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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, 2022
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 4, 2022, the registrant had 48,759,419 shares of common stock, $0.0001 par value per share, outstanding.



Table of Contents
  
 
 
 
 
 
  
  

2


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the "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 (bexotegrast), 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;
Our ability to borrow additional term loans under our term loan facility (the “Oxford Loan Agreement”) with Oxford Finance LLC, as collateral agent and lender (“Oxford”);
•    The potential benefits of orphan drug and fast track designations for PLN-74809 (bexotegrast);
•    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
3


undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
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. 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.
Covenants and other provisions in the Oxford Loan Agreement restrict our business and operations in many ways, and if we do not effectively manage our covenants, our financial conditions and results of operations could be adversely affected. In addition, our operations may not provide sufficient cash to meet the repayment obligations of our debt incurred under the Oxford Loan Agreement.
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 (bexotegrast), 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 (bexotegrast) or any other product candidates.
•    We may fail to obtain and maintain orphan drug 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 may fail to secure a positive recommendation from health technology bodies which will impair the market penetration.
•    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
5


•    Our success depends in part on our ability to obtain patent term extensions and 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
•    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 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 ongoing COVID-19 pandemic could adversely impact our business, including our preclinical studies and clinical trials.
•    Our loss of key management personnel, or if we fail 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,
2022
*December 31,
2021
Assets
Current assets
Cash and cash equivalents$44,617 $51,665 
Short-term investments315,624 148,931 
Accounts receivable1,482 1,998 
Tax credit receivable83 83 
Prepaid expenses and other current assets (Note 5)4,159 6,764 
Total current assets365,965 209,441 
     Property and equipment, net4,799 4,606 
     Operating lease right-of-use assets6,020 6,330 
     Other non-current assets397 838 
Total assets$377,181 $221,215 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$3,206 $2,971 
Accrued liabilities (Note 6)20,306 11,991 
Lease liabilities, current$2,649 1,869 
Total current liabilities26,161 16,831 
Lease liabilities, non-current$4,126 5,325 
Term loan$9,900  
Total liabilities40,187 22,156 
Stockholders’ equity
Common stock, $0.0001 par value; 300,000,000 shares authorized at September 30, 2022 and December 31, 2021; and 48,749,842 and 36,083,301 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively;
5 3 
Additional paid-in capital642,795 414,348 
Accumulated deficit(303,352)(215,091)
Accumulated other comprehensive loss(2,454)(201)
Total stockholders’ equity336,994 199,059 
Total liabilities and stockholders’ equity$377,181 $221,215 
*The condensed balance sheet as of December 31, 2021 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,
2022202120222021
Revenue$1,482 $1,610 $7,720 $5,573 
Operating expenses:
Research and development(24,606)(21,052)(71,822)(58,797)
General and administrative(8,823)(7,671)(25,698)(19,712)
Total operating expenses(33,429)(28,723)(97,520)(78,509)
Loss from operations(31,947)(27,113)(89,800)(72,936)
Interest and other income (expense), net1,332 68 1,539 204 
Net loss$(30,615)$(27,045)$(88,261)$(72,732)
Net loss attributable to common stockholders$(30,615)$(27,045)$(88,261)$(72,732)
Net loss per share, attributable to common stockholders:
Basic$(0.65)$(0.75)$(2.22)$(2.03)
Diluted$(0.65)$(0.75)$(2.22)$(2.03)
Shares used in computing net loss per share attributable to common stockholders:
Basic46,799,058 35,906,303 39,735,342 35,787,022 
Diluted46,799,058 35,906,303 39,735,342 35,787,022 
Comprehensive loss:
Net loss$(30,615)$(27,045)$(88,261)$(72,732)
Net unrealized loss on short-term investments$(1,195)$(10)$(2,253)$(8)
Total other comprehensive loss(1,195)(10)(2,253)(8)
Comprehensive loss$(31,810)$(27,055)$(90,514)$(72,740)
The accompanying notes are an integral part of these condensed financial statements.
8


Pliant Therapeutics, Inc.
Condensed Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except number of shares and per share amounts)
    Additional
Paid-In
Capital
Accumulated
Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders’
Equity
 Common Stock
 SharesAmount
Balance at December 31, 202136,083,301 $3 $414,348 $(201)$(215,091)$199,059 
Vesting of restricted stock awards15,606 — 1 — — 1 
Option exercises63,552 — 51 — — 51 
Stock-based compensation expense— — 3,531 — — 3,531 
Net unrealized loss on short-term investments— — — (749)— (749)
Net loss— — — — (28,100)(28,100)
Balance at March 31, 202236,162,459 $3 $417,931 $(950)$(243,191)$173,793 
Vesting of restricted stock awards6,235 — 1 — — 1 
Option exercises13,603 — 446 — — 446 
Stock-based compensation expense— — 3,403 — — 3,403 
Net unrealized loss on short-term investments— — — (309)— (309)
Net loss— — — — (29,546)(29,546)
Balance at June 30, 202236,182,297 $3 $421,781 $(1,259)$(272,737)$147,788 
Option exercises135,113 — 808 — — 808 
Stock-based compensation expense— — 4,808 — — 4,808 
Net unrealized loss on short-term investments— — — (1,195)— (1,195)
Common stock issued in a public offering, net of offering expenses12,432,432 2 215,398 — — 215,400 
Net loss— — — — (30,615)(30,615)
Balance at September 30, 202248,749,842 $5 $642,795 $(2,454)$(303,352)$336,994 

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

9


Pliant Therapeutics, Inc.
Condensed Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except number of shares and per share amounts)
    Additional
Paid-In
Capital
Accumulated
Other
Comprehensive Loss
Accumulated
Deficit
Total
Stockholders’
Equity
 Common Stock
 SharesAmount
Balance at December 31, 202035,552,795 $3 $400,918 $(32)$(117,828)$283,061 
Vesting of restricted stock awards30,277 — 2 — — $2 
Option exercises165,264 — 1,370 — — 1,370 
Stock-based compensation expense— — 2,578 — — 2,578 
Net unrealized loss on short-term investments— — — 14 — 14 
Net loss— — — — (22,856)(22,856)
Balance at March 31, 202135,748,336 $3 $404,868 $(18)$(140,684)$264,169 
Vesting of restricted stock awards30,136 — 2 — — $2 
Option exercises75,444 — 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, 202135,853,916 $3 $407,522 $(30)$(163,515)$243,980 
Vesting of restricted stock awards26,791 — 2 — — $2 
Option exercises96,587 — 702 — — 702 
Stock-based compensation expense— — 2,811 — — 2,811 
Net unrealized loss on short-term investments— — — (10)— (10)
Net loss— — — — (27,045)(27,045)
Balance at September 30, 202135,977,294 $3 $411,037 $(40)$(190,560)$220,440 

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)20222021
Cash flows from operating activities  
Net loss$(88,261)$(72,732)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense1,368 1,117 
Stock-based compensation expense11,743 7,669 
Non-cash operating lease expense1,260 863 
Other (264)914 
Changes in operating assets and liabilities:
Accounts receivable516 7,669 
Prepaid expenses and other current assets2,605 (900)
Other non-current assets441 (380)
Accounts payable254 401 
Accrued liabilities8,315 719 
Other long-term liabilities   
Operating lease liabilities(1,369)(918)
Net cash used in operating activities(63,392)(55,578)
Cash flows from investing activities
Purchase of short-term investments(289,402)(181,967)
Maturity of short-term investments120,770 231,244 
Purchase of property and equipment(1,594)(1,361)
Net cash (used in ) provided by investing activities(170,226)47,916 
Cash flows from financing activities
Proceeds from issuances of common stock1,305 2,443 
Payment of deferred offering costs(786)(432)
Payment of debt issuance costs(150) 
Proceeds from term loan10,000  
Proceeds from sale of common stock in a public offering, net of expenses216,201  
Net cash provided by financing activities226,570 2,011 
Net decrease in cash and cash equivalents(7,048)(5,651)
Cash and cash equivalents at beginning of period51,665 50,882 
Cash and cash equivalents at end of period$44,617 $45,231 
Supplemental disclosures of cash flow information:
Cash paid for interest$332 $ 
Supplemental disclosures of noncash investing and financing activities:
Purchase of property and equipment in accounts payable and accrued liabilities$33 $330 
Reclassification of restricted stock awards from liabilities to common stock upon vesting
$ $7 
Deferred offering costs in accounts payable and accrued liabilities$14 $17 
Net unrealized loss (gain) on short-term investments$2,253 $(8)
Right-of-use assets obtained in exchange for new operating lease liabilities$950 $ 
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.
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, 2022, condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, condensed statements of cash flows for the nine months ended September 30, 2022 and 2021, and the condensed statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, are unaudited. The balance sheet as of December 31, 2021 was derived from audited financial statements as of and for the year ended December 31, 2021. The unaudited interim condensed financial statements have been prepared on the same basis as the audited annual financial statements as of and for the year ended December 31, 2021, 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, 2022, and the results of its operations and its cash flows for the three and nine months ended September 30, 2022 and 2021. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2022 and 2021, are also unaudited.
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.
Stock-based Compensation
The Company's stock-based equity awards include restricted stock awards, stock options, restricted stock units ("RSUs"), performance-based restricted stock units ("PSUs"), and shares that will be issued under the Company's 2020 Employee Stock Purchase Plan ("ESPP"). Stock-based compensation for awards that are granted to employees is accounted at fair value on the award grant date and the expense is recognized over the period the employee is required to provide service in exchange for the award, which is generally on a straight-line basis over the vesting period of the award. The expense is recorded in either research and development or general and administrative expenses in the statements of operations and comprehensive loss based on the function to which the related services are provided. Forfeitures are accounted for as they occur.
The Company utilizes the Monte Carlo simulation model with significant inputs including volatility, closing price of stock on grant, for estimating the fair value of equity awards with market-based vesting conditions and uses the closing price of common stock on the date of grant for PSUs and RSUs with a performance or service-based vesting condition. The Black-Scholes valuation model is used for estimating the fair value of stock options on the date of grant.
12


Significant Accounting Policies
There have been no other significant changes to the accounting policies during the three months ended September 30, 2022, 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, 2021.
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 active 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 other than Level 1 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 assets or liabilities recorded at fair value to the condensed balance sheets using Level 3 inputs as of September 30, 2022 and as of December 31, 2021.
The following tables show the Company’s Money Market Funds, U.S. Treasury securities, U.S. government agency securities and corporate debt securities by significant investment category as of September 30, 2022 and December 31, 2021 (in thousands):
 As of September 30, 2022
 Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Market
Value
Level 1:    
Money Market Funds$12,465 $ $ $12,465 
Level 2:
U.S. Treasury securities included in cash and cash equivalents and short-term investments2,469  (4)2,465 
U.S. government agency securities included in cash and cash equivalents and short-term investments25,748 1 (82)25,667 
Corporate debt securities included in cash and cash equivalents and short-term investments
304,832  (2,369)302,463 
Total financial assets$345,514 $1 $(2,455)$343,060 
 As of December 31, 2021
 Adjusted
Cost
Unrealized
Gains
Unrealized
Losses
Market
Value
Level 1:    
Money Market Funds$15,329 $ $ $15,329 
Level 2:
U.S. government agency securities included in short-term investments5,003   5,003 
Corporate debt securities included in cash and cash equivalents and short-term investments163,626 1 (202)163,425 
Total financial assets$183,958 $1 $(202)$183,757 
13


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, 2022 and December 31, 2021. The Company evaluates transfers between levels at the end of each reporting period and there have been no transfers between fair value measurement levels during the nine months ended September 30, 2022. In addition, there were no assets or liabilities measured at fair value on a non-recurring basis as of September 30, 2022 and December 31, 2021.
As of September 30, 2022, 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, net in its condensed statement of operations and comprehensive loss.
4. Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
  As of September 30, 2022As of December 31, 2021
Computer equipment and software$30 $22 
Laboratory equipment9,412 7,947 
Leasehold improvements1,638 1,618 
Construction-in-progress104 38 
Total property and equipment, gross11,185 9,625 
Less: Accumulated depreciation(6,386)(5,019)
Total property and equipment, net$4,799 $4,606 
Depreciation expense for the three months ended September 30, 2022 and 2021 was $0.5 million and $0.4 million, respectively. Depreciation expense for the nine months ended September 30, 2022 and 2021 was $1.4 million and $1.1 million, respectively.
5. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
As of September 30,
2022
As of December 31,
2021
Prepaid research and development2,258 2,819 
Prepaid insurance6 2,585 
Prepaid licenses936 819 
Interest receivable752 385 
Other207 156 
Total prepaid expenses and other current assets4,159 6,764 
6. Accrued Liabilities and Other Current Liabilities
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
14


As of September 30,
2022
As of December 31,
2021
Accrued compensation and benefits$4,712 $5,216 
Accrued research and development expenses14,689 5,868 
Other accrued liabilities905 907 
Total accrued liabilities$20,306 $11,991 
Accrued compensation and benefits consist primarily of accrued bonuses and accrued vacation.

7. Debt
In May 2022, we entered into a term loan facility (the “Oxford Loan Agreement”) with Oxford Finance LLC (the "Lender") for up to $100.0 million. At closing, we entered into a term loan for $10.0 million of an initial $25.0 million tranche, with the remaining $15.0 million available through the end of the year. The Oxford Loan Agreement provides for an additional $75.0 million over three tranches, $50.0 million of which is at our option upon the satisfaction of certain conditions related to the development of PLN-74809 (bexotegrast) and one of our preclinical product candidates, and $25.0 million at the Lender's discretion. In connection with the Oxford Loan Agreement, we granted a security interest in substantially all of our current and future assets. There are no warrants or financial covenants associated with the Oxford Loan Agreement.
Borrowings under the Oxford Loan Agreement bear interest at a rate per annum equal to 1-month term Secured Overnight Financing Rate (SOFR) plus 8.5%, subject to an agreed upon floor and cap. The Oxford Loan Agreement requires the Company to make monthly interest-only payments until July 1, 2026 (extendable to July 1, 2027) with monthly interest and principal payments thereafter until the maturity date of May 1, 2027 (extendable to May 1, 2028).
The estimated fair value of the term loan as of September 30, 2022 was measured using Level 2 and Level 3 inputs and approximates the carrying value recorded to the condensed balance sheet. The effective interest rate for the term loan is 12.45% and interest expense for the three and nine months ended September 30, 2022 was $0.3 million and $0.5 million, respectively. We had no outstanding debt and did not incur interest expense in 2021.

Future maturities of debt as of September 30, 2022 are as follows (in thousands):
As of September 30, 2022
2022$ 
2023 
2024 
2025 
20265,455 
Thereafter4,545 
Total payments$10,000 
Less: unamortized debt issuance costs(139)
Accretion of final payment$39 
Total$9,900 


8. 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 $20.0 million associated with research and development services for PLN-1474 and up to $16.8 million for research and development services on the integrin research targets. As of September 30, 2022, the aggregate unrecognized transaction price of $1.2 million is associated with performance obligations we expect to satisfy in 2022.
15


In the second quarter of 2022, Novartis exercised their right to opt-in to a research program and secured an exclusive license to compounds associated with an integrin research target, which entitles us to a $4.0 million payment, which was recognized in accounts receivable and revenue for the nine months ended September 30, 2022. Subsequent payment of the $4.0 million was received during the third quarter of 2022. To date, we have received $29.0 million in contingent payments and $387.0 million remain eligible for achievement. No contingent payments were recognized during the three and nine months ended September 30, 2021. Revenues associated with the Novartis Agreement for the three and nine months ended September 30, 2022 were $1.5 million and $7.7 million, respectively, and $1.6 million and $5.6 million for three and nine months ended September 30, 2021, respectively.

9. 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 initial public offering 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.

10. 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, 2022, we have not exercised our option to further develop any antibody proteins. During the three and nine months ended September 30, 2022, no research and development expenses under the Adimab Agreement were recognized relating to full-time employee costs. The Company recognized costs of nil and $28,000 during the three and nine months ended September 30, 2021.

11. 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 of September 30, 2022 and December 31, 2021, the Company was authorized to issue 10,000,000 shares of preferred stock and there was no outstanding preferred stock as of September 30, 2022 and December 31, 2021.
12. Common Stock
On July 15, 2022, the Company completed a public offering of 12,432,432 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,621,621 additional shares of common stock. The shares were offered at a price to the public of $18.50 per share, resulting in aggregate proceeds of approximately $215.4 million, net of underwriting discounts, commissions and offering expenses.
As of September 30, 2022 and December 31, 2021, 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.
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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. The terms of the Oxford Loan Agreement restrict our ability to declare and pay dividends.
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,
2022
As of
December 31,
2021
Exercises of outstanding stock option awards5,474,346 3,620,180 
Vesting of RSUs525,825  
Vesting of PSUs709,064  
Shares of common stock available for future grants under the 2020 Equity Incentive Plan3,090,672 4,234,213 
Shares of common stock available for future issuance under the 2020 ESPP888,184 613,098 
Total shares reserved for future issuance10,688,091 8,467,491 
13. 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, 2022, 3.1 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.
Equity awards 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
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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 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, 2022 and December 31, 2021, the Company recorded a liability included in accrued expenses and other liabilities of $0 and $2,000, respectively.
There were no grants of restricted stock awards for the nine months ended September 30, 2022 and 2021.
The following table summarizes restricted stock activity during the nine months ended September 30, 2022:
  Number
of
Shares
Weighted-
Average
Grant Date
fair value
Outstanding and unvested, as of December 31, 202121,841 $2.16 
Vested(21,841)$2.16 
Outstanding and unvested, as of September 30, 2022 $ 
As of September 30, 2022, there were no unrecognized compensation costs related to restricted stock awards. The aggregate fair value of restricted stock awards vested during the nine months ended September 30, 2022 was $47,000.
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,
 20222021
Expected volatility
73.78% - 79.53%
74.95% - 76.31%
Risk-free interest rate
1.64% - 3.59%
0.61% - 1.07%
Expected dividend
Expected term (in years)
5.33 - 6.08
5.44 - 6.08
Underlying common stock fair value
4.92 - 24.23
18.85 - 38.23
The Company granted 229,014 stock options under the 2020 Plan during the three months ended September 30, 2022.
A summary of option activity under the 2015 Plan and the 2020 Plan is as follows:
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  Number
of
Options
Weighted-
Average Exercise
Price per Share
Weighted-
Average
Remaining
Contractual
Term (in Years)
Aggregate
Intrinsic
Value
Outstanding as of December 31, 20213,620,180 $14.56 8.25$16,735 
Granted2,343,884 $10.94 
Exercised(126,299)$4.90 
Forfeited(363,419)$17.26 
Outstanding as of September 30, 20225,474,346 $13.05 8.25$50,755 
Exercisable as of September 30, 20222,167,500 $11.88 7.38$23,172 
Vested and expected to vest as of September 30, 20225,474,346 $13.05 8.25$50,755 

As of September 30, 2022, there was $28.6 million of unrecognized compensation costs that is expected to be recognized over the weighted-average period of 2.62 years related to stock options. Aggregate intrinsic value represents the difference between the fair value of the underlying common stock and the exercise price as of September 30, 2022. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2022 was $7.27 per share.
Restricted Stock Units
The service-based condition for restricted stock units ("RSUs") is generally satisfied over two years. The following table sets forth the outstanding RSUs and related activity for the nine months ended September 30, 2022:

Restricted Stock UnitsWeighted Average Grant Date Fair Value
Unvested and outstanding at December 31, 2021  
Granted525,825 17.43 
Forfeited(2,350)17.30 
Unvested and outstanding at September 30, 2022523,475 17.43 
As of September 30, 2022, the Company had $8.3 million of unrecognized stock-based compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of 1.83 years.
Performance-Based Restricted Stock Units
Performance-based restricted stock units ("PSUs") vest upon the achievement of market and performance conditions. Market conditions include the Company's total shareholder return ("TSR") relative to the NASDAQ Biotechnology Index over the term of the award ending on June 30, 2024, and performance conditions consist of multiple clinical development milestones associated with progressing a label-enabling study related to PLN-74809 (bexotegrast). The performance vesting conditions generally must be satisfied with a two-year period and are forfeited if the vesting conditions are not met. Additionally, the number of shares of common stock issued upon vesting will range from 0% to 200% of the PSUs based on achievement of certain targets. The PSUs granted in the three months ended September 30, 2022 were allocated evenly between the market based, TSR, awards and those with performance conditions associated with clinical development milestones. The PSUs with clinical development milestones performance conditions were not considered probable of vesting as of September 30, 2022.
The fair value of PSUs associated with clinical development vesting conditions were determined to be equal to the fair market value of the Company's share price on the date of grant. The fair value of the TSR PSUs were derived from a Monte Carlo simulation model that used the following key assumptions:
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Valuation date share price$17.57 
Award term (years)1.92
Volatility70.62 %
Correlation coefficient0.3508
Average peer group volatility79.69 %
Average peer group correlation coefficient0.4397
Risk free interest rate2.84 %
The following table sets forth the outstanding PSUs and related activity for the nine months ended September 30, 2022:
Performance Stock UnitsWeighted Average Grant Date Fair Value
Unvested and outstanding at December 31, 2021  
Granted*709,064 23.36 
Unvested and outstanding at September 30, 2022*709,064 23.36 
*PSUs granted and outstanding based on target level of achievement of 100%.

As of September 30, 2022, the Company had $15.6 million of unrecognized stock-based compensation expense related to outstanding PSUs expected to be recognized over a remaining weighted-average period of 1.83 years.
Stock-Based Compensation Expense
The following table presents the components and classification of stock-based compensation expense for the Company’s stock-based awards for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Restricted stock awards$ $47 $36 $149 
Stock options and ESPP3,087 2,764 9,986 7,520 
Restricted stock units$800 $ $800 $ 
Performance-based restricted stock units$921 $ $921 $ 
Total stock-based compensation expense$4,808 $2,811 $11,743 $7,669 
Research and development expenses$2,999 $915 $6,675 $2,953 
General and administrative expenses$1,809 $1,896 $5,068 $4,716 
2020 Employee Stock Purchase Plan
In June 2020, the Company adopted the Company's 2020 Employee Stock Purchase Plan (the "2020 ESPP"). The Company reserved 700,000 shares of common stock for future issuance under the plan. The 2020 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1 of each calendar year, beginning January 1, 2021, by the least of (1) 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (2) 700,000 shares or (3) such lesser amount as determined by the administrator of the 2020 ESPP, which is the compensation committee of the board of directors of the Company.
Under the 2020 ESPP, eligible employees may purchase shares of our common stock through payroll deductions that cannot exceed 15% of each employee’s salary. The 2020 ESPP provides for a six-month offering period. At the end of the purchase period, eligible employees are permitted to purchase shares of common stock at the lower of 85% of the fair market value at the beginning of the offering period or 85% of the fair market value at the end of the purchase period, subject to tax limitations on the total value of the purchase. The 2020 ESPP is considered a compensatory plan, and the Company recorded $0.1 million and $0.2 million in stock-based compensation expense for the three and nine months ended September 30, 2022. There was $0.1 million and $0.5 million in stock-based compensation expense attributed to the 2020 ESPP for the three and nine months ended September 30, 2021, respectively. During the nine months ended September 30, 2022, 85,969 shares of common stock were issued under the 2020 ESPP with 888,184 shares remaining available for issuance under
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the 2020 ESPP. The Company used Black-Scholes option pricing model to estimate stock-based compensation expense for the 2020 ESPP with the following assumptions:
 Nine Months Ended
September 30,
 20222021
Risk-free interest rate
0.60% - 3.34%
0.06% -