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Table of Contents                                 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)  
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
Or
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to         

Commission file number: 001-36080
IVERIC bio, Inc.
(Exact name of registrant as specified in its charter)
Delaware 20-8185347
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
8 Sylvan Way 07054
Parsippany,NJ(Zip Code)
(Address of principal executive offices)
(609474-6755
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareISEEThe Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes     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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging 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 October 31, 2022 there were 120,722,802 shares of Common Stock, $0.001 par value per share, outstanding.





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Table of Contents                                 
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “goals,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
the potential benefits of our business plan and strategy, including our goal to deliver treatment options for various stages of age-related macular degeneration (AMD);
our expectations regarding the impact of results from GATHER1, our completed Phase 3 clinical trial evaluating avacincaptad pegol (Zimura®) for the treatment of Geographic Atrophy (GA) secondary to AMD, and from GATHER2, our ongoing Phase 3 clinical trial evaluating avacincaptad pegol for the treatment of GA secondary to AMD, on our business and regulatory strategy, including our plans to submit a new drug application to the U.S. Food and Drug Administration (FDA) and a marketing authorization application to the European Medicines Agency (EMA);
the timing, costs, conduct and outcome of GATHER2, including expectations regarding patient retention and the safety profile of avacincaptad pegol, including from our open-label extension study for patients who completed the GATHER2 trial, and expectations regarding the potential for avacincaptad pegol to receive regulatory approval for the treatment of GA based on the clinical trial results we have received to date;
our plans and expectations for initiating development of avacincaptad pegol for the treatment of intermediate AMD;
our plans and strategy for the potential commercialization of avacincaptad pegol, including hiring of medical affairs and commercialization personnel, building a commercialization infrastructure, including sales, marketing and distribution capabilities, and our expectations regarding the market dynamics for treatments for GA and other commercial matters;
our ability to establish and maintain capabilities and capacity for the manufacture of avacincaptad pegol and our other product candidates, including scale up and validation of the manufacturing process for avacincaptad pegol drug substance and drug product, and securing the supply of the polyethylene glycol (PEG) starting material and other materials for our expected manufacturing needs and securing the supply of avacincaptad pegol drug substance and drug product for our expected needs;
our plans for evaluating, obtaining rights to, developing and potentially commercializing new formulations of avacincaptad pegol with the silica-based sustained release technology we in-licensed from DelSiTech Ltd. (DelSiTech) and other sustained release delivery technologies for avacincaptad pegol;
the timing, costs, conduct and outcome of STAR, our ongoing Phase 2b screening trial evaluating avacincaptad pegol for the treatment of autosomal recessive Stargardt disease, including expectations regarding the recruitment of additional patients for this trial;
our plans and ability to consummate business development transactions, including potential collaboration opportunities for further development and potential commercialization of avacincaptad pegol outside the United States and potential collaboration or outlicense opportunities for further development of IC-100 and IC-200; and in-licenses or other opportunities to acquire rights to additional product candidates or technologies to treat retinal diseases, including additional sustained release delivery technologies for avacincaptad pegol;
the actual and expected effects of the COVID-19 pandemic, other macro-economic events and related response measures on our business and operations, including the timing, costs, conduct and outcome of our research and development programs, our supply chain, the work of our third-party vendors and collaborators, the work and well-being of our employees, and our financial position;
our estimates regarding expenses, future revenues and debt service obligations, the sufficiency of our cash resources and our capital requirements and need for, and ability to obtain, additional financing;
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our plans to raise additional capital, including through equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, royalty agreements and marketing and distribution arrangements;
the timing, costs, conduct and outcome of our ongoing and planned clinical trials, including statements regarding the timing of the initiation and completion of, and the receipt of results from, such clinical trials, the costs to conduct such clinical trials, and the impact of the results of such clinical trials on our business strategy;
the timing, costs, conduct and outcome of our ongoing and planned research and preclinical development activities, including statements regarding the timing of the initiation and completion of, and the receipt of results from, such activities, the costs to conduct such activities, and the impact of the results of such activities on our business strategy;
the timing of and our ability to submit investigational new drug applications for, and to submit new drug applications or marketing authorization applications for and to obtain marketing approval of our product candidates, and the ability of our product candidates to meet existing or future regulatory standards;
the potential advantages of our product candidates and other technologies that we are pursuing, including our hypotheses regarding complement factor C5 inhibition and HtrA1 inhibition as potentially relevant mechanisms of action to treat GA and other stages of AMD, and of gene therapy, including the use of minigenes;
our estimates regarding the number of patients affected by the diseases our product candidates and development programs are intended to treat;
our estimates regarding the potential market opportunity for our product candidates, including our ability to obtain coverage and reimbursement for those product candidates, if approved;
the rate and degree of potential market acceptance and clinical utility of our product candidates, if approved;
the potential receipt of revenues from future sales of our product candidates, if approved;
our personnel and human capital resources;
our intellectual property position;
the impact of existing and new governmental laws and regulations; and
our competitive position.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and our stockholders should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Summary of Principal Risk Factors” below and the risk factors detailed further in Item 1A, “Risk Factors”, of Part II of this Quarterly Report on Form 10-Q, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, licenses, dispositions, joint ventures or investments we may make.
You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q and our other periodic reports, completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
This Quarterly Report on Form 10-Q includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.
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Summary of Principal Risk Factors
The following is a summary of the principal factors that make an investment in our company speculative or risky. This summary does not address all of the risks and uncertainties that we face. Additional risk and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations. Additional discussion of the risks summarized in this summary, and other risks that we face, can be found in Item 1A. “Risk Factors” of Part II of this Quarterly Report on
Form 10-Q, and should be carefully considered, together with other information in this Quarterly Report on Form 10-Q and
our other filings with the Securities Exchange Commission, before making an investment decision regarding our common
stock. The forward-looking statements discussed above are qualified by these risk factors. If any of the following risks occur,
our business, financial condition, results of operations and future growth prospects could be materially and adversely affected.

1.We are a development-stage company without any commercial products. The value of your investment is highly dependent on the success and potential commercialization of avacincaptad pegol. We are working to transition to being a company capable of commercializing a pharmaceutical product, if approved, and may not be successful in this transition.

2.We have a history of significant operating losses and expect to continue to incur losses until we can successfully commercialize one or more of our product candidates, if ever. We may never achieve or maintain profitability.

3.We may need additional financing in order to finish developing and start commercializing one or more of our product candidates, if approved. Securing financing may be challenging and/or dilutive to our shareholders, and if we are unable to secure financing when needed, we may need to curtail our development programs or planned commercialization activities.

4.The covenants in our loan and security agreement with Hercules Capital, Inc. and Silicon Valley Bank may limit and restrict from us from pursuing certain operating activities. If we are in default under that agreement, we may need to repay all existing indebtedness under that term loan facility.

5.The COVID-19 pandemic has adversely affected our business, for example, by impacting the initiation and conduct of our clinical trials, the work of our contract manufacturing organizations, contract research organizations and other vendors, and aspects of our supply chain. Because of the ongoing and fluid nature of the pandemic, it may continue to affect our business.

6.We need to satisfy numerous regulatory requirements in order to secure marketing approval and reimbursement approval, if applicable, for avacincaptad pegol and other product candidates. These requirements differ across jurisdictions. Failure to satisfy and maintain those requirements can preclude us from commercializing our products.

7.Regulatory authorities, including the FDA and EMA, may disagree with the design of or our analyses or conclusions from our clinical trials of avacincaptad pegol in GA secondary to AMD. Since receipt of the 12-month results from GATHER1, we have not had any formal interactions with the EMA regarding our planned regulatory pathway for avacincaptad pegol in GA and the EMA and other regulatory authorities may disagree with the requirements of the FDA. We may need to conduct additional clinical trials or nonclinical studies for avacincaptad pegol in order to obtain marketing approval or reimbursement approval.

8.Manufacturing our product candidates is technically complex, expensive and time consuming. We may face issues with scaling up and validating the manufacturing process for avacincaptad pegol. We may not be able to secure adequate supply of PEG starting material, avacincaptad pegol drug substance or avacincaptad pegol drug product for our future needs, including potential commercial launch. Issues with manufacturing can derail the further development or commercialization of our product candidates.

9.To commercialize any of our product candidates, if approved, we will need to set up a sales and marketing infrastructure. We are continuing to hire commercialization personnel and will need to continue building our commercial infrastructure. The success of our commercialization efforts will depend in part on the degree of acceptance of our product candidates by patients, the medical community and payors.

10.We face substantial competition from large pharmaceutical companies, smaller biotech companies and others.

11.Drug development is inherently risky with numerous scientific, technical, regulatory and other challenges. A promising drug candidate can fail at any time and for any number of reasons.
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12.We are pursuing the development of our product candidates using novel mechanisms of action targeting indications for which there are no approved products. These include, for example, complement inhibition and inhibition of High temperature requirement A serine peptidase 1 protein for GA, and complement inhibition for intermediate AMD and autosomal recessive Stargardt disease. These approaches carry numerous scientific, regulatory and other risks.

13.The 12-month results of GATHER2 may not be replicated by the 24-month results from the trial, which may not replicate the results of the GATHER1 trial. We may discover safety issues with our product candidates due to known and currently unknown factors, which could hamper their further development or commercialization.

14.We may not be successful in developing a formulation of avacincaptad pegol with the sustained release delivery technology we in-licensed from DelSiTech, or obtaining rights to and developing other sustained release delivery technologies for avacincaptad pegol.

15.We do not have any internal manufacturing facilities and rely heavily on our third-party contract manufacturers. They may have different business priorities than we do and may fail to meet our expectations or follow regulatory requirements, including current good manufacturing practices and data integrity requirements. We may need to engage alternative manufacturers or suppliers sooner than we currently expect.

16.We plan to rely on third-party distribution and other commercial services vendors to assist us with the commercialization of avacincaptad pegol, if approved, and those third parties may not perform satisfactorily for any number of reasons.

17.We rely heavily on our third-party contract research organizations as well as our clinical trial sites. They may have different priorities than we do and may fail to follow regulatory requirements, including good laboratory practice, good clinical practice and other data integrity requirements.

18.We may pursue a collaboration for the further development and potential commercialization of avacincaptad pegol in one or more territories outside the United States, and are seeking a collaborator or licensee for the further development and potential commercialization of IC-100 and IC-200. For any of these, we may not be able to enter into a collaboration or out-license on favorable terms, or at all. Even if we are able to do so, the collaboration or out-license may not be successful.

19.We rely on patents to protect our proprietary position. We may not obtain the patent rights that we seek and/or we may not be able to exclude our competitors from relevant markets. We may be subject to litigation involving our patents or those of third parties.

20.We are highly dependent on our information security systems and those of third parties we work with. A cybersecurity incident may cause interruptions to the progress of our development programs and operations, financial or regulatory penalties and/or harm to our reputation.

21.We rely on a limited number of employees to conduct our operations, including supervising our outside vendors. The skills needed to advance our research and development programs and plan for commercialization of our product candidates are highly specialized. We plan to hire additional qualified personnel, including sales force personnel, to support the growth of our business. Hiring these personnel and retaining existing employees may be challenging.

22.We and any potential commercialization partners are subject to numerous healthcare laws and regulations governing our relationships with patients, healthcare professionals and third-party payors. Failure to comply with these requirements may adversely affect our business.

23.The reimbursement and payment regime for pharmaceutical products in the United States remains in flux, including as a result of the implementation of and litigation involving the Patient Protection and Affordable Care Act. There are ongoing, and often bipartisan, efforts to reduce the prices of pharmaceutical products.
USE OF TRADEMARKS
    The trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We have omitted the ® and ™ designations, as applicable, for the trademarks named in this Quarterly Report on Form 10-Q after their first reference in this Quarterly Report on Form 10-Q.
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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
IVERIC bio, Inc.
Condensed Unaudited Consolidated Balance Sheets
(in thousands, except share and per share data)
 September 30, 2022December 31, 2021
Assets  
Current assets  
Cash and cash equivalents$153,100 $261,447 
Available for sale securities167,435 120,302 
Prepaid expenses and other current assets8,943 5,739 
Total current assets329,478 387,488 
Property and equipment, net708 348 
Right-of-use asset, net1,604 1,522 
Total assets$331,790 $389,358 
Liabilities and Stockholders' Equity   
Current liabilities  
Accrued research and development expenses$11,383 $14,403 
Accounts payable and accrued expenses11,601 12,856 
Lease liability1,604 952 
Total current liabilities24,588 28,211 
Lease liability, non-current27 619 
Term loan, net47,649  
Total liabilities72,264 28,830 
Stockholders' equity  
Preferred stock—$0.001 par value, 5,000,000 shares authorized, no shares issued or outstanding
  
Common stock—$0.001 par value, 200,000,000 shares authorized, 120,572,641 and 115,277,012 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
121 115 
Additional paid-in capital1,065,545 1,040,098 
Accumulated deficit(805,745)(679,595)
Accumulated other comprehensive income(395)(90)
Total stockholders' equity259,526 360,528 
Total liabilities and stockholders' equity$331,790 $389,358 
   
The accompanying unaudited notes are an integral part of these financial statements.
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IVERIC bio, Inc.
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Operating expenses:   
Research and development$24,967 $17,935 $81,171 $59,972 
General and administrative17,545 6,648 45,764 21,688 
Total operating expenses42,512 24,583 126,935 81,660 
Loss from operations(42,512)(24,583)(126,935)(81,660)
Interest income, net200 42 815 184 
Other expense, net(39)(10)(30)(13)
Loss before income tax benefit(42,351)(24,551)(126,150)(81,489)
Income tax benefit    
Net loss$(42,351)$(24,551)$(126,150)$(81,489)
Comprehensive loss$(42,218)$(24,565)(126,455)$(81,503)
Net loss per common share:  
Basic and diluted$(0.35)$(0.23)(1.05)$(0.84)
Weighted average common shares outstanding:
Basic and diluted120,277 105,217 119,578 97,370 
   
The accompanying unaudited notes are an integral part of these financial statements.

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IVERIC bio, Inc.
Condensed Unaudited Consolidated Statements of Stockholders' Equity
(in thousands)
 Preferred StockCommon StockAdditional
paid-in
capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balance at December 31, 2021 $ 115,277 $115 $1,040,098 $(679,595)$(90)$360,528 
Issuance of common stock under employee stock compensation plans— — 697 1 2,079 — — 2,080 
Share-based compensation— — — — 5,386 — — 5,386 
Net loss— — — — — (34,536)— (34,536)
Unrealized loss on available for sale securities, net of tax— — — — — — (304)(304)
Balance at March 31, 2022 $ 115,974 $116 $1,047,563 $(714,131)$(394)$333,154 
Issuance of common stock under employee stock compensation plans— — 900 1 2,800 — — 2,801 
Share-based compensation— — — — 6,388 — — 6,388 
Net loss— — — — — (49,263)— (49,263)
Unrealized loss on available for sale securities, net of tax— — — — — — (134)(134)
Balance at June 30, 2022 $ 116,874 $117 $1,056,751 $(763,394)$(528)$292,946 
Issuance of common stock under employee stock compensation plans and warrants— — 3,698 4 2,238 — — 2,242 
Share-based compensation— — — — 6,556 — — 6,556 
Net loss— — — — — (42,351)— (42,351)
Unrealized loss on available for sale securities, net of tax— — — — — — 133 133 
Balance at September 30, 2022 $ 120,572 $121 $1,065,545 $(805,745)$(395)$259,526 
 Preferred StockCommon StockAdditional
paid-in
capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Income (Loss)
Total
 SharesAmountSharesAmount
Balance at December 31, 2020 $ 90,121 $90 $756,543 $(565,073)$3 $191,563 
Issuance of common stock under employee stock compensation plans— — 49 — 129 — — 129 
Share-based compensation— — — — 2,292 — — 2,292 
Net loss— — — — — (26,795)— (26,795)
Unrealized loss on available for sale securities, net of tax— — — — — — (1)(1)
Balance at March 31, 2021 $ 90,170 $90 $758,964 $(591,868)$2 $167,188 
Issuance of common stock under employee stock compensation plans— — 217 — 448 — — 448 
Share-based compensation— — — — 2,079 — — 2,079 
Net loss— — — — — (30,143)— (30,143)
Unrealized loss on available for sale securities, net of tax— — — — — — 1 1 
Balance at Balance at June 30, 2021 $ 90,387 $90 $761,491 $(622,011)$3 $139,573 
Issuance of common stock and pre-funded warrants through underwritten offering, net of issuance costs— — 13,398 14 107,743 — — 107,757 
Issuance of common stock under employee stock compensation plans— — 453 — 1,095 — — 1,095 
Share-based compensation— — — — 2,626 — — 2,626 
Net loss— — — — — (24,551)— (24,551)
Unrealized loss on available for sale securities, net of tax— — — — — — (14)(14)
Balance at Balance at September 30, 2021 $ 104,238 $104 $872,955 $(646,562)$(11)$226,486 

The accompanying unaudited notes are an integral part of these financial statements.
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IVERIC bio, Inc.
Condensed Unaudited Consolidated Statements of Cash Flows
(in thousands)
 Nine Months Ended September 30,
 20222021
Operating Activities  
Net loss$(126,150)$(81,489)
Adjustments to reconcile net loss to net cash used in operating activities  
Depreciation and other expense80 24 
   Amortization and accretion of term loan related costs172  
Amortization of premium and discounts on investment securities450 918 
Share-based compensation18,330 6,997 
Changes in operating assets and liabilities:  
  Income tax receivable 1,765 
Prepaid expense and other assets(3,204)726 
Accrued interest receivable82 449 
Accrued research and development expenses(3,020)(916)
Accounts payable and accrued expenses(1,660)(4,662)
  Accrued interest payable405  
Change in working capital(22)63 
Net cash used in operating activities(114,537)(76,125)
Investing Activities  
Purchase of marketable securities(165,469)(56,245)
Purchase of property and equipment(440) 
Maturities of marketable securities117,499 136,447 
Net cash (used in) provided by investing activities(48,410)80,202 
Financing Activities  
Proceeds from employee stock plan purchases 7,123 1,672 
Proceeds from term loan50,000  
Payment of term loan issuance costs(2,523) 
Proceeds from follow-on public offering, net 107,757 
Net cash provided by financing activities54,600 109,429 
Net increase (decrease) in cash and cash equivalents(108,347)113,506 
Cash and cash equivalents  
Beginning of period261,447 66,373 
End of period$153,100 $179,879 
Supplemental disclosure of cash paid
Income tax refunds received $ $1,765 
Supplemental disclosures of non-cash information related to investing and financing activities
Operating right-of-use assets obtained in exchange for lease obligations$953 $2,086 
“Interest expense” paid in cash $486 $ 

   The accompanying unaudited notes are an integral part of these financial statements.
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IVERIC bio, Inc.
Notes to Condensed Unaudited Consolidated Financial Statements
(in thousands, except per share data)
1. Business
Description of Business and Organization
IVERIC bio, Inc. (the “Company”) is a science-driven biopharmaceutical company focused on the discovery and development of novel treatments for retinal diseases with significant unmet medical needs. The Company is committed to having a positive impact on patients’ lives by delivering high-quality, safe and effective treatments designed to address debilitating retinal diseases, including earlier stages of age-related macular degeneration (“AMD”).
The Company’s lead asset is its clinical stage product candidate avacincaptad pegol (also referred to as Zimura®), a complement C5 inhibitor. It is currently targeting the following diseases with avacincaptad pegol:

Geographic Atrophy (“GA”), which is the advanced stage of AMD, and is characterized by marked thinning or atrophy of retinal tissue, leading to irreversible loss of vision;

intermediate AMD, which is an earlier stage of AMD that precedes GA; and

autosomal recessive Stargardt disease (“STGD1”), which is an orphan inherited condition characterized by progressive damage to the central portion of the retina (the “macula”) and other retinal tissue, leading to loss of vision.

In October 2019, the Company announced positive 12-month data for GATHER1, its first Phase 3 clinical trial evaluating avacincaptad pegol for the treatment of GA secondary to AMD. In GATHER1, 286 patients were randomized to receive various doses of avacincaptad pegol, including avacincaptad pegol 2 mg, or sham control. The Company observed a 27.7% (p-value = 0.0063) reduction in the mean rate of growth (slope) estimated based on GA area between the avacincaptad pegol 2 mg group and the corresponding sham control group over 12 months, when performing the primary analysis, and a 35.4% (p-value = 0.0050) reduction in the mean rate of growth (slope) estimated based on GA area between the two groups over 12 months, when performing the supportive analysis. These results are based on a post-hoc analysis of the GATHER1 data using the U.S. Food and Drug Administration (“FDA”) preferred primary efficacy endpoint analysis from the Company’s Special Protocol Assessment (“SPA”), which is described further below. The Company analyzed the endpoint by using the square root transformation of the GA area, which it refers to as the primary analysis, and the Company analyzed the endpoint by using the observed GA area (without square root transformation), which it refers to as the supportive analysis. In GATHER1, through month 12, the Company did not observe any events of endophthalmitis or ischemic optic neuropathy events, and only one case of intraocular inflammation, which was mild and transient and reported as related to the injection procedure. The incidence of choroidal neovascularization (“CNV”) in the study eye through month 12 was 6 patients (9.0%) in the avacincaptad pegol 2 mg group and 3 patients (2.7%) in the corresponding sham control group.

In June 2020, the Company started enrolling patients in GATHER2, its second Phase 3 clinical trial evaluating avacincaptad pegol for the treatment of GA secondary to AMD. In July 2021, the Company received a written agreement from the FDA under the SPA for the overall design of GATHER2. The SPA is a procedure by which the FDA provides a clinical trial sponsor with an official evaluation and written guidance on the design of a proposed protocol intended to form the basis for a new drug application (“NDA”). In connection with our SPA, the FDA recommended, and the Company accepted, modifying the primary efficacy endpoint for the GATHER2 trial from the mean rate of change in GA area over 12 months measured by fundus autofluorescence (“FAF”) at three timepoints: baseline, month 6 and month 12, to the mean rate of growth (slope) estimated based on GA area measured by FAF in at least three timepoints: baseline, month 6 and month 12.

In September 2022, the Company announced positive 12-month top-line data for GATHER2. In GATHER2, 448 patients were randomized on a 1:1 basis to receive avacincaptad pegol 2 mg or sham control over the first 12 months of the trial. At 12 months, the Company measured the primary efficacy endpoint in accordance with the SPA. In GATHER2, the Company observed a 14.3% (p-value = 0.0064) reduction in the mean rate of growth (slope) in GA area between the two groups at 12 months with the primary analysis, and a 17.7% (p-value = 0.0039) reduction in the mean rate of growth (slope) in GA area between the two groups at 12 months with the supportive analysis. The Company did not observe any events of endophthalmitis, intraocular inflammation events, events of vasculitis or ischemic optic neuropathy events through month 12, and the incidence of choroidal neovascularization (“CNV”) in the study eye through month 12 was 15 patients (6.7%) in the avacincaptad pegol 2 mg group and 9 patients (4.1%) in the sham control group.

The Company believes that with the statistically significant results from its GATHER1 and GATHER2 trials and the safety profile of avacincaptad pegol to date, it has sufficient data from two independent, adequate and well-controlled pivotal clinical trials of avacincaptad pegol in GA secondary to AMD to support an application for marketing approval. The Company
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recently submitted to the FDA the first part of its NDA, which includes the complete clinical data package for avacincaptad pegol, for rolling review of avacincaptad pegol for the treatment of GA secondary to AMD. The Company plans to complete the submission of the NDA to the FDA by the end of 2022.

In addition to avacincaptad pegol, the Company is developing its preclinical product candidate IC-500, a High temperature requirement A serine peptidase 1 protein (“HtrA1”) inhibitor, for GA secondary to AMD and potentially other age-related retinal diseases.

The Company’s portfolio also includes two preclinical stage gene therapy product candidates (IC-100 and IC-200)
and several ongoing gene therapy research programs, each of which uses adeno-associated virus (“AAV”) for gene delivery. These AAV mediated gene therapy programs are targeting the following orphan inherited retinal diseases (“IRDs”):

rhodopsin-mediated autosomal dominant retinitis pigmentosa (“RHO-adRP”), which is characterized by progressive and severe bilateral loss of vision leading to blindness;

IRDs associated with mutations in the BEST1 gene, including Best vitelliform macular dystrophy (“Best disease”);

Leber Congenital Amaurosis type 10 (“LCA10”), which is characterized by severe bilateral loss of vision at or soon after birth;

STGD1; and

IRDs associated with mutations in the USH2A gene, which include Usher syndrome type 2A, and USH2A-associated non-syndromic autosomal recessive retinitis pigmentosa.

As the Company focuses its efforts on and prioritizes the development and potential commercialization of avacincaptad pegol, it has been considering its development options for IC-100 and IC-200, which the Company has been developing for RHO-adRP and BEST1-related IRDs, respectively. It is currently seeking a collaborator or licensee for the future development and potential commercialization of these product candidates.
2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” in the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on February 24, 2022.
Basis of Presentation and Consolidation
In the opinion of management, the Company’s condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes included in the Annual Report.
The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.
Segment and Geographic Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating and reportable segment.
Use of Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are
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reasonable under the circumstances. The amounts of assets and liabilities reported in the Company's Condensed Unaudited Consolidated Balance Sheets and the amount of expenses reported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, accounting for research and development costs, accounting for share-based compensation and accounting for income taxes. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of 90 days or less when purchased to be cash equivalents. The carrying amounts reported in the Condensed Unaudited Consolidated Balance Sheets for cash and cash equivalents are valued at cost, which approximates their fair value.
Available for Sale Securities
The Company considers debt securities with original maturities of greater than 90 days to be available for sale securities. Available for sale securities with original maturities of greater than one year are recorded as non-current assets. Available for sale securities are recorded at fair value and unrealized gains and losses are recorded within other comprehensive income.
On a quarterly basis, the Company reviews the status of each security in an unrealized loss position, to evaluate the existence of potential credit losses. The Company first considers whether it intends to sell, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet this criteria, the Company considers a number of factors to determine if the decline in fair value has resulted from credit losses or other factors, including but not limited to: (1) the extent of the decline; (2) changes to the rating of the security by a rating agency; (3) any adverse conditions specific to the security; and (4) other market conditions that may affect the fair value of the security. If this assessment indicates that a credit loss exists and the present value of cash flows expected to be collected is less than the amortized cost basis, an allowance for credit losses is required for the credit loss. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.
Financial Instruments
Cash equivalents and available for sale securities are reflected in the accompanying financial statements at fair value. The carrying amount of accounts payable and accrued expenses, including accrued research and development expenses, approximates fair value due to the short-term nature of those instruments.
Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The Company reviews investments on a periodic basis for other than temporary impairments. This review is subjective as it requires management to evaluate whether an event or change in circumstances has occurred in the period that may have a significant adverse effect on the fair value of the investment. The Company uses the market approach to measure fair value for its financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets. The Company classifies its corporate debt securities within the fair value hierarchy as Level 2 assets, as it primarily utilizes quoted market prices or rates for similar instruments to value these securities.
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:
Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market. The Company's Level 1 assets consist of investments in money market funds and U.S. Treasury securities.
Level 2—inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. The Company's Level 2 assets consist of investments in investment-grade corporate debt securities.
Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability. The Company does not hold any assets that are measured using Level 3 inputs.
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Concentration of Credit Risk
The Company's financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash equivalents and available for sale securities. The Company maintains its cash in bank accounts, the balances of which generally exceed federally insured limits. The Company maintains its cash equivalents and available for sale securities in investments in money market funds, in U.S. Treasury securities, asset-backed securities and investment-grade corporate debt securities with original maturities of 90 days or less.
The Company believes it is not exposed to significant credit risk on its cash, cash equivalents and available for sale securities.
Concentration of Suppliers
The Company historically relied upon a single third-party manufacturer to provide the drug substance for avacincaptad pegol on a purchase order basis. The Company also historically relied upon a single third-party manufacturer to provide fill/finish services for avacincaptad pegol drug product. The Company has engaged one additional third-party manufacturer to provide drug substance for avacincaptad pegol and one additional third-party manufacturer to provide fill/finish services for avacincaptad pegol drug product. In addition, the Company currently relies upon a single third-party supplier to supply on a purchase order basis the polyethylene glycol starting material used to manufacture avacincaptad pegol. Furthermore, the Company and its contract manufacturers currently rely upon sole-source suppliers of certain raw materials and other specialized components of production used in the manufacture and fill/finish of avacincaptad pegol. The Company currently relies upon a single third-party contract manufacturer to conduct process development, scale-up and GMP manufacture of the drug substance for IC-500 for preclinical toxicology studies and early-stage clinical trials and a single third-party contract manufacturer to conduct fill/finish services for IC-500. If the Company’s third-party manufacturers or fill/finish service providers should become unavailable to the Company for any reason, including as a result of capacity constraints, different business objectives, financial difficulties, insolvency or the COVID-19 pandemic, the Company believes that there are a limited number of potential replacement manufacturers, and the Company likely would incur added costs and delays in identifying or qualifying such replacements.
Leases
The Company determines if an arrangement contains a lease at inception. For arrangements where the Company is the lessee, it recognizes a right-of-use (“ROU”) asset and operating lease liability on the Company's Condensed Unaudited Consolidated Balance Sheet. ROU lease assets represent the Company's right to use the underlying asset for the lease term and the lease obligation represents the Company's commitment to make the lease payments arising from the lease. ROU lease assets and obligations are recognized at the commencement date based on the present value of remaining lease payments over the lease term. As the Company’s leases do not provide an implicit discount rate, the Company has used an estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU lease asset includes any lease payments made prior to commencement and excludes any lease incentives. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. For all office lease agreements the Company combines lease and nonlease components. Leases with an initial term of 12 months or less are not recorded on the Company's Condensed Unaudited Consolidated Balance Sheet.
Property and Equipment
Property and equipment, which consists mainly of clinical and laboratory equipment, computers, software, other office equipment, and leasehold improvements, are carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the respective assets, generally three to ten years, using the straight-line method. Amortization of leasehold improvements is recorded over the shorter of the lease term or estimated useful life of the related asset.
Research and Development
The Company's research and development expenses primarily consist of costs associated with the manufacturing, development and preclinical and clinical testing of the Company’s product candidates and costs associated with its gene therapy research programs. The Company's research and development expenses consist of:
external research and development expenses incurred under arrangements with third parties, such as academic research collaborators, contract research organizations (“CROs”) and contract development and manufacturing organizations (“CDMOs”) and other vendors for the production and analysis of drug substance and drug product; and
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employee-related expenses for employees dedicated to research and development activities, including salaries, benefits and share-based compensation expense.
Research and development expenses also include costs of acquired product licenses, in-process research and development, and related technology rights where there is no alternative future use, costs of prototypes used in research and development, consultant fees and amounts paid to collaborators.
All research and development expenses are charged to operations as incurred in accordance with ASC 730, Research and Development. The Company accounts for non-refundable advance payments for goods and services that will be used in future research and development activities as expenses when the service has been performed or when the goods have been received, rather than when the payment is made.
Income Taxes
The Company utilizes the liability method of accounting for deferred income taxes, as set forth in ASC 740, Income Taxes.  Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is established against deferred tax assets when, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company's policy is to record interest and penalties on uncertain tax positions as income tax expense.
Share-Based Compensation
The Company follows the provisions of ASC 718, Compensation—Stock Compensation, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, non-employees and non-employee directors, including employee stock options, restricted stock units (“RSUs”) and options granted to employees to purchase shares under the 2016 Employee Stock Purchase Plan (the “ESPP”). Share-based compensation expense is based on the grant date fair value estimated in accordance with the provisions of ASC 718 and is generally recognized as an expense over the requisite service period, net of estimated forfeitures. For grants containing performance-based vesting provisions, expense is recognized over the estimated achievement period only when the performance-based milestone is deemed probable of achievement. If performance-based milestones are later determined not to be probable of achievement, then all previously recorded stock-based compensation expense associated with such options will be reversed during the period in which the Company makes this determination.
The Company estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ from its estimates. The Company uses historical data to estimate pre-vesting forfeitures and record share-based compensation expense only for those awards that are expected to vest. To the extent that actual forfeitures differ from the Company's estimates, the difference is recorded as a cumulative adjustment in the period the estimates were revised.
Stock Options
The Company estimates the fair value of stock options granted to employees, non-employee directors and consultants on the date of grant using the Black-Scholes option-pricing model. The Company's computation of stock-price volatility is based on daily historical volatility during the time period that corresponds to the expected option term. The Company's computation of expected term is determined using the expected term of stock option grants to employees based on an analysis of actual option exercises. The Company utilizes a dividend yield of zero based on the fact that the Company has never paid cash dividends to stockholders and has no current intentions to pay cash dividends. The risk-free interest rate is based on the zero-coupon U.S. Treasury yield at the date of grant for a term equivalent to the expected term of the option.
The weighted-average assumptions used to estimate grant date fair value of stock options using the Black-Scholes option pricing model were as follows for the three and nine month periods ended September 30, 2022 and 2021:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Expected common stock price volatility76%113%83%113%
Risk-free interest rate
2.64%-3.36%
0.68%-0.84%
1.38%-3.36%
0.31%-0.96%
Expected term of options (years)5.05.24.95.2
Expected dividend yield
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RSUs
The Company estimates the fair value of RSUs granted to employees using the closing market price of the Company's common stock on the date of grant.
ESPP
In April 2016, the Company's board of directors adopted the ESPP pursuant to which the Company may sell up to an aggregate of 1,000,000 shares of its common stock. The ESPP was approved by the Company’s stockholders in June 2016. The ESPP is considered compensatory and the fair value of the discount and look back provision are estimated using the Black-Scholes option-pricing model and recognized over the six months withholding period prior to purchase.
Recent Accounting Pronouncements
The Company has evaluated recent accounting pronouncements through the date the financial statements were issued and filed with the SEC and believes that there are none that will have a material impact on the Company’s financial statements.
3. Net Loss Per Common Share
Basic and diluted net loss per common share is determined by dividing net loss by the weighted average common shares and pre-funded warrants outstanding during the period. Basic and diluted shares outstanding includes the weighted average effect of the Company's outstanding pre-funded warrants as the exercise of such pre-funded warrants requires nominal consideration to be given for the delivery of the corresponding shares of common stock. As of September 30, 2022, the Company had no pre-funded warrants outstanding. As of September 30, 2021, the Company had 3,164,280 pre-funded warrants outstanding, which if exercised, would increase the number of shares of common stock issued and outstanding. For the periods when there is a net loss, shares underlying stock options and RSUs have been excluded from the calculation of diluted net loss per common share because the effect of including such shares would be anti-dilutive. Therefore, the weighted average common shares used to calculate both basic and diluted net loss per common share would be the same.
The following table sets forth the computation of basic and diluted net loss per common share for the periods indicated:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Basic and diluted net loss per common share calculation:  
Net loss$(42,351)$(24,551)$(126,150)$(81,489)
Weighted average common shares outstanding - basic and dilutive120,277 105,217 119,578 97,370 
Net loss per share of common stock - basic and diluted$(0.35)$(0.23)$(1.05)$(0.84)
The following potentially dilutive securities have been excluded from the computations of diluted weighted average common shares outstanding for the periods presented, as the effect of including such shares would be anti-dilutive:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Stock options outstanding10,250 9,089 10,250 9,089 
Restricted stock units2,401 1,903 2,401 1,903 
Total12,651 10,992 12,651 10,992 
4. Licensing and Commercialization Agreements
On June 30, 2022, the Company entered into a license agreement (the “DelSiTech License Agreement”) with DelSiTech Ltd. (“DelSiTech”). Under the DelSiTech License Agreement, DelSiTech granted the Company a worldwide, exclusive license under specified patent rights and know-how to develop, have developed, make, have made, use, offer to sell, sell, have sold, otherwise commercialize, export and import avacincaptad pegol using DelSiTech’s silica-based sustained release technology for the treatment of diseases of the eye in humans (the “Licensed Product”). The Company may grant sublicenses of the licensed patent rights and know-how without DelSiTech’s consent.
The Company has agreed to pay DelSiTech, within 60 days after execution of the DelSiTech License Agreement, a €1.25 million upfront license fee, which was recognized as a research and development expense during the three months ended June 30, 2022. Under the DelSiTech License Agreement, the Company is further obligated to pay DelSiTech, up to an aggregate of €35.0 million, if the Company achieves specified clinical and development milestones with respect to the Licensed
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Product. In addition, the Company is also obligated to pay DelSiTech up to an aggregate of €60.0 million if the Company achieves specified commercial sales milestones with respect to worldwide net sales of the Licensed Product. Due to the uncertainty of the achievement of these milestones, the Company will account for any additional payments if and when such milestones are met.

The Company is also obligated to pay DelSiTech royalties at a low single-digit percentage of net sales of the Licensed Product. The royalties payable by the Company are subject to reduction under specified circumstances. The Company’s obligation to pay royalties under the DelSiTech License Agreement will continue on a country-by-country basis until the later of: (a) the expiration of the last-to-expire licensed patent rights covering the Licensed Product in the country of sale, or (b) expiration of all regulatory exclusivity for the Licensed Product in the country of sale. Future milestones and royalties will be recognized in their entirety when achieved.

Unless earlier terminated by the Company or DelSiTech, the DelSiTech License Agreement will expire on a country-by-country basis upon the expiration of the Company’s obligation to pay royalties to DelSiTech on net sales of the Licensed Product. Upon expiration of the DelSiTech License Agreement, the licenses granted by DelSiTech to the Company will become fully paid up and irrevocable. The Company may terminate the agreement at any time for any reason upon 60 days’ prior written notice to DelSiTech. Either party may also terminate the DelSiTech License Agreement if the other party materially breaches the DelSiTech License Agreement and does not cure such breach within a specified cure period. Following any termination of the DelSiTech License Agreement prior to expiration of the term of the DelSiTech License Agreement, all rights to the licensed patent rights and know-how that DelSiTech granted to the Company will revert to DelSiTech, subject to the Company’s right to sell off any Licensed Product in the Company’s inventory as of the effectiveness of such termination.

5. Cash, Cash Equivalents and Available for Sale Securities
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at the date of purchase to be cash equivalents. As of September 30, 2022 and December 31, 2021, the Company had cash and cash equivalents of approximately $153.1 million and $261.4 million, respectively. Cash and cash equivalents included cash of $9.9 million at September 30, 2022 and $9.9 million at December 31, 2021. Cash and cash equivalents at September 30, 2022 and December 31, 2021 included $143.2 million and $251.5 million, respectively, of investments in money market funds.
The Company considers debt securities with original maturities of greater than 90 days at the date of purchase to be available for sale securities. As of September 30, 2022 and December 31, 2021, the Company held available for sale securities of $167.4 million and $120.3 million, respectively, all of which have maturities of less than one year.
The Company evaluates securities with unrealized losses, if any, to determine whether the decline in fair value has resulted from credit loss or other factors. The Company has determined that there were no credit losses in fair value of its investments as of September 30, 2022. Factors considered in determining whether a loss resulted from a credit loss or other factors included the length of time and extent to which the investment’s fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, the extent of the loss related to credit of the issuer, the expected cash flows from the security, the Company’s intent to sell the security, and whether or not the Company will be required to sell the security before the recovery of its amortized cost.
The Company classifies these securities as available for sale. However, the Company has not sold and does not currently intend to sell its investments and the Company believes it is more likely than not that the Company will recover the carrying value of these investments.
The Company believes that its existing cash, cash equivalents and available for sale securities as of September 30, 2022 will be sufficient to fund its currently planned capital expenditure requirements and operating expenses for at least the next 12 months from the filing of this Quarterly Report on Form 10-Q.
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Available for sale securities, including carrying value and estimated fair values, are summarized as follows:
 As of September 30, 2022
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury securities$48,001 $ $(183)$47,818 
Corporate debt securities100,383  (172)100,211 
Asset-backed securities14,472 1 (37)14,436 
Supranational securities4,974  (4)4,970 
Total$167,830 $1 $(396)$167,435 

 As of December 31, 2021
 Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury securities$18,201 $ $(16)$18,185 
Corporate debt securities82,138  (57)82,081 
Asset-backed securities16,009  (14)15,995 
Supranational securities4,044  (3)4,041 
Total$120,392 $ $(90)$120,302 
The Company’s available for sale securities are reported at fair value on the Company’s balance sheet. Unrealized gains (losses) are reported within other comprehensive income in the statements of comprehensive loss. The cost of securities sold and any realized gains/losses from the sale of available for sale securities are based on the specific identification method. The changes in accumulated other comprehensive income associated with the unrealized gain on available for sale securities during the three months ended September 30, 2022 and 2021, respectively, were as follows:
 Three months ended September 30,Nine Months Ended September 30, 2022
 2022202120222021
Beginning balance$(528)$3 $(90)$3 
Current period changes in fair value before reclassifications, net of tax133 (14)(305)(14)
Amounts reclassified from accumulated other comprehensive income, net of tax    
Total other comprehensive loss$133 $(14)(305)(14)
Ending balance$(395)$(11)$(395)$(11)
6. Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value standard also establishes a three-level hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company's assets
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and liabilities that are measured at fair value on a recurring basis as of September 30, 2022:
 Fair Value Measurement Using
 Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets   
Investments in money market funds*$143,165 $ $ 
Investments in U.S. Treasury securities$47,818 $ $ 
Investments in corporate debt securities$ $100,211 $ 
Investments in asset-backed securities$ 14,436 $ 
Investments in supranational securities$ 4,970 $ 
*Investments in money market funds are reflected in cash and cash equivalents in the accompanying Condensed Unaudited Consolidated Balance Sheets.
The following table presents, for each of the fair value hierarchy levels required under ASC 820, the Company's assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2021:
 Fair Value Measurement Using
 Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets   
Investments in money market funds*$251,488 $ $ 
Investments in U.S. Treasury securities $18,185 $ $ 
Investments in corporate debt securities$ $82,081 $ 
Investments in asset-backed securities $ $15,995 $ 
Investments in supranational securities$ $4,041 $ 
*Investments in money market funds are reflected in cash and cash equivalents in the accompanying Condensed Unaudited Consolidated Balance Sheets.
No transfer of assets between Level 1 and Level 2 of the fair value measurement hierarchy occurred during the three and nine months ended September 30, 2022.
7. Share-Based Compensation
Pursuant to the evergreen provisions of the Company's 2013 stock incentive plan (the “2013 Plan”), annual increases have resulted in the addition of an aggregate of approximately 15,624,000 additional shares to the 2013 Plan, including for 2022, an increase of approximately 2,542,000 shares. As of September 30, 2022, the Company had approximately 3,204,000 shares available for grant under the 2013 Plan.
In October 2019, the Company's board of directors adopted its 2019 Inducement Stock Incentive Plan (the “2019 Inducement Plan”) to reserve initially 1,000,000 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company as a material inducement to such individuals’ entry into employment with the Company within Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms and conditions of the 2019 Inducement Plan are substantially similar to those of the 2013 Plan. In March 2020, the Company's board of directors amended the 2019 Inducement Plan to reserve an additional 1,000,000 shares of its common stock for issuance under the plan, and in February 2021, September 2021, December 2021 and May 2022, the Company's board of directors further amended the 2019 Inducement Plan to reserve an additional 600,000 shares, an additional 1,000,000 shares, an additional 1,000,000 shares and an additional 1,000,000 shares, respectively, of its common stock for issuance under the plan. As of September 30, 2022, the Company had approximately 1,245,000 shares available for grant under the 2019 Inducement Plan.
Share-based compensation expense, net of estimated forfeitures, includes expenses related to stock options and RSUs granted to employees, non-employee directors and consultants, as well as options granted to employees to purchase shares
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under the ESPP. Stock-based compensation by award type was as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Stock options$4,021 $1,485 $11,095 $3,997 
Restricted stock units2,444 1,101 7,020 2,896 
Employee stock purchase plan91 40 215 104 
Total$6,556 $2,626 $18,330 $6,997 
The Company allocated stock-based compensation expense in the Company’s Consolidated Statements of Operations and Comprehensive Loss as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Research and development$2,681 $1,476 $8,108 $4,138 
General and administrative3,875 1,150 10,222 2,859 
Total$6,556 $2,626 $18,330 $6,997 
Stock Options
A summary of the stock option activity, weighted average exercise prices, options outstanding, exercisable and expected to vest as of September 30, 2022 is as follows (in thousands except weighted average exercise price):
 Number of Shares Underlying OptionsWeighted
Average
Exercise
Price
Outstanding, December 31, 202110,861 $10.94 
Granted1,388 $14.23 
Exercised(1,797)$3.69 
Forfeited(202)$14.14 
Outstanding, September 30, 202210,250 $12.60 
Vested and exercisable, September 30, 20224,830 $13.38 
Vested and expected to vest, September 30, 20229,762 $12.63 
As of September 30, 2022, there were approximately $37.4 million of unrecognized compensation costs, net of estimated forfeitures, related to stock option awards grants, which are expected to be recognized over a remaining weighted average period of