10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 2023

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: 001-40708

 

ELIEM THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

83-2273741

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

PMB #117
2801 Centerville Road 1st Floor
Wilmington, DE 19808-1609

98053

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: 1-877-ELIEMTX (354-3689)

 

23515 NE Novelty Hill Road

Suite B221 #125

Redmond, WA 98053

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

 

Common Stock, par value $0.0001 per share

 

ELYM

 

The Nasdaq Stock Market LLC

(The Nasdaq Global 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, 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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of November 9, 2023, the registrant had 27,572,664 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

1

 

 

 

Item 1.

Condensed Consolidated Financial Statements (unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results and Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

 

 

 

 

 

 

PART II.

OTHER INFORMATION

25

 

 

 

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

64

Item 3.

Defaults Upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

65

Signatures

66

 

 

 

 


 

PART I - FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

Eliem Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(unaudited)

 

Assets

 

September 30, 2023

 

 

December 31, 2022

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

57,353

 

 

$

43,585

 

Short-term marketable securities

 

 

50,080

 

 

 

79,981

 

Prepaid expenses and other current assets

 

 

5,001

 

 

 

10,827

 

Total current assets

 

$

112,434

 

 

$

134,393

 

Operating lease right-of-use assets

 

 

286

 

 

 

471

 

Other long-term assets

 

 

15

 

 

 

128

 

Total assets

 

$

112,735

 

 

$

134,992

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

736

 

 

 

750

 

Accrued expenses

 

 

1,764

 

 

 

5,047

 

Operating lease liabilities

 

 

401

 

 

 

300

 

Total current liabilities

 

$

2,901

 

 

$

6,097

 

Operating lease liabilities, net of current portion

 

 

58

 

 

 

180

 

Other long-term liabilities

 

 

34

 

 

 

 

Total liabilities

 

$

2,993

 

 

$

6,277

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $0.0001 par value per share, 250,000,000 shares authorized; 27,466,005 and 26,567,681 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

262,088

 

 

 

249,930

 

Accumulated other comprehensive loss

 

 

(11

)

 

 

(358

)

Accumulated deficit

 

 

(152,338

)

 

 

(120,860

)

Total stockholders’ equity

 

$

109,742

 

 

$

128,715

 

Total liabilities and stockholders’ equity

 

$

112,735

 

 

$

134,992

 

 

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

1


 

Eliem Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

2,876

 

 

$

4,258

 

 

$

12,284

 

 

$

21,287

 

General and administrative

 

 

2,125

 

 

 

4,490

 

 

 

22,869

 

 

 

14,294

 

Total operating expenses

 

 

5,001

 

 

 

8,748

 

 

 

35,153

 

 

 

35,581

 

Loss from operations

 

 

(5,001

)

 

 

(8,748

)

 

 

(35,153

)

 

 

(35,581

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency gain (loss)

 

 

(228

)

 

 

(1,317

)

 

 

404

 

 

 

(2,516

)

Interest income, net

 

 

1,261

 

 

 

383

 

 

 

3,271

 

 

 

615

 

Total other income (expense)

 

 

1,033

 

 

 

(934

)

 

 

3,675

 

 

 

(1,901

)

Net loss

 

$

(3,968

)

 

$

(9,682

)

 

$

(31,478

)

 

$

(37,482

)

Net loss per share, basic and diluted

 

$

(0.15

)

 

$

(0.37

)

 

$

(1.17

)

 

$

(1.43

)

Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted

 

 

27,071,053

 

 

 

26,336,029

 

 

 

26,803,468

 

 

 

26,290,868

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,968

)

 

$

(9,682

)

 

$

(31,478

)

 

$

(37,482

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments, net of tax of $0

 

 

24

 

 

 

23

 

 

 

347

 

 

 

(458

)

Comprehensive loss

 

$

(3,944

)

 

$

(9,659

)

 

$

(31,131

)

 

$

(37,940

)

 

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

 

 

2


 

Eliem Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(unaudited)

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-in Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Total Stockholders' Equity

 

Balance as of December 31, 2022

 

 

26,390,186

 

 

$

3

 

 

$

249,930

 

 

$

(358

)

 

$

(120,860

)

 

$

128,715

 

Vesting of restricted stock awards

 

 

19,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

406,194

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Stock-based compensation

 

 

 

 

 

 

 

 

10,171

 

 

 

 

 

 

 

 

 

10,171

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

263

 

 

 

 

 

 

263

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,290

)

 

 

(22,290

)

Balance as of March 31, 2023

 

 

26,815,988

 

 

$

3

 

 

$

260,102

 

 

$

(95

)

 

$

(143,150

)

 

$

116,860

 

Vesting of restricted stock awards and units

 

 

44,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

23,526

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

24

 

Stock-based compensation

 

 

 

 

 

 

 

 

777

 

 

 

 

 

 

 

 

 

777

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

60

 

 

 

 

 

 

60

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,220

)

 

 

(5,220

)

Balance as of June 30, 2023

 

 

26,883,552

 

 

$

3

 

 

$

260,903

 

 

$

(35

)

 

$

(148,370

)

 

$

112,501

 

Vesting of restricted stock awards and units

 

 

27,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

459,684

 

 

 

 

 

 

529

 

 

 

 

 

 

 

 

 

529

 

Stock-based compensation

 

 

 

 

 

 

 

 

656

 

 

 

 

 

 

 

 

 

656

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

24

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,968

)

 

 

(3,968

)

Balance as of September 30, 2023

 

 

27,370,508

 

 

$

3

 

 

$

262,088

 

 

$

(11

)

 

$

(152,338

)

 

$

109,742

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional Paid-in Capital

 

 

Accumulated Other Comprehensive Loss

 

 

Accumulated Deficit

 

 

Total Stockholders' Equity

 

Balance as of December 31, 2021

 

 

26,235,317

 

 

$

3

 

 

$

242,939

 

 

$

(123

)

 

$

(75,616

)

 

$

167,203

 

Vesting of restricted stock awards

 

 

9,451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,541

 

 

 

 

 

 

 

 

 

1,541

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(398

)

 

 

 

 

 

(398

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,204

)

 

 

(13,204

)

Balance as of March 31, 2022

 

 

26,244,768

 

 

$

3

 

 

$

244,480

 

 

$

(521

)

 

$

(88,820

)

 

$

155,142

 

Vesting of restricted stock awards

 

 

82,633

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,772

 

 

 

 

 

 

 

 

 

1,772

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(83

)

 

 

 

 

 

(83

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(14,596

)

 

$

(14,596

)

Balance as of June 30, 2022

 

 

26,327,401

 

 

$

3

 

 

$

246,252

 

 

$

(604

)

 

$

(103,416

)

 

$

142,235

 

Vesting of restricted stock awards

 

 

20,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,783

 

 

 

 

 

 

 

 

 

1,783

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

23

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(9,682

)

 

$

(9,682

)

Balance as of September 30, 2022

 

 

26,348,371

 

 

$

3

 

 

$

248,035

 

 

$

(581

)

 

$

(113,098

)

 

$

134,359

 

 

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

3


 

Eliem Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(31,478

)

 

$

(37,482

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

11,604

 

 

 

5,096

 

Right-of-use asset impairment

 

 

180

 

 

 

 

Non-cash operating lease expense

 

 

318

 

 

 

329

 

Accretion of discounts and amortization of premiums on investments, net

 

 

(1,985

)

 

 

223

 

Foreign currency (gain) loss from remeasurement

 

 

(634

)

 

 

2,220

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

5,826

 

 

 

1,219

 

Long-term assets

 

 

114

 

 

 

(72

)

Accounts payable

 

 

(14

)

 

 

91

 

Accrued liabilities

 

 

(3,283

)

 

 

(188

)

Operating lease liabilities

 

 

(334

)

 

 

(356

)

Long-term liabilities

 

 

34

 

 

 

 

Net cash used in operating activities

 

$

(19,652

)

 

$

(28,920

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of marketable securities

 

 

(58,448

)

 

 

(81,249

)

Proceeds from maturities of marketable securities

 

 

90,681

 

 

 

101,411

 

Net cash provided by investing activities

 

$

32,233

 

 

$

20,162

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

553

 

 

 

 

Net cash provided by financing activities

 

$

553

 

 

$

 

Effect of exchange rate changes on cash and cash equivalents

 

 

634

 

 

 

(2,220

)

Net change in cash and cash equivalents

 

$

13,768

 

 

$

(10,978

)

Cash and cash equivalents at beginning of period

 

 

43,585

 

 

 

46,922

 

Cash and cash equivalents at end of period

 

$

57,353

 

 

$

35,944

 

Supplemental disclosure of cash operating activities:

 

 

 

 

 

 

Cash paid for leases included in operating cash outflows

 

$

376

 

 

$

345

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease liabilities

 

$

313

 

 

$

915

 

 

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

 

 

4


 

Eliem Therapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Description of Organization and Summary of Significant Accounting Policies

Organization

Eliem Therapeutics, Inc. (the Company) is a biotechnology company focused on developing novel therapies for neuronal excitability disorders to address unmet needs in psychiatry, epilepsy, chronic pain, and other disorders of the peripheral and central nervous systems. The Company was incorporated on October 18, 2018 as a Delaware corporation and is headquartered in Delaware.

On February 7, 2023, the Company’s board of directors approved a restructuring plan (the Restructuring Plan) to conserve financial resources and better align the Company’s workforce with current business needs, as a result of the decision to pause development of ETX-155 and focus on the Company’s preclinical Kv7 program. As part of the Restructuring Plan, the Company's workforce was reduced by approximately 55%, with substantially all of the reduction in personnel completed in the first half of 2023.

On July 20, 2023, the Company announced that it made the determination to conduct a comprehensive exploration of strategic alternatives focused on maximizing stockholder value. As part of that effort, the Company has paused further development of its Kv7 program, while continuing ongoing preclinical studies and exploring options for both Kv7 and ETX-155.

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements of the Company and its wholly owned subsidiary have been prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP). All intercompany transactions and balances have been eliminated in consolidation.

The accompanying condensed consolidated balance sheet as of September 30, 2023, and condensed consolidated statements of operations and comprehensive loss, condensed consolidated statements of cash flows, and condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, are unaudited. The consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements as of and for the year ended December 31, 2022, but does not include all disclosures required by U.S. GAAP. The unaudited interim condensed financial statements have been prepared on a basis consistent with the audited annual financial statements as of and for the year ended December 31, 2022, and, in the opinion of management, reflect all adjustments, consisting solely of normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2023, the condensed results of its operations as of the three and nine months ended September 30, 2023 and 2022, and its cash flows for the nine months ended September 30, 2023 and 2022. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2023 and 2022 are also unaudited. The condensed results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2023 or any other period. These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 6, 2023.

Liquidity

Since inception, the Company has experienced recurring losses from operations and generated negative cash flows from operations. The Company has an accumulated deficit of $152.3 million as of September 30, 2023 and expects to incur additional losses from operations in the future. The Company estimates the available cash, cash equivalents, and marketable securities of $107.4 million as of September 30, 2023 will be sufficient to meet its projected operating requirements for at least the next twelve months from the filing date of these unaudited condensed consolidated financial statements and the Company anticipates that it will need to raise substantial financing in the future to fund its operations.

The Company may finance future cash needs through equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. In addition, the Company may continue to rely on capital markets, and to a lesser extent, United Kingdom (U.K.) research and development tax credits and incentives for funding. There are no assurances that the Company will be able to raise sufficient amounts of funding in the future on acceptable terms, or at all.

5


 

Use of Estimates

The preparation of the interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Key management estimates include those related to the accrual of research and development expenses, recoverable research and development tax credits, and the valuation of stock-based awards. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and marketable securities. The Company’s cash is held by two financial institutions in the United States (U.S.) and two financial institutions in the U.K. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company’s deposits held in the U.S. and U.K. may exceed the Federal Depository Insurance Corporation and Financial Services Compensation Scheme, respectively, insured limits. The Company has diversified investments in money market funds, U.S. Treasury and government agency debt securities, commercial paper, and corporate bonds with high-quality accredited financial institutions, which are held in a segregated account at a third-party custodian. The Company has established guidelines relative to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. Through September 30, 2023, and the date of this filing, the Company has not experienced any losses on such deposits.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, reliance on single-source vendors and collaborators, availability of raw materials, patentability of the Company’s products and processes and clinical efficacy and safety of the Company’s products under development, compliance with government regulations and the need to obtain additional financing to fund operations. Any product candidates the Company may develop in the future will require significant additional research and development efforts, including extensive preclinical studies, clinical trials, and regulatory approval, prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting.

There can be no assurance that any future research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if any future product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid technological change and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.

Segments

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (the CODM). The Company’s CODM is its executive chairman who reviews financial information together with certain operating metrics principally to make decisions about how to allocate resources and to measure the Company’s performance. Management has determined that the Company operates as a single operating and reportable segment. The Company’s CODM evaluates financial information on a consolidated basis. As the Company operates as one operating segment, all required segment financial information is found in the interim condensed consolidated financial statements.

Fair Value Measurement

Assets and liabilities recorded at fair value on a recurring basis in the balance sheet are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company measures fair value based on a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

6


 

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the assets or liabilities. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In determining fair value, the Company utilizes quoted market prices, or valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

There were no transfers into or out of Level 3 for any of the periods presented.

The Company’s fair value measurements as of September 30, 2023 and December 31, 2022 was as follows (in thousands):

 

 

 

September 30, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Balance

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

50,308

 

 

$

 

 

$

 

 

$

50,308

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

 

31,737

 

 

 

 

 

 

 

 

 

31,737

 

Commercial paper

 

 

 

 

 

3,222

 

 

 

 

 

 

3,222

 

Corporate bonds