0001798749-24-000015 | 10-K | XBRL Viewer | Aerovate Therapeutics INC

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2023

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):


			Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2023		(Level 1)		(Level 2)		(level 3)
Assets:
Cash equivalents
Money market funds	$	19,787	$	19,787	$	—	$	—
Total cash equivalents		19,787		19,787		—		—

Short-term investments
Agency bonds		42,255		—		42,255		—
Commercial Paper		38,386		—		38,386		—
U.S. Treasury bills		10,362		10,362		—		—
Corporate debt securities		7,945		—		7,945		—
Total short-term investments		98,948		10,362		88,586		—

Total fair value of assets	$	118,735	$	30,149	$	88,586	$	—


			Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2022		(Level 1)		(Level 2)		(level 3)
Assets:
Cash equivalents
Money market funds	$	18,436	$	18,436	$	—	$	—
Total cash equivalents		18,436		18,436		—		—

Short-term investments
Commercial paper		55,577		—		55,577		—
U.S. Treasury bills		26,841		26,841		—		—
Agency Bonds		24,405		—		24,405		—
Total short-term investments		106,823		26,841		79,982		—

Total fair value of assets	$	125,259	$	45,277	$	79,982	$	—

SCHEDULE OF SHORT TERM INVESTMENT

The following tables summarize the Company’s short-term investments (in thousands):


		As of December 31, 2023
				Gross		Gross
		Amortized		unrealized		unrealized		Estimated fair
	Maturity	cost		gains		losses		value
Agency bonds	2 years or less		42,090		179		(14)		42,255
Commercial paper	2 years or less		38,362		29		(5)		38,386
U.S. Treasury bills	2 years or less		10,334		31		(3)		10,362
Corporate debt securities	2 years or less		7,925		21		(1)		7,945
		$	98,711	$	260	$	(23)	$	98,948


		As of December 31, 2022
				Gross		Gross
		Amortized		unrealized		unrealized		Estimated fair
	Maturity	cost		gains		losses		value
Commercial paper	1 year or less	$	55,645	$	16	$	(84)	$	55,577
U.S. Treasury bills	1 year or less		27,108		—		(267)		26,841
Agency bonds	2 years or less		24,536		2		(133)		24,405
		$	107,289	$	18	$	(484)	$	106,823

SCHEDULE OF SHORT-TERM INVESTMENTS WITH UNREALIZED LOSSES


		As of December 31, 2023
		Less than 12 months			12 months or Greater
			Unrealized				Unrealized		Total		Total Unrealized
		Fair Value	Losses		Fair Value		Losses		Fair Value		Losses
Commercial paper	$	6,042	$	(5)	$	—	$	—	$	6,042	$	(5)
Agency bonds		3,760		(6)		6,579		(8)		10,339		(14)
U.S. Treasury bills		488		(2)		1,007		(1)		1,495		(3)
Corporate debt securities		3,110		(1)		—		—		3,110		(1)
	$	13,400	$	(14)	$	7,586	$	(9)	$	20,986	$	(23)


		As of December 31, 2022
		Less than 12 months			12 months or Greater
			Unrealized				Unrealized		Total		Total Unrealized
		Fair Value	Losses		Fair Value		Losses		Fair Value		Losses
Commercial paper	$	34,928	$	(84)	$	—	$	—	$	34,928	$	(84)
U.S. Treasury bills		1,971		(6)		24,833		(261)		26,804		(267)
Agency bonds		22,964		(133)		—		—		22,964		(133)
	$	59,863	$	(223)	$	24,833	$	(261)	$	84,696	$	(484)

- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

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+ Details

BALANCE SHEET COMPONENTS - SCHEDULE OF ACCRUED AND OTHER CURRENT LIABILITIES - (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
BALANCE SHEET COMPONENTS
Accrued research and development	$ 9,363	$ 2,751
Accrued payroll and other employee benefits	4,368	1,691
Other	1,090	380
Total accrued and other current liabilities	$ 14,821	$ 4,822

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 23,491	$ 22,397
Short-term investments	98,948	106,823
Prepaid expenses and other current assets	1,793	2,276
Total current assets	124,232	131,496
Property and equipment, net	288	242
Operating lease right-of-use assets	614	1,003
Other long-term assets	2,284	2,560
Total assets	127,418	135,301
Current liabilities:
Accounts payable	2,396	2,575
Accrued and other current liabilities	14,821	4,822
Operating lease liabilities	420	385
Total current liabilities	17,637	7,782
Operating lease liabilities, net of current portion	255	705
Other liabilities	70	71
Total liabilities	17,962	8,558
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized as of December 31, 2023 and December 31, 2022, respectively; no shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively
Common stock, $0.0001 par value; 150,000,000 shares authorized at December 31, 2023 and December 31, 2022, respectively; 27,762,703 and 24,722,974 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively	3	2
Additional paid-in capital	272,640	215,110
Accumulated other comprehensive income (loss)	237	(466)
Accumulated deficit	(163,424)	(87,903)
Total stockholders' equity	109,456	126,743
Total liabilities and stockholders' equity	$ 127,418	$ 135,301

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash flow from operating activities:
Net loss	$ (75,521)	$ (51,511)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	11,906	5,476
Depreciation and amortization expense	96	68
Accretion of discounts and amortization of premiums on investments, net	(3,057)	(910)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	483	4,677
Other long-term assets	(110)	(1,872)
Accounts payable	(164)	1,368
Accrued and other liabilities	9,999	3,672
Operating lease assets and liabilities, net	(26)	43
Other liabilities	(384)	(133)
Net cash used in operating activities	(56,778)	(39,122)
Cash flow from investing activities:
Purchases of short-term investments	(123,982)	(147,623)
Maturities of short-term investments	136,000	154,744
Purchases of property and equipment	(142)	(195)
Net cash provided by investing activities	11,876	6,926
Cash flow from financing activities:
Proceeds from sale of common stock in connection with ATM, net	44,888
Payments for offering costs	(234)	(371)
Proceeds from issuance of common stock under ESPP	356	150
Proceeds from issuance of common stock upon exercise of stock options	986	617
Net cash provided by financing activities	45,996	396
Net increase (decrease) in cash and cash equivalents	1,094	(31,800)
Cash and cash equivalents at the beginning of the year	22,397	54,197
Cash and cash equivalents at the end of the period	$ 23,491	22,397
Supplemental disclosure of noncash investing and financing activities:
Right-of-use asset obtained in exchange for operating lease liability		765
Deferred offering costs included in accounts payable		$ 15

Pay vs Performance Disclosure - USD ($) $ in Thousands	12 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (75,521)	$ (51,511)

- Definition

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

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+ Details

BALANCE SHEET COMPONENTS (Tables)

12 Months Ended

Dec. 31, 2023

BALANCE SHEET COMPONENTS

SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following (in thousands):


	December 31,		December 31,
	2023		2022
Prepaid expenses	$	1,168	$	1,503
Prepaid research and development		375		478
Other current assets		250		295
Total prepaid expenses and other current assets	$	1,793	$	2,276

SCHEDULE OF ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consisted of the following (in thousands):


	December 31,		December 31,
	2023		2022
Accrued research and development	$	9,363	$	2,751
Accrued payroll and other employee benefits		4,368		1,691
Other		1,090		380
Total accrued and other current liabilities	$	14,821	$	4,822

FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2023

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

(3) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):


			Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2023		(Level 1)		(Level 2)		(level 3)
Assets:
Cash equivalents
Money market funds	$	19,787	$	19,787	$	—	$	—
Total cash equivalents		19,787		19,787		—		—

Short-term investments
Agency bonds		42,255		—		42,255		—
Commercial Paper		38,386		—		38,386		—
U.S. Treasury bills		10,362		10,362		—		—
Corporate debt securities		7,945		—		7,945		—
Total short-term investments		98,948		10,362		88,586		—

Total fair value of assets	$	118,735	$	30,149	$	88,586	$	—


			Fair Value Measurements Using
			Quoted Prices in
			Active Markets		Significant Other		Significant
			for Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
	2022		(Level 1)		(Level 2)		(level 3)
Assets:
Cash equivalents
Money market funds	$	18,436	$	18,436	$	—	$	—
Total cash equivalents		18,436		18,436		—		—

Short-term investments
Commercial paper		55,577		—		55,577		—
U.S. Treasury bills		26,841		26,841		—		—
Agency Bonds		24,405		—		24,405		—
Total short-term investments		106,823		26,841		79,982		—

Total fair value of assets	$	125,259	$	45,277	$	79,982	$	—

Cash Equivalents and Short-Term Investments

Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and short-term investments. Cash equivalents consisted of cash, money market funds and commercial paper, and short-term investments consisted of U.S. Treasury bills, agency bonds, corporate debt securities and commercial paper. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.

The following tables summarize the Company’s short-term investments (in thousands):


		As of December 31, 2023
				Gross		Gross
		Amortized		unrealized		unrealized		Estimated fair
	Maturity	cost		gains		losses		value
Agency bonds	2 years or less		42,090		179		(14)		42,255
Commercial paper	2 years or less		38,362		29		(5)		38,386
U.S. Treasury bills	2 years or less		10,334		31		(3)		10,362
Corporate debt securities	2 years or less		7,925		21		(1)		7,945
		$	98,711	$	260	$	(23)	$	98,948


		As of December 31, 2022
				Gross		Gross
		Amortized		unrealized		unrealized		Estimated fair
	Maturity	cost		gains		losses		value
Commercial paper	1 year or less	$	55,645	$	16	$	(84)	$	55,577
U.S. Treasury bills	1 year or less		27,108		—		(267)		26,841
Agency bonds	2 years or less		24,536		2		(133)		24,405
		$	107,289	$	18	$	(484)	$	106,823

The following tables summarize the Company’s short-term investments with unrealized losses for less than 12 months and 12 months or greater:


		As of December 31, 2023
		Less than 12 months			12 months or Greater
			Unrealized				Unrealized		Total		Total Unrealized
		Fair Value	Losses		Fair Value		Losses		Fair Value		Losses
Commercial paper	$	6,042	$	(5)	$	—	$	—	$	6,042	$	(5)
Agency bonds		3,760		(6)		6,579		(8)		10,339		(14)
U.S. Treasury bills		488		(2)		1,007		(1)		1,495		(3)
Corporate debt securities		3,110		(1)		—		—		3,110		(1)
	$	13,400	$	(14)	$	7,586	$	(9)	$	20,986	$	(23)


		As of December 31, 2022
		Less than 12 months			12 months or Greater
			Unrealized				Unrealized		Total		Total Unrealized
		Fair Value	Losses		Fair Value		Losses		Fair Value		Losses
Commercial paper	$	34,928	$	(84)	$	—	$	—	$	34,928	$	(84)
U.S. Treasury bills		1,971		(6)		24,833		(261)		26,804		(267)
Agency bonds		22,964		(133)		—		—		22,964		(133)
	$	59,863	$	(223)	$	24,833	$	(261)	$	84,696	$	(484)

The Company considers whether unrealized losses have resulted from a credit loss or other factors. The unrealized losses on the Company’s available-for-sale securities as of December 31, 2023 were caused by fluctuations in market value and interest rates as a result of the economic environment and not credit risk. The Company concluded that an allowance for credit losses was unnecessary as of December 31, 2023. It is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value. Unrealized gains and losses are included in accumulated other comprehensive loss.

Accrued interest receivable is written off through net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payment. Accrued interest receivable related to short-term investments was $0.6 million and $0.3 million as of December 31, 2023 and December 31, 2022, respectively.

- Definition

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

STOCKHOLDERS' EQUITY - SCHEDULE OF COMMON STOCK SHARES RESERVED FOR ON AND AS-CONVERTED BASIS, FOR FUTURE ISSUANCE (Details)	Dec. 31, 2023 shares
Sale of Stock
Common stock reserved for future issuance	6,291,927
Common Stock
Sale of Stock
Common stock reserved for future issuance	5,230,344
Employee Stock Option
Sale of Stock
Common stock reserved for future issuance	604,363
Restricted stock units
Sale of Stock
Common stock reserved for future issuance	21,968
Employee stock purchase plan awards
Sale of Stock
Common stock reserved for future issuance	435,252

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES NOT INCLUDED IN THE CALCULATION OF DILUTED NET LOSS PER SHARE (Details) - shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Antidilutive Securities
Antidilutive Securities	5,252,312	4,139,100
Employee Stock Option
Antidilutive Securities
Antidilutive Securities	5,230,344	4,110,219
Restricted stock units
Antidilutive Securities
Antidilutive Securities	21,968	28,881

RELATED PARTY TRANSACTIONS (Details) - Service agreement with Carnot LLC - USD ($)	1 Months Ended		12 Months Ended
	Jul. 31, 2019	Aug. 31, 2018	Dec. 31, 2023	Dec. 31, 2022
Related Party Transaction [Line Items]
Term of service agreement	2 years	2 years
Termination notice period		30 days
Material breach correction period		30 days
Expenses from transactions with related party			$ 0
Amount payable to related parties			$ 0	$ 0
Maximum
Related Party Transaction [Line Items]
Expenses from transactions with related party				$ 100,000

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands		12 Months Ended
	Apr. 05, 2023	Dec. 31, 2023
Sale of Stock
Proceeds from issuance of common stock		$ 44,888
Cash and cash equivalents and short term investment		$ 122,400
BofA Securities, Inc.
Sale of Stock
Aggregate amount of shares	$ 75,000
Shares sold		2,662,721
Proceeds from issuance of common stock		$ 44,300
Value of remaining common stock available for sale Under ATM Program		$ 30,000

BALANCE SHEET COMPONENTS

12 Months Ended

Dec. 31, 2023

BALANCE SHEET COMPONENTS

BALANCE SHEET COMPONENTS

(4) BALANCE SHEET COMPONENTS

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	December 31,		December 31,
	2023		2022
Prepaid expenses	$	1,168	$	1,503
Prepaid research and development		375		478
Other current assets		250		295
Total prepaid expenses and other current assets	$	1,793	$	2,276

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):


	December 31,		December 31,
	2023		2022
Accrued research and development	$	9,363	$	2,751
Accrued payroll and other employee benefits		4,368		1,691
Other		1,090		380
Total accrued and other current liabilities	$	14,821	$	4,822

SHARE-BASED COMPENSATION - SCHEDULE OF FAIR VALUE OF STOCK OPTIONS ASSUMPTIONS (Details)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award
Expected volatility, minimum	73.90%	73.50%
Expected volatility, maximum	91.50%	76.50%
Risk-free interest rate, minimum	3.50%	1.60%
Risk-free interest rate, maximum	4.80%	4.30%
Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award
Expected term (in years)	5 years 3 months 18 days	5 years 6 months
Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award
Expected term (in years)	6 years 1 month 6 days	6 years 1 month 6 days

- Definition

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.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
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-Name Accounting Standards Codification
-Section 35
-Paragraph 1D
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

INCOME TAXES - SUMMARY OF RECONCILIATION OF FEDERAL INCOME TAX RATE (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
INCOME TAXES
U.S. Federal statutory income tax rate	$ (15,831)	$ (10,829)
State taxes	(3,389)	(2,828)
Permanent and other differences	416	563
Stock-based compensation	1,049	(787)
Research and development credits	(2,676)	(757)
Change in valuation allowance	20,487	14,663
Total tax provision	$ 56	$ 25

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

INCOME TAXES

SUMMARY OF COMPONENTS OF NET DEFERRED TAX ASSETS

Significant components of the Company’s net deferred tax assets are as follows (in thousands):


	December 31,
	2023		2022
Deferred income tax assets:
NOL carryforwards	$	16,199	$	11,781
Research credit carryforwards		5,153		1,601
Capitalized R&D		19,404		8,490
Stock based compensation		1,929		923
Other		1,117		790
Gross deferred tax assets		43,802		23,585
Less: valuation allowance		(43,596)		(23,283)
Total deferred tax assets		206		302
Deferred income tax liabilities:
Other		(206)		(302)
Total deferred tax liabilities		(206)		(302)
Net deferred tax assets (liabilities)	$	—	$	—

SUMMARY OF RECONCILIATION OF FEDERAL INCOME TAX RATE

A reconciliation between the provision for income taxes and income taxes computed using the U.S. federal statutory corporate tax rate is as follows (in thousands):


	Years ended December 31,
	2023		2022
U.S. Federal statutory income tax rate	$	(15,831)	$	(10,829)
State taxes		(3,389)		(2,828)
Permanent and other differences		416		563
Stock-based compensation		1,049		(787)
Research and development credits		(2,676)		(757)
Change in valuation allowance		20,487		14,663
Total tax provision	$	56	$	25

SUMMARY OF GROSS UNRECOGNIZED TAX BENEFITS

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits at the beginning and end of the years ended December 31, 2023 and December 31, 2022 (in thousands):


	Years ended December 31,
	2023		2022
Beginning balance of unrecognized tax benefits	$	993	$	529
Additions based on tax positions related to the current year		1,127		461
Additions based on tax positions related to the prior year		94		3
Ending balance of unrecognized tax benefits	$	2,214	$	993

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1)ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Organization and Nature of Operations

Aerovate Therapeutics Inc. (“Aerovate” or the “Company”) was incorporated in the state of Delaware in July 2018, and is headquartered in Waltham, Massachusetts. The Company has a wholly owned subsidiary, Aerovate Securities Corporation. The Company is a clinical-stage biopharmaceutical company that is focused on the development of drugs that meaningfully improve the lives of patients with rare cardiopulmonary disease. The Company’s initial focus is on advancing AV-101, the Company’s dry powder inhaled formulation of imatinib for the treatment of pulmonary arterial hypertension (“PAH”). The Company initiated a global Phase 2b/Phase 3 trial of AV-101 in adults with PAH in December 2021 and announced in November 2023 completion of enrollment of the Phase 2b portion of this trial and enrollment of the first patient in the Phase 3 portion of this trial.

(b)

At-the-Market Offering

On April 5, 2023, the Company entered into an ATM Equity Offering^SM Sales Agreement, or the Sales Agreement, with BofA Securities, Inc., or the Agent, pursuant to which the Company can sell, from time to time, at its option, up to an aggregate of $75.0 million of shares of its common stock, through the Agent, as its sales agent. As of December 31, 2023, 2,662,721 shares have been sold under the Sales Agreement, generating approximately $44.3 million of net proceeds after deducting commissions to the sales agent and other offering costs, and up to $30.0 million of shares of the Company’s common stock remain available for sale from time to time under the Sales Agreement.

(c)

Liquidity and Management Plans

Since inception, the Company has devoted substantially all of its resources to research and development activities, business planning, establishing and maintaining its intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations and has not realized revenues from its planned principal operations. The Company has incurred losses and negative cash flows from operations since inception. In addition, the Company expects to incur substantial operating losses for the next several years as it continues its research and development activities. As of December 31, 2023, the Company had cash and cash equivalents and short-term investments of $122.4 million.

Management plans to continue to incur substantial costs in order to conduct research and development activities and additional capital will be needed to undertake these activities. The Company intends to raise such capital through debt or equity financings or other arrangements to fund operations. Management believes that the Company’s current cash and cash equivalents and short-term investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report.

INCOME TAXES - SUMMARY OF COMPONENTS OF NET DEFERRED TAX ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
INCOME TAXES
NOL carryforwards	$ 16,199	$ 11,781
Research credit carryforwards	5,153	1,601
Capitalized R&D	19,404	8,490
Stock based compensation	1,929	923
Other	1,117	790
Gross deferred tax assets	43,802	23,585
Less: valuation allowance	(43,596)	(23,283)
Total deferred tax assets	206	302
Other	(206)	(302)
Total deferred tax liabilities	$ (206)	(302)
Net deferred tax assets (liabilities)

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

(5) COMMITMENTS AND CONTINGENCIES

In August 2021, the Company entered into a lease agreement (the “Waltham Lease”) for approximately 5,000 square feet of office space in Waltham, Massachusetts for the Company’s corporate headquarters. The Waltham Lease has a term of thirty-nine months (“Lease Term”), unless extended or earlier terminated. The Company has the option to extend the Waltham Lease for one additional period of three years. The Lease Term had an initial abatement period, and the initial base rent payable is approximately $18,000 per month following the abatement period. The initial base rent payable will increase by approximately 2% per year over the Lease Term. The Waltham Lease commencement date was September 1, 2021. In January 2024, the Company entered into the First Amendment to the Waltham Lease resulting in the lease expiring on December 31, 2025, and an increase of $1.00 per rentable square foot during the additional lease term. In obtaining this lease extension, the Company no longer has the option to extend the Waltham Lease for one additional period of three years.

In April 2022, the Company entered into a lease agreement (the “Foster City Lease”) for approximately 3,500 square feet of office space in Foster City, California. The Foster City Lease has a term of thirty-nine months, unless extended or earlier terminated. The Company has the option to extend the Foster City Lease for on

additional period of one year. The base rent payable under the Lease Term will be $22,600 per month and will be subject to annual increase of 3% on each anniversary.

As of December 31, 2023, the consolidated balance sheet includes an operating lease right-of-use asset of $0.6 million and operating lease liability of $0.7 million. The total operating lease expense was $0.4 million for both of the years ended December 31, 2023 and 2022.

As of December 31, 2023, the future minimum annual lease payments under the operating leases were as follows (in thousands):


	Total Minimum
	Lease Payments
2024		$	466
2025			242
Total operating lease payments			708
Less: Amount representing interest			(33)
Present value of net minimum lease payments		$	675

The components of operating leases for the years ended December 31, 2023 and December 31, 2022 were as follows (in thousands except lease term and discount rate):


	December 31,			December 31,
Operating lease liabilities:	2023			2022
Current		420			385
Non-current		255			705
Total lease liabilities	$	675		$	1,090
Weighted-average remaining lease term (in years)		1.5			2.4
Weighted-average incremental borrowing rate		6	%		6	%

Legal Proceedings

The Company may from time to time be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the years ended December 31, 2023 and 2022, and no material legal proceedings are currently pending or, to the best of its knowledge, threatened.

COMMITMENTS AND CONTINGENCIES - SCHEDULE OF FUTURE MINIMUM ANNUAL LEASE PAYMENTS FOR OPERATING LEASES (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
COMMITMENTS AND CONTINGENCIES
2024	$ 466
2025	242
Total operating lease payments	708
Less: Amount representing interest	(33)
Present value of net minimum lease payments	675	$ 1,090
Operating lease liabilities:
Current	420	385
Non-current	$ 255	$ 705
Weighted-average remaining lease term (in years)	1 year 6 months	2 years 4 months 24 days
Weighted-average incremental borrowing rate	6.00%	6.00%

BALANCE SHEET COMPONENTS - SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
BALANCE SHEET COMPONENTS
Prepaid expenses	$ 1,168	$ 1,503
Prepaid research and development	375	478
Other current assets	250	295
Total prepaid expenses and other current assets	$ 1,793	$ 2,276

INCOME TAXES - SUMMARY OF GROSS UNRECOGNIZED TAX BENEFITS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
INCOME TAXES
Beginning balance of unrecognized tax benefits	$ 993	$ 529
Additions based on tax positions related to the current year	1,127	461
Additions based on tax positions related to the prior year	94	3
Ending balance of unrecognized tax benefits	$ 2,214	$ 993

COMMITMENTS AND CONTINGENCIES (Details)	1 Months Ended			12 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Jan. 31, 2024 USD ($)	Apr. 30, 2022 USD ($) ft²	Aug. 31, 2021 USD ($) ft²	Dec. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)
Lessee, Lease, Description
Operating lease liability				$ 675,000	$ 1,090,000
Operating lease right-of-use assets				614,000	1,003,000
Total operating lease expenses				$ 400,000	$ 400,000
Waltham Lease
Lessee, Lease, Description
Area of land \| ft²			5,000
Operating lease term			39 months
Lease, option to extend	false		true
Renewal term	3 years		3 years
Increase of rental value for square foot	$ 1.00
Payment for rent			$ 18,000
Lease rent percentage			2.00%
Foster City Lease
Lessee, Lease, Description
Area of land \| ft²		3,500
Operating lease term		39 months
Renewal term		1 year
Payment for rent		$ 22,600
Lease rent percentage		3.00%

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2023

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

SCHEDULE OF NET LOSS PER SHARE

The following table summarizes the Company’s net loss per share:


	Year Ended December 31,
	2023		2022
Numerator:
Net loss	$	(75,521)	$	(51,511)
Net loss available to common stockholders	$	(75,521)	$	(51,511)

Denominator:
Weighted-average common stock outstanding, basic and diluted		26,331,630		24,472,104
Net loss per share, basic and diluted	$	(2.87)	$	(2.10)

SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES NOT INCLUDED IN THE CALCULATION OF DILUTED NET LOSS PER SHARE

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would have had an anti-dilutive effect are as follows (in common stock equivalent shares):


	As of December 31,
	2023	2022
Options to purchase common stock	5,230,344	4,110,219
Unvested restricted stock units	21,968	28,881
	5,252,312	4,139,100

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive (Loss) Income	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2021	24,410,393
Beginning balance, value at Dec. 31, 2021	$ 2	$ 208,867	$ (59)	$ (36,392)	$ 172,418
Unrealized loss on investments			(407)		(407)
Stock based compensation		5,476			5,476
Issuance of common stock upon exercise of stock options		617			617
Issuance of common stock upon exercise of stock options (in shares)	298,712
Issuance of common stock under ESPP		150			150
Issuance of common stock under ESPP, shares	13,869
Net loss				(51,511)	(51,511)
Ending balance, shares at Dec. 31, 2022	24,722,974
Ending balance, value at Dec. 31, 2022	$ 2	215,110	(466)	(87,903)	126,743
Unrealized gain on investments			703		703
Stock based compensation		11,906			11,906
Issuance of common stock in connection with ATM, net	$ 1	44,282			44,283
Issuance of common stock in connection with ATM, net, shares	2,662,721
Vesting of restricted stock units, shares	9,913
Issuance of common stock upon exercise of stock options		986			$ 986
Issuance of common stock upon exercise of stock options (in shares)	338,987				338,987
Issuance of common stock under ESPP		356			$ 356
Issuance of common stock under ESPP, shares	28,108
Net loss				(75,521)	(75,521)
Ending balance, shares at Dec. 31, 2023	27,762,703
Ending balance, value at Dec. 31, 2023	$ 3	$ 272,640	$ 237	$ (163,424)	$ 109,456

SHARE-BASED COMPENSATION - SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE BY TYPE OF AWARDS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award
Stock-based compensation expense	$ 11,906	$ 5,476
Employee Stock Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award
Stock-based compensation expense	11,494	5,316
Employee stock purchase plan awards
Share-Based Compensation Arrangement by Share-Based Payment Award
Stock-based compensation expense	211	62
Restricted stock awards and units
Share-Based Compensation Arrangement by Share-Based Payment Award
Stock-based compensation expense	$ 201	$ 98

- Definition

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.

+ References

+ Details

FAIR VALUE OF FINANCIAL INSTRUMENTS - SCHEDULE OF SHORT-TERM INVESTMENTS WITH UNREALIZED LOSSES (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale, Unrealized Loss Position
Short-term investments, Less than 12 months, Fair Value	$ 13,400	$ 59,863
Short-term investments, Less than 12 months, Unrealized Losses	(14)	(223)
Short-term investments, 12 months or Greater, Fair Value	7,586	24,833
Short-term investments, 12 months or Greater, Unrealized Losses	(9)	(261)
Short-term investments, Total Fair Value	20,986	84,696
Short-term investments, Total Unrealized Losses	(23)	(484)
Commercial paper
Debt Securities, Available-for-Sale, Unrealized Loss Position
Short-term investments, Less than 12 months, Fair Value	6,042	34,928
Short-term investments, Less than 12 months, Unrealized Losses	(5)	(84)
Short-term investments, Total Fair Value	6,042	34,928
Short-term investments, Total Unrealized Losses	(5)	(84)
Agency bonds
Debt Securities, Available-for-Sale, Unrealized Loss Position
Short-term investments, Less than 12 months, Fair Value	3,760	22,964
Short-term investments, Less than 12 months, Unrealized Losses	(6)	(133)
Short-term investments, 12 months or Greater, Fair Value	6,579
Short-term investments, 12 months or Greater, Unrealized Losses	(8)
Short-term investments, Total Fair Value	10,339	22,964
Short-term investments, Total Unrealized Losses	(14)	(133)
U.S. Treasury bills
Debt Securities, Available-for-Sale, Unrealized Loss Position
Short-term investments, Less than 12 months, Fair Value	488	1,971
Short-term investments, Less than 12 months, Unrealized Losses	(2)	(6)
Short-term investments, 12 months or Greater, Fair Value	1,007	24,833
Short-term investments, 12 months or Greater, Unrealized Losses	(1)	(261)
Short-term investments, Total Fair Value	1,495	26,804
Short-term investments, Total Unrealized Losses	(3)	$ (267)
Corporate debt securities
Debt Securities, Available-for-Sale, Unrealized Loss Position
Short-term investments, Less than 12 months, Fair Value	3,110
Short-term investments, Less than 12 months, Unrealized Losses	(1)
Short-term investments, Total Fair Value	3,110
Short-term investments, Total Unrealized Losses	$ (1)

FAIR VALUE OF FINANCIAL INSTRUMENTS - SCHEDULE OF FAIR VALUE INSTRUMENTS (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	$ 98,948	$ 106,823
Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total cash equivalents	19,787	18,436
Total short-term investments	98,948	106,823
Total fair value of assets	118,735	125,259
Fair Value, Recurring \| Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total cash equivalents	19,787	18,436
Total short-term investments	10,362	26,841
Total fair value of assets	30,149	45,277
Fair Value, Recurring \| Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	88,586	79,982
Total fair value of assets	88,586	79,982
Money market funds \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total cash equivalents	19,787	18,436
Money market funds \| Fair Value, Recurring \| Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total cash equivalents	19,787	18,436
Commercial paper \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	38,386	55,577
Commercial paper \| Fair Value, Recurring \| Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	38,386	55,577
U.S. Treasury bills \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	10,362	26,841
U.S. Treasury bills \| Fair Value, Recurring \| Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	10,362	26,841
Corporate debt securities \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	7,945
Corporate debt securities \| Fair Value, Recurring \| Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	7,945
Agency bonds \| Commercial paper \| Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	42,255	24,405
Agency bonds \| Commercial paper \| Fair Value, Recurring \| Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Total short-term investments	$ 42,255	$ 24,405

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(2)BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

(a)

Basis of Presentation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the Company’s wholly owned subsidiary, Aerovate Securities Corporation. All intercompany transactions and balances have been eliminated in consolidation.

(b)

Use of Estimates

The preparation of the Company’s 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 and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Reported amounts and note disclosures reflect the overall economic conditions that are most likely to occur and anticipated measures management intends to take. Actual results could differ materially from those estimates. Accounting estimates and management judgements reflected in the consolidated financial statements include: normal recurring accruals, including the accrual for research and development expenses, stock-based compensation, fair value of investments, and operating lease right-of-use assets and lease liabilities. Estimates and assumptions are reviewed quarterly. Any revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

(c)

Cash and Cash Equivalents

Cash and cash equivalents include cash in readily available checking accounts, money market funds and commercial paper. The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents.

(d)

Short-term Investments

Short-term investments consist of corporate debt securities, commercial paper and U.S. Treasury bills, classified as available-for-sale securities and have maturities of greater than three months. The Company has classified all of its available-for-sale investment securities as current assets on the consolidated balance sheets because these are considered highly liquid securities and are available for use in current operations. The Company carries these securities at fair value and reports unrealized gains and losses as a separate component of accumulated other comprehensive loss. The cost of debt securities is adjusted for amortization of purchase premiums and accretion of discounts to maturity. Such amortization and accretion is included in interest income in the consolidated statements of operations and comprehensive loss. Realized gains and losses on sales of securities are determined using the specific identification method and recorded in other income (expense), net in the consolidated statement of operations and comprehensive loss.

(e)

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash, cash equivalents and short-term investments. The Company maintains cash, cash equivalents and short-term investments with various high credit quality banks and other financial institutions in the United States. Such deposits may be in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. The Company has not experienced any losses on deposits since inception.

(f)

Comprehensive Loss

Comprehensive loss consists of net loss and unrealized gains or losses on available-for-sale investments. The Company displays comprehensive loss and its components as part of the consolidated statements of operations and comprehensive loss.

(g)

Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in

pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of prepaid expenses and other current assets, accounts payable, accrued liabilities and other current liabilities are reasonable estimates of their fair value due to the short-term nature of these accounts.

(h)

Prepaid Expenses and Other Current Assets

Any expenses paid prior to the related services rendered are recorded as prepaid expenses. Such prepaid expenses are expensed in the period the expense is incurred. If the expense is for a service covering multiple periods, it is expensed from the date the services begin and over the period of the service rendered (or contract service period if services rendered dates are not defined).

(i)

Property and Equipment, Net

Property and equipment, which consist of leasehold improvements, furniture and fixtures, research equipment, computers and construction-in-progress are stated at cost less accumulated depreciation or accumulated amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which ranges from three to five years. Leasehold improvements are amortized over the remaining life of the lease for leasehold improvements at the time the asset is placed into service.

(j)

Impairment of Long-lived Assets

The carrying value of long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable. An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. Through December 31, 2023, there has been no such impairment losses recorded by the Company.

(k)

Leases

At the commencement date of a lease, the Company recognizes lease liabilities which represent its obligation to make lease payments, and right-of-use assets (“ROU assets”) which represent its right to use the underlying asset during the lease term. The lease liability is measured at the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date. The ROU asset is measured at cost, which includes the initial measurement of the lease liability and initial direct costs incurred by the Company and excludes lease incentives. ROU assets are recorded in operating lease ROU assets and lease liabilities are recorded in operating lease liabilities, current and noncurrent in the consolidated balance sheets.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to separate lease and non-lease components and not recognize lease liabilities and ROU assets for short-term leases with terms of twelve months or less.

(l)

Convertible Preferred Stock

The Company records convertible preferred stock at fair value on the dates of issuance, net of issuance costs. Upon the occurrence of certain events that are outside the Company’s control, including a deemed liquidation event, holders of the convertible preferred stock can cause redemption for cash. Therefore, convertible preferred stock is classified outside of stockholders’ deficit on the balance sheets as events triggering the liquidation preferences are not solely within the Company’s control. The carrying values of the convertible preferred stock are adjusted to their liquidation preferences if and when it becomes probable that such a liquidation event will occur.

(m)

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development costs consist primarily of salaries and other benefits of research and development personnel, including associated share-based compensation, costs related to research activities, preclinical studies, clinical trial, drug manufacturing and allocated overhead and facility-related expenses. The Company accounts for non-refundable advance payments for goods or services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made.

Clinical trial costs are a component of research and development expenses. The Company expenses costs for its clinical trial activities performed by third parties, including clinical research organizations and other service providers, as they are incurred, based upon estimates of the work completed over the life of the individual study in accordance with associated agreements. The Company uses information it receives from internal personnel and outside service providers to estimate the clinical trial costs incurred.

(n)

Stock-Based Compensation

Stock-based compensation expense represents the cost of the grant-date fair value of employee, officer, director, and non-employee stock option grants and restricted stock units, estimated in accordance with the applicable accounting guidance, recognized using the straight-line method over the vesting period for service-based options and using the graded vesting method for performance-based options. The vesting period generally approximates the expected service period of the awards. Forfeitures are recognized and accounted for as they occur.

The fair value of stock options is estimated using a Black-Scholes option pricing model on the date of grant. This method requires certain assumptions be used as inputs, such as the fair value of the underlying common stock, expected term of the option before exercise, expected volatility of the Company’s common stock, expected dividend yield, and a risk-free interest rate. Options and awards granted during the year have a maximum contractual term of ten years. The Company has limited historical stock option activity and therefore estimates the expected term of stock options granted using the simplified method, which represents the average of the contractual term of the stock option and its weighted-average vesting period. The expected volatility of stock options is based upon the historical volatility of a number of publicly traded companies in similar stages of clinical development. The Company has historically not declared or paid any dividends and does not currently expect to do so in the foreseeable future. The risk-free interest rates used are based on the U.S. Department of Treasury (“U.S. Treasury”) yield in effect at the time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the expected term of the stock options.

(o)

Income Taxes

Income taxes are accounted for using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss ("NOL") and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax

assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance against deferred tax assets is recorded if, based upon the weight of all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.

(p)

Segment Reporting

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 in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as one operating segment.

(q)

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of common shares plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include convertible preferred stock prior to the conversion of such shares to common stock and outstanding stock options under the Company’s equity incentive plan, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

The following table summarizes the Company’s net loss per share:


	Year Ended December 31,
	2023		2022
Numerator:
Net loss	$	(75,521)	$	(51,511)
Net loss available to common stockholders	$	(75,521)	$	(51,511)

Denominator:
Weighted-average common stock outstanding, basic and diluted		26,331,630		24,472,104
Net loss per share, basic and diluted	$	(2.87)	$	(2.10)


	As of December 31,
	2023	2022
Options to purchase common stock	5,230,344	4,110,219
Unvested restricted stock units	21,968	28,881
	5,252,312	4,139,100

(r)

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, "Improvements to Income Tax Disclosures." ASU 2023-09 requires disaggregated information about a reporting entity's effective tax rate reconciliation as well as

information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024 and for private businesses for annual periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its financial statement disclosures.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820) - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This standard clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This standard will be effective for the Company on January 1, 2024, and is not expected to have an impact on the Company’s financial position or results of operations upon adoption.

FAIR VALUE OF FINANCIAL INSTRUMENTS - SCHEDULE OF SHORT TERM INVESTMENT (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Amortized cost	$ 98,711	$ 107,289
Gross unrealized gains	260	18
Gross unrealized loss	(23)	(484)
Estimated fair value	98,948	106,823
Accrued interest receivable	$ 600	$ 300
Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other long-term assets	Other long-term assets
Corporate debt securities
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Amortized cost	$ 7,925
Gross unrealized gains	21
Gross unrealized loss	(1)
Estimated fair value	7,945
Commercial paper
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Amortized cost	38,362	$ 55,645
Gross unrealized gains	29	16
Gross unrealized loss	(5)	(84)
Estimated fair value	38,386	55,577
U.S. Treasury bills
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Amortized cost	10,334	27,108
Gross unrealized gains	31
Gross unrealized loss	(3)	(267)
Estimated fair value	10,362	26,841
Agency bonds
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Amortized cost	42,090	24,536
Gross unrealized gains	179	2
Gross unrealized loss	(14)	(133)
Estimated fair value	$ 42,255	$ 24,405
Maximum \| Corporate debt securities
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Maturity term	2 years
Maximum \| Commercial paper
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Maturity term	2 years	1 year
Maximum \| U.S. Treasury bills
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Maturity term	2 years	1 year
Maximum \| Agency bonds
Fair Value, off-Balance-Sheet Risks, Disclosure Information
Maturity term	2 years	2 years

STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2023

STOCKHOLDERS' EQUITY

SCHEDULE OF COMMON STOCK SHARES RESERVED FOR ON AND AS-CONVERTED BASIS, FOR FUTURE ISSUANCE

As of December 31, 2023, the Company had reserved the following shares of common stock for future issuance:


		December 31, 2023
Common stock options granted and outstanding		5,230,344
Shares reserved for issuance under the 2021 Plan		604,363
Reserved for vesting of outstanding restricted stock units		21,968
Reserved for future ESPP issuances		435,252
Total		6,291,927

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2023

COMMITMENTS AND CONTINGENCIES

SCHEDULE OF FUTURE MINIMUM ANNUAL LEASE PAYMENTS FOR OPERATING LEASES


	Total Minimum
	Lease Payments
2024		$	466
2025			242
Total operating lease payments			708
Less: Amount representing interest			(33)
Present value of net minimum lease payments		$	675

SCHEDULE OF COMPONENTS OF OPERATING LEASES


	December 31,			December 31,
Operating lease liabilities:	2023			2022
Current		420			385
Non-current		255			705
Total lease liabilities	$	675		$	1,090
Weighted-average remaining lease term (in years)		1.5			2.4
Weighted-average incremental borrowing rate		6	%		6	%

Cover - USD ($) $ in Millions	12 Months Ended
Cover - USD ($) $ in Millions	Dec. 31, 2023	Mar. 21, 2024	Jun. 30, 2023
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2023
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Transition Report	false
Entity File Number	001-40544
Entity Registrant Name	Aerovate Therapeutics, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-1377888
Entity Address, Address Line One	930 Winter Street
Entity Address, Address Line Two	Suite M-500
Entity Address, City or Town	Waltham
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02451
City Area Code	617
Local Phone Number	443-2400
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	AVTE
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	true
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction Flag	false
Entity Shell Company	false
Entity Public Float			$ 232.0
Entity Common Stock, Shares Outstanding		27,862,961
Documents Incorporated by Reference	The registrant intends to file a definitive proxy statement pursuant to Regulation 14A relating to the 2024 Annual Meeting of Stockholders within 120 days of the end of the registrant’s fiscal year ended December 31, 2023. Portions of such definitive proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.
Auditor Firm ID	185
Auditor Name	KPMG LLP
Auditor Location	San Diego, California
Entity Central Index Key	0001798749
Document Fiscal Period Focus	FY
Amendment Flag	false

SHARE-BASED COMPENSATION - SCHEDULE OF UNVESTED RESTRICTED STOCK UNIT ACTIVITY (Details) - Restricted stock units shares in Thousands	12 Months Ended
	Dec. 31, 2023 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award
Number of units, beginning \| shares	28,881
Weighted Average Grant date fair value, beginning \| $ / shares	$ 21.62
Number of units, Granted \| shares	3,000
Weighted Average Grant date fair value, Granted \| $ / shares	$ 24.58
Number of units, Vested \| shares	(9,913)
Weighted Average Grant date fair value, Vested \| $ / shares	$ 21.10
Number of units, Ending \| shares	21,968
Weighted Average Grant date fair value, Ending \| $ / shares	$ 22.26

- Definition

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.

+ References

+ Details

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2023	Dec. 31, 2022
CONSOLIDATED BALANCE SHEETS
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	27,762,703	24,722,974
Common stock, shares outstanding	27,762,703	24,722,974

INCOME TAXES (Details) - USD ($) $ in Thousands	Dec. 31, 2023	Dec. 31, 2022
Operating Loss Carryforwards [Line Items]
Deferred tax assets valuation allowance	$ 43,596	$ 23,283
Domestic Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	64,800	46,900
Domestic Tax Authority \| Research Tax Credit Carryforward
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards		6,000
State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 44,100	30,500
State and Local Jurisdiction \| Research Tax Credit Carryforward
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards		$ 1,300

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Operating expenses:
Research and development	$ 64,219	$ 38,622
General and administrative	17,190	14,615
Total operating expenses	81,409	53,237
Loss from operations	(81,409)	(53,237)
Other income (expense):
Interest income	5,945	1,830
Other expense:	(1)	(79)
Total other income	5,944	1,751
Net loss before income taxes	(75,465)	(51,486)
Provision for income taxes	56	25
Net loss	(75,521)	(51,511)
Comprehensive loss:
Net loss	(75,521)	(51,511)
Other comprehensive loss:
Unrealized gain (loss) on securities	703	(407)
Comprehensive loss	$ (74,818)	$ (51,918)
Net loss per share, basic	$ (2.87)	$ (2.10)
Net loss per share, diluted	$ (2.87)	$ (2.10)
Weighted-average shares of common stock outstanding, basic	26,331,630	24,472,104
Weighted-average shares of common stock outstanding, diluted	26,331,630	24,472,104

STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2023

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

(6) STOCKHOLDERS’ EQUITY

Under the Company’s Amended and Restated Certificates of Incorporation dated August 3, 2020, the Company had a total of 94,052,154 shares of capital stock authorized for issuance, consisting of 50,000,000 shares of common stock, par value of $0.0001 per share, and 44,052,154 shares of convertible preferred stock, par value of $0.0001 per share. Shares of authorized convertible preferred stock were designated as 4,000,000 shares of Series Seed redeemable convertible preferred stock and 40,052,154 shares of Series A redeemable convertible preferred stock.

Common Stock

On July 2, 2021, the Company’s certificate of amendment to its certificate of incorporation became effective, which provided 150,000,000 authorized shares of common stock with a par value of $0.0001 per share and 10,000,000 authorized shares of undesignated preferred stock with a par value of $0.0001 per share.

In August 2018, the Company issued 241,467 shares of common stock to RA Capital Healthcare Fund, L.P. at a price of $0.0012 per share. On July 2, 2021, in conjunction with the Company’s initial public offering, or IPO, the Company issued 9,984,463 shares of its common stock and all outstanding shares of the Company’s redeemable convertible preferred stock were converted into 14,182,854 shares of the Company’s common stock.

The holders of the common stock are entitled to one vote for each share of common stock held at all meetings of stockholders.

As of December 31, 2023, the Company had reserved the following shares of common stock for future issuance:


		December 31, 2023
Common stock options granted and outstanding		5,230,344
Shares reserved for issuance under the 2021 Plan		604,363
Reserved for vesting of outstanding restricted stock units		21,968
Reserved for future ESPP issuances		435,252
Total		6,291,927

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2023

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

(a)

Basis of Presentation

Use of Estimates

(b)

Use of Estimates

Cash and Cash Equivalents

(c)

Cash and Cash Equivalents

Short-term Investments

(d)

Short-term Investments

Concentration of Credit Risk

(e)

Concentration of Credit Risk

Comprehensive Loss

(f)

Comprehensive Loss

Fair Value Measurements

(g)

Fair Value Measurements

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Prepaid Expenses and Other Current Assets

(h)

Prepaid Expenses and Other Current Assets

Property and Equipment, Net

(i)

Property and Equipment, Net

Impairment of Long-lived Assets

(j)

Impairment of Long-lived Assets

Leases

(k)

Leases

Convertible Preferred Stock

(l)

Convertible Preferred Stock

Research and Development Expenses

(m)

Research and Development Expenses

Stock-Based Compensation

(n)

Stock-Based Compensation

Income Taxes

(o)

Income Taxes

Segment Reporting

(p)

Segment Reporting

Net Loss Per Share

(q)

Net Loss Per Share

The following table summarizes the Company’s net loss per share:


	Year Ended December 31,
	2023		2022
Numerator:
Net loss	$	(75,521)	$	(51,511)
Net loss available to common stockholders	$	(75,521)	$	(51,511)

Denominator:
Weighted-average common stock outstanding, basic and diluted		26,331,630		24,472,104
Net loss per share, basic and diluted	$	(2.87)	$	(2.10)


	As of December 31,
	2023	2022
Options to purchase common stock	5,230,344	4,110,219
Unvested restricted stock units	21,968	28,881
	5,252,312	4,139,100

Recently Issued Accounting Pronouncements

(r)

Recently Issued Accounting Pronouncements

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - SCHEDULE OF NET LOSS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Net loss	$ (75,521)	$ (51,511)
Net loss available to common stockholders	$ (75,521)	$ (51,511)
Weighted-average common stock outstanding, basic	26,331,630	24,472,104
Weighted-average common stock outstanding, diluted	26,331,630	24,472,104
Net loss per share, basic	$ (2.87)	$ (2.10)
Net loss per share, diluted	$ (2.87)	$ (2.10)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

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

+ References

+ Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

SHARE-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions		1 Months Ended	12 Months Ended		30 Months Ended
	Jan. 01, 2023	Jun. 30, 2021	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award
Options granted			1,546,001
Stock option grants per share			$ 15.69	$ 10.48
Unrecognized stock based compensation			$ 29.1		$ 29.1
Unrecognized stock-based compensation weighted-average period			2 years 3 months 18 days
2021 Stock Option and Incentive Plan
Share-Based Compensation Arrangement by Share-Based Payment Award
Percentage on total number of shares outstanding			4.00%
Number of shares authorized			4,565,333		4,565,333
Common stock available for issuance, awards granted					3,075,841
Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award
Expiration period			10 years
Employee Stock Option [Member] \| 2021 Stock Option and Incentive Plan
Share-Based Compensation Arrangement by Share-Based Payment Award
Number of shares authorized			604,363		604,363
Options granted			3,931,887
Employee Stock Option [Member] \| 2018 Plan
Share-Based Compensation Arrangement by Share-Based Payment Award
Options granted			1,298,457
Employee Stock Option [Member] \| 2021 Plan and 2018 Plan
Share-Based Compensation Arrangement by Share-Based Payment Award
Expiration period			10 years
Employee Stock Option [Member] \| Minimum \| 2021 Plan and 2018 Plan
Share-Based Compensation Arrangement by Share-Based Payment Award
Vested term			3 years
Employee Stock Option [Member] \| Maximum \| 2021 Plan and 2018 Plan
Share-Based Compensation Arrangement by Share-Based Payment Award
Vested term			4 years
Restricted stock units
Share-Based Compensation Arrangement by Share-Based Payment Award
Restricted stock units award			3,000,000
Unrecognized stock based compensation			$ 0.9		$ 0.9
Unrecognized stock-based compensation weighted-average period			2 years 4 months 24 days
Restricted stock units \| 2021 Stock Option and Incentive Plan
Share-Based Compensation Arrangement by Share-Based Payment Award
Restricted stock units award			31,881
Restricted stock units \| Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award
Vested term			1 year
Restricted stock units \| Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award
Vested term			4 years
ESPP
Share-Based Compensation Arrangement by Share-Based Payment Award
Number of shares authorized		230,000	435,252		435,252
Number of additional shares authorized	247,229
Percentage of common stock purchase price		15.00%	1.00%
Offering period			6 months
Discount percentage on marker price		85.00%
Shares issued			41,977

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

(7) SHARE-BASED COMPENSATION

(a) Stock Option Plan

The Company’s 2021 Stock Option and Incentive Plan (the “2021 Plan”) was adopted by the Company’s board of directors and approved by the Company’s stockholders in June 2021 and became effective as of June 29, 2021. Upon the effectiveness of the 2021 Plan, the Company’s 2018 Equity Incentive Plan (the “2018 Plan”) was terminated and no further grants may be made thereunder. The Company’s 2021 Plan allows for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, stock bonuses, restricted stock, stock units and other forms of awards including cash awards to its officers, directors, employees, consultants and advisors.

As of December 31, 2023, a total of 4,565,333 shares of the Company’s common stock were authorized for issuance with respect to awards granted under the 2021 Plan. The share limit will automatically increase on the first trading day in January of each year (commencing with 2022) by an amount equal to the lesser of (1) 4% of the total number of outstanding shares of the Company’s common stock on the last trading day in December in the prior year, or (2) such lesser number as determined by the Company’s board of directors. Since adoption, the annual increases have accumulated to a total of 3,075,841 shares through January 1, 2024.

Any shares subject to awards granted under the 2021 Plan or the 2018 Plan that are not paid, delivered or exercised before they expire or are canceled or terminated, or otherwise fail to vest, as well as shares used to pay the purchase or exercise price of such awards or related tax withholding obligations, will become available for new award grants under the 2021 Plan.

As of December 31, 2023, 3,931,887 options had been granted under the 2021 Plan, with 604,363 shares authorized under the 2021 Plan available for future issuance. As of December 31, 2023, a total of 1,298,457 options had been granted and were outstanding under the 2018 Plan.

The options that are granted under the 2021 Plan and the 2018 Plan are exercisable at various dates as determined upon grant and terminate within 10 years of the date of grant. The vesting period generally occurs over three to four years.

The following table summarizes the option activity under the 2021 Plan and 2018 Plan for the year ended December 31, 2023:


				Weighted-
				Average
				Remaining	Aggregate
		Weighted-Average		Contractual Term	Intrinsic Value
	Options	Exercise Price		(in years)	(in thousands)
Vested and expected to vest at December 31, 2022	4,110,219	$	9.23	8.46	$	82,490
Granted	1,546,001		22.85
Exercised	(338,987)		2.91
Cancelled/Forfeited	(86,889)		9.62
Outstanding at December 31, 2023	5,230,344	$	13.66	8.16	$	49,728
Vested and exercisable at December 31, 2023	2,157,378		11.24	7.81		25,152
Vested and expected to vest at December 31, 2023	5,230,344	$	13.66	8.16	$	49,728

The weighted-average grant date fair value of stock option grants was $15.69 and $10.48 per share for the years ended December 31, 2023 and December 31, 2022, respectively. All exercisable options are vested and all outstanding options are vested or expected to vest.

As of December 31, 2023 there was approximately $29.1 million of unrecognized stock-based compensation expense related to nonvested stock-based compensation arrangements granted under the 2021 Plan and 2018 Plan, which is expected to be recognized over a weighted-average period of 2.3 years.

(b) Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “ESPP”) was adopted by the Company’s board of directors and stockholders in June 2021 and became effective upon the consummation of the IPO. A total of 230,000 shares of the Company’s common stock is initially available for issuance under the ESPP. The share limit will automatically increase on the first trading day in January of each year (commencing with 2022) by an amount equal to the lesser of (1) 1% of the total number of outstanding shares of the Company’s common stock on the last trading day in December in the prior year, or (2) such lesser number as determined by the Company’s board of directors. The number of shares available under the 2021 Plan increased by 247,229 shares effective January 1, 2023 as determined by the Company’s board of directors. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. As of December 31, 2023, 41,977 shares had been issued under the ESPP, and 435,252 shares authorized under the ESPP Plan were available for issuance.

As of December 31, 2023, 31,881 restricted stock units had been awarded under the 2021 Plan. A summary of the status of and changes in unvested restricted stock unit activity under the Company’s equity award plans for the year ended December 31, 2023, was as follows:


		Weighted-
		Average Grant
		Date Fair Value
	Units	Per Unit
Unvested restricted stock units as of December 31, 2022	28,881	$	21.62
Granted	3,000		24.58
Vested	(9,913)		21.10
Forfeited	—		—
Unvested restricted stock units as of December 31, 2023	21,968	$	22.26

Stock-based compensation of restricted stock units is based on the fair value of the Company’s common stock on the date of grant and recognized over the vesting period. The vesting period generally occurs over one to four years.

As of December 31, 2023, the Company had unrecognized stock-based compensation expense related to its unvested restricted stock units of $0.9 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.4 years.

(d) Stock-Based Compensation Expense

The Company estimated the fair value of stock options using the Black-Scholes valuation model. The Company accounts for any forfeitures of options when they occur. Previously recognized compensation expense for an award is reversed in the period that the award is forfeited. The fair value of stock options was estimated using the following assumptions:


	Year Ended December 31,
	2023		2022
Expected term (in years)	5.3 - 6.1		5.5 - 6.1
Expected volatility	73.9 - 91.5	%	73.5 - 76.5	%
Risk-free interest rate	3.5 - 4.8	%	1.6 - 4.3	%
Expected dividend	—		—

Stock-based compensation expense recognized for stock option grants has been reported in the statements of operations and comprehensive loss as follows (in thousands):


	Year Ended December 31,
	2023		2022
Research and development	$	6,621	$	2,129
General and administrative		5,285		3,347
Total	$	11,906	$	5,476

Stock-based compensation expense by type of award included within the consolidated statements of operations and comprehensive (loss) income was as follows:


	Year Ended December 31,
	2023		2022
Stock options	$	11,494	$	5,316
Employee stock purchase plan awards		211		62
Restricted stock awards and units		201		98
Total	$	11,906	$	5,476

RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

(8) RELATED PARTY TRANSACTIONS

Services Agreement

In August 2018, the Company entered into a services agreement (“Services Agreement”) with Carnot, LLC (“Carnot”), an entity owned and controlled by RA Capital Management, L.P. under which Carnot provides research and other services to the Company. RA Capital Management, L.P. is a related party due to its equity ownership of the Company. The Company pays Carnot for services performed and costs incurred. The Services Agreement is for a term of two years. The Company may terminate the Services Agreement by giving 30 days’ prior notice and either party can terminate the services agreement for a material breach, if not cured within 30 days following notice by the nonbreaching party.

In July 2019, the Services Agreement with Carnot was amended whereby research and other services are now performed by Carnot Pharma, LLC (“Carnot Pharma”), an entity owned and controlled by RA Capital Management, L.P., and the term was updated to the later of (i) two years from July 15, 2019 and (ii) completion of services under the agreement.

Expenses incurred by the Company under the Services Agreement with Carnot Pharma totaled $0 and less than $0.1 million for the years ended December 31, 2023 and December 31, 2022, respectively, and are presented in the statement of operations and comprehensive loss as research and development and general and administrative expenses. No amount was due to Carnot Pharma, LLC as of December 31, 2023 and December 31, 2022.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

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-Topic 946
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-Name Accounting Standards Codification
-Section 50
-Paragraph 2
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-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2023

SHARE-BASED COMPENSATION

SCHEDULE OF OPTION ACTIVITY UNDER 2021 PLAN AND 2018 PLAN

The following table summarizes the option activity under the 2021 Plan and 2018 Plan for the year ended December 31, 2023:


				Weighted-
				Average
				Remaining	Aggregate
		Weighted-Average		Contractual Term	Intrinsic Value
	Options	Exercise Price		(in years)	(in thousands)
Vested and expected to vest at December 31, 2022	4,110,219	$	9.23	8.46	$	82,490
Granted	1,546,001		22.85
Exercised	(338,987)		2.91
Cancelled/Forfeited	(86,889)		9.62
Outstanding at December 31, 2023	5,230,344	$	13.66	8.16	$	49,728
Vested and exercisable at December 31, 2023	2,157,378		11.24	7.81		25,152
Vested and expected to vest at December 31, 2023	5,230,344	$	13.66	8.16	$	49,728

SCHEDULE OF UNVESTED RESTRICTED STOCK UNIT ACTIVITY


		Weighted-
		Average Grant
		Date Fair Value
	Units	Per Unit
Unvested restricted stock units as of December 31, 2022	28,881	$	21.62
Granted	3,000		24.58
Vested	(9,913)		21.10
Forfeited	—		—
Unvested restricted stock units as of December 31, 2023	21,968	$	22.26

SCHEDULE OF FAIR VALUE OF STOCK OPTIONS ASSUMPTIONS


	Year Ended December 31,
	2023		2022
Expected term (in years)	5.3 - 6.1		5.5 - 6.1
Expected volatility	73.9 - 91.5	%	73.5 - 76.5	%
Risk-free interest rate	3.5 - 4.8	%	1.6 - 4.3	%
Expected dividend	—		—

SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE RECOGNIZED FOR STOCK OPTION GRANTS

Stock-based compensation expense recognized for stock option grants has been reported in the statements of operations and comprehensive loss as follows (in thousands):


	Year Ended December 31,
	2023		2022
Research and development	$	6,621	$	2,129
General and administrative		5,285		3,347
Total	$	11,906	$	5,476

Stock-based compensation expense by type of award included within the consolidated statements of operations and comprehensive (loss) income was as follows:


	Year Ended December 31,
	2023		2022
Stock options	$	11,494	$	5,316
Employee stock purchase plan awards		211		62
Restricted stock awards and units		201		98
Total	$	11,906	$	5,476

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Dec. 31, 2023 shares
Benjamin Dake [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On November 16, 2023, Benjamin Dake, our President, adopted a trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) (the Dake 10b5-1 Plan). Between March 18, 2024 and December 31, 2024, the Dake 10b5-1 Plan provides for the potential sale of approximately 193,530 of our common stock. The plan expires on December 31, 2024, or upon the earlier completion of all authorized transactions under the plan
Name	Benjamin Dake
Title	President
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	November 16, 2023
Aggregate Available	193,530
Expiration Date	December 31, 2024
Marinus Verwijs [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On November 17, 2023, Marinus Verwijs, our Chief Technology Officer, adopted a trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) (the Verwijs 10b5-1 Plan). Between March 19, 2024 and October 1, 2024, the Verwijs 10b5-1 Plan provides for the potential sale of approximately 42,400 of the our common stock. The plan expires on December 31, 2024, or upon the earlier completion of all authorized transactions under the plan.
Name	Marinus Verwijs
Title	Chief Technology Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	November 17, 2023
Aggregate Available	42,400
Expiration Date	December 31, 2024
Timothy Noyes [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On November 24, 2023, Timothy Noyes, our Chief Executive Officer, adopted a trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) (the Noyes 10b5-1 Plan). Between April 1, 2024 and July 16, 2025, the Noyes 10b5-1 Plan provides for the potential sale of approximately 280,000 of our common stock. The plan expires on July 31, 2025, or upon the earlier completion of all authorized transactions under the plan.
Name	Timothy Noyes
Title	Chief Executive Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	November 24, 2023
Aggregate Available	280,000
Expiration Date	July 31, 2025

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) segment
Impairment losses \| $	$ 0
Number of Operating Segments \| segment	1
Minimum
Leasehold improvements are amortized over the remaining life	3 years
Maximum
Leasehold improvements are amortized over the remaining life	5 years
Expiration period	10 years

SHARE-BASED COMPENSATION - SCHEDULE OF STOCK-BASED COMPENSATION EXPENSE RECOGNIZED FOR STOCK OPTION GRANTS (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Share-Based Payment Arrangement, Expensed and Capitalized, Amount
Stock-based compensation expense	$ 11,906	$ 5,476
Research and Development Expense
Share-Based Payment Arrangement, Expensed and Capitalized, Amount
Stock-based compensation expense	6,621	2,129
General and Administrative Expense
Share-Based Payment Arrangement, Expensed and Capitalized, Amount
Stock-based compensation expense	$ 5,285	$ 3,347

STOCKHOLDERS' EQUITY (Details)		1 Months Ended
STOCKHOLDERS' EQUITY (Details)	Jul. 02, 2021 $ / shares shares	Aug. 31, 2018 $ / shares shares	Dec. 31, 2023 Vote $ / shares shares	Dec. 31, 2022 $ / shares shares	Aug. 03, 2020 $ / shares shares
Class of Stock
Capital stock shares authorized					94,052,154
Common stock, shares authorized	150,000,000		150,000,000	150,000,000	50,000,000
Common stock, par value \| $ / shares	$ 0.0001		$ 0.0001	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000		10,000,000	10,000,000
Preferred stock, par value \| $ / shares	$ 0.0001		$ 0.0001	$ 0.0001
Temporary equity, shares authorized					44,052,154
Temporary equity, par value \| $ / shares					$ 0.0001
Conversion of stock shares issued	14,182,854
Number of votes for each share of common stock \| Vote			1
IPO
Class of Stock
Number of shares issued	9,984,463
RA Capital Healthcare Fund, L.P
Class of Stock
Number of shares issued		241,467
Share price \| $ / shares		$ 0.0012
Series Seed Redeemable Convertible Preferred Stock
Class of Stock
Temporary equity, shares authorized					4,000,000
Series A Redeemable Convertible Preferred Stock
Class of Stock
Temporary equity, shares authorized					40,052,154

SHARE-BASED COMPENSATION - SCHEDULE OF OPTION ACTIVITY UNDER 2021 PLAN AND 2018 PLAN (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
SHARE-BASED COMPENSATION
Options Outstanding, beginning balance	4,110,219
Weighted-Average Exercise Price Outstanding, beginning balance	$ 9.23
Weighted- Average Remaining Contractual Term, Outstanding	8 years 1 month 28 days	8 years 5 months 15 days
Aggregate Intrinsic Value Outstanding, beginning balance	$ 82,490
Options Granted	1,546,001
Weighted-Average Exercise Price, Granted	$ 22.85
Options Exercised	(338,987)
Weighted-Average Exercise Price, Exercised	$ 2.91
Options, Cancelled/Forfeited	(86,889)
Weighted-Average Exercise Price, Cancelled/Forfeited	$ 9.62
Options Outstanding, ending balance	5,230,344	4,110,219
Weighted-Average Exercise Price Outstanding, ending balance	$ 13.66	$ 9.23
Aggregate Intrinsic Value Outstanding, ending balance	$ 49,728	$ 82,490
Options, Vested and exercisable	2,157,378
Weighted-Average Exercise Price, Vested and exercisable	$ 11.24
Weighted- Average Remaining Contractual Term, Vested and exercisable	7 years 9 months 21 days
Aggregate Intrinsic Value, Vested and exercisable	$ 25,152
Options, Vested and expected to vest	5,230,344
Weighted-Average Exercise Price, Vested and expected to vest	$ 13.66
Weighted- Average Remaining Contractual Term, Vested and expected to vest	8 years 1 month 28 days
Aggregate Intrinsic Value, Vested and expected to vest	$ 49,728

INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

(9) INCOME TAXES

Significant components of the Company’s net deferred tax assets are as follows (in thousands):


	December 31,
	2023		2022
Deferred income tax assets:
NOL carryforwards	$	16,199	$	11,781
Research credit carryforwards		5,153		1,601
Capitalized R&D		19,404		8,490
Stock based compensation		1,929		923
Other		1,117		790
Gross deferred tax assets		43,802		23,585
Less: valuation allowance		(43,596)		(23,283)
Total deferred tax assets		206		302
Deferred income tax liabilities:
Other		(206)		(302)
Total deferred tax liabilities		(206)		(302)
Net deferred tax assets (liabilities)	$	—	$	—

A reconciliation between the provision for income taxes and income taxes computed using the U.S. federal statutory corporate tax rate is as follows (in thousands):


	Years ended December 31,
	2023		2022
U.S. Federal statutory income tax rate	$	(15,831)	$	(10,829)
State taxes		(3,389)		(2,828)
Permanent and other differences		416		563
Stock-based compensation		1,049		(787)
Research and development credits		(2,676)		(757)
Change in valuation allowance		20,487		14,663
Total tax provision	$	56	$	25

The Company had federal NOL carryforwards available of $64.8 million and $46.9 million as of December 31, 2023 and December 31, 2022, respectively, before consideration of limitations under Section 382 of the Internal Revenue Code or Section 382, as further described below. The NOL generated from 2018 onwards of $64.8 million will carryforward indefinitely and be available to offset up to 80% of future taxable income each year. Additionally, the Company had state NOL carryforwards available of $44.1 million and $30.5 million as of December 31, 2023 and December 31, 2022, respectively. The state NOLs may be used to offset future taxable income and will begin to expire in 2038. At December 31, 2023 the Company had federal and state research and development credit carryforwards available of $6.0 million and $1.3 million, respectively. The federal credit carryforwards will begin to expire in 2038, unless previously utilized. The Massachusetts credit carryforwards will begin expiring in 2036, unless previously utilized. The California credits carry forward indefinitely.

The Company has established a full valuation allowance for its deferred tax assets due to uncertainties that preclude it from determining that it is more likely than not that the Company will be able to generate sufficient taxable income to realize such assets. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred since inception. Such objective evidence limits the ability to consider other subjective evidence such as the Company’s projections for future growth. Based on this evaluation, as of December 31, 2023 and December 31, 2022, a valuation allowance of $43.6 million and $23.3 million, respectively, has been recorded against all of the Company’s net deferred tax assets, as the Company has determined that none of the Company’s balance of net deferred tax assets is more likely than not to be realized. The amount of the deferred tax assets considered realizable, however, could be

adjusted in the future if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence, such as estimates of future taxable income during carryforward periods and the Company’s projections for growth.

The future utilization of the Company’s NOL and tax credit carryforwards to offset future taxable income may be subject to a substantial annual limitation as a result of changes in ownership by stockholders that hold 5% or more of the Company’s common stock. An assessment of such ownership changes under Section 382 and 383 was not completed through December 31, 2023. Utilization of our net operating loss and income tax credit carryforwards may be subject to a substantial annual limitation due to ownership changes that may have occurred or that could occur in the future. These ownership changes may limit the amount of the net operating loss and income tax credit carryover that can be utilized annually to offset future taxable income. The Company will examine the impact of any potential ownership changes in the future.


	Years ended December 31,
	2023		2022
Beginning balance of unrecognized tax benefits	$	993	$	529
Additions based on tax positions related to the current year		1,127		461
Additions based on tax positions related to the prior year		94		3
Ending balance of unrecognized tax benefits	$	2,214	$	993

The unrecognized tax benefit amounts are reflected in the determination of the Company’s deferred tax assets. If recognized, none of these amounts would affect the Company’s effective tax rate, since it would be offset by an equal corresponding adjustment in the deferred tax asset valuation allowance. The Company does not foresee material changes to its liability for uncertain tax benefits within the next twelve months.

The Company is subject to taxation in the United States and various states. The Company’s Federal and state returns are subject to examination, due to the carryforward of unutilized net operating losses and research and development credits.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org//740/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-21

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482526/740-270-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482685/740-10-50-17

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
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-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details