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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to           
Commission File Number: 001-39303
PLIANT THERAPEUTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware47-4272481
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
260 Littlefield Avenue 
South San Francisco, CA
94080
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (650) 481-6770
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading
Symbol
Name of Each Exchange on which Registered
Common Stock, par value $0.0001 per sharePLRXThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 5, 2021, the registrant had 36,038,994 shares of common stock, $0.0001 par value per share, outstanding.



Table of Contents
  
 
 
 
 
 
  
  

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or this Report, contains forward-looking statements that involve risks, uncertainties, and assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The statements contained in this Report that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are often identified by the use of words such as, but not limited to, “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements in this Report include, but are not limited to, statements about:
•    Our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
•    The success, cost and timing of our product development activities and clinical trials of our lead product candidate, PLN-74809, as well as PLN-1474 and our other product candidates;
•    Our estimates regarding the impact of the COVID-19 pandemic on our business and operations, and our ability to manage such impacts;
•    Our or our current or future collaborators plans to initiate, recruit and enroll patients in, and conduct our clinical trials at the pace that we project;
•    Our plans and strategy to obtain and maintain regulatory approvals of our product candidates;
•    Our plans and strategy to obtain funding for our operations, including funding necessary to complete further development and, upon successful development, if approved, commercialize any of our product candidates;
•    The potential benefit of orphan drug designations for PLN-74809;
•    Our ability to compete with companies currently marketing or engaged in the development of treatments for fibrosis;
•    Our plans and strategy regarding obtaining and maintaining intellectual property protection for our product candidates and the duration of such protection;
•    Our plans and strategy regarding the manufacture of our product candidates for clinical trials and for commercial use, if approved;
•    Our dependence on current and future collaborators for developing, obtaining regulatory approval for and commercializing product candidates in the collaboration;
•    Our receipt and timing of any milestone payments or royalties under any current of future research collaboration or license agreements or arrangements;
•    Our plans and strategy regarding the commercialization of any products that are approved for marketing and our ability to establish adequate pricing in the U.S. and international markets;
•    The size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in combination with others;
•    Our ability to attract and retain qualified employees and key personnel; and
•    Our expectations regarding government and third-party payor coverage and reimbursement.
These statements are based on the beliefs and assumptions of our management, which are in turn based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results and timing expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled “Risk Factors” included under Part II, Item 1A in this Report. Furthermore, such forward-looking statements speak only as of the date of this Report. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.


3



4


SUMMARY OF RISKS ASSOCIATED WITH OUR BUSINESS
Our business involves significant risks, some of which are summarized below. The summary risk factors listed below should be read together with the text of the full risk factors discussed in "Part II, Item 1A. Risk Factors" in this Report. You should carefully consider the risks described below, as well as the other information in this Report, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as in other documents that we file with the Securities and Exchange Commission, or the SEC. The occurrence of any of the events or developments described in this Report could have a material adverse effect on our business, financial condition, results of operations, growth prospects and stock price. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations and the market price of our common stock.

Risks Related to Our Financial Position and Need for Additional Capital
•    We have incurred significant net losses since inception, and we expect to continue to incur significant net losses for the foreseeable future.
•    We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and drug development programs, future commercialization efforts or other operations.

Risks Related to Research and Development and the Biopharmaceutical Industry
•    We have a limited operating history, which may make it difficult to evaluate our prospects and likelihood of success.
•    Our business is highly dependent on the success of our lead product candidate, PLN-74809, as well as PLN-1474 and any other product candidates that we advance into the clinic. All of our product candidates will require significant additional preclinical and clinical development before we may be able to seek regulatory approval for and launch a product commercially.
Our approach to drug discovery and development in the area of fibrotic diseases is unproven and may not result in marketable products.
•    Clinical development involves a lengthy, complex, and expensive process, with an uncertain outcome.
•    We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of PLN-74809 or any other product candidates.
We may fail to obtain and maintain orphan designations in some jurisdictions and therefore fail to secure orphan exclusivity in those jurisdictions.
Our ongoing and future clinical trials may reveal significant adverse events or unexpected drug-drug interactions not seen in our preclinical studies and may result in a safety profile that could delay or prevent regulatory approval or market acceptance of any of our product candidates.
•    If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
•    We face substantial competition, which may result in others discovering, developing, or commercializing products before or more successfully than us.
Risks Related to Our Intellectual Property
•    Our success depends in part on our ability to obtain patent term extensions and to protect our intellectual property. It is difficult and costly to protect our proprietary rights and technology, and we may not be able to ensure their protection.
•    Our collaborators may assert ownership or commercial rights to inventions they develop from research we support or that we develop from our use of the tissue samples or other biological materials, which they provide to us, or otherwise arising from the collaboration.

Risks Related to Our Reliance on Third Parties
5



•    We have entered into a collaboration agreement with Novartis Institutes for Biomedical Research, Inc., or Novartis, for the development of PLN-1474 and may in the future seek to enter into collaborations with third parties for the development and commercialization of other product candidates. If we fail to enter into such collaborations, or if our collaborations are not successful, we may be unable to continue development of such product candidates, we would not receive any contemplated milestone payments or royalties, and we could fail to capitalize on the market potential of such product candidates
•    We rely on third parties to conduct certain aspects of our preclinical studies and clinical trials and for tissue samples and other materials required for our research and development activities.

Risks Related to Managing Our Business and Operations
•    The outbreak of the novel coronavirus disease, COVID-19, could adversely impact our business, including our preclinical studies and clinical trials.
•    Our loss of key management personnel, or our failure to recruit additional highly skilled personnel, will impair our ability to develop current product candidates or identify and develop new product candidates, could result in loss of markets or market share and could make us less competitive.

6


PART I—FINANCIAL INFORMATION
Item 1. Condensed Financial Statements.
Pliant Therapeutics, Inc.
Condensed Balance Sheets
(Unaudited)
(In thousands, except number of shares and per share amounts)
 September 30,
2021
December 31,
2020
Assets
Current assets
Cash and cash equivalents$45,231 $50,882 
Short-term investments175,813 226,012 
Accounts receivable1,610 9,279 
Tax credit receivable83 83 
Prepaid expenses and other current assets5,847 4,498 
Total current assets228,584 290,754 
Property and equipment, net4,706 4,321 
Other non-current assets831 451 
Total assets$234,121 $295,526 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$2,605 $2,023 
Accrued liabilities (Note 5)10,320 9,576 
Total current liabilities12,925 11,599 
Other long-term liabilities (Note 5)756 866 
Total liabilities13,681 12,465 
Stockholders’ equity
Common stock, $0.0001 par value; 300,000,000 shares authorized at September 30, 2021 and December 31, 2020; and 35,977,294 and 35,552,795 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively;
3 3 
Additional paid-in capital411,037 400,918 
Accumulated deficit(190,560)(117,828)
Accumulated other comprehensive loss(40)(32)
Total stockholders’ equity220,440 283,061 
Total liabilities and stockholders’ equity$234,121 $295,526 
*The condensed balance sheet as of December 31, 2020 has been derived from the audited financial statements as of that date.
The accompanying notes are an integral part of these condensed financial statements
7


Pliant Therapeutics, Inc.
Condensed Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except number of shares and per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021202020212020
Revenue — related party$1,610 $4,814 $5,573 $37,352 
Operating expenses:
Research and development(21,052)(16,884)(58,797)(48,339)
General and administrative(7,671)(4,591)(19,712)(11,642)
Total operating expenses(28,723)(21,475)(78,509)(59,981)
Loss from operations(27,113)(16,661)(72,936)(22,629)
Interest and other income (expense), net68 127 204 123 
Net loss$(27,045)$(16,534)$(72,732)$(22,506)
Net loss attributable to common stockholders$(27,045)$(16,534)$(72,732)$(22,506)
Net loss per share, attributable to common stockholders:
Basic$(0.75)$(0.47)$(2.03)$(1.36)
Diluted$(0.75)$(0.47)$(2.03)$(1.36)
Shares used in computing net loss per share attributable to common stockholders:
Basic35,906,303 35,445,504 35,787,022 16,592,746 
Diluted35,906,303 35,445,504 35,787,022 16,592,746 
Comprehensive loss:
Net loss$(27,045)$(16,534)$(72,732)$(22,506)
Net unrealized gain (loss) on short-term investments$(10)$12 $(8)$(17)
Total other comprehensive income (loss)(10)12 (8)(17)
Comprehensive loss$(27,055)$(16,522)$(72,740)$(22,523)
The accompanying notes are an integral part of these condensed financial statements.
8


Pliant Therapeutics, Inc.
Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(Unaudited)
(In thousands, except number of shares and per share amounts)
 Redeemable Convertible Preferred Stock   Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Gain (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
 Series ASeries BSeries CCommon Stock
 SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2020 $  $  $ 35,552,795 $3 $400,918 $(32)$(117,828)$283,061 
Vesting of restricted stock awards— — — — — — 30,277 — 2 — — 2 
Option exercises— — — — — — 165,264 — 1,370 — — 1,370 
Stock-based compensation expense— — — — — — — — 2,578 — — 2,578 
Net unrealized gain on short-term investments— — — — — — — — — 14 — 14 
Net loss— — — — — — — — — — (22,856)(22,856)
Balance at March 31, 2021 $  $  $ 35,748,336 $3 $404,868 $(18)$(140,684)$264,169 
Vesting of restricted stock awards— — — — — — 30,136 — 2 — — 2 
Option exercises— — — — — — 75,444 — 372 — — 372 
Stock-based compensation expense— — — — — — — — 2,280 — — 2,280 
Net unrealized loss on short-term investments— — — — — — — — — (12)— (12)
Net loss— — — — — — — — — — (22,831)(22,831)
Balance at June 30, 2021 $  $  $ 35,853,916 $3 $407,522 $(30)$(163,515)$243,980 
Vesting of restricted stock awards— — — — — — 26,791 — 2 — — 2 
Option exercises— — — — — — 96,587 — 702 — — 702 
Stock-based compensation expense— — — — — — — — 2,811 — — 2,811 
Net unrealized gain on short-term investments
— — — — — — — — — (10)— (10)
Net loss— — — — — — — — — — (27,045)(27,045)
Balance at September 30, 2021 $  $  $ 35,977,294 $3 $411,037 $(40)$(190,560)$220,440 

The accompanying notes are an integral part of these condensed financial statements.
9


Pliant Therapeutics, Inc.
Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(Unaudited)
(In thousands, except number of shares and per share amounts)
 Redeemable Convertible Preferred Stock  Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Gain (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity (Deficit)
 Series ASeries BSeries CCommon Stock
 SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 201956,000,000 $62,468 49,501,221 $75,860 26,360,745 $47,947 1,846,024 $1 $ $(1)$(76,295)$(76,295)
Issuance of Series C redeemable preferred stock, net of issuance costs— — — — 28,527,313 52,038 — — — — — — 
Vesting of restricted stock awards— — — — — — 52,093 — 4 — — 4 
Option exercises— — — — — — 8,232 — 26 — — 26 
Stock-based compensation expense— — — — — — — — 425 — — 425 
Net unrealized gain on short- term investments— — — — — — — — — 60 — 60 
Net income— — — — — — — — — — 11,029 11,029 
Balance at March 31, 202056,000,000 $62,468 49,501,221 $75,860 54,888,058 $99,985 1,906,349 $1 $455 $59 $(65,266)$(64,751)
Issuance of common stock upon initial public offering, net of issuance costs— — — — — — 10,350,000 $1 $148,399 $— $— $148,400 
Issuance of common stock upon private placement— — — — — — 625,000 — 10,000 — — 10,000 
Vesting of founders' common stock and restricted stock awards— — — — — — 40,102 — 1 — — $1 
Option exercises— — — — — — 73,719 — 177 — — 177 
Conversion of Series A, B, C convertible preferred stock to common stock(56,000,000)$(62,468)(49,501,221)$(75,860)(54,888,058)$(99,985)22,432,029 1 238,292 — — $238,293 
Stock-based compensation expense— — — — — — — — 786 — — 786 
Net unrealized loss on short-term investments— — — — — — — — — (89)— $(89)
Net loss— — — — — — — — — — (17,001)(17,001)
Balance at June 30, 2020 $  $  $ 35,427,199 $3 $398,110 $(30)$(82,267)$315,816 
Additional issuance costs related to initial public offering— — — — — — — $— $(123)$— $— $(123)
Vesting of founders' common stock and restricted stock awards— — — — — — 38,058 — 3 — — $3 
Option exercises— — — — — — 458 — 3 — — $3 
Stock-based compensation expense— — — — — — — — 1,169 — — $1,169 
Net unrealized loss on short-term investments— — — — — — — — — 12 — $12 
Net income— — — — — — — — — — (16,534)$(16,534)
Balance at September 30, 2020 $  $  $ 35,465,715 $3 $399,162 $(18)$(98,801)$300,346 
The accompanying notes are an integral part of these condensed financial statements.
10


Pliant Therapeutics, Inc.
Condensed Statements of Cash Flows
(Unaudited)
  Nine Months Ended
September 30,
(In thousands)20212020
Cash flows from operating activities  
Net loss$(72,732)$(22,506)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense1,117 963 
Stock-based compensation expense7,669 2,380 
Other 914  
Changes in operating assets and liabilities:
Tax credit receivable 250 
Accounts receivable7,669 (79)
Prepaid expenses and other current assets(900)(4,774)
Other non-current assets(380)(70)
Accounts payable401 1,826 
Accrued liabilities719 1,228 
Other long-term liabilities(55)(4)
Net cash used in operating activities(55,578)(20,786)
Cash flows from investing activities
Purchase of short-term investments(181,967)(267,818)
Maturity of short-term investments231,244 45,997 
Accretion of short-term investments (6)
Purchase of property and equipment(1,361)(945)
Net cash provided by/(used in) investing activities47,916 (222,772)
Cash flows from financing activities
Proceeds from issuance of common stock upon initial public offering, net of issuance costs 150,751 
Proceeds from issuance of common stock upon completion of private placement 10,000 
Proceeds from issuance of Series C preferred stock, net of issuance costs 52,019 
Proceeds from issuances of common stock2,443 205 
Payment of deferred offering costs(432) 
Net cash provided by financing activities2,011 212,975 
Net decrease in cash and cash equivalents(5,651)(30,583)
Cash and cash equivalents at beginning of period50,882 85,807 
Cash and cash equivalents at end of period$45,231 $55,224 
Supplemental disclosures of noncash investing and financing activities:
Purchase of property and equipment in accounts payable and accrued liabilities$330 $242 
Reclassification of restricted stock award liabilities to common stock upon vesting$7 $9 
Deferred offering costs in accounts payable and accrued liabilities$17 $ 
Net unrealized gain/(loss) on short-term investments$(8)$(17)
The accompanying notes are an integral part of these condensed financial statements.
11


Pliant Therapeutics, Inc.
Notes to Condensed Financial Statements
(Unaudited)
1. Organization and Description of Business
Pliant Therapeutics, Inc. (the “Company” or "Pliant" or “we” or “our” or “us”) is a clinical stage biopharmaceutical company focused on discovering and developing novel therapies for the treatment of fibrosis with an initial focus on treating fibrosis by inhibiting integrin-mediated activation of TGF-ß. Fibrosis refers to the abnormal thickening and scarring of connective tissue due to the production and deposition of excess collagen in the extra-cellular matrix. Fibrosis can occur in many different tissues including lung, liver, kidney, muscle, skin and the GI tract, and often causes severe and debilitating disease leading to organ failure. The Company is located in South San Francisco, California, and was incorporated in the state of Delaware in June 2015.
Reverse Stock Split
On May 22, 2020, the Company implemented a 1-for-7.15 reverse stock split of the Company’s common stock. Stockholders entitled to fractional shares as a result of the reverse stock split received a cash payment in lieu of receiving fractional shares. All share and per share data shown in the accompanying financial statements and related notes have been retroactively revised to reflect the reverse stock split. Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities. Shares of common stock reserved for issuance upon the conversion of the Company’s convertible preferred stock were proportionately reduced and the respective conversion prices were proportionately increased. As of June 3, 2020, all outstanding preferred stock had been converted into common stock.
Initial Public Offering
In June 2020, the Company completed its initial public offering (the "IPO"), in which the Company issued and sold an aggregate of 10,350,000 shares of common stock, which consisted of 9,000,000 shares of common stock and 1,350,000 shares of common stock sold pursuant to the underwriters’ exercise of their option to purchase additional shares, at a public offering price of $16.00 per share. The aggregate net proceeds received by the Company from the offering were $148.3 million, net of underwriting discounts, commissions and offering expenses of $5.7 million. Upon the closing of the IPO, 160,389,279 shares of the Company’s outstanding convertible preferred stock were automatically converted to common stock on a 7.15:1 basis and the related carrying amount of $238.3 million was reclassified to common stock and additional paid-in capital within stockholders’ equity (deficit).
Concurrent with the completion of the IPO, the Company also issued 625,000 shares of its common stock to Novartis Institutes for Biomedical Research, Inc. (“Novartis”), a strategic partner and existing stockholder of the Company, in a private placement at a price of $16.00 per share for proceeds of $10.0 million, which resulted in Novartis owning approximately 6.1% of the Company’s outstanding shares of common stock immediately after the IPO.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain prior year reported amounts have been reclassified to conform with the current period presentation.
The accompanying condensed balance sheet as of September 30, 2021, condensed statements of operations and comprehensive loss, condensed statements of cash flows, and the condensed statements of redeemable convertible preferred stock and stockholders’ equity (deficit) for the three and nine months ended September 30, 2021 and 2020, are unaudited. The balance sheet as of December 31, 2020 was derived from audited financial statements as of and for the year ended December 31, 2020. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements as of and for the year ended December 31, 2020, and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2021, and the results of its operations and its cash flows for the three and nine months ended September 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2021 and 2020, are also unaudited.
12


Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses as well as the disclosure of contingent assets and liabilities as of and during the reporting period. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these financial statements include, but are not limited to stock-based compensation expense and accruals for research and development costs. The Company assesses estimates on an ongoing basis, however, actual results could materially differ from those estimates.
Significant Accounting Policies
There have been no significant changes to the accounting policies during the nine months ended September 30, 2021, as compared to the significant accounting policies described in Note 2 of the "Notes to the Financial Statements" in the Company's audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Recently Issued Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2016-2, Leases (“Topic 842”), which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. For public entities, ASU No. 2016-2 is effective for fiscal years beginning after December 15, 2018. The ASU will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. As a result of the Company's ceasing to be an emerging growth company on December 31, 2021, Topic 842 will be effective for the Company for its Annual Report on Form 10-K for the year ending December 31, 2021 and interim periods thereafter. The Company is currently in the process of evaluating the impact of the adoption of ASU No. 2016-2 on the Company’s financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): The Measurement of Credit Losses on Financial Instruments. The new standard amends guidance on measuring and reporting credit losses for financial assets held at amortized cost basis, including accounts receivable and investments classified as available for sale, such as our debt securities. This ASU requires a new forward-looking model based on expected credit losses rather than the current one based on incurred losses. As a result of the Company's ceasing to be an emerging growth company on December 31, 2021, this standard will be effective for the Company for its Annual Report on Form 10-K for the year ending December 31, 2021 and interim periods thereafter. The Company is currently in the process of evaluating the impact of the adoption of ASU 2016-13 on the Company’s financial statements.
3. Financial Instruments
The Company’s short-term investments consist of U.S. Treasury securities, U.S. Government agency securities and highly rated, investment-grade corporate debt securities with original maturities beyond three months at the date of purchase. The Company has classified and accounted for its short-term investments as available-for-sale securities as the Company may sell these securities at any time even prior to maturity and such investments represent cash available for current operations. As a result, short-term investments may include securities with maturities beyond twelve months that are classified within current assets in the Balance Sheets. The Company’s short-term investments classified as available-for-sale are carried at fair market value with unrealized losses or income recognized in other comprehensive income (loss).
The Company’s cash equivalent Money Market Funds are classified as Level 1 because they are valued using quoted market prices. The fair value of the Company’s U.S. Treasury securities, U.S. government agency securities and corporate debt securities are classified as Level 2 because they are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency and include U.S. government agency securities, U.S. Treasury securities and corporate debt securities.
There were no Level 3 assets or liabilities as of September 30, 2021 and as of December 31, 2020.
The following tables show the Company’s cash and cash equivalents, Money Market Funds and short-term investments by significant investment category as of September 30, 2021 and December 31, 2020 (in thousands):
13


 As of September 30, 2021
 Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Market
Value
Level 1:    
Money Market Funds$19,981 $ $ $19,981 
Level 2:
U.S. Treasury securities included in short-term investments
2,503   2,503 
U.S. government agency securities included in cash and cash equivalents and short-term investments
17,057 1  17,058 
Corporate debt securities included in cash and cash equivalents and short-term investments
164,292 7 (48)164,251 
Total financial assets$203,833 $8 $(48)$203,793 
 As of December 31, 2020
 Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Market
Value
Level 1:    
Money Market Funds$27,686 $ $ $27,686 
Level 2:
U.S. Treasury securities included in short-term investments
63,101 4 (1)63,104 
U.S. government agency securities included in cash and cash equivalents and short-term investments
54,183 10  54,193 
Corporate debt securities included in cash and cash equivalents and short-term investments
118,759 1 (46)118,714 
Total financial assets$263,729 $15 $(47)$263,697 
The Company may sell certain of its short-term securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.
There were no liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020. There have been no transfers between fair value measurement levels during the nine months ended September 30, 2021 and 2020. In addition, there were no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2021 and December 31, 2020.
As of September 30, 2021, the Company had not recorded any impairment related to other-than-temporary declines in the fair value of short-term investments. Short-term investments are considered impaired when a decline in fair value is judged to be other-than-temporary. The Company consults with its investment managers and considers available quantitative and qualitative evidence in evaluating potential impairment of its short-term investments on a quarterly basis. If the cost of an individual investment exceeds its fair value, the Company evaluates, among other factors, general market conditions, the duration and extent to which the fair value is less than cost and its intent and ability to hold the investment.
The Company records interest income and accretion income earned on Money Market Funds and U.S. Treasury, U.S. government agency and corporate debt securities to interest and other income (expense), net in its condensed statement of operations and comprehensive loss.
14


4. Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
  As of
September 30,
2021
As of
December 31,
2020
Computer equipment and software$22 $22 
Laboratory equipment7,600 6,540 
Leasehold improvements1,092 947 
Construction-in-progress597 300 
Total property and equipment9,311 7,809 
Less: Accumulated depreciation(4,605)(3,488)
Total property and equipment, net$4,706 $4,321 
Depreciation expense for the three months ended September 30, 2021 and 2020 was $0.4 million and $0.3 million, respectively. Depreciation expense for the nine months ended September 30, 2021 and 2020 was $1.1 million and $1.0 million, respectively.
5. Accrued Liabilities and Other Long-Term Liabilities
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
As of
September 30,
2021
As of
December 31,
2020
Accrued compensation and benefits$3,787 $4,542 
Accrued research and development expenses5,987 3,274 
Other accrued liabilities408 1,675 
Deferred rent138 85 
Total accrued liabilities$10,320 $9,576 
Accrued compensation and benefits consist primarily of accrued bonuses and accrued vacation.
Other Long-Term Liabilities
Other long-term liabilities consisted of the following (in thousands):
  
As of
September 30,
2021
As of
December 31,
2020
Deferred rent$534 $581 
Leasehold incentive obligation222 283 
Other liabilities — deposits 2 
Total other long-term liabilities$756 $866 

6. Novartis Collaboration and License Agreement (the "Novartis Agreement")
In 2019, we entered into the Novartis Agreement for the development and commercialization of our preclinical product candidate, PLN-1474 and up to three additional integrin research targets. PLN-1474 is an internally discovered small molecule selective inhibitor of integrin αvß1, currently being developed for the treatment of liver fibrosis associated with nonalcoholic steatohepatitis (“NASH”). Pursuant to the agreement, we received an upfront, non-refundable license fee of $50.0 million and were eligible to receive additional payments of $416.0 million contingent upon achievement of specified research, development, regulatory and commercial events and royalties on world-wide net sales thereafter. Additionally, Novartis is funding up to $19.6 million associated with research and development services for PLN-1474 and up to $13.4 million for research and development services on the integrin research targets.
15


To date, we have received $25.0 million in contingent payments and $391.0 million remain eligible for achievement. No contingent payments were recognized during the three and nine months ended September 30, 2021 and one contingent payment of $25.0 million was recognized in the first quarter of 2020. Revenues for research and development services for the three and nine months ended September 30, 2021 and 2020 were $1.6 million and $5.6 million, and $4.8 million and $37.4 million, respectively.

7. Regents of the University of California License Agreement (the "UC Agreement")
In 2015, we entered into the UC Agreement to obtain an exclusive, worldwide license relating to the use of certain patents and technology relating to αvß1 compound in fibrosis indications. Pursuant to the UC Agreement, we made a $2.4 million milestone payment upon the close of our IPO in June 2020. Subsequently, we determined the licensed technology was no longer relevant to the development of our product candidates and, therefore, we exercised our right to terminate the UC Agreement which became effective in the first quarter of 2021. No further obligations or financial commitments survive the termination.

8. Adimab Development and Option Agreement (the "Adimab Agreement")
In 2018, we entered into a development and option agreement with Adimab, LLC (“Adimab”) for the discovery and optimization of proprietary antibodies as potential therapeutic product candidates. Under the Adimab Agreement, we will select biological targets against which Adimab will use its proprietary platform technology to research and develop antibody proteins using a mutually agreed upon research plan. We are required to pay Adimab an agreed upon rate for its full-time employees during the discovery period while Adimab performs research on each target under the applicable research plan. We have an exclusive option to obtain a worldwide, royalty-bearing, sublicensable license under Adimab platform patents and other Adimab technology to research, develop and commercialize up to 24 antibodies of our selection.
As of September 30, 2021, we have not exercised our option to further develop any antibody proteins. During the nine months ended September 30, 2021, we recognized research and development expenses under the Adimab Agreement of $28,000 related to full-time employee costs. No research and development expenses under the Adimab Agreement was recognized during the three months ended September 30, 2021. The Company recognized costs of $37,000 during the nine months ended September 30, 2020 and no costs during the three months ended September 30, 2020.

9. Redeemable Convertible Preferred Stock
Under the Company’s Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”), the Company is authorized to issue two classes of shares: preferred and common stock. The preferred stock may be issued in series, and the Company’s board of directors is authorized to determine the rights, preferences, and terms of each series. These rights preferences and terms could include dividend rights, conversion rights, voting rights, terms of redemptions, liquidation preferences and sinking fund terms. As a result of the IPO in June 2020, in which all then outstanding convertible preferred stock was converted into shares of common stock of the Company, there are no outstanding shares of preferred stock as of September 30, 2021.
10. Common Stock
As of September 30, 2021 and December 31, 2020, the Company was authorized to issue 300,000,000 shares of common stock at a par value of $0.0001 per share. The common stock has the following rights and privileges:
Voting
The holders of shares of common stock are entitled to one vote for each share of common stock held at any meeting of stockholders and at the time of any written action in lieu of a meeting.
Dividends
The holders of shares of common stock are entitled to receive dividends, when declared by the Company’s board of directors. Cash dividends may not be declared or paid to holders of shares of common stock until all unpaid dividends on preferred stock have been paid in accordance with their terms. No dividends have been declared or paid by the Company since its inception.
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Liquidation
Subject to the preferential rights of holders of preferred stock then outstanding, the holders of shares of common stock are entitled to share ratably in the Company’s remaining assets available for distribution to its stockholders in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company.
Shares reserved for future issuance
As of
September 30,
2021
As of
December 31,
2020
Exercises of outstanding stock option awards3,687,930 2,993,855 
Shares of common stock available for future grants under the 2020 Equity Incentive Plan4,290,283 3,644,459 
Shares of common stock available for future issuance under the 2020 ESPP613,098 700,000 
Total shares reserved for future issuance8,591,311 7,338,314 
11. Equity Incentive Plans and Stock-Based Compensation
In August 2015, the Company's board of directors adopted the 2015 Equity Incentive Plan (as amended, the “2015 Plan”), which provides for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights and restricted stock awards to the Company’s employees, officers, directors, advisors, and consultants for the purchase of up to 1.5 million shares of the Company’s common stock. In July 2018 and January 2019, the 2015 Plan was amended to increase the number of shares reserved thereunder by 1.0 million and 0.4 million shares, respectively. In March 2020, the Company’s board of directors and stockholders voted to increase the number of shares reserved for issuance under the 2015 Plan by 1.4 million shares. In May 2020, the board of directors adopted the 2020 Stock Options and Incentive Plan (the “2020 Plan”). The 2015 Plan was suspended and no further grants may be issued under the 2015 Plan.
The 2020 Plan provides for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights, restricted stock awards and restricted stock units to the Company’s employees, officers, directors, advisors, and consultants for the purchase of up to 4.2 million shares of the Company’s common stock. In addition, to the extent that awards outstanding under the 2020 Plan or the 2015 Plan are cancelled, forfeited or held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) subsequent to May 2020, the shares of common stock reserved for issuance pursuant to such awards will become available for issuance as shares of common stock under the 2020 Plan. The 2020 Plan provides that an additional number of shares will automatically be added to the shares authorized for issuance under the 2020 Plan on January 1 of each year beginning January 1, 2021. The number of shares added each January 1 will be equal to the lesser of: (i) 5% of the outstanding shares on the immediately preceding December 31 or (ii) such amount as determined by the administrator of the 2020 Plan, which is the compensation committee of the board of directors of the Company. As of September 30, 2021, 4.3 million shares remained available for issuance under the 2020 Plan.
Prior to the adoption of the 2020 Plan, options under the 2015 Plan could be granted for periods of up to 10 years and at prices no less than 100% of the estimated fair value of the shares on the date of grant as determined by our board of directors, provided, however, that the exercise price of an incentive stock option granted to a person owning (or deemed to own) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any affiliate of the Company (a "10% shareholder") could not be less than 110% of the estimated fair value of the shares on the date of grant and the option was not exercisable after the expiration of five years from the date of grant.
Options under the 2020 Plan may be granted for periods of up to 10 years and at prices no less than the market price of the Company’s common stock on the date of grant, provided, however, that the exercise price of an incentive stock option granted to a 10.0% shareholder shall not be less than 110.0% of the estimated fair value of the shares on the date of grant and the option is not exercisable after the expiration of five years from the date of grant.
Restricted Common Stock Awards
The Company granted restricted stock awards under the 2015 Plan. The purchase price of the restricted common stock awards was the estimated fair value as determined by the Company's board of directors at the issuance date. The shares vest from one to four years and vesting could be accelerated upon a change in control. A holder of an award may pay a total purchase price or a part of the purchase price for granted shares at any time during the vesting periods. Upon termination of employment, the Company has the right to repurchase any unvested restricted shares. The repurchase price for unvested shares
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of common stock will be the lower of (i) the fair market value on the date of repurchase or (ii) their original purchase price. During the vesting term, holders of restricted stock awards are deemed to be common stock shareholders and have dividends and voting rights.
The Company accounted for restricted stock awards as early exercised options and recognized a liability in other liabilities when cash was received for the purchase of shares of restricted stock. As shares of restricted stock vested, the Company reclassified the liability to common stock and additional paid in capital. As of September 30, 2021 and December 31, 2020, the Company recorded a liability included in accrued expenses and other liabilities of $3,000 and $10,000, respectively.
There were no grants of restricted stock awards for the nine months ended months ended September 30, 2021 and 2020.
The following table summarizes restricted stock activity during the nine months ended months ended September 30, 2021:
  Number
of
Shares
Weighted-
Average
Grant Date
fair value
Outstanding and unvested, as of December 31, 2020126,522 $1.85 
Issued $ 
Vested(87,204)$1.72 
Repurchases(1,480)$2.12 
Outstanding and unvested, as of September 30, 202137,838 $2.13 
Restricted stock awards of 4,195 shares with a weighted-average grant date fair value of $0.08 per share, were not purchased by the award holders as of September 30, 2021. As these shares of the restricted common stock awards were not issued, they are not included in the table above.
The aggregate fair value of restricted stock awards vested during the nine months ended months ended September 30, 2021 was $150,000. Total intrinsic value of outstanding unvested restricted stock awards as of September 30, 2021 was $0.6 million.
Incentive Stock Options and Nonqualified Stock Options
Stock options issued under either the 2015 Plan or the 2020 Plan generally vest over four years and expire ten years from the date of grant. Certain options provide for accelerated vesting if there is a change in control, as defined in the respective plans.
The Company used Black-Scholes option pricing model to estimate stock-based compensation expense for stock option awards with the following assumptions:
  Nine Months Ended September 30,
 20212020
Expected volatility
74.95% - 76.31%