounts received prior to satisfying the above revenue recognition criteria were recognized as deferred
revenue until all applicable revenue recognition criteria were met. Deferred revenue represented the portion of payments received that have not been earned.
Accrued Research and Development Expenses
We are required to estimate our expenses resulting from our obligations under contracts with vendors, consultants and CROs, in connection with
conducting research and development activities. The financial terms of these contracts vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts.
We reflect research and development expenses in our financial statements by matching those expenses with the period in which services and efforts are expended.
We account for these expenses according to the progress of the preclinical study as measured by the timing of various aspects of the study or
related activities. We determine accrual estimates through review of the underlying contracts along with discussions with our third-party services providers and our personnel as to the progress of studies, or other services being conducted. During
the course of a study, we adjust our rate of expense recognition if actual results differ from our estimates.
Although we do not expect
our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are
too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.
Preferred Stock Purchase Right Liabilities
We have entered into convertible preferred stock financings where, in addition to the initial closing, investors agreed to buy, and we agreed
to sell, additional shares of that convertible preferred stock at a fixed price in the event that certain agreed-upon milestones are achieved. We evaluated this purchase right and assessed whether it meets the definition of a freestanding instrument
and, if it did, we determined the fair value of the purchase right liability and recorded it on the balance sheet with the remainder of the proceeds raised being allocated to convertible preferred stock. The preferred stock purchase right liability
was revalued at each reporting period with changes in the fair value of the liability recorded as a component of other income (expense), net, in the statements of operations and comprehensive loss. The preferred stock purchase right liability was
revalued at settlement and the resultant fair value was reclassified to convertible preferred stock at that time. The estimated fair value of the preferred stock purchase right liability was determined using valuation models that consider the
probability of achieving the requisite milestones, our cost of capital, the estimated time period the preferred stock right would be outstanding, consideration received for the convertible preferred stock, the number of shares to be issued to
satisfy the preferred stock purchase right and at what price, and the probability of the consummation of an initial public offering, as applicable. The completion of our initial public offering resulted in the conversion of all of our convertible
preferred stock into common stock.
There are significant judgments and estimates inherent in the determination of the fair value of our
preferred stock purchase right liability. If we had made different assumptions, the carrying value of our preferred stock, net loss and net loss per common share could have been significantly different.
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Stock-Based Compensation Expense
Stock-based compensation expense represents the cost of the grant date fair value of equity awards recognized over the requisite service period
of the awards (usually the vesting period) on a straight-line basis. We estimate the fair value of stock option awards using the Black-Scholes option pricing model and recognize forfeitures as they occur.
For restricted stock awards, the fair value of the award is the estimated fair value of our common stock on the grant date, as determined by
our board of directors.
The Black-Scholes option pricing model requires the use of subjective assumptions, including the risk-free
interest rate, the expected stock price volatility, the expected term of stock options, the expected dividend yield and the fair value of the underlying common stock on the date of grant. Changes in the assumptions can materially affect the fair
value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop. See Note 10 to our financial statements included elsewhere in this Annual
Report on Form 10-K for information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted
in 2020 and 2019.
In 2020 and 2019, stock-based compensation expense related to stock options was $1.4 million and
$0.5 million, respectively. As of December 31, 2020, the unrecognized stock-based compensation expense related to stock options was $7.2 million and is expected to be recognized as expense over a weighted-average period of
approximately 3.2 years.
Determination of the fair value of common stock
We are required to estimate the fair value of the common stock underlying our equity awards when performing fair value calculations. The fair
value of the common stock underlying our equity awards was determined on each grant date by our board of directors, taking into account input from management and independent third-party valuation analyses. All options to purchase shares of our
common stock are intended to be granted with an exercise price per share no less than the fair value per share of our common stock underlying those options on the date of grant, based on the information known to us on the date of grant. In the
absence of a public trading market for our common stock, on each grant date we develop an estimate of the fair value of our common stock in order to determine an exercise price for the option grants. Our determinations of the fair value of our
common stock were made using methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately Held Company Equity Securities Issued as
Compensation, or the Practice Aid.
Our board of directors considered various objective and subjective factors, along with input from
management, to determine the fair value of our common stock, including:
• the lack of marketability of our common stock as a private company;
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• trends and developments in our industry; and
The Practice Aid prescribes several valuation approaches for setting the value of an enterprise, such as the cost, income and market
approaches and various methodologies for allocating the value of an enterprise to its common stock. The cost approach establishes the value of an enterprise based on the cost of reproducing or replacing the property less depreciation and functional
or economic obsolescence, if present. The income approach establishes the value of an enterprise based on the present value of future cash flows that are reasonably reflective of our future operations, discounting to the present value with an
appropriate risk adjusted discount rate or capitalization rate. The market approach is based on the assumption that the value of an asset is equal to the value of a substitute asset with the same characteristics. Each valuation methodology was
considered in our valuations.
Through December 31, 2019, we estimated the enterprise value of our business and underlying stock option
grants using the income approach and the Option Pricing Method, or OPM, to allocate enterprise value to the various share classes. The present value of future cash flows was utilized to estimate our current equity value. Under the OPM, shares are
valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the preferred and common stock are inferred by analyzing these options. We believed the
OPM was the most appropriate method at that time given the uncertainty of various potential liquidity outcomes and the difficulty of selecting and supporting specific outcomes given our early stage of development. In 2020, we changed to a hybrid of
the OPM and Probability-Weighted Expected Return Method, or PWERM, because of a near-term potential IPO scenario that also factored in the inherent uncertainty associated with being able to complete an IPO. The PWERM is a scenario-based analysis
that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us, as well as the economic and control rights of each share class.
Under this hybrid method, we considered the expected initial public offering liquidity scenario, but also used the OPM to capture all other scenarios in the event a near-term initial public offering does not occur. The IPO liquidity scenario equity
value was estimated based on recent IPO valuations in the life sciences and biotechnology sectors, discounted to present value based on anticipated IPO timing. The OPM scenario equity value was determined based on the terms of a recent
arm’s-length convertible preferred stock financing, which implies an equity value by taking into account our capital structure and the rights and preferences of each class of our stock.
We further adjusted the fair value of our common stock to recognize the lack of liquidity associated with shares of our common stock due to
the fact that our stockholders do not have access to public trading markets similar to those enjoyed by stockholders of public companies. Accordingly, we applied discounts to reflect this lack of marketability of our common stock based on the
weighted-average expected time to liquidity.
There are significant judgments and estimates inherent in the determination of the fair
value of our common stock. These judgments and estimates include assumptions regarding our future operating performance, the time to complete an initial public offering or other liquidity event and the determination of the appropriate valuation
methods. If we had made different assumptions, our stock-based compensation expense, net loss and net loss per common share could have been significantly different.
Following the closing of our initial public offering, our board of directors determines the fair value of our common stock based on the
closing price as reported on the date of grant by the Nasdaq Global Select Market.
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Emerging Growth Company and Smaller Reporting Company Status
In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take
advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, will be subject to the same new or revised
accounting standards as other public companies that are not emerging growth companies. We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act.
We are also a “smaller reporting company,” meaning that the
market value of our stock held by non-affiliates plus the aggregate amount of gross proceeds to us as a result of our initial public offering, is less than $700 million and our annual revenue was less
than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than
$250 million as of the last business day of the second fiscal quarter or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million as of the last business day of the second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to
rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in
our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Net Operating Loss and Research and Development Carryforwards and Other Income Tax Information
As of December 31, 2020, we had federal and state NOL carryforwards of $94.2 million and $46.5 million, respectively. The
federal NOLs include $4.4 million that may be used to offset up to 100% of future taxable income and will begin to expire in 2035 unless previously utilized and $89.8 million that are not subject to expiration. The net operating loss
carryforwards subject to expiration could expire unused and be unavailable to offset future income tax liabilities. The federal NOLs not subject to expiration are available to offset up to 80% of taxable income each year indefinitely. The state NOL
carryforwards will begin to expire in 2035, unless previously utilized. As of December 31, 2020, we also had federal and state research credit carryforwards of $2.7 million and $2.3 million, respectively. The federal research and
development tax credit carryforwards expire beginning in 2038 unless previously utilized, and the state research and development tax credit carryforwards do not expire. We have established valuation allowances against our NOLs and research and
development credits due to the uncertainty surrounding the realization of these assets.
We have not completed a Section 382 study to
assess whether an ownership change has occurred or whether there have been multiple ownership changes since our formation due to the complexity and cost associated with such a study and the fact that there may be additional such ownership changes in
the future. Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use of our NOL and research and development tax credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a
three-year period.
Recently Adopted Accounting Pronouncements
In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value
Measurement. The primary focus of the standard is to improve the effectiveness of the disclosure requirements for fair value measurements. We adopted the standard on January 1, 2020, and the adoption did not have a material impact on our financial
statements and related disclosures.
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In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021.
ASU 2019-12 is effective for us beginning January 1, 2022. Early adoption is permitted. We adopted the standard during the year ended December 31, 2020, and the adoption did not have a material impact on our financial statements and related
disclosures.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not
required to provide the information required under this item.
Item 8. Financial Statements and Supplementary Data.
Our financial statements and the report of our independent registered accounting firm required pursuant to this item are incorporated
by reference herein from the applicable information included in Item 15 of this Annual Report on Form 10-K and are presented beginning on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and
Procedures.
Evaluation of Disclosure Controls and Procedures
Based on their evaluation as of December 31, 2020, our management, including the Chief Executive Officer and Chief Financial Officer, has
concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were not effective to provide reasonable assurance because of the material weakness in our
internal control over financial reporting described below.
Material Weakness
A material weakness was identified in our internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
We have the following material weakness in our internal control over financial reporting as of December 31, 2020:
The above material
weakness did not result in a material misstatement of our previously issued financial statements, however, it could result in a misstatement of our account balances or disclosures that would result in a material misstatement of our annual or interim
financial statements that would not be prevented or detected.
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Remediation Activities
In order to address the material weakness in internal control over financial reporting described above, management, with direction from the
Audit Committee, has begun the process of remediation to address control deficiencies that led to the material weakness. Specifically, management has:
• Increased the number of accounting personnel;
Management will continue to review and make necessary changes to the overall design of our internal
control environment, as well as policies and procedures to improve the overall effectiveness of internal control over financial reporting. The material weakness will not be considered remediated, however, until the applicable controls operate for a
sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Management’s Report on
Internal Control Over Financial Reporting
This Annual Report does not include a report of management’s assessment regarding
internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the three months ended December 31, 2020 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on the Effectiveness Over
Financial Reporting
The effectiveness of any system of internal control over financial reporting, including ours, is subject to
inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over
financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our
business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.
Item 9B. Other Information.
None.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Executive Officers and Directors
The
following table sets forth certain information for our executive officers and directors as of December 31, 2020:
Name Age Position(s)
Executive Officers
Randall C. Schatzman, Ph.D. 66 Chief Executive Officer and Director
William P. Quinn 50 Chief Financial Officer
David Dornan, Ph.D. 43 Chief Scientific Officer
Edith A. Perez, M.D. 64 Chief Medical Officer
Grant Yonehiro 57 Chief Business Officer
Non-Employee Directors
Peter Moldt, Ph.D.(2) 61 Chairman of the Board
Edgar G. Engleman, M.D. 75 Director
James I. Healy(3) 55 Director
Ashish Khanna, Ph.D.(1)(2) 49 Director
Kathleen LaPorte(1) 59 Director
Richard A. Miller, M.D.(2)(3) 69 Director
Mahendra G. Shah, Ph.D.(1)(3) 75 Director
(1) Member of the audit committee
(2) Member of the compensation committee
(3) Member of the nominating and corporate governance committee
Executive Officers
Randall C. Schatzman, Ph.D. has served as our Chief Executive Officer and director since July 2019. From 2004 to March 2018,
Dr. Schatzman served as President, Chief Executive Officer and a member of the board of directors of Alder BioPharmaceuticals, Inc. From 1999 to 2004, Dr. Schatzman served as Senior Vice President of Discovery Research at Celltech R&D,
Inc., a wholly-owned subsidiary of Celltech Group plc. From 1995 to 1999, Dr. Schatzman served as Director of Gene Discovery at Mercator Genetics Inc. From 1987 to 1995, Dr. Schatzman served as Section Leader at Roche Bioscience,
previously Syntex Corp., a subsidiary of Roche Holdings Ltd. Dr. Schatzman holds a Ph.D. in Molecular Pharmacology from Emory University and a B.S. in Biochemistry from Purdue University. We believe that Dr. Schatzman is qualified to serve
on our board of directors due to his daily insight into corporate matters as our Chief Executive Officer and his extensive background in the biotechnology industry.
William P. Quinn has served as our Chief Financial Officer since May 2020. From November 2017 to May 2020, Mr. Quinn served as
Chief Financial Officer and Senior Vice President, Finance and Corporate Development, of Sunesis Pharmaceuticals, Inc. From 2011 to November 2017, Mr. Quinn served as President and Chief Executive Officer of Bullet Biotechnology, Inc. From 2003
to 2011, Mr. Quinn served in various positions at Jazz Pharmaceuticals, Inc. From 2001 to 2002, Mr. Quinn served as Chief Operating Officer and Chief Financial Officer at Novation Biosciences. From 1999 to 2001, Mr. Quinn served as
Associate Partner at Mobius Venture Capital, an early-stage venture capital fund. Since 2011, Mr. Quinn has served on the board of directors of A Foundation Building Strength, a non-profit dedicated to
finding treatments for Nemaline Myopathy. Mr. Quinn holds a B.A. and M.A. from Stanford University and an M.B.A. from Stanford Graduate School of Business.
David Dornan, Ph.D. has served as our Chief Scientific Officer since January 2021. From November 2017 to January 2021, Dr. Dornan
served as our Senior Vice President of Research and Manufacturing. From 2012 to
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November 2017, Dr. Dornan held various positions at Gilead Sciences, Inc., including Director and Head of Oncology Research and Senior Research Scientist II, Oncology. From 2002 to 2012,
Dr. Dornan held various positions at Genentech, Inc. Dr. Dornan received a B.Sc. in Biochemistry and Molecular Biology from the University of Strathclyde and a Ph.D. in Molecular Oncology/Biochemistry from the University of Dundee.
Edith A. Perez, M.D. has served as our Chief Medical Officer since April 2020. From 2015 to 2018, Dr. Perez served as Vice
President and Head of the U.S. BioOncology Medical Unit of Genentech, Inc. From 2011 to 2015, Dr. Perez served in multiple senior leadership positions at Alliance for Clinical Trials in Oncology, including Vice President and Group Vice Chair.
Since 1995, Dr. Perez has held various positions at the Mayo Clinic, including Supplemental Consultant in the Departments of Hematology/Oncology and Cancer Biology, Director of the Breast Cancer Translational Genomics Program and Professor of
Medicine. From 2014 to 2018, Dr. Perez served as a member of the board of directors for the American Association for Cancer Research. Dr. Perez received a B.S. in Biology from the University of Puerto Rico, Rio Piedras and an M.D. from the
University of Puerto Rico. Dr. Perez did her training in Internal Medicine at Loma Linda University and completed a Fellowship in Hematology/Oncology at the University of California at Davis. Dr. Perez is board certified in Internal
Medicine, Hematology and Oncology.
Grant Yonehiro has served as our Chief Business Officer since November 2016. From February 2016
to November 2016, Mr. Yonehiro served as Interim Chief Commercial Officer at Vium, Inc., a private biotechnology company. From 2013 to January 2016, Mr. Yonehiro served as Chief Business Officer at Berkeley Lights, a public biotechnology
company. From 2009 to 2013, Mr. Yonehiro served as Chief Executive Officer and President at Perseid Therapeutics LLC, which was acquired by Astellas Pharma, Inc. in 2011. From 2003 to 2009, Mr. Yonehiro served as Chief Business Officer and
Senior Vice President at Maxygen, Inc, a public biopharmaceutical company. From 1997 to 2003, Mr. Yonehiro served in various roles at GenVec, Inc., most recently serving as its Vice President, Drug Development. Mr. Yonehiro received a
B.I.S. in Business, Economics and International Relations from the University of Minnesota, Twin Cities and an M.B.A. from the University of California at Berkeley.
Non-Employee Directors
Peter Moldt, Ph.D. has served as chairman of our board of directors since September 2016. Since May 2012, Dr. Moldt has been
employed as a Senior Partner at Novo Ventures (US) Inc., which provides certain consultancy services to Novo Holdings A/S, a Danish limited liability company that manages investments and financial assets. From 2009 to 2012, Dr. Moldt served as
Partner of Novo Holdings A/S. From 2004 to 2009, Dr. Moldt served as Chief Executive Officer of Curalogic A/S, a publicly listed Danish pharmaceutical company which Dr. Moldt founded. From 2000 to 2004, Dr. Moldt served as Chief
Operating Officer of 7TM Pharma A/S, a private biotechnology company which Dr. Moldt co-founded. From 1989 to 2000, Dr. Moldt held various positions with NeuroSearch A/S, a publicly listed Danish
biotechnology company. Dr. Moldt currently serves on the boards of directors of several private biotechnology and biopharmaceutical companies. He received an M.Sc. and a Ph.D. in Pharmacy and Medicinal Chemistry from the Royal Danish School of
Pharmacy. Dr. Moldt also served as a post-doc with Yale University’s department of organic chemistry. We believe that Dr. Moldt is qualified to serve on our board of directors due to his
experience in the biotechnology and biopharmaceutical industries and his substantial professional experience.
Edgar G. Engleman,
M.D. has been a member of our board of directors since January 2015, when he founded Bolt. Since 1996, Dr. Engleman has held various positions at Vivo Capital, LLC, a global investment firm focused on healthcare that Dr. Engleman co-founded, and currently serves as Partner, Chief Scientific Advisor. Since 1990, Dr. Engleman has served as Professor of Pathology and Medicine at Stanford University School of Medicine, where he established
the Stanford Blood Center, mentors a wide range of trainees and co-directs the Tumor Immunology and Immunotherapy Program of the Stanford Cancer Institute. Dr. Engleman has
co-founded a number of biopharmaceutical companies, including Cetus Immune Corporation, Genelabs Technologies, Inc., Dendreon Corporation, Medeor Therapeutics and Tranquis Therapeutics. He received a B.A.
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from Harvard University and an M.D. from Columbia University School of Medicine. We believe that Dr. Engleman is qualified to serve on our board of directors due to his experience as founder
of our company and his expertise and experience in the biopharmaceutical industry.
James I. Healy, M.D. has served as a member of
our board of directors since January 2021. Dr. Healy has been a General Partner of Sofinnova Investments (formerly Sofinnova Ventures), a biotech investment firm, since June 2000. Prior to June 2000, Dr. Healy held various positions at
Sanderling Ventures, Bayer Healthcare Pharmaceuticals (as successor to Miles Laboratories) and ISTA Pharmaceuticals, Inc. Dr. Healy is currently on the board of directors of Ascendis Pharma A/S, Coherus BioSciences, Inc., Karuna Therapeutics,
Inc., Natera, Inc., NuCana PLC, ObsEva SA, and Y-mAbs Therapeutics, Inc. and several private companies. Previously, he served as a board member of Amarin Corporation, Auris Medical Holding AG, Edge
Therapeutics, Inc., Hyperion Therapeutics, Inc., InterMune, Inc., Anthera Pharmaceuticals, Inc., Durata Therapeutics, Inc., CoTherix, Inc., Iterum Therapeutics, plc, Movetis NV and several private companies. In 2011, Dr. Healy won the IBF Risk
Innovator Award and was named as one of the industry’s top leading Life Science investors in 2013 by Forbes Magazine. Dr. Healy received a B.A. in Molecular Biology and a B.A. in Scandinavian Studies from the University of California,
Berkeley, and received an M.D. and Ph.D. in Immunology from Stanford University School of Medicine. We believe that Dr. Healy is qualified to serve on our board of directors due to his extensive experience in the biopharmaceutical industry,
including as a venture capital investor and a member of the boards of directors of other biopharmaceutical companies.
Ashish
Khanna,Ph.D. has served as a member of our board of directors since July 2018. Since September 2017, Dr. Khanna has served as a Venture Partner at Pivotal bioVenture Partners. Dr. Khanna also serves on the board of directors of
two private biopharmaceutical companies, Evommune, Inc. and Fountain Therapeutics, Inc. From 2013 to August 2017, Dr. Khanna served as Chief Business Officer of Vaxcyte, Inc., a company which he
co-founded. Prior to his role at Vaxcyte, Dr. Khanna was a Principal at SV Life Sciences, a healthcare focused venture capital firm, investing in private biotech and diagnostic companies. Dr. Khanna
holds a B.S. in Pharmacy from the University of Bombay, an M.B.A. in Finance from The Wharton School and a Ph.D. in Pharmaceutics from the State University of New York. We believe that Dr. Khanna is qualified to serve on our board of directors
due to his expertise and experience in the biopharmaceutical industry and his experience in healthcare investing.
Kathleen LaPorte
has served as a member of our board of directors since December 2020. Since 2016, Ms. LaPorte has served on several company boards and currently serves as a director of Precipio, Inc. and as a director of several private biotechnology and
biopharmaceutical companies. From 2014 to 2016, Ms. LaPorte served in multiple senior leadership positions at Nodality Inc., including Chief Business Officer and, most recently, Chief Executive Officer. From 2001 to 2013, Ms. LaPorte
served on the board of Affymax, Inc. From 2002 to 2011, she served as a director for ISTA Pharmaceuticals, Inc. From 2005 to 2011, she was a Managing Director of New Leaf Venture Partners, a spinout from the Sprout Group. From 1994 to 2000,
Ms. LaPorte served on the board of Onyx Pharmaceuticals Inc. From 1993 to 2005, she served as a General Partner of the Sprout Group. Ms. LaPorte received a B.S. in Biology from Yale University and an M.B.A. from the Stanford University
Graduate School of Business. We believe that Ms. LaPorte is qualified to serve on our board of directors due to her experience in the biotechnology and biopharmaceutical industries, her substantial professional experience and the fact that she
is a qualified financial expert.
Richard A. Miller, M.D. has served as a member of our board of directors since July 2017. Since
2014, Dr. Miller has served as Chief Executive Officer, President and Chairman of the Board of Directors of Corvus Pharmaceuticals, Inc., a public biotechnology company developing drugs and biologics for cancer and other diseases. From 2012 to
2014, Dr. Miller served as Chairman and Chief Executive Officer of Graphea, Inc., a privately held chemical company that he founded. From 2010 to 2011, Dr. Miller served as Chief Commercialization Officer, Associate Dean and Research
Professor in Chemistry at The University of Texas at Austin. From 2009 to 2011, Dr. Miller served as President, Chief Executive Officer and Director of Principia Biopharma Inc., which he founded. From 1991 to 2008, Dr. Miller served as
President, Chief Executive Officer
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and Director of Pharmacyclics, Inc., which he co-founded. Since 1991, Dr. Miller has been an Adjunct Clinical Professor of Medicine (Oncology) at
Stanford University Medical Center. Dr. Miller received a B.A. in Chemistry from Franklin & Marshall College and an M.D. from the State University of New York Medical School. He is board certified in both Internal Medicine and Medical
Oncology. We believe that Dr. Miller is qualified to serve on our board of directors due to his expertise and experience in the biotechnology industry and his leadership experience as a senior executive at various biotechnology companies.
Mahendra G. Shah, Ph.D. has served as a member of our board of directors since September 2016. Since 2010, Dr. Shah has served in
multiple positions at Vivo Capital, LLC and currently serves as Managing Director. From 2005 to 2009, Dr. Shah served as Chairman and Chief Executive Officer of NextWave Pharmaceuticals, Inc., a company which he also founded. From 1993 to 2003,
Dr. Shah served as the Chairman and Chief Executive Officer of First Horizon Pharmaceutical Corporation. From 1991 to 1999, Dr. Shah served as Vice President of E. J. Financial Enterprises, Inc., a healthcare-fund management company. From
1987 to 1991, Dr. Shah served as the Senior Director of New Business Development at Fujisawa USA Inc. Dr. Shah received a B.A. and M.A. in Pharmacy from L.M. College of Pharmacy in Gujarat, India and a Ph.D. in Industrial Pharmacy from St.
John’s University. We believe that Dr. Shah is qualified to serve on our board of directors due to his expertise and experience in the biopharmaceutical industry and his experience in healthcare investing.
Family Relationships
There are no family
relationships among any of the directors or executive officers.
Composition of Our Board of Directors
The primary responsibilities of our board of directors are to provide oversight, strategic guidance, counseling and direction to our
management. Our board of directors meets on a regular basis and additionally as required. Our board of directors currently consists of seven directors. Our amended and restated certificate of incorporation provides that the authorized number of
directors may be changed only by a resolution approved by a majority of our board of directors. In accordance with our amended and restated certificate of incorporation, our board of directors are divided into three classes with staggered three-year
terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors are divided
among the three classes as follows:
Any additional directorships resulting from an increase in the
number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board of directors into three classes
with staggered three-year terms may delay or prevent a change of our management or a change in control.
Director Independence
Under the listing requirements and rules of the Nasdaq Stock Market, independent directors must comprise a majority of our board of directors
as a listed company within one year of the closing of our initial public offering.
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Our board of directors has undertaken a review of its composition, the composition of its
committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has
determined that Drs. Engleman, Healy, Khanna, Miller, Moldt and Shah and Ms. LaPorte do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each
of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC and the listing requirements and rules of the Nasdaq Stock Market. In making this determination, our board of directors
considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their
independence, including the beneficial ownership of our capital stock by each non-employee director.
Committees of our Board of Directors
Our
board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and responsibilities of each of the committees of our board of directors are described below.
Members serve on these committees until their resignation or until otherwise determined by our board of directors. Our board of directors may establish other committees as it deems necessary or appropriate from time to time. Each committee operates
under a charter that has been approved by our board and has the composition and responsibilities described below. The charters for each committee are available at the investor relations section of our website at www.boltbio.com. Information
contained on, or that can be accessed through, our website is not incorporated by reference into this Annual Report, and you should not consider information on or accessible through our website to be part of this Annual Report.
Audit Committee
Our audit committee consists of Kathleen LaPorte, Ashish Khanna and Mahendra Shah. Our board of directors has determined that each member of
the audit committee satisfies the independence requirements under the Nasdaq Stock Market listing standards and Rule 10A-3(b)(1) of the Exchange Act. The chairperson of our audit committee is Ms. LaPorte.
Our board of directors has determined that Ms. LaPorte is an “audit committee financial expert” within the meaning of SEC regulations. Each member of our audit committee can read and understand fundamental financial statements in
accordance with applicable requirements. In arriving at these determinations, our board of directors has examined each audit committee member’s scope of experience and the nature of their employment.
The primary purpose of the audit committee is to discharge the responsibilities of our board of directors with respect to our corporate
accounting and financial reporting processes, systems of internal control and financial statement audits, and to oversee our independent registered public accounting firm. Specific responsibilities of our audit committee include:
• assisting with design and implementation of our risk assessment functions;
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• reviewing related person transactions;
Compensation Committee
Our compensation committee consists of Ashish Khanna, Peter Moldt and Richard Miller. The chairperson of our compensation committee is
Dr. Moldt. Our board of directors has determined that each member of the compensation committee is independent under the listing standards of the Nasdaq Stock Market, and a “non-employee
director” as defined in Rule 16b-3 promulgated under the Exchange Act.
The primary purpose
of our compensation committee is to discharge the responsibilities of our board of directors in overseeing our compensation policies, plans and programs and to review and determine the compensation to be paid to our executive officers, directors and
other senior management, as appropriate. Specific responsibilities of our compensation committee include:
• administering our equity incentive plans and other benefit programs;
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of James Healy, Richard Miller and Mahendra Shah. The chairperson of our nominating
and corporate governance committee is Dr. Healy. Our board of directors has determined that each member of the nominating and corporate governance committee is independent under the listing standards of the Nasdaq Stock Market.
Specific responsibilities of our nominating and corporate governance committee include:
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Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our code of business conduct and ethics is available under the Corporate Governance section of our website at www.boltbio.com.
In addition, we post on our website all disclosures that are required by law or the listing standards of the Nasdaq Stock Market concerning any amendments to, or waivers from, any provision of the code. The reference to our website address does not
constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this Annual Report on Form 10-K.
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committee is currently or has been at any time one of our officers or employees. None of our executive
officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation
committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to
file reports of ownership on Forms 3, 4 and 5 with the SEC. Officers, directors and greater than 10% stockholders are required to furnish us with copies of all Forms 3, 4 and 5 they file.
We did not have a class of equity securities registered pursuant Section 12 of the Exchange Act during the fiscal year ended
December 31, 2020, as our initial public offering was completed in February 2021. As a result, our executive officers and directors, and persons who own more than 10% of a registered class our common stock, were not subject to
Section 16(a) during the fiscal year ended December 31, 2020.
Process for Stockholder Nominations
The Nominating and Corporate Governance Committee shall have the power and authority to consider recommendations for board nominees and
proposals submitted by our stockholders and to establish any policies, requirements, criteria and procedures, including policies and procedures to facilitate stockholder communications with the board of directors, to recommend to the board of
directors appropriate action on any such proposal or recommendation and to make any disclosures required by applicable law in the course of exercising its authority. At this time, the Nominating and Corporate Governance Committee does not have a
policy with regard to the consideration of director candidates recommended by stockholders.
Item 11. Executive
Compensation.
EXECUTIVE COMPENSATION
Our named executive officers for the year ended December 31, 2020, consisting of our principal executive officer and four other most
highly compensated officers serving at the end of such year, were:
• Randall Schatzman, Ph.D., our Chief Executive Officer and Director;
• William P. Quinn, our Chief Financial Officer;
• David Dornan, Ph.D., our Chief Scientific Officer;
• Edith A. Perez, M.D., our Chief Medical Officer; and
• Grant Yonehiro, our Chief Business Officer.
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Summary Compensation Table
The following table presents all of the compensation awarded to, earned by or paid to our named executive officers during the year ended
December 31, 2020:
Name Year Salary Bonus OptionAwards(1) OtherCompensation Total
Chief Financial Officer
Chief Medical Officer
(6) Mr. Quinn commenced his employment with us in May 2020.
(7) Dr. Perez commenced her employment with us in April 2020.
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