0000950170-24-058672 | 10-Q | XBRL Viewer | Terns Pharmaceuticals INC

Jill Quigley

Director

true

March 18, 2024

December 31, 2025

654 days

56,520

^[1],[2]

Erin Quirk [Member]

Erin Quirk

President, Head of Research & Development

true

March 19, 2024

December 31, 2025

653 days

137,965

^[3]

Mark Vignola [Member]

Mark Vignola

Chief Financial Officer and Treasurer

true

March 18, 2024

December 31, 2025

654 days

100,000

^[1],[3]

Bryan Yoon [Member]

Bryan Yoon

Chief Operating Officer, General Counsel and Secretary

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

true

March 18, 2024

December 31, 2025

654 days

120,000

^[1],[3]

[1]	The number of shares subject to an RSU grant covered by this trading arrangement that will be sold to satisfy applicable tax withholding obligations upon vesting is unknown as the number will vary based on the extent to which vesting conditions are satisfied and the market price of the Company’s common stock at the time of settlement. This trading arrangement includes the automatic sale of shares that would otherwise be issuable on each settlement date of the RSU in an amount sufficient to satisfy the applicable withholding obligation, with the proceeds of the sale delivered to the Company in satisfaction of the applicable withholding obligation.
[2]	The number of shares subject to stock options covered by this trading arrangement that will be sold will vary based on the number of shares sold pursuant to Ms. Quigley’s prior trading arrangement, subject to the extent to which vesting conditions are satisfied and the market price of the Company’s common stock at the time of any potential exercise.
[3]	The number of shares subject to stock options covered by this trading arrangement that will be sold will vary based on the extent to which vesting conditions are satisfied and the market price of the Company’s common stock at the time of any potential exercise.

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

1. Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

Nature of the Business

Terns Pharmaceuticals, Inc. (Terns) is a clinical-stage biopharmaceutical company developing a portfolio of small-molecule product candidates to address serious diseases including oncology and obesity.

Terns was incorporated as an exempted company in the Cayman Islands in December 2016. In December 2020, the Company effected a de-registration of the Company in the Cayman Islands and a domestication in the State of Delaware, pursuant to which it became a Delaware corporation. Terns owns all of the share capital of Terns Pharmaceutical HongKong Limited (Terns Hong Kong) and Terns, Inc., a Delaware corporation (Terns U.S. Opco). Terns Hong Kong holds all of the share capital of Terns China Biotechnology Co., Ltd. (organized in Shanghai, People’s Republic of China (PRC)) (Terns China) and Terns (Suzhou) Biotechnology Co., Ltd. (organized in Suzhou, PRC) (Terns Suzhou).

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.

Basis of Presentation

The accompanying condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the accounts of Terns and its wholly owned subsidiaries Terns U.S. Opco and Terns Hong Kong and its wholly owned subsidiaries Terns China and Terns Suzhou, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other future periods.

Unaudited Interim Financial Information

These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim periods. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto in the Company’s Annual Report on Form 10-K (the Annual Report) for the fiscal year ended December 31, 2023, as filed with the SEC on March 14, 2024. There have been no significant changes to the Company's significant accounting policies described in Note 1, Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies, in Notes to Consolidated Financial Statements in Item 8 of Part II of the Form 10-K for the fiscal year ended December 31, 2023.

Any reference to these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASUs) of the Financial Accounting Standards Board (FASB).

At-the-Market Offering

In March 2022, the Company entered into a Sales Agreement with Cowen and Company, LLC (Cowen) as sales agent, pursuant to which the Company has the ability to offer and sell, from time to time, through Cowen, shares of its common stock having an aggregate offering price of up to $75.0 million in an at-the-market offering. The shares are offered pursuant to the Company's shelf registration statement on Form S-3 filed with the Securities and Exchange Commission (SEC), which became effective in March 2022. As of March 31, 2024, there were 9,781,673 shares of our common stock sold for aggregate net proceeds of $66.6 million after deducting commissions and offering expenses pursuant to this agreement. There were no sales of the Company's common stock pursuant to this agreement during the three months ended March 31, 2024.

In May 2023, the Company entered into a Sales Agreement with Cowen as sales agent, pursuant to which the Company has the ability to offer and sell, from time to time, through Cowen, shares of its common stock having an aggregate offering price of up to $150.0 million in an at-the-market offering. The shares are offered pursuant to the Company's shelf registration statement on Form S-3 filed with the SEC, which became effective in February 2023. There were no sales of the Company's common stock pursuant to this agreement through March 31, 2024.

Summary of Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, the estimates for accruals of research and development expenses, accrual of research contract costs, unrecognized tax benefits, fair value of common stock and stock option valuations. On an ongoing basis, the Company evaluates its estimates and judgments, using historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.

Cash, Cash Equivalents and Marketable Securities

Cash and cash equivalents consist of standard checking accounts and money market funds. The Company considers all highly liquid investments with an original maturity of 90 days or less at the date of purchase to be cash equivalents.

The Company classifies as available-for-sale marketable securities with a remaining maturity when purchased of greater than three months. The Company’s marketable securities are maintained by investment managers and may consist of U.S. government and non-U.S. government securities, corporate debt securities and commercial paper. Debt securities are carried at fair value with the unrealized gains and losses included in the condensed consolidated statements of operations and comprehensive loss and as a component of stockholders’ equity until realized. Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity. Amortization and accretion of premiums and discounts are recorded in interest income and/or expense. Gains and losses on securities sold are recorded based on the specific identification method and are included in Interest income, net in the condensed consolidated statements of operations and comprehensive loss. The Company has not incurred any material realized gains or losses from sales of securities to date.

The Company assesses its available-for-sale debt securities for impairment as of each reporting date in order to determine if a portion of any decline in fair value below carrying value is the result of a credit loss. The Company records credit losses in the condensed consolidated statements of operations and comprehensive loss as credit loss expense within other expense, net, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit losses on its available-for-sale debt securities.

Interest receivable related to the Company's available-for-sale debt securities is presented as marketable securities on the Company's condensed consolidated balance sheets. The Company writes off interest receivable once it has determined that the asset is not realizable. To date, the Company has not written off any interest receivables associated with its marketable securities.

Operating Leases and Rent Expense

At the inception of a contractual arrangement, the Company determines whether the contract contains a lease by assessing whether there is an identified asset and whether the contract conveys the right to control the use of the identified asset in exchange for consideration over a period of time. If both criteria are met, upon lease commencement, the Company records a lease liability which represents the Company’s obligation to make lease payments arising from the lease, and a corresponding right-of-use (ROU) asset which represents the Company’s right to use an underlying asset during the lease term.

Operating lease right-of-use assets and liabilities are recognized on the balance sheet at the lease commencement date based on the present value of the future minimum lease payments over the lease term. In determining the net present value of the lease payments, the Company uses its incremental borrowing rate applicable to the underlying asset unless the implicit rate is readily determinable. Any lease incentives received are deferred and recorded as a reduction of the ROU asset and amortized over the term of the lease. The Company does not separate lease and non-lease components and instead treats them as a single component. Rent expense, comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term. The Company determines the lease term as the noncancellable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

The Company elected to not apply the recognition requirements of the new leasing standard to short term leases with terms of 12 months or less. As a result, leases with a term of 12 months or less are not recognized on the balance sheet.

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including personnel expenses, stock-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs, including fees paid to consultants and contract research organizations, or CROs, in connection with nonclinical studies and clinical trials and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation and analysis. Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Costs incurred in obtaining technology licenses are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.

The Company has from time to time entered into various research and development and other agreements with commercial firms, researchers, universities and others for provisions of goods and services. These agreements are generally cancelable, and the related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or clinical trials, including the phase or completion of events, invoices received and contracted costs. Estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. Since inception, the Company’s historical accrual estimates have not been materially different from the actual costs.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	March 31, 2024		December 31, 2023
Research and development costs	$	2,155	$	2,010
Compensation and benefit costs		2,100		5,683
Accrued professional fees		1,913		855
Other		532		278
Total accrued expenses and other current liabilities	$	6,700	$	8,826

Executive Leadership Transition

In August 2023, the Company and Senthil Sundaram, former chief executive officer, entered into a separation agreement. Pursuant to the separation agreement, Mr. Sundaram was entitled to receive severance in the amount of $0.6 million and 100% of his annual target discretionary bonus for 2023 in the amount of $0.3 million. During the year ended December 31, 2023, the Company recorded an accrued liability and recognized expense of $0.9 million related to the departure of the former chief executive officer. As of March 31, 2024, the ending accrued liability was $0.4 million and is presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. The vesting of each equity award held by Mr. Sundaram was fully accelerated as of December 31, 2023. As a result of the change in service period for all outstanding unvested option grants to the Company’s former chief executive officer in August 2023, the Company recognized $10.5 million in stock-based compensation expense during the during the year ended December 31, 2023. The expense was recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

In August 2023, Bryan Yoon, chief operating officer and general counsel, and Mark Vignola, Ph.D., chief financial officer, received retention awards payable in cash in the aggregate amount of $0.5 million for Mr. Yoon and $0.7 million for Dr. Vignola. Each retention award is payable in two installments of 33% of the award on February 1, 2024 and 67% of the award on August 1, 2024, subject to the applicable officer’s continued employment with the Company through such date. Expense is recognized on a straight-line basis over the requisite service period. During the three months ended March 31, 2024, the Company recorded an accrued liability and recognized expense of $0.3 million related to the retention awards. These accruals are presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under General and administrative.

In November 2023, Erin Quirk, M.D., president and head of research & development, received a retention award payable in cash in the aggregate amount of $0.6 million and a recognition bonus in the aggregate amount of $0.1 million. The retention award is payable in two installments of 33% of the award on February 1, 2024 and 67% of the award on August 1, 2024, and the recognition bonus was payable on January 1, 2024, subject to Dr. Quirk's continued employment with the Company through such date. Expense is recognized on a straight-line basis over the requisite service period. During the three months ended March 31, 2024, the Company recorded an accrued liability and recognized expense of $0.2 million related to the retention award. These accruals are presented within the Condensed Consolidated Balance Sheets under Accrued expenses and other current liabilities. The expenses were recognized as operating expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss under Research and development.

Income Taxes

The provision for income taxes primarily relates to projected federal, state and foreign income taxes. To determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is generally based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. In addition, the tax effects of certain significant or unusual items are recognized discretely in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

Income taxes are computed using the asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements. In estimating future tax consequences, the Company considers all expected future events including the enactment of changes in tax laws or rates. A valuation allowance is recorded, if necessary, to reduce net deferred tax assets to their realizable values if management does not believe it is more likely than not that the net deferred tax assets will be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the amount of the valuation allowance. When the Company establishes or reduces the valuation allowance against its deferred tax assets, its provision for income taxes will increase or decrease, respectively, in the period such determination is made.

The Company assesses accounting for uncertainty in income taxes by modeling for the recognition, measurement and disclosure in financial statements any uncertain income tax positions that the Company has taken or expects to take on a tax return. The Company accrues interest and related penalties, if applicable, on all tax exposures for which reserves have been established consistent with jurisdictional tax laws. The Company includes interest and penalties related to unrecognized tax benefits within the provision for income taxes.

The Company recorded income tax expense for the three months ended March 31, 2024 and 2023 of less than $0.1 million. The expenses are primarily related to foreign income tax expenses from China.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Stock-Based Compensation

Stock-based compensation expense relates to stock options, restricted stock units (RSUs) with service conditions, and RSUs with market conditions issued under the Company’s equity incentive plan and rights to acquire stock granted under the Company’s employee stock purchase plan (ESPP). Grants are measured at the grant date based on the fair value of the awards and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Forfeitures are recognized as they occur.

The Black-Scholes option pricing model estimates the fair value of stock options with time-based vesting and rights to acquire stock under the ESPP. The Company lacks sufficient company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. The Company estimates risk-free rates using the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term and dividend yield using the Company’s expectations and historical data. The Company uses the simplified method to calculate the expected term of stock option grants as the Company has limited historical information from which to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. Under the simplified method, the expected term is estimated to be the mid-point between the vesting date and the contractual term of the option. The fair value is calculated based upon the Company’s common stock valuation on the date of the grant.

The fair value of RSUs with service conditions is based upon the Company’s common stock valuation on the date of the grant.

The Monte Carlo simulation model estimates the fair value of the RSUs with market conditions, using inputs for the common stock valuation on the date of the grant, volatility, the risk-free interest rate, and the dividend yield. Compensation expense is recognized on a straight-line basis over the derived service period commencing on the grant date. The derived service period is the median duration of the successful stock price paths to meet the price goal for each tranche as simulated in the Monte Carlo valuation model. If the related market condition is achieved earlier than its estimated derived service period, the stock-based compensation expense is accelerated, and a cumulative catch-up expense is recorded during the period in which the market condition is met.

Pre-funded Warrants

Pre-funded warrants are classified as a component of permanent stockholders’ equity within additional paid-in capital and are recorded at the issuance date using a relative fair value allocation method. The pre-funded warrants are equity classified because they (i) are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, (ii) are immediately exercisable, (iii) do not embody an obligation for the Company to repurchase its shares, (iv) permit the holders to receive a fixed number of shares of common stock upon exercise, (v) are indexed to the Company’s common stock and (vi) meet the equity classification criteria. In addition, such pre-funded warrants do not provide any guarantee of value or return. The value of the pre-funded warrants is known at issuance, as their sales price approximates their fair value, and net proceeds from the sale are recorded as a component of additional paid-in capital.

Net Loss Per Share of Common Stock

Basic net income (loss) per share of common stock is computed by dividing the net income (loss) per share of common stock by the weighted average number of shares of common stock outstanding for the period. The weighted-average shares of common stock outstanding as of March 31, 2024 included pre-funded warrants, as the warrants were issued for minimal consideration and were immediately exercisable.

Diluted net income (loss) per share of common stock is computed by adjusting net income (loss) to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share of common stock is computed by dividing the diluted net loss by the weighted average number of shares of common stock outstanding for the period, including potentially dilutive shares.

The Company reported a net loss for the three months ended March 31, 2024 and 2023. In periods in which the Company reported a net loss, diluted net loss per share of common stock was the same as basic net loss per share of common stock, since dilutive shares were not assumed to have been issued if their effect is anti-dilutive. The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss attributable to common stockholders per share of common stock for the periods indicated because including them would have had an anti-dilutive effect:


	March 31,
	2024		2023
Options to purchase common stock		10,964,422		7,729,844
Unvested restricted stock units with service conditions		923,693		388,103
Unvested restricted stock units with market conditions		150,000		—
Shares issuable under employee stock purchase plan		66,202		106,308
Total		12,104,317		8,224,255

Deferred Offering Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated.

After consummation of the equity financing, these costs are recorded as a reduction to the carrying value of stockholders’ equity as a reduction of additional paid-in capital or equity generated as a result of such offering. Should an in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations and comprehensive loss.

Commitments and Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. For all periods presented, the Company was not a party to any pending material litigation or other material legal proceedings.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies. The Company is an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). Under the JOBS Act, emerging growth companies have extended transition periods available for complying with new or revised accounting standards. The Company has elected to use this exemption to delay adopting new or revised accounting standards until such time as those standards apply to private companies. Where allowable, the Company has early adopted certain standards as described below.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which requires additional income tax disclosures in the annual consolidated financial statements. The amendments in ASU 2023-09 are intended to enhance the transparency and decision usefulness of income tax disclosures. For public entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. For non-public entities, ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2025. Under the JOBS Act, emerging growth companies have extended transition periods available for complying with new or revised accounting standards. The Company is currently evaluating the impact of ASU 2023-09 on its financial statements and related disclosures.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07), which expands segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The disclosures required under ASU 2023-07 are also required for public entities with a single reportable segment. ASU 2023-07 is effective for the Company’s first fiscal year beginning after December 15, 2023 and for interim periods within the Company’s first fiscal year beginning after December 15, 2024, with early adoption permitted. The Company does not expect the adoption of ASU 2023-07 to have a material impact on its financial statements and related disclosures.

Common Stock and Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Common Stock and Stock-Based Compensation

5. Common Stock and Stock-Based Compensation

The Company is authorized to issue 150,000,000 shares of common stock and 10,000,000 shares of preferred stock. All classes of stock have a par value of $0.0001. There were no shares of preferred stock outstanding as of March 31, 2024 and December 31, 2023.

The Company had reserved shares of common stock for issuance in connection with the following:


	March 31, 2024		December 31, 2023
Options outstanding under incentive award plans		10,964,422		8,349,922
Unvested restricted stock units with service conditions		923,693		365,892
Unvested restricted stock units with market conditions		150,000		—
Shares available for future grant under incentive award plans		2,320,147		1,005,587
Shares available for future grant under employee stock purchase plans		701,671		701,671
Shares available for future grant under employment inducement award plans		1,808,000		3,291,000
Pre-funded warrants		9,751,500		9,751,500
Total shares reserved		26,619,433		23,465,572

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, if any, as may be declared by the Company’s board of directors. Through March 31, 2024, no cash dividends have been declared or paid by the Company.

Stock-Based Compensation Plans

The Company has three stock-based compensation plans, the 2017 Incentive Award Plan (the “2017 Plan”), the 2021 Incentive Award Plan (the “2021 Plan”) and the 2022 Employment Inducement Award Plan (the “2022 Inducement Plan”). Although awards made under the 2017 Plan continue to be governed by its terms, the 2017 Plan was terminated at the time of the Company’s IPO and no further awards are made under this plan. The 2021 Plan, while effective, authorizes the granting of equity awards to employees and directors of the Company, as well as non-employee consultants. The 2022 Inducement Plan authorizes the granting of equity awards to newly hired employees of the Company.

2021 Incentive Award Plan

In January 2021, the Company's board of directors approved the 2021 Plan which permits the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards and other stock awards to employees, directors, officers and consultants. In February 2021, 2,400,007 shares were authorized for issuance under the 2021 Plan, which shall be cumulatively increased on the first day of each year beginning in 2022 and ending in 2031 equal to the lesser of (i) the amount equal to 5% of the number of shares issued and outstanding on the last day of the immediately preceding fiscal year or (ii) such lower number of shares as may be determined by the Company’s board of directors. The 2021 Plan is the successor to the 2017 Incentive Award Plan and no additional awards may be issued from the 2017 Plan. However, the 2017 Plan will continue to govern the terms and conditions of the outstanding awards granted under this plan. Shares of common stock subject to awards granted under the 2017 Plan that are forfeited or lapse unexercised and which following the effective date of the 2021 Plan are not issued under the 2017 Plan will be available for issuance under the 2021 Plan. The number of authorized shares reserved for issuance under the 2021 Plan was increased by 3,228,835 shares effective as of January 1, 2024. As of March 31, 2024, 2,320,147 shares of the Company’s common stock were available for future grants under the 2021 Plan.

2021 Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan (the “2021 ESPP”) was approved by the Company’s board of directors in January 2021. In February 2021, a total of 240,000 shares were initially reserved for issuance under this plan, which shall be cumulatively increased on the first day of each year beginning in 2022 and ending in 2031 equal to the lesser of (i) 1% of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the Company’s board of directors. The number of authorized shares reserved for issuance under the 2021 ESPP was increased by 645,767 shares effective as of January 1, 2024. As of March 31, 2024, 701,671 shares of the Company’s common stock were available for future grants under the 2021 ESPP.

Under the 2021 ESPP, eligible employees may select a rate of payroll deduction up to 15% of their eligible compensation subject to certain maximum purchase limitations. The duration for each offering period is 24 months and is divided into four purchase periods of approximately six months in length. Offerings are concurrent. The purchase price of the shares under the offering is the lesser of 85% of the fair market value of the shares on the offering date or 85% of the fair market value of the shares on the purchase date. A look-back feature in the 2021 ESPP causes the offering period to automatically reset if the fair value of the Company’s common stock on the last day of the purchase period is less than that on the original offering date. 2021 ESPP purchases by employees are settled with newly-issued common stock from the 2021 ESPP’s previously authorized and available pool of shares.

As of March 31, 2024, there was $0.9 million of unrecognized stock-based compensation expense related to unvested employee stock purchases. The unrecognized stock-based compensation expense is estimated to be recognized over a period of 1.38 years as of March 31, 2024. There were no shares purchased by employees under the 2021 ESPP during the three months ended March 31, 2024 and 2023.

2022 Employment Inducement Award Plan

In September 2022, the Company's compensation committee approved the 2022 Employment Inducement Award Plan (the "2022 Inducement Plan"), which authorized 1,400,000 shares of common stock to be issued and permitted the granting of nonqualified stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards to newly hired employees and officers. In September 2023, the Company approved an amendment to the 2022 Inducement Plan which increased the number of authorized shares reserved for issuance by 3,113,250 shares. As of March 31, 2024, 1,808,000 shares of the Company's common stock were available for future grants under the 2022 Inducement Plan.

Pre-Funded Warrants

In August 2022, the Company sold pre-funded warrants to purchase 14,630,000 shares of common stock at a price of $2.4199 per pre-funded warrant. The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.0001 per share exercise price of such pre-funded warrant. As of March 31, 2024, 4,878,500 pre-funded warrants have been exercised.

Stock Options

Stock options granted to employees and non-employees under the plans generally vest over four years and allow the holder of the option to purchase common stock at a stated exercise price. Options granted under the plans generally expire ten years after the date of grant. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

The following table summarizes the stock option activity for all stock plans during the three months ended March 31, 2024:


	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
					(in years)		(in thousands)
Outstanding as of December 31, 2023		8,349,922	$	9.04		6.82	$	2,225
Granted		2,614,500		6.75
Outstanding as of March 31, 2024		10,964,422	$	8.49		7.36	$	3,133
Exercisable, March 31, 2024		5,149,787	$	8.72		5.19	$	1,673
Vested and expected to vest, March 31, 2024		10,964,422	$	8.49		7.36	$	3,133

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.

As of March 31, 2024, there was $30.9 million of unrecognized stock-based compensation expense related to unvested stock options which is estimated to be recognized over a period of 2.94 years.

Restricted Stock Units with Service Conditions

Restricted stock units (RSUs) with service conditions granted to employees under the plans generally vest over four years. The number of shares issued on the date the RSUs vest is net of the minimum statutory tax withholdings, which are paid in cash to the appropriate taxing authorities on behalf of the Company’s employees. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period.

The following table summarizes the RSUs with service conditions activity for all stock plans during the three months ended March 31, 2024:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested restricted stock units as of December 31, 2023		365,892		$	8.79
Granted		632,775			6.16
Vested		(74,974	)		9.66
Unvested restricted stock units as of March 31, 2024		923,693		$	6.91

As of March 31, 2024, there was $5.9 million of unrecognized stock-based compensation expense related to RSUs with service conditions which is estimated to be recognized over a period of 3.30 years.

Restricted Stock Units with Market Conditions

In March 2024, the Company granted 150,000 RSUs with market conditions, which are subject to the achievement of certain escalating stock price thresholds established by the Company's compensation committee of the board of directors. The RSUs with market conditions vest in equal installments upon the achievement of escalating stock price thresholds of $15.00 and $20.00, respectively, calculated based on the average price per share of the Company’s common stock for a period of 30 consecutive trading days equaling or exceeding the applicable price threshold, with vesting occurring as of the last day of the 30 consecutive trading day period. The escalating stock price thresholds can be met any time after the first anniversary of employment of the recipient but prior to the fourth anniversary of the date of grant.

The Company estimated the fair value of RSUs with market conditions granted using a Monte Carlo simulation model with the following assumptions:


	Three Months Ended March 31, 2024
Expected volatility		78.45	%
Risk-free interest rate		4.27	%
Fair value of underlying common stock	$	7.31
Weighted average grant-date fair value per share	$	5.39

As of March 31, 2024, none of the escalating stock price thresholds had been met for any of the RSUs with market conditions, resulting in no shares vested.

As of March 31, 2024, there was $0.8 million of unrecognized stock-based compensation expense related to RSUs with market conditions which is estimated to be recognized over a period of 1.55 years.

Stock-Based Compensation Expense

The Company estimated the fair value of options granted and rights to acquire stock granted under the Company’s employee stock purchase plan using a Black-Scholes option pricing model with the following assumptions presented on a weighted average basis:


	Three Months Ended March 31,
	2024			2023
Stock Option Plans
Expected term (years)		6.08			6.08
Expected volatility		78.46	%		73.44	%
Risk-free interest rate		4.14	%		3.49	%
Fair value of underlying common stock	$	6.75		$	9.07
Weighted average grant-date fair value per share	$	4.78		$	6.10

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Research and development expense	$	2,088	$	1,348
General and administrative expense		1,940		2,590
Total stock-based compensation expense	$	4,028	$	3,938

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (22,373)	$ (21,528)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	4,028	3,938
Depreciation expense	82	76
Accretion on marketable securities	(360)	(806)
Change in deferred taxes and uncertain tax positions	34	32
Amortization of operating lease assets	154	146
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(1,249)	(67)
Accounts payable	(814)	1,324
Accrued expenses and other current liabilities	(2,125)	2,666
Operating lease liabilities	(175)	(163)
Net cash used in operating activities	(22,798)	(14,382)
Cash flows from investing activities:
Purchase of property and equipment	(29)	0
Purchase of investments	(50,594)	(23,862)
Proceeds from sales and maturities of investments	58,620	51,793
Net cash provided by investing activities	7,997	27,931
Cash flows from financing activities:
Net proceeds from issuance of common stock in at-the-market offering	0	27,924
Payment of deferred offering costs	0	(344)
Net cash provided by financing activities	0	27,580
Effect of exchange rate changes on cash and cash equivalents	(26)	(10)
Net (decrease) increase in cash and cash equivalents	(14,827)	41,119
Cash and cash equivalents at beginning of period	79,926	143,235
Cash and cash equivalents at end of period	65,099	184,354
Supplemental disclosure of cash flow information:
Cash paid for amounts included in the measurement of lease liabilities	$ 183	$ 180

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Basis of Presentation

Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other future periods.

Unaudited Interim Financial Information

At-the-Market Offering

Use of Estimates

Cash, Cash Equivalents and Marketable Securities

Operating Leases and Rent Expense

Research and Development Expenses

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities included the following:


(in thousands)	March 31, 2024		December 31, 2023
Research and development costs	$	2,155	$	2,010
Compensation and benefit costs		2,100		5,683
Accrued professional fees		1,913		855
Other		532		278
Total accrued expenses and other current liabilities	$	6,700	$	8,826

Executive Leadership Transition

Income Taxes

The Company recorded income tax expense for the three months ended March 31, 2024 and 2023 of less than $0.1 million. The expenses are primarily related to foreign income tax expenses from China.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources.

Stock-Based Compensation

The fair value of RSUs with service conditions is based upon the Company’s common stock valuation on the date of the grant.

Pre-funded Warrants

Net Loss Per Share of Common Stock


	March 31,
	2024		2023
Options to purchase common stock		10,964,422		7,729,844
Unvested restricted stock units with service conditions		923,693		388,103
Unvested restricted stock units with market conditions		150,000		—
Shares issuable under employee stock purchase plan		66,202		106,308
Total		12,104,317		8,224,255

Deferred Offering Costs

Commitments and Contingencies

Recent Accounting Pronouncements

Recently Issued Accounting Pronouncements Not Yet Adopted

Common Stock and Stock-Based Compensation - Summary of Stock Option Activity (Details) - Employee Stock Option - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Number of Shares
Number of Shares, Outstanding beginning balance	8,349,922
Number of Shares, Granted	2,614,500
Number of Shares, Outstanding ending balance	10,964,422	8,349,922
Number of Shares, Exercisable	5,149,787
Number of Shares, Vested and expected to vest	10,964,422
Weighted-Average Exercise Price
Weighted-Average Exercise Price, Outstanding beginning balance	$ 9.04
Weighted-Average Exercise Price, Granted	6.75
Weighted-Average Exercise Price, Outstanding ending balance	8.49	$ 9.04
Weighted-Average Exercise Price, Exercisable	8.72
Weighted-Average Exercise Price, Vested and expected to vest	$ 8.49
Weighted-Average Remaining Contractual Term and Aggregate Intrinsic Value
Weighted-Average Remaining Contractual Term, Outstanding	7 years 4 months 9 days	6 years 9 months 25 days
Weighted-Average Remaining Contractual Term, Exercisable	5 years 2 months 8 days
Weighted-Average Remaining Contractual Term, Vested and expected to vest	7 years 4 months 9 days
Aggregate Intrinsic Value, Outstanding, beginning balance	$ 2,225
Aggregate Intrinsic Value, Outstanding, ending balance	3,133	$ 2,225
Aggregate Intrinsic Value, Exercisable	1,673
Aggregate Intrinsic Value, Vested and expected to vest	$ 3,133

Cash Equivalents and Marketable Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

Cash Equivalents and Marketable Securities

2. Cash Equivalents and Marketable Securities

The amortized cost and fair value of cash equivalents and marketable securities by major security type is as follows:


	March 31, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	44,181	$	—	$	—		$	44,181
U.S. government securities		175,691		28		(164	)		175,555
Total	$	219,872	$	28	$	(164	)	$	219,736

Classified as:
Cash equivalents								$	44,181
Marketable securities									175,555
Total								$	219,736

	December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	33,788	$	—	$	—		$	33,788
U.S. government securities		183,357		219		(62	)		183,514
Total	$	217,145	$	219	$	(62	)	$	217,302

Classified as:
Cash equivalents								$	33,788
Marketable securities									183,514
Total								$	217,302

The aggregate fair value of the Company’s available-for-sale marketable securities that have been in a continuous unrealized loss position for less than twelve months or twelve months or longer is as follows:


	March 31, 2024
	Less than 12 months					12 months or longer				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government securities	$	144,569	$	(164	)	$	—	$	—	$	144,569	$	(164	)
Total	$	144,569	$	(164	)	$	—	$	—	$	144,569	$	(164	)

	December 31, 2023
	Less than 12 months					12 months or longer				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government securities	$	80,461	$	(62	)	$	—	$	—	$	80,461	$	(62	)
Total	$	80,461	$	(62	)	$	—	$	—	$	80,461	$	(62	)

At March 31, 2024, the Company had 32 available-for-sale marketable securities in an unrealized loss position without an allowance for credit losses. The Company does not intend to sell these securities and the Company believes it is more likely than not that marketable securities in an unrealized loss position will be held until maturity and that the Company will not be required to sell these securities before recovery of their amortized cost basis. The Company believes that an allowance for credit losses is unnecessary as the securities are of high credit quality and the decline in fair value is due to market conditions and/or changes in interest rates.

Common Stock and Stock-Based Compensation - Additional Information (Details)		1 Months Ended		3 Months Ended
	Jan. 01, 2023 shares	Sep. 30, 2023 shares	Feb. 28, 2021 shares	Mar. 31, 2024 USD ($) Plan Vote $ / shares shares	Dec. 31, 2023 $ / shares shares	Sep. 30, 2022 shares	Aug. 31, 2022 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock, voting rights				Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends
Number of voting rights per share \| Vote				1
Cash dividends declared or paid \| $				$ 0
Number of stock-based compensation plans \| Plan				3
Number of shares authorized				150,000,000	150,000,000
Preferred stock, shares authorized				10,000,000
Preferred stock, par or stated value per share \| $ / shares				$ 0.0001
Common stock, par value \| $ / shares				$ 0.0001	$ 0.0001
Preferred Stock, Shares Outstanding				0	0
Initial total shares reserved				26,619,433	23,465,572
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grants				2,614,500
Unrecognized stock-based compensation expense related to unvested stock options \| $				$ 30,900,000
Unrecognized stock-based compensation expense recognized period				2 years 11 months 8 days
Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense related to unvested stock options \| $				$ 5,900,000
Unrecognized stock-based compensation expense recognized period				3 years 3 months 18 days
Number of Shares, Granted				632,775
Restricted Stock Units with Market Conditions
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense related to unvested stock options \| $				$ 800,000
Unrecognized stock-based compensation expense recognized period				1 year 6 months 18 days
Number of Shares, Granted				150,000
Stock Price Thresholds , Minimum \| $				$ 15
Stock Price Thresholds , Maximum \| $				$ 20
2021 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based payment award, number of shares authorized			2,400,007
Increase of number of authorized shares reserved for issuance under the 2021 Plan	3,228,835
Share-based payment award, shares available for future grants				2,320,147
Increase of authorized shares, percent of common stock outstanding			5.00%
2017 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase of number of authorized shares reserved for issuance under the 2021 Plan			0
2021 Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase of number of authorized shares reserved for issuance under the 2021 Plan	645,767
Share-based payment award, shares available for future grants				701,671
Initial total shares reserved			240,000
Shares purchased by employees under the ESPP				0
Increase of authorized shares, percent of common stock outstanding			1.00%
Unrecognized stock-based compensation expense recognized period				1 year 4 months 17 days
Percentage of fair market value of the shares on the offering date				85.00%
Percentage of fair market value of the shares on the purchase date				85.00%
Unrecognized stock-based compensation expense related to unvested employee stock purchases \| $				$ 900,000
2021 Employee Stock Purchase Plan \| Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share Based Compensation Rate of Payroll Deduction				15.00%
2022 Inducement Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares authorized						1,400,000
Increase of number of authorized shares reserved for issuance under the 2021 Plan		3,113,250
Shares available for future grants				1,808,000
Pre-Funded Warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Pre Funded warrants exercised				4,878,500
Common stock, par value \| $ / shares							$ 0.0001
Pre-funded warrants to purchase							14,630,000
Pre-funded warrant price \| $ / shares							$ 2.4199

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Operating expenses:
Research and development	$ 18,587	$ 17,056
General and administrative	6,859	7,101
Total operating expenses	25,446	24,157
Loss from operations	(25,446)	(24,157)
Other income:
Interest income	3,182	2,693
Other expense, net	(12)	(4)
Total other income, net	3,170	2,689
Loss before income taxes	(22,276)	(21,468)
Income tax expense	(97)	(60)
Net loss	$ (22,373)	$ (21,528)
Net loss per share, basic	$ (0.3)	$ (0.31)
Net loss per share, diluted	$ (0.3)	$ (0.31)
Weighted average common stock outstanding, basic	74,399,378	69,778,420
Weighted average common stock outstanding, diluted	74,399,378	69,778,420
Other comprehensive loss:
Net loss	$ (22,373)	$ (21,528)
Unrealized (loss) gain on available-for-sale securities, net of tax	(293)	418
Foreign exchange translation adjustment, net of tax	(9)	(12)
Comprehensive loss	$ (22,675)	$ (21,122)

Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended			12 Months Ended
	Aug. 31, 2023	Mar. 31, 2024	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2023	Nov. 30, 2023
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Common stock, authorized		150,000,000			150,000,000
Common stock, par value		$ 0.0001			$ 0.0001
Other Accrued Liabilities, Current		$ 532			$ 278
Preferred stock, shares authorized		10,000,000
Preferred stock, par or stated value per share		$ 0.0001
Income tax expense		$ 97	$ 60
Foreign Country [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Income tax expense		100	$ 100
Mr. Sundaram
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Severance Costs	$ 600
Other Accrued Liabilities, Current		400			900
Stock-Based Compensation Expense					$ 10,500
Discretionary Bonus	100.00%
Discretionary Bonus Amount	$ 300
Mr. Yoon
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Retention awards payable	500
Dr. Vignola
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Retention awards payable	$ 700
Mr. Yoon and Dr. Vignola
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Other Accrued Liabilities, Current		300
Erin Quirk [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Other Accrued Liabilities, Current		$ 200
Retention awards payable						$ 600
Recognition bonus aggregate amount						$ 100
At-the-Market Offering [Member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Offer price				$ 75,000
At-the-Market Offering [Member] \| Common Stock
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Number of shares issued		9,781,673
Net proceeds from issuance of common stock		$ 66,600
Sales Agreement With Cowen
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Offer price		$ 150,000

Common Stock and Stock-Based Compensation - Schedule of Stock Options Weighted Average Assumptions (Details) - Employee Stock Option - $ / shares	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected option life	6 years 29 days	6 years 29 days
Expected volatility	78.46%	73.44%
Risk-free interest rate	4.14%	3.49%
Fair value of underlying common stock	$ 6.75	$ 9.07
Weighted average grant-date fair value per share	$ 4.78	$ 6.1

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three levels of inputs that may be used to measure fair value are defined below:

•

Level 1—Quoted prices in active markets for identical assets or liabilities at the measurement date.

•

Level 2—Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of the Company’s other assets, accounts payable and accrued expenses and other current liabilities approximate their fair values due to the short-term nature of these assets and liabilities.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value at March 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	20,918	$	—	$	—	$	20,918
Money market funds		44,181		—		—		44,181
Total cash and cash equivalents	$	65,099	$	—	$	—	$	65,099
Marketable securities
U.S. government securities	$	—	$	175,555	$	—	$	175,555
Total marketable securities	$	—	$	175,555	$	—	$	175,555

	Fair Value at December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	46,138	$	—	$	—	$	46,138
Money market funds		33,788		—		—		33,788
Total cash and equivalents	$	79,926	$	—	$	—	$	79,926
Marketable securities
U.S. government securities	$	—	$	183,514	$	—	$	183,514
Total marketable securities	$	—	$	183,514	$	—	$	183,514

The aggregate amortized cost and fair value of marketable securities as of March 31, 2024, by contractual maturity, are as follows:


(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	126,159	$	126,077
Due after one year through two years		49,532		49,478
Total marketable securities	$	175,691	$	175,555

There were no transfers between Level 1, Level 2 and Level 3 during the periods presented.

Share-Based Payment Arrangement [Abstract]

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Condensed Consolidated Balance Sheets(Unaudited) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 65,099	$ 79,926
Marketable securities	175,555	183,514
Prepaid expenses and other current assets	5,241	3,992
Total current assets	245,895	267,432
Property and equipment, net	447	506
Operating lease assets	369	523
Other assets	55	56
Total assets	246,766	268,517
Current liabilities:
Accounts payable	1,701	2,515
Accrued expenses and other current liabilities	6,700	8,826
Current portion of operating lease liabilities	427	603
Total current liabilities	8,828	11,944
Taxes payable, non-current	1,218	1,206
Total liabilities	10,046	13,150
Commitments and contingencies
Stockholders' equity:
Common stock, $0.0001 par value, 150,000,000 shares authorized at March 30, 2024 and December 31, 2023; 64,651,693 and 64,576,719 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	6	6
Additional paid-in capital	592,036	588,008
Accumulated other comprehensive loss	(321)	(19)
Accumulated deficit	(355,001)	(332,628)
Total stockholders' equity	236,720	255,367
Total liabilities and stockholders' equity	$ 246,766	$ 268,517

Common Stock and Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Schedule of Common Stock Shares Reserved for Issuance

he Company had reserved shares of common stock for issuance in connection with the following:


	March 31, 2024		December 31, 2023
Options outstanding under incentive award plans		10,964,422		8,349,922
Unvested restricted stock units with service conditions		923,693		365,892
Unvested restricted stock units with market conditions		150,000		—
Shares available for future grant under incentive award plans		2,320,147		1,005,587
Shares available for future grant under employee stock purchase plans		701,671		701,671
Shares available for future grant under employment inducement award plans		1,808,000		3,291,000
Pre-funded warrants		9,751,500		9,751,500
Total shares reserved		26,619,433		23,465,572

Summary of Stock Option Activity

The following table summarizes the stock option activity for all stock plans during the three months ended March 31, 2024:


	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
					(in years)		(in thousands)
Outstanding as of December 31, 2023		8,349,922	$	9.04		6.82	$	2,225
Granted		2,614,500		6.75
Outstanding as of March 31, 2024		10,964,422	$	8.49		7.36	$	3,133
Exercisable, March 31, 2024		5,149,787	$	8.72		5.19	$	1,673
Vested and expected to vest, March 31, 2024		10,964,422	$	8.49		7.36	$	3,133

Schedule of Stock Options Weighted Average Assumptions


	Three Months Ended March 31,
	2024			2023
Stock Option Plans
Expected term (years)		6.08			6.08
Expected volatility		78.46	%		73.44	%
Risk-free interest rate		4.14	%		3.49	%
Fair value of underlying common stock	$	6.75		$	9.07
Weighted average grant-date fair value per share	$	4.78		$	6.10

Summary of Restricted Stock Award Activity

The following table summarizes the RSUs with service conditions activity for all stock plans during the three months ended March 31, 2024:


	Number of Shares			Weighted Average Grant-Date Fair Value
Unvested restricted stock units as of December 31, 2023		365,892		$	8.79
Granted		632,775			6.16
Vested		(74,974	)		9.66
Unvested restricted stock units as of March 31, 2024		923,693		$	6.91

Schedule Of Estimated the Fair Value of RSUs with Market Conditions

The Company estimated the fair value of RSUs with market conditions granted using a Monte Carlo simulation model with the following assumptions:


	Three Months Ended March 31, 2024
Expected volatility		78.45	%
Risk-free interest rate		4.27	%
Fair value of underlying common stock	$	7.31
Weighted average grant-date fair value per share	$	5.39

Schedule of Stock-based Compensation Expense

Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:


	Three Months Ended March 31,
(in thousands)	2024		2023
Research and development expense	$	2,088	$	1,348
General and administrative expense		1,940		2,590
Total stock-based compensation expense	$	4,028	$	3,938

Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional paid-in capital	Accumulated Other Comprehensive Loss	Accumulated deficit
Balances at Dec. 31, 2022	$ 276,943	$ 5	$ 520,178	$ (822)	$ (242,418)
Balance at Beginning of period (in shares) at Dec. 31, 2022		53,723,171
Issuance of common stock in at-the-market offering	27,924		27,924
Issuance of common stock in at-the-market offering, Shares		2,929,922
Vesting of restricted stock units with service conditions (in shares)		16,503
Stock-based compensation expense	3,938		3,938
Unrealized gain (loss) on available-for-sale securities	418			418
Foreign exchange translation adjustment	(12)			(12)
Net Income (Loss)	(21,528)				(21,528)
Balances at Mar. 31, 2023	287,683	$ 5	552,040	(416)	(263,946)
Balance at end of period (in shares) at Mar. 31, 2023		56,669,596
Balances at Dec. 31, 2023	255,367	$ 6	588,008	(19)	(332,628)
Balance at Beginning of period (in shares) at Dec. 31, 2023		64,576,719
Vesting of restricted stock units with service conditions (in shares)		74,974
Stock-based compensation expense	4,028		4,028
Unrealized gain (loss) on available-for-sale securities	(293)			(293)
Foreign exchange translation adjustment	(9)			(9)
Net Income (Loss)	(22,373)				(22,373)
Balances at Mar. 31, 2024	$ 236,720	$ 6	$ 592,036	$ (321)	$ (355,001)
Balance at end of period (in shares) at Mar. 31, 2024		64,651,693

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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Amount of equity (deficit) attributable to parent. Excludes temporary equity and equity attributable to noncontrolling interest.

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Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2024	May 03, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Entity Registrant Name	Terns Pharmaceuticals, Inc.
Entity Central Index Key	0001831363
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding		64,677,145
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-39926
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	98-1448275
Entity Address Address Line1	1065 East Hillsdale Blvd
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Foster City
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94404
City Area Code	650
Local Phone Number	525-5535
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	TERN
Security Exchange Name	NASDAQ

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis:


	Fair Value at March 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	20,918	$	—	$	—	$	20,918
Money market funds		44,181		—		—		44,181
Total cash and cash equivalents	$	65,099	$	—	$	—	$	65,099
Marketable securities
U.S. government securities	$	—	$	175,555	$	—	$	175,555
Total marketable securities	$	—	$	175,555	$	—	$	175,555

	Fair Value at December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash in bank balances	$	46,138	$	—	$	—	$	46,138
Money market funds		33,788		—		—		33,788
Total cash and equivalents	$	79,926	$	—	$	—	$	79,926
Marketable securities
U.S. government securities	$	—	$	183,514	$	—	$	183,514
Total marketable securities	$	—	$	183,514	$	—	$	183,514

Schedule of Aggregate Fair Value of Marketable Securities

The aggregate amortized cost and fair value of marketable securities as of March 31, 2024, by contractual maturity, are as follows:


(in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	126,159	$	126,077
Due after one year through two years		49,532		49,478
Total marketable securities	$	175,691	$	175,555

Common Stock and Stock-Based Compensation - Schedule of Common Stock Shares Reserved for Issuance (Details) - shares	Mar. 31, 2024	Dec. 31, 2023
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	26,619,433	23,465,572
Options Outstanding Under Incentive Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	10,964,422	8,349,922
Unvested Restricted Stock Units With Service Conditions
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	923,693	365,892
Unvested Restricted Stock Units With Market Conditions
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	150,000	0
Shares Available For Future Grant Under Incentive Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	2,320,147	1,005,587
Shares Available For Future Grant Under Employee Stock Purchase Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	701,671	701,671
Shares Available For Future Grant Under Employment Inducement Award Plans
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	1,808,000	3,291,000
Pre-Funded Warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total shares reserved	9,751,500	9,751,500

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

Investments, Debt and Equity Securities [Abstract]

Cash Equivalents and Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2024

Schedule of Fair Value And Amortized Cost of Marketable Securities

The amortized cost and fair value of cash equivalents and marketable securities by major security type is as follows:


	March 31, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	44,181	$	—	$	—		$	44,181
U.S. government securities		175,691		28		(164	)		175,555
Total	$	219,872	$	28	$	(164	)	$	219,736

Classified as:
Cash equivalents								$	44,181
Marketable securities									175,555
Total								$	219,736

	December 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	33,788	$	—	$	—		$	33,788
U.S. government securities		183,357		219		(62	)		183,514
Total	$	217,145	$	219	$	(62	)	$	217,302

Classified as:
Cash equivalents								$	33,788
Marketable securities									183,514
Total								$	217,302

Schedule of Available-for-sale Marketable Securities for Unrealized Loss Position


	March 31, 2024
	Less than 12 months					12 months or longer				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government securities	$	144,569	$	(164	)	$	—	$	—	$	144,569	$	(164	)
Total	$	144,569	$	(164	)	$	—	$	—	$	144,569	$	(164	)

	December 31, 2023
	Less than 12 months					12 months or longer				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government securities	$	80,461	$	(62	)	$	—	$	—	$	80,461	$	(62	)
Total	$	80,461	$	(62	)	$	—	$	—	$	80,461	$	(62	)

Common Stock and Stock-Based Compensation - Schedule of Estimated the Fair value of RSUs with Market Conditions (Details) - Restricted Stock Units with Market Conditions	3 Months Ended
	Mar. 31, 2024 $ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected volatility	78.45%
Risk-free interest rate	4.27%
Fair value of underlying common stock	$ 7.31
Weighted average grant-date fair value per share	$ 5.39

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.