EDGAR 10-K Filing

Company CIK: 1601485
Filing Year: 2023
Filename: 1601485_10-K_2023_0001601485-23-000011.json

---

ITEM 1. BUSINESS
Item 1. Business
Overview
We had been a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel small molecule therapeutics to address chronic and progressive fibrotic diseases, prior to our 2022 Strategic Realignment. Our goal was to transform the treatment paradigm for patients suffering from these potentially life-threatening conditions for which there are no approved medicines or where existing approved medicines have known limitations. Our product candidates and programs included ANG-3070, a highly selective oral tyrosine kinase receptor inhibitor (TKI) in development as a treatment for fibrotic diseases, a ROCK2 preclinical program targeted towards the treatment of fibrotic diseases, a CYP11B2 preclinical program targeted towards diseases related to aldosterone synthase dysregulation, and a CYP26 (retinoic acid metabolism) inhibitor program targeted towards a number of indications, including cancer, and ANG-3777, a hepatocyte growth factor (HGF) mimetic. If we do not complete the merger transaction with Elicio Therapeutices, Inc. (Elicio) , we expect to move forward with developing ANG-3070 and conducting further preclinical studies for our ROCK2 program.
On January 17, 2023, we entered into a definitive merger agreement with Elicio under which Elicio will merge with a wholly-owned subsidiary of Angion in an all-stock transaction (the “Merger”). Upon completion of the Merger, the combined company will focus on advancing Elicio’s proprietary lymph node AMP technology to develop immunotherapies, with a focus on ELI-002, a therapeutic cancer vaccine targeting mKRAS-driven tumors.
Our 2022 Strategic Realignment was announced following our June 2022 termination of our Phase 2 “JUNIPER” dose-finding trial for ANG-3070 in patients with primary proteinuric kidney diseases, specifically focal segmental glomerulorsclerosis (FSGS) and immunoglobulin A nephropathy (IgAN). The JUNIPER trial was terminated in the interests of patient safety based upon a reassessment of the risk/benefit profile of ANG-3070 in patients with established serious kidney disease. We completed the data collection work necessary related to the JUNIPER trial to ascertain whether the drug had any effect, positive or negative, in patients with fibrotic kidney diseases and determined there was no economically-viable path forward for ANG-3070 in primary proteinuric kidney diseases.
ANG-3070
Prior to the termination of the Phase 2 study, we had been focused on developing ANG-3070 in for fibrotic diseases in the kidney and lung. We continue to believe that, notwithstanding the termination of the ANG-3070 program in kidney indication, ANG-3070 could be a viable development candidate in lung indications such as idiopathic pulmonary fibrosis (IPF).
Pulmonary fibrosis is characterized by progressive scarring (fibrosis) of the lungs, which leads to their deterioration and destruction. Over time, patients’ lung scarring progresses and breathing becomes difficult, often resulting in the lungs failing to take in enough oxygen to meet the body’s needs.
IPF is an aggressive form of pulmonary fibrosis with a median survival of two to three years from diagnosis. The course of the disease is highly variable. Certain patients become seriously ill within a few months, while others may survive for five years or longer. Most deaths in IPF occur from progression of pulmonary fibrosis leading to respiratory failure. According to the National Institutes of Health (NIH), approximately 140,000 people in the United States have IPF, and approximately 30,000 to 40,000 new cases are diagnosed each year, usually affecting people between the ages of 50 to 70. EU incidence rates are estimated to be similar. Over half are undiagnosed in the mild category alone, while more could be underdiagnosed. The disease is of unknown cause and represents an important area of unmet medical need.
There are currently two approved therapies for IPF, pirfenidone (Esbriet®, sold by Roche/Genentech) and the kinase inhibitor nintedanib (OFEV®, sold by Boehringer-Ingelheim). Nintedanib is also approved for SSc-ILD patients. Both drugs have known tolerability challenges for patients. Diarrhea and nausea are very common side effects, with 62% of patients taking nintedanib reporting diarrhea and 29% reporting nausea according to its drug label. Similarly, diarrhea was reported by 26% and nausea by 36% of patients taking pirfenidone according to its label. Patient convenience is also a recognized challenge, with nintedanib required to be dosed twice per day with food and pirfenidone three times per day with food after a three-step titration over the first two weeks. Patient drop-out rates for both drugs are substantial, with 43.8% of patients on nintedanib and 51.5% of patients on pirfenidone
dropping out after 12 months. Neither therapy demonstrated an impact on patient survival in the clinical trials forming the basis for their approval. Due to the recognized limitations of these approved medicines, under 30% of U.S. patients diagnosed with IPF, despite it being a life-threatening disease, are prescribed nintedanib or pirfenidone.
Despite these drawbacks to tolerability, convenience, and efficacy, pirfenidone and nintedanib generated approximately $3.8 billion in combined 2021 worldwide sales. If we are able to demonstrate in clinical trials ANG-3070 provides IPF patients with an alternative treatment option with a more acceptable tolerability, convenience, and/or efficacy profile, we would expect ANG-3070, if approved, to compete successfully with these two approved medicines. However, there is no guarantee ANG-3070 will be able to achieve these goals or, if it does, generate comparable revenues.
The next steps for the ANG-3070 program would be additional preclinical and/or clinical work to confirm target engagement and dose levels in patients with IPF. In anticipation of the announced Merger, however, we have suspended the advancement of ANG-3070 in preclinical or clinical studies. Absent completion of the transaction with Elicio, we could move forward with this program. We hold global rights to the ANG-3070 program.
ANG-3777
In 2022, we completed preclinical work and the process of closing out analyses of data from the 2021 clinical trial readouts of ANG-3777, that was formerly our lead product candidate until December 2021. We have shared these data with our license partner Vifor International, Ltd, (Vifor Pharma) and conversations continue on next steps for the program, if any. We do not intend to continue the clinical development plan for ANG-3777 set forth in the Vifor License, which had included a Phase 3 study for the prevention of AKI in patients undergoing cardiac surgery involving cardiopulmonary bypass (CSA-AKI) and a Phase 4 confirmatory study in donor kidney transplant patients who were at risk for developing delayed graft function (DGF), given we do not believe the earlier Phase 2 and Phase 3 clinical trial results in the respective indications support regulatory approval.
ROCK2, CYP11B2 and CYP26
During 2022, we also conducted activities in our ROCK2, CYP11B2 and CYP26 preclinical programs.
ROCK2
Our ROCK2 program includes a number of highly selective, oral small molecule inhibitors of ROCK2 developed internally as a potential treatment for fibrotic and other diseases. Over the past year, we conducted additional chemistry work resulting in additional libraries of ROCK(Rho-associated coiled-coil forming protein kinase)-targeting compounds with differing ratios of ROCK2 and ROCK1 selectivity ranging from 300-fold to 1,600-fold selectivity for ROCK2 versus ROCK1 with promising bioavailability.
ROCK signal transduction pathways are implicated in the development of fibrosis. Inhibition of ROCK isoforms ROCK1 and ROCK2 have shown promise in fibrosis and cardiovascular remodeling diseases. However, ROCK1 inhibition has been associated with hypotension (low blood pressure) and enhanced vascular permeability.
Recent scientific work using specific genetic or pharmacological reduction of ROCK2 indicates ROCK2 inhibition by itself can result in anti-fibrotic activity without causing hypotension. These findings informed our strategy to develop a ROCK2-specific inhibitor, with the goal of minimizing ROCK1 inhibition, as a potential treatment for fibrosis and other diseases. We believe this approach could translate into product candidates with enhanced tolerability potentially supporting long-term systemic use.
Multiple dual ROCK1/2 inhibitors have received regulatory approval, including ripasudil (Glanatec®), which is approved in Japan for treating glaucoma and ocular hypertension, fasudil (ErilTM), which is approved in Japan and China for treating cerebral vasospasm in hemorrhagic stroke, and netarsudil (Rhopressa®), which is approved in the United States for the treatment of glaucoma. The ROCK2-selective inhibitor belumosudil has been approved by the United States Food and Drug Administration (FDA) for the treatment of chronic graft-versus-host disease.
Elevated expression of ROCK2 has been implicated in a number of chronic fibrotic conditions and other diseases. ROCK2 is significantly upregulated in fibrotic kidneys in both pediatric and adult patients, with ROCK2 levels positively correlated with the severity of the fibrosis. Study of ROCK2 inhibition in the unilateral ureteral obstruction (UUO) model of renal fibrosis showed ROCK2 inhibition alleviates renal fibrosis. Furthermore, in a
mouse model of IPF, researchers found mice with either ROCK1 or ROCK2 genetically deleted were protected from bleomycin-induced IPF, indicating specifically targeting either ROCK isoform would be an effective therapeutic strategy against IPF. ROCK2 expression in vitro has also been associated with co-expression of fibrotic liver markers. Elevated ROCK2 levels are seen in cardiac hypertrophy, cardiac fibrosis and diastolic dysfunction. ROCK2 has also been shown to play a role in neurodegenerative disorders such as amyotrophic lateral sclerosis, Parkinson's disease and Alzheimer's disease. As a result, we believe a potent ROCK2 inhibitor should prevent disease progression in chronic fibrotic diseases and potentially be useful in a variety of other cardiac and neurodegenerative disorders.
Dual ROCK1/2 inhibitors can have problematic side effects including hypotension and increased vascular permeability. In an in vitro analysis measuring binding affinity for ROCK2 and ROCK1, our ROCK2 selective inhibitors show much stronger binding affinity for ROCK2 versus ROCK1. We believe high selectivity for ROCK2 could provide enhanced tolerability, potentially supporting long-term systemic use.
We hold global rights to our ROCK2 inhibitor program. Currently, we are completing certain discovery and preclinical activities in our ROCK2 program, and absent completion of the announced Merger, we could move forward with this program, which is also currently available for out-licensing. Given the early stage of the program, prior to a lead candidate being selected, investors should not expect any significant funds would be generated from a transaction, or even such a transaction occurring.
CYP11B2
We created a selection of inhibitor molecules with high specificity to CYP11B2 (aldosterone synthase) relative to CYP11B1, which we were investigating for the purpose of targeting aldosterone-related diseases including resistant hypertension, congestive heart failure, renal fibrosis, and primary hyperaldosteronism.
Aldosterone is a hormone produced in the adrenal glands which helps control the body's blood pressure by causing the kidneys to retain salt and excrete potassium, thereby increasing water retention, blood volume and blood pressure. CYP11B2 is a member of the broad cytochrome P450 family and is responsible for the biosynthesis of aldosterone. There are a number of diseases associated with dysregulated aldosterone, including primary hyperaldosteronism (Conn's Syndrome), refractory hypertension, congestive heart failure and kidney fibrosis. As a result, we believe inhibition of CYP11B2 could potentially be used in aldosterone-related diseases. We have determined not to proceed with this program.
CYP26
We also worked on a CYP26 (retinoic acid metabolism) inhibitor program targeted towards a number of indications, including cancer. The CYP26 program focuses on selective and potent inhibitors of CYP26, which is responsible for the degradation of retinoic acid. Retinoic acid, primarily in the form of ATRA (all-trans retinoic acid) has been used both topically and systemically to treat conditions including acne, acyte promyelocytic leukemia, and photoaging. In a variety of animal models, we demonstrated CYP26 inhibition can increase retinoic acid levels in target tissue while reducing systemic exposure of retinoic acid. We hold global rights to our CYP26 inhibitor program. We have determined not to proceed with this program, other than under our exclusive license agreement with Ohr Cosmetics LLC.
Manufacturing
We have relied on third-party contract manufacturing organizations to manufacture and supply product candidates for our clinical trials. Currently, we have agreements with a single third-party contract manufacturer to supply the drug substance for ANG-3070 and with a single third-party contract manufacturer to manufacture all clinical trial supplies of ANG-3070. Currently, we believe we have sufficient inventory of ANG 3070 to meet the immediate requirements of potential future clinical trials, which may be conducted absent the completion of the announced Merger.
Competition
The biotechnology and pharmaceutical industries are characterized by intense competition and rapid innovation. Our potential competitors include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and universities and other research institutions. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative
arrangements with large, established companies. We believe the key competitive factors affecting the development and commercial success of our product candidates will be whether or not such product candidates are deemed to be safe and effective by relevant regulatory authorities, as well as their tolerability profile, reliability, convenience of dosing, price, and reimbursement. Absent the completion of the announced Merger, we could face significant competition in our ANG-3070 program for IPF from both approved therapies such as pirfenidone (Esbriet®, sold by Roche/Genentech) for IPF and nintedanib (OFEV®, sold by Boehringer Ingleheim) and from product candidates in development for IPF, such as PLN-74809 from Pliant Therapeutics for IPF, BI 1015550 from Boehringer Ingelheim, pamrevlumab from FibroGen, and other companies. We would also face competition for our ROCK2 program from Kadmon Holdings, Inc.'s belumosudil (KD025) and RXC007/RXC008 from Redx Pharma as well as other companies developing ROCK inhibitors.
Intellectual Property
The proprietary nature of, and protection for, our product candidates, processes and know-how are important to our business. We pursue various avenues of intellectual property protection, including consideration of patent, trademark, and trade secret strategies. We have sought patent protection in the United States and internationally for our programs relating to small molecule compounds with our tyrosine kinase inhibitors (including ANG-3070), HGF-like activity (including ANG-3777), our ROCK2 inhibitors and our CYP inhibitors. Our patent strategy seeks to protect our product candidates by filing patent applications, in the United States and in relevant foreign jurisdictions, and we pursue multi-faceted protection, as available, for example to relevant small molecule compounds and analogs, pharmaceutical compositions and related methods of manufacture and use. Our policy is to pursue, maintain and defend patent rights in order to protect the technology, inventions and improvements that are commercially important to our business. We also rely on trade secret protection for certain intellectual property that may be important to the development of our business and expect to pursue trademark registrations for brand names or other text or images that may provide commercial value.
In the United States and worldwide, issued patents have a presumptive term, assuming all maintenance fees are paid, of twenty years from their earliest non-provisional filing date. Certain jurisdictions offer opportunities to extend this term. For example, the U.S. Patent and Trademark Office (USPTO) may add term to a patent (referred to as Patent Term Adjustment) if delays by the USPTO of certain activities exceed prespecified durations, from which delays by the Applicant are subtracted. Additionally, many jurisdictions, including the United States and Europe, provide opportunities for extending the term of patents relating to approved pharmaceutical products or their approved uses. In the United States, a single patent can be extended per approved product, for a period (referred to as Patent Term Extension) of up to five years, depending on the dates of patent issuance relative to submission of an application for premarketing approval (i.e., of a NDA or a BLA) under provisions of the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act. Similar restoration of term is available in Europe under so-called Supplementary Protection Certificate rights, and extensions under similar policies may be available in other countries.
Depending upon the timing, duration and specifics of FDA marketing approval of our product candidates, if any, one or more of our patents may be eligible for limited Patent Term Extension under the Hatch-Waxman Act in the United States, Supplementary Protection Certificate in Europe.
Our commercial success will depend in part on obtaining and maintaining patent protection and/or other intellectual property protection for our current and future product candidates, including for their use, production, formulation, etc., with commercially relevant terms; our commercial success may also depend in part on our ability to successfully defend our patent and/or other intellectual property rights against third-party challenges. Our ability to stop third parties from making, using, selling, offering to sell and/or importing our products may depend on the extent to which we have rights under valid and enforceable intellectual property rights that cover these activities. We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our product candidates, discovery programs and processes. Additionally, we cannot be certain that we will always be able to establish sufficient ownership rights to ensure complete or necessary control over our intellectual property rights as required in order to obtain, maintain, and/or enforce them. For these and more comprehensive risks related to our intellectual property, please see "Risk Factors-Risks Relating to Our Intellectual Property." The expiration dates of the patents discussed below assume in all cases that the appropriate maintenance, renewal, annuity, or other governmental fees are paid to maintain the patent(s) in force for the full extent of their term and any extension(s) thereof.
Our ANG-3070 Tyrosine Kinase Inhibitor Program
As of March 17, 2023, compound, pharmaceutical composition and methods of use claims to our kinase inhibitors are covered in patents issued in the United States. We also owned issued patents in Australia, Canada, China, Europe, Hong Kong, Israel, India, and Japan. The European patent was validated in Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, Monaco, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland/Liechtenstein, Turkey, and the United Kingdom. A continuation application is pending in the United States. These patents, and patents that may issue from the pending applications, provide patent protection until 2033, assuming payment of all appropriate annuities and/or maintenance fees.
As of March 17, 2023, we had filed applications directed to the use of ANG-3070 in the treatment of irritable bowel disease (IBD) in Australia, Canada, China, Europe, Israel, Japan, and the United States. Patents issuing from corresponding national applications will expire in 2040.
As of March 17, 2023, we had filed applications in the United States and Europe relating to solid forms of ANG-3070. Patents issuing from corresponding national applications will expire in 2041.
As of March 17, 2023, we had filed a PCT patent application relating to gene expression levels associated with treatment comprising ANG-3070. Patents issuing from corresponding national applications, if granted, will expire in 2042.
Under the Hatch-Waxman Act, a single patent term restoration of up to five years in the United States may be available. We also may be eligible for similar restoration of term in Europe under supplementary protection certificate rights, and similar extensions in certain other countries.
ROCK2 Inhibitor Program
As of March 17, 2023, the patent portfolio for the ROCK2 inhibitor program consists of three composition of matter patents. The first family includes granted patents in the United States and India, and pending applications in the United States, Australia, Canada, China, Europe, Hong Kong, Israel, and Japan, each of which would have presumed twenty-year terms expiring in 2038. A second family includes pending applications in the United States, Australia, Canada, China, Europe, Israel, India, and Japan, each of which would have presumed twenty-year terms expiring in 2040. A third family includes or will include pending applications in the United States, Canada, China, Europe, Israel, and Japan, each of which would have presumed twenty-year terms expiring in 2041.
CYP11B2 Inhibitor Program
As of March 17, 2023, the patent portfolio for the CYP11B2 inhibitor program includes pending applications in the United States, Europe and Israel, each of which would have presumed twenty-year terms expiring in 2038. As of March 15, 2023, we owned issued patents in the United States that claim, among other things, ANG-3598 composition of matter, pharmaceutical compositions comprising ANG-3598, and methods of treating renal fibrosis. We also owned issued patents in Australia, China, Israel, India and Japan. Each of the patents expire in 2035.
ANG-3777
The patent portfolio for ANG-3777 includes patents and patent applications that describe and/or specifically claim pharmaceutical compositions whose active agent is ANG-3777 and uses thereof, as well as compounds structurally related to ANG-3777, pharmaceutical compositions and uses thereof. As of March 15, 2023, we owned issued patents in the United States that claim, among other things, pharmaceutical compositions comprising ANG-3777. We also owned issued patents in Australia, Canada, China, Europe, Hong Kong, Israel, and Japan. Granted European patents have been validated in the following European countries: Denmark, France, Germany, Hungary, Ireland, Italy, Luxembourg, Monaco, Netherlands, Sweden, Switzerland/Liechtenstein, and the United Kingdom. These patents should remain in force, if the appropriate maintenance, renewal, annuity or other governmental fees are paid, in the United States until 2024, and in other jurisdictions until mid-2023.
An aqueous formulation of ANG-3777 and analogues of sufficient solubility for intravenous administration is the subject of claims in a patent issued in the United States that will expire in 2030 assuming continued payment of all maintenance fees.
We have issued United States patents on the use of ANG-3777 and related compounds for the treatment of chronic obstructive pulmonary disease, (COPD), and scleroderma, which expire in 2028 and 2029, respectively.
We have issued claims in the United States to solid forms of ANG-3777 which expires in 2040, and pending applications in Australia, Brazil, Canada, China, Israel, Japan, Korea, Mexico, New Zealand, Singapore, and the United States. Patents issuing from these applications will expire in 2040.
As of March 17, 2023, we have filed applications in the United States and Europe directed to the use of ANG-3777 in the treatment of delayed graft function. Patents issuing from these applications will expire in 2040.
As of March 17, 2023, we have filed a PCT application directed to methods of manufacturing ANG-3777 drug product. The presumptive twenty-year expiration of any national applications arising therefrom is 2041.
As of March 17, 2023, we have filed a PCT application directed to methods of administering ANG-3777. The presumptive twenty-year expiration of any national applications arising therefrom is 2042.
As of March 17, 2023, we have filed a PCT application directed to ANG-3777 prodrugs. The presumptive twenty-year expiration of any national applications arising therefrom is 2042.
Under the Hatch-Waxman Act, a single patent term restoration of up to five years in the United States may be available. We also may be eligible for similar restoration of term in Europe under supplementary protection, certificate rights, and similar extensions in certain other countries.
Licenses and Collaborations
License Agreement with Vifor Pharma
In November 2020, we granted Vifor Pharma, an exclusive, global (excluding Greater China), royalty-bearing license (the Vifor License), for the commercialization of ANG-3777 in all Renal Indications, beginning with DGF and CSA-AKI. The Vifor License also grants Vifor Pharma exclusive rights, with a right to sublicense subject to our consent for certain specified conditions, to develop and manufacture ANG-3777 for commercialization in Renal Indications worldwide (excluding Greater China) in cooperation with us or independently. We retain the right to develop and commercialize combination therapy products combining ANG-3777 with our other proprietary molecules, subject to Vifor Pharma's right of first negotiation with respect to global (excluding Greater China) rights to such combination therapy products in the Renal Indications. Although the Vifor License includes additional milestone and royalty objectives, we do not expect to receive any clinical, post-approval, or sales milestones, or royalties, as we do not intend to continue to pursue the clinical development plan for ANG-3777, which had included a Phase 3 study for CSA-AKI and a phase 4 confirmatory study in DGF. We and Vifor continue to discuss the analyses of the results of the clinical trials announced in the fourth quarter of 2021 and the future of the collaboration.
Collaboration with the University of Michigan
In 2019, we entered into a subcontractor agreement with The Regents of the University of Michigan (UM),
under which we provided funding for identification of ANG-3070-responsive disease marker profiles in rodent models, and their intersection with existing data on patients with various forms of nephrotic kidney disease, to identify potential ANG-3070-responsive patient subsets. Under this agreement we obtained access to the Nephrotic Syndrome Study Network (NEPTUNE), an integrated group of academic centers, patient support organizations and clinical resources dedicated to advancing the treatment of kidney disorders. The goal of work under this agreement, which we support through a grant from the U.S. Department of Defense, is to identify human disease and drug response profiles based upon the genes, networks and pathways that correlate with the therapeutic activity of ANG-3070 in primary FSGS and other fibrotic renal diseases. We are obligated to provide to UM up to a total of $520,000 over the course of the project. We have an option to license and commercialize intellectual property generated during the term of the agreement that is solely owned by UM under commercially reasonable terms. On March 21, 2022, we provided written notice to UM of our intention to terminate the subcontractor agreement as we believe the work under the related U.S. Department of Defense grant to be complete.
Collaboration with Ohr Cosmetics LLC
In November 2013, we granted Ohr an exclusive worldwide license, with the right to sublicense, under our patent rights covering one of our CYP26 inhibitors, for the use in treating conditions of the skin or hair. Sublicensees
may not grant further sublicenses under our patent rights other than to affiliates of such sublicensees and entities with which sublicensees are collaborating for the research, development, manufacture and commercialization of the products. Ohr will pay us a royalty at a rate in the low single digits on gross revenue of products incorporating ANG-3522, and milestone payments potentially totaling up to $9.0 million based on achievement of sales milestones. Royalties and milestone payments will be paid until the later of 15 years from the first commercial sale of a licensed product or the last to expire licensed patent rights. The royalty rate is subject to adjustments under certain circumstances. The Ohr License represents a related-party transaction, as discussed in our financial statements included in Item 8 in this Annual Report on Form 10-K below, and we believe the Ohr License was made on terms no less favorable to us than those we could obtain from unaffiliated third parties. On February 5, 2023, we and Ohr executed the First Amendment to the Ohr license agreement. This amendment allows Ohr access to our CYP26 inhibitors beyond ANG-3522 for the use in treating conditions of the skin and hair, eliminates our obligation to prosecute or maintain the patents rights licensed to Ohr at its principal expense, and allows Ohr to prosecute and maintain such patent rights its sole own expense. No revenue from this license agreement was recognized during the year ended December 31, 2022 or 2021.
Government Regulation and Product Approval
The FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, marketing and promotion, distribution, post-approval monitoring and reporting, sampling, and import and export of drugs, such as those we are developing. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
U.S. Drug Regulation
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act and its implementing regulations. FDA approval is required before any new drug can be marketed in the United States. Drugs are also subject to other federal, state and local statutes and regulations. Failure to comply with applicable FDA or other requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA clinical holds, refusal to approve pending applications, withdrawal of an approval, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following:
▪completion of preclinical laboratory tests and animal studies, all performed in accordance with the FDA's Good Laboratory Practice (GLP) regulations;
▪submission to the FDA of an investigational new drug application (IND) which must become effective before human clinical studies may begin and must be updated annually or when significant changes are made;
▪approval by an independent institutional review board (IRB) representing each clinical site before a clinical study may be initiated;
▪performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (GCP) regulations to establish the safety and efficacy of the product candidate for each proposed indication;
▪preparation of and submission to the FDA of a new drug application (NDA);
▪satisfactory completion of an FDA advisory committee review, if applicable;
▪a determination by the FDA within 60 days of its receipt of an NDA to file the application for review;
▪satisfactory completion of an FDA pre-approval inspection of the manufacturing facility(ies) where the product is manufactured to assess compliance with current good manufacturing practice (cGMP) regulations, and of selected clinical investigation sites to assess compliance with GCP; and
▪FDA review and approval of an NDA to permit commercial marketing of the product for its particular labeled uses in the United States.
International Regulation
In addition to regulations in the United States, we could become subject to a variety of foreign regulations regarding development, approval, commercial sales and distribution of our products if we seek to market our product candidates in other jurisdictions. Whether or not we obtain FDA approval for a product, we must obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country and can involve additional product testing and additional review periods, and the time may be longer or shorter than that required to obtain FDA approval. The requirements governing, among other things, the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. If we fail to comply with applicable foreign regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.
Human Capital Resources
As of December 31, 2022, we have three full-time employees and nine part-time consultants.
Corporate Information
We were incorporated in the State of Delaware on April 6, 1998. Our corporate headquarters are located at 7-57 Wells Avenue, Newton, Massachusetts 02459 and our telephone number is (415) 655-4899. Our website address is www.angion.com. The information contained on, or that can be accessed through, our website will not be deemed to be incorporated by reference into and does not constitute part of this filing.
Available Information
We are subject to the information requirements of the Securities Exchange Act of 1934, as amended, and we therefore file periodic reports, proxy statements and other information with the SEC relating to our business, financial statements and other matters. The SEC maintains an Internet site, www.sec.gov, that contains reports, proxy statements and other information regarding issuers such as Angion Biomedica Corp.
For more information about us, including free access to our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, visit our website, www.angion.com. The information found on or accessible through our website is not incorporated into, and does not form a part of, this Annual Report on Form 10-K.

---

ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this Annual Report on Form 10-K, including our consolidated financial statements and related notes, before deciding whether to invest in shares of our common stock. Many of the following risks and uncertainties are, and will be, exacerbated by the coronavirus disease 2019 (COVID-19) pandemic and any worsening of the global business and economic environment as a result. The occurrence of any of the adverse developments described in the following risk factors could materially and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Relating to Our Merger with Elicio
If the conditions to the closing of our pending Merger with Elicio are not met, the Merger may not occur.
Even if our stockholders approve the Merger, specified conditions must be satisfied or waived to complete the Merger. We cannot assure you that all of the conditions will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or will be delayed, and we may lose some or all the intended benefits of the Merger.
Failure to complete the Merger may result in Angion paying a termination fee to Elicio and could harm our common stock price and future business and operations.
If the Merger is not completed:
•upon termination of the Merger Agreement, we may be required to pay Elicio a termination fee of $2.0 million or $1.0 million, under certain circumstances, and/or up to $500,000 in expense reimbursements;
•we will have incurred significant expenses related to the Merger, such as legal and accounting fees, which must be paid even if the Merger is not completed;
•the price of our common stock may decline and remain volatile; and
•we may be forced to cease its operations, dissolve and liquidate its assets.
In addition, if the Merger Agreement is terminated and our board of directors (Board or the Angion Board) determines to seek another business combination, there can be no assurance that we will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the Merger or any partner at all.
The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes and/or other causes.
In general, we or Elicio can refuse to complete the Merger if there is a material adverse change affecting the other party between January 17, 2023, the date of the Merger Agreement, and the closing of the Merger, subject to certain exceptions.
Purported lawsuits have been filed, and additional lawsuits may be filed, relating to the Merger. An adverse ruling in any such lawsuit may prevent the Merger from being consummated.
Following announcement of the merger agreement with Elicio on January 17, 2023, and the filing of a Registration Statement on Form S-4 on February 13, 2023, a lawsuit was filed in the United States District Court for the Eastern District of New York on February 17, 2023 by a purported stockholder of Angion in connection with the proposed merger between Angion and Elicio. The lawsuit was captioned Klein v. Angion Biomedica Corp., et al., No. 1:23-cv-01313 (E.D.N.Y.). The Klein complaint named as defendants Angion, and the members of the Angion Board. The Klein complaint alleged claims for breaches of fiduciary duty against the members of the Angion Board, aiding and abetting breaches of fiduciary duty against Angion, violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the members of the Angion Board. The plaintiff contended that the registration statement on Form S-4 filed on February 13, 2023 omitted or misrepresented material information regarding the proposed merger between Angion and Elicio, rendering the registration statement false and misleading. The Klein complaint sought injunctive and declaratory relief, as well as damages. On February 21, 2023, the plaintiff filed a notice of voluntary dismissal of the Klein lawsuit. Although the plaintiffs voluntarily dismissed this case, litigation of this type is prevalent in mergers involving public companies, and other potential plaintiffs may file lawsuits challenging the Merger.
The outcome of any additional future litigation is uncertain. Such litigation, if not resolved, could prevent or delay completion of the Merger and result in substantial costs to Angion, including any costs associated with the indemnification of directors and officers. One of the conditions to the completion of the Merger is the absence of any law or order from a governmental entity (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits the consummation of the Merger. Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the Merger on the agreed-upon terms, then such injunction may prevent the Merger from being completed, or from being completed within the expected timeframe. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect Angion’s business, financial condition, results of operations and cash flows.
During the pendency of the Merger, we may not be able to enter into a business combination with another party at a favorable price because of restrictions in the Merger agreement, which could adversely affect our business.
Covenants in the Merger Agreement impede the our ability to make acquisitions, subject to specified exceptions relating to fiduciary duties, or complete other mergers, sales of assets or other business combinations that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, we may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, we are generally prohibited from soliciting, initiating, encouraging or entering into specified
extraordinary transactions, such as a merger, sale of assets or other business combination, with any third party, subject to specified exceptions, even if any such transaction could be favorable to our stockholders.
Certain provisions of the Merger Agreement may discourage third parties from submitting competing proposals, including proposals that may be superior to the arrangements contemplated by the Merger Agreement.
The terms of the Merger Agreement prohibit each of Angion and Elicio from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances when such party’s board of directors determines in good faith, after consultation with its outside financial advisor and outside counsel, that an unsolicited competing proposal constitutes, or is reasonably likely to result in, a superior competing proposal and, after consultation with its outside counsel, that failure to take such action is reasonably likely to be inconsistent with the fiduciary duties of the applicable board of directors. In addition, if Angion or Elicio terminate the Merger Agreement under specified circumstances, including terminating because of a decision of the Angion Board to recommend a superior competing proposal, Angion may be required to pay Elicio a termination fee of $2.0 million or $1.0 million or up to $0.5 million in expense reimbursements or Elicio may be required to pay Angion a termination fee of $1.0 million, or up to $0.5 million in expense reimbursements, as defined and described under “The Merger Agreement-Termination of the Merger Agreement and Termination Fee.” This termination fee may discourage third parties from submitting competing proposals to Angion or its stockholders and may cause the Angion Board to be less inclined to recommend a competing proposal.
Risks Relating to Our 2022 Strategic Realignment
Our recent organizational changes and cost cutting measures may not be successful.
In July 2022, we implemented a reduction-in-force affecting a majority of our workforce and a process to explore strategic options for enhancing and preserving shareholder value (2022 Strategic Realignment), which resulted in us entering into the Merger Agreement with Elicio. As of March 15, 2023, we have three employees. The reductions in workforce and cost cutting measures will make it difficult for us to resume development activities we suspended or pursue new initiatives if we do not successfully complete the Merger, requiring us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses. As a result of the loss of services of substantially all of our personnel, including several of our executive officers, we may be unable to continue our operations and meet our ongoing obligations if we do not successfully complete the Merger. Any of these unintended consequences may have a material adverse impact on our business, financial condition, and results of operations.
We may not be able to comply with Nasdaq’s continued listing standards.
Our common stock trades on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “ANGN.” There is also no guarantee we will be able to perpetually satisfy Nasdaq’s continued listing requirements to maintain our listing on Nasdaq for any periods of time. Among the conditions required for continued listing on Nasdaq, we are required to maintain a stock price over $1.00 per share pursuant to Rule 5550(a)(2) of the Nasdaq Listing Rules. On December 15, 2022, we received a letter from Nasdaq notifying us that for the last 30 consecutive business days the bid price of our common stock had closed below $1.00 per share, the minimum closing bid price required by the continued listing requirements of Nasdaq listing rule 5450(a)(1). If our common stock does not achieve compliance by June 13, 2023, we may be eligible for an additional 180-day period to regain compliance if we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards, with the exception of the bid price requirement, and provide written notice to Nasdaq of our intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we do not meet the other listing standards, Nasdaq could provide notice that our common stock will become subject to delisting. In the event we receive notice that our common stock is being delisted, Nasdaq rules permit Angion to appeal any delisting determination.
In addition, even if we demonstrate compliance with the requirement above, we will have to continue to meet other objective and subjective listing requirements to continue to be listed on Nasdaq, which we may not be able to continue to meet. Delisting from Nasdaq could make trading our common stock more difficult for investors, potentially leading to declines in our share price and liquidity. Without a Nasdaq listing, stockholders may have a difficult time obtaining a quote for the sale or purchase of our common stock, the sale or purchase of our common stock would likely be made more difficult, and the trading volume and liquidity of our common stock could decline.
Delisting from Nasdaq could also result in negative publicity and could also make it more difficult for us to raise additional capital.
Risks Relating to Our Financial Position and Need for Additional Capital
We have temporarily suspended our clinical programs and we have no products approved for sale, which makes it difficult to assess our future viability.
We are a biopharmaceutical company that has suspended our clinical programs, has only a small number of pre-clinical programs, and has no products approved for sale. Drug development is a highly speculative undertaking and involves a substantial degree of risk. We have not yet submitted any product candidates for approval or received approval of any product candidate by regulatory authorities in any jurisdiction, including the FDA. We do not expect to generate revenue from product sales unless we, or we or our collaborators, resume clinical development of our product candidates and obtain approval and commercialize our product candidates, which we do not expect to occur for several years, if ever. We expect to continue to incur net losses for the foreseeable future to the extent we advance our product candidates through preclinical and clinical and development, and as we continue to incur expenses to protect our intellectual property, maintain our general and administrative support functions, and incur costs associated with operating as a public company. If we are unable to enroll clinical trials for any of our product candidates, or we fail in clinical trials or do not gain regulatory approval, we may never generate revenue or become profitable.
To achieve our goals we will require substantial additional funding, which capital may not be available to us on acceptable terms, or at all, and, if not so available, may require us to delay, limit, reduce or cease our operations
We have invested and, to the extent we resume clinical development and clinical trials of our product candidates following our 2022 Strategic Realignment process, will continue to invest a significant portion of our efforts and financial resources in research and development activities. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive. We will require substantial additional future capital to complete clinical development, including additional clinical trials, and seek regulatory approval to bring our product candidates to market. Regulatory authorities in the United States and elsewhere could also require us to perform additional preclinical studies or clinical trials to receive or maintain regulatory approval of our product candidates, and our expenses would further increase beyond what we currently expect. Because successful development of our product candidates is uncertain, we are unable to estimate the actual funds we will require to complete research and development of our product candidates as well as the costs of commercializing any of our wholly-owned product candidates and those for which we retain the right to commercialize.
In addition, whether or not we resume clinical trials of our product candidates, we will continue to incur costs:
▪to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights, and
▪the costs associated with being a public company, including our need to implement additional internal systems and infrastructure, including financial and reporting systems.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions could adversely affect our current financial condition and projected business operations.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (SVB), where we hold substantially all of our cash and cash equivalents, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation, (FDIC), as receiver. On March 12, 2023, the Department of the Treasury, the Federal Reserve, and the FDIC jointly released a statement that depositors at SVB would have access to their funds, even those funds in
excess of the standard FDIC insurance limits, under a systemic risk exception. As of March 13, 2023, we had access to our cash and cash equivalents at SVB; however, there is uncertainty in the markets regarding the stability of regional banks and the safety of deposits in excess of the FDIC insured deposit limits. The ultimate outcome of these events cannot be predicted, but these events could have a material adverse effect on our business operations as well as our ability to complete the merger transaction with Elicio if our ability to access funds at SVB is compromised.
Risks Relating to the Development and Regulatory Approval of Our Product Candidates
COVID-19 could adversely impact our business, including our clinical trials and financial condition.
We have been and continue to be subject to risks related to public health crises such as the global pandemic associated with COVID-19. As COVID-19 continues to persist around the globe, to the extent we resume clinical trials or commence new clinical trials, we may experience disruptions that could severely impact our business and clinical trials, including:
▪delays or difficulties in enrolling patients in our clinical trials;
▪delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
▪diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;
▪interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the integrity of clinical trial data;
▪risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events;
▪limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;
▪delays in receiving authorizations from local regulatory authorities to initiate our planned clinical trials;
▪delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;
▪interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials;
▪changes in local regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;
▪interruptions or delays in preclinical studies due to restricted or limited operations at our research and development laboratory facilities;
▪delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and refusal of the FDA to accept data from clinical trials in affected geographies outside the United States.
▪refusal of the FDA to accept data from clinical trials in affected geographies outside the United States.
The global pandemic of COVID-19 continues to evolve. The extent to which COVID-19 may impact our business and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the geographic spread of the disease and its variants, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
Product development and regulatory approval involve a lengthy and expensive process with uncertain outcomes. We cannot be certain ANG-3070 or any of our other product candidates will receive or maintain
regulatory approval and, without regulatory approval, we and our collaborators will not be able to market our product candidates.
We currently have suspended our clinical programs, only have a small number of pre-clinical programs, and have no products approved for sale, and even if we resume clinical trials we cannot guarantee we will ever have approved products we or our collaborators can market and sell. The development of a product candidate and issues relating to approval and marketing are subject to extensive regulation by regulatory authorities, including the FDA in the United States and other regulatory authorities in other foreign countries, with regulations differing from country to country. We are not permitted to market our product candidates in the United States or elsewhere until we receive regulatory approval and/or marketing authorization, such as approval of an NDA from the FDA. We have not submitted any marketing applications for any of our product candidates.
New drug marketing applications must include extensive preclinical and clinical data and supporting information to establish the product candidate's safety and effectiveness for each desired indication. Such marketing applications must also include significant information regarding the chemistry, manufacturing, and controls for the product. Obtaining approval of our product candidates will be a lengthy, expensive, and uncertain process, and we may not be successful. Specifically, the review processes of the FDA and foreign regulatory authorities can take years to complete, and approval is never guaranteed. Even if a product is approved, the FDA or foreign regulatory authorities may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or require expensive and time-consuming additional clinical trials or reporting as conditions of approval. The FDA or foreign regulatory authorities also may not approve our product candidates with the labeling that we believe is necessary or desirable for the successful commercialization of such product candidates. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure we will be able to obtain regulatory approval in any other country.
If we resume clinical trials, we cannot predict whether the clinical trials of our product candidates will be successful, or whether regulators will agree with our conclusions regarding the preclinical studies and clinical trials we have conducted to date or we conduct in the future. If we are unable to obtain approval from regulatory authorities for any of our product candidates, we may not be able to generate sufficient revenue to become profitable or to continue our operations.
Delays or difficulties in the commencement, enrollment and completion of clinical trials could result in increased costs to us and delay or limit our ability to obtain regulatory approval for our product candidates.
If we resume or commence clinical trials, delays in the commencement, enrollment, and completion of clinical trials would increase our product development costs beyond what we expect or could limit the regulatory approval of our product candidates. Delays in any of our clinical trials may increase the amount of additional funding we will require to complete these trials.
Changes in regulatory requirements and related guidance related to regulatory approval may also occur and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit clinical trial protocols to IRBs for re-examination, which may impact the costs, timing or successful completion of our clinical trials.
Furthermore, if we are required to conduct additional clinical trials or other preclinical studies of our product candidates beyond those contemplated, our ability to obtain or maintain regulatory approval of these product candidates and generate revenue from their sales would be similarly harmed.
Clinical failure can occur at any stage of clinical development, and the results of earlier clinical trials are not necessarily predictive of future results.
Clinical failure can occur at any stage of our clinical development. For example, in the fourth quarter of 2021, we disclosed the results of the ANG-3777 Phase 3 clinical trial for DGF and AKI associated with cardiac surgery involving CSA-AKI, neither of which met their primary endpoints despite the existence of encouraging pre-clinical and clinical data for ANG-3777 established prior to initiating such studies. Clinical trials may produce negative or inconclusive results, and we or our collaborators may decide, or regulators may require us, to conduct additional clinical trials or preclinical studies. In addition, data obtained from trials and studies are susceptible to various interpretations, and regulators may not interpret our data as favorably as we do, which may delay, limit or prevent regulatory approval. Success in preclinical studies and early clinical trials does not ensure subsequent clinical trials
will generate the same or similar results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate. A number of companies in the pharmaceutical industry, including those with greater resources and experience than us, have suffered significant setbacks in Phase 3 registration trials, even after seeing promising results in earlier pre-clinical studies.
In addition, the design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. We have limited experience in designing clinical trials as we have never previously completed a Phase 3 registration trial with results sufficient to obtain regulatory approval or submitted an NDA to the FDA or a marketing application to any foreign regulatory authority, and we may be unable to design and execute a clinical trial to support regulatory approval. Further, clinical trials of potential products often reveal it is not practical or feasible to continue development efforts, as has occurred with the clinical development of ANGN-3070.
If we resume or commence clinical trials, the product candidates in those clinical trials may be the subject of clinical trial failures or found to be unsafe or lack efficacy, and if that were to occur we would not be able to obtain regulatory approval for them and our business would be harmed.
Our product candidates may have undesirable side effects which may delay or halt clinical development or prevent marketing approval or, if approval is received, require them to be taken off the market, require them to include safety warnings, or otherwise limit their sales.
The results of any clinical trials of our product candidates we may resume or commence may show such product candidates led to patient safety concerns or undesirable or unacceptable side effects, creating risk to the patient which is deemed to outweigh the potential benefits of treatment to that patient. Unforeseen side effects from any of our product candidates could arise either during clinical development or, if approved, after the approved product has been marketed. Any such event could interrupt, delay or halt such clinical trials, resulting in the denial of regulatory approval by the FDA and other regulatory authorities or result in restrictive label warnings, if approved. In light of widely publicized events concerning the safety risk of certain drug products, regulatory authorities, members of Congress, the Government Accounting Office, medical professionals and the general public have raised concerns about potential drug safety issues. These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk management programs that may, for instance, restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials. Data from clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, or require longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval or approval for a more limited indication than originally sought.
We have relied, and may continue to rely, on single-source third party contract manufacturing organizations to manufacture and supply our product candidates, and if the FDA or foreign regulatory authorities do not approve these manufacturing facilities or if these organizations fail to perform, our ability to conduct clinical trials and obtain regulatory approval our product candidates may be harmed.
We do not own facilities for clinical and commercial manufacturing of our product candidates, and to the extent we resume or commence clinical trials of any of our product candidates, we will rely upon third-party contract manufacturing organizations to manufacture and supply product candidates for our clinical trials and we will rely in such manufacturers to meet commercial demand.
Additionally, the facilities at which any of our product candidates are manufactured must be the subject of a satisfactory inspection before the FDA or the regulators in other jurisdictions approve the product candidate manufactured at that facility. We are completely dependent third-party vendors for compliance with the current Good Manufacturing Practice requirements (cGMPs), and the requirements of United States and non-United States regulators for the manufacture of our active ingredients, drug products, and finished products. If our manufacturers cannot successfully manufacture material conforming to our specifications and cGMPs of any applicable governmental agency, our product candidates will not be approved or, if already approved, may be subject to recalls or demands by regulatory agencies to stop selling the product until manufacturing issues are resolved.
If we are able to develop and obtain regulatory approval for any of our product candidates, our business will be materially harmed if we are unable to successfully commercialize such approved products.
Even if we pursue and receive regulatory approval of any product candidate, it is uncertain whether we will be able to successfully commercialize such product. Our marketing of any approved product will be limited to the product’s approved use and potentially subject to other limitations as set forth in its approved prescribing information and package insert. Accordingly, we cannot ensure any of our future approved products will be successfully developed, approved or commercialized. If we are unable to successfully commercialize any future approved products, we may not be able to generate sufficient revenue to operate our business.
Risks Relating to Our Business
We face competition from other biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. We will have competitors in the United States, Europe, and other jurisdictions, including major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical and generic drug companies, and universities and other research institutions, for any of our product candidates we determine to pursue. Many of these competitors have greater financial and other resources, such as larger research and development staff and more experienced marketing and manufacturing organizations. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining regulatory approvals, recruiting patients, and manufacturing pharmaceutical products. These companies also have significantly greater research, sales, and marketing capabilities and collaborative arrangements in our target markets with leading companies and research institutions. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds potentially making the product candidates we develop obsolete. As a result of all of these factors, any of these competitors may succeed in obtaining patent protection and/or FDA approval or discovering, developing, and commercializing drugs for kidney, heart, liver, lung and other diseases we are targeting before we do. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. In addition, many universities and private and public research institutes may become active in our target disease areas.
We will depend on single third-party suppliers for the manufacture and supply of drug substance and potential future commercial product supplies for our product candidates, and any performance failure on the part of our supplier could delay the development and potential commercialization of our product candidates.
To the extent we resume or commence clinical trials of our product candidates, we cannot be certain our drug substance supplier will continue to provide us with sufficient quantities of drug substance, or our manufacturers will be able to produce sufficient quantities of drug product incorporating such drug substance, to satisfy our anticipated specifications and quality requirements, or such quantities can be obtained at pricing necessary to sustain acceptable pharmaceutical margins for any of our product candidates, if approved. Our dependence on a single supplier for our drug substance and the challenges we may face in obtaining adequate supply of drug substance involves several risks, including limited control over pricing, availability, quality and delivery schedules, and such risks may be heightened as a result of the COVID-19 pandemic. Any supply interruption in drug substance or drug product could materially harm our ability to complete our development program for such indications, until a new source of supply, if any, could be identified and qualified. We may be unable to find a sufficient alternative supply channel in a reasonable time or on commercially reasonable terms. Any performance failure on the part of our suppliers could delay the development and potential commercialization of our product candidates, including limiting supplies necessary for clinical trials and regulatory approvals, which would have a material adverse effect on our business.
We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization.
The use of our product candidates in clinical trials and the sale of any products for which we may obtain marketing approval expose us to the risk of product liability claims. Product liability claims may be brought against us or our collaborators by participants enrolled in our past and any future clinical trials, patients, healthcare
providers, or others using, administering, or selling our products. If we cannot successfully defend ourselves against any such claims, we would incur substantial liabilities.
Under the terms of the government grant funding we have received, the government may compel us to license to a third party, or suspend, terminate or withhold grant funding.
A significant amount of our discovery and initial clinical research we have conducted has been funded principally by United States government grants and contracts. As with all other pharmaceutical research programs supported in part by federal research dollars, conducting research under federal grants required us to grant the U.S. government a nonexclusive, nontransferable, irrevocable, paid-up license for the government to practice or have the invention practiced on its behalf throughout the world. Under certain circumstances, the government can require the grantee to license a third party, or the government may take title and grant a license itself, known as march-in rights, which may occur if the invention is not brought to practical use within a reasonable time, if health or safety issues arise, if public use of the invention is in jeopardy, or if other legal requirements are not satisfied. Although, to our knowledge, the U.S. government has never forced a grantee to license a third party or taken title and granted a license itself, these march-in rights are available to the government, and we cannot assure you the government will not exercise such rights in the future.
Under the terms and conditions of the government grant funding, we are obligated to comply with various reporting requirements and to take certain administrative actions. Material noncompliance with the terms and conditions of the grant funding may result in one or more enforcement actions by the grant agency. These enforcement actions include denying funds for the cost of funded activities, suspending the grant in whole or in part, pending corrective action, and withholding further grant awards. The grant agency may also terminate the grant for cause, or take other legally available remedies.
Risks Relating to Our Intellectual Property
It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection. If our patent position and potential regulatory exclusivity do not adequately protect our product candidates, others could compete against us more directly, which would harm our business, possibly materially.
Our success will depend in part on obtaining and maintaining patent protection and trade secret protection of our current and future product candidates, and their methods of manufacture and use. Our ability to stop third parties from making, using, selling, offering to sell or importing our product candidates is dependent upon the extent to which we have rights under valid and enforceable patents and/or trade secrets that cover these activities. The patent positions of biotechnology and pharmaceutical companies can be highly uncertain and involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in pharmaceutical patents has emerged to date in the United States or in many jurisdictions outside of the United States. Changes in either the patent laws or interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property. Accordingly, we cannot predict the breadth of claims that may be issued in relevant jurisdictions from our present or future patent filings, or those we license from third parties, and further cannot predict the extent to which we will be able to enforce such issued claims in jurisdictions important to our business. If any patents we obtain or license are deemed invalid and unenforceable, our ability to commercialize or license our technology could be adversely affected.
It is possible others have filed, and in the future may file, patent applications covering products and technologies similar, identical or competitive to ours, or are otherwise important to our business. We cannot be certain any patent filings owned by a third party will not have priority over patent applications filed or in-licensed by us, or we or our licensors will not be involved in interference, opposition or invalidity proceedings before United States or foreign patent offices. The costs of defending our patents or enforcing our proprietary rights in post-issuance administrative proceedings and litigation can be substantial and the outcome can be uncertain. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, and/or could allow third parties to commercialize our technology or products and compete directly with us, without payment to us. Furthermore, third-party filings may issue as patents infringed by our manufacture or commercialization of our products. Licenses may not be available to such third party patents, and challenges to their validity or infringement may be expensive and may not succeed. If the breadth or strength of protection provided by our patents and patent applications is threatened, or if we are perceived or found to infringe intellectual property
rights of others, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates, and could impede or preclude our ability to commercialize our products.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. We may become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. Such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, any of which could limit our ability to stop others from using or commercializing similar or identical technology and products, and/or limit the duration of the patent protection of our technology and products.
Without patent protection for our compounds, pharmaceutical compositions, or formulations of our product candidates, our ability to stop others from using or selling our product, or other competitive products including our compounds, may be limited.
If the patent applications we hold or have in-licensed with respect to present or future product candidates fail to issue, if their breadth and/or strength of protection is limited or challenged, or if they fail to provide meaningful exclusivity for present or future product candidates, it could dissuade companies from collaborating with us to develop future candidates and threaten our ability to commercialize future commercial products. Any such outcome could have a materially adverse effect on our business.
We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights.
If we choose to go to court to stop another party from using the inventions claimed in any patents we obtain, that individual or company has the right to ask the court to rule such patents are invalid or should not be enforced against that third party. These lawsuits are expensive, would consume time and resources and would divert the attention of managerial and scientific personnel even if we were successful in stopping the infringement of such patents. In addition, there is a risk the court will decide such patents are not valid and we do not have the right to stop the other party from using the inventions.
There is also a risk, even if the validity of such patents is upheld, the court will refuse to stop the other party on the grounds such other party's activities do not infringe our patents. In addition, the United States Supreme Court has recently modified some tests used by the USPTO in granting patents over the past 20 years, which may decrease the likelihood we will be able to obtain patents and increase the likelihood of challenge of any patents we obtain or license.
We may infringe the intellectual property rights of others, which may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our product candidates.
Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. We cannot guarantee our products or product candidates, or their manufacture or use, will not infringe third-party patents. Furthermore, a third party may claim we or our manufacturing or commercialization collaborators are using inventions covered by the third party's patent rights. It is also possible a third party might allege our products or product candidates, or their manufacture or use, incorporate or rely on trade secrets improperly received from the third party. A third party alleging violations of their intellectual property rights may go to court to stop us from engaging in our normal operations and activities, including making or selling our product candidates. Defense of such claims, regardless of their merit, are costly and could affect our results of operations and divert the attention of managerial and scientific personnel.
There is a risk a court would decide we or our commercialization collaborators are infringing the third party's intellectual property rights and would order us or our collaborators to stop relevant activities. In that event, we or our commercialization collaborators may not have a viable way to avoid the infringement and may need to halt commercialization of the relevant product. In addition, there is a risk a court will order us or our collaborators to pay the other party damages for having infringed the other party's intellectual property rights. In the future, we may agree to indemnify our commercial collaborators against certain intellectual property infringement claims brought by third parties. The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not
always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
If we are sued for patent or other intellectual property (e.g., trade secret, trademark, etc.) infringement, we could incur significant costs, and delays in our product development or commercialization.
Our competitors may have filed, and may in the future file, patent applications covering technology like ours. Any such patent application may have priority over our patent applications, which could further require us to obtain rights to issued patents covering such technologies. If another party has filed a United States patent application on inventions similar to ours, we may have to participate in an interference or derivation proceeding declared by the USPTO to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible such efforts would be unsuccessful if, unbeknownst to us, the other party had independently arrived at the same or similar invention prior to our own invention, resulting in a loss of our United States patent position with respect to such inventions, and granting such position to the third party, so we may need to seek a license from such third party to continue our use of the technologies, which license might not be available, or might impose significant costs.
Other countries have similar laws permitting secrecy of patent applications and may be entitled to priority over our applications in such jurisdictions.
In addition, we may be subject to claims we are infringing other intellectual property rights, such as trademarks or copyrights, or misappropriating the trade secrets of others, and to the extent our employees, consultants or contractors use intellectual property or proprietary information owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
We may not have sufficient resources to bring actions alleging intellectual property infringement to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology, fail to defend an infringement action successfully or have infringed patents declared invalid, we may incur substantial monetary damages, encounter significant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates. Furthermore, even if we are successful in proceedings relating to alleged intellectual property infringement or misappropriation, we may incur substantial costs and divert management's time and attention in pursuing these proceedings, which could have a material adverse effect on us.
Some of our competitors may be able to sustain the costs of complex litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the USPTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to the USPTO and non-United States patent agencies. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance could have a material adverse effect on our business.
The laws of some foreign countries do not protect proprietary rights to the same extent as do the laws of the United States, and we may encounter significant problems in securing and defending our intellectual property rights outside the United States.
Many companies have encountered significant problems in protecting and defending intellectual property rights in certain countries. The legal systems of certain countries, particularly certain developing countries, do not always favor the enforcement of patents, trade secrets, and other intellectual property rights, particularly those relating to pharmaceutical products, which could make it difficult for us to stop infringement of our patents, misappropriation of our trade secrets, or marketing of competing products in violation of our proprietary rights. Proceedings to enforce our intellectual property rights in foreign countries could result in substantial costs, divert our efforts and attention from other aspects of our business, and put our patents in these territories at risk of being invalidated or interpreted narrowly, or our patent applications at risk of not being granted, and could provoke third parties to assert claims against us. We may not prevail in all legal or other proceedings we may initiate and, if we were to prevail, the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property we develop or license.
Risks Relating to Our Common Stock
Our stock price may be volatile and you may not be able to resell shares of our common stock at or above the price you paid.
The trading price of our common stock could be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. These factors include those discussed above.
In addition, the stock markets in general, and the markets for pharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that may have been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If we were to become involved in securities litigation, we could incur substantial costs and resources and the attention of our management could be diverted from the operation of our business.
We are an "emerging growth company" and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.
We are an "emerging growth company," as defined in Jumpstart Our Business Act of 2012, (JOBS Act), and we intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and obtaining stockholder approval of any golden parachute payments not previously approved. In addition, as an "emerging growth company," the JOBS Act allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards applicable to public companies, which may make comparison of our financials to those of other public companies more difficult. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply for a period of time with the auditor attestation requirements of Section 404, and reduced disclosure obligations regarding executive compensation in this report and our periodic reports and proxy statements.
We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an emerging growth company or smaller reporting company.
We have completed and may in the future complete related party transactions that were not and may not be conducted on an arm's length basis.
We have in the past and continue to be party to certain transactions with certain entities affiliated with Dr. Goldberg, director and Chairman Emeritus on our Board, as well as certain of his immediate family members. For instance, in November 2013, we granted Ohr Cosmetics, LLC (Ohr), an affiliated company, an exclusive worldwide license, with the right to sublicense, under our patent rights covering one of our CYP26 inhibitors, ANG-3522, for the use in treating conditions of the skin or hair. We own, and the family of Dr. Goldberg, owns approximately 2.4% and 78.7%, respectively, of the membership interests in Ohr. Dr. Goldberg's son is the manager of Ohr. In addition, Dr. Venkatesan, our President and Chief Executive Officer and director, and Mr. Ganzi, our lead independent director, each own approximately 1.6% of the membership interests in Ohr.
In addition, prior to March 2023, we rented office and laboratory space in Uniondale, New York from NovaPark LLC (NovaPark), an affiliated company, under a lease scheduled to expire on June 20, 2026. The space we rented was part of an approximately 110,000-square-foot general laboratory and development facility (the “Property”) for biological and chemistry research owned by NovaPark. In March 2023, we entered into a Surrender Agreement with NovaPark which terminated the Uniondale, New York lease for a termination fee of $3.03 million and entered into a Membership Interest Redemption Agreement with NovaPark to relinquish our 10% membership interest in NovaPark. Prior to entering into the Membership Interest Redemption Agreement, we owned, and Dr. Goldberg, and Rina Kurz, Dr. Goldberg's spouse, owned 10%, 45% and 45%, respectively, of the membership interests in NovaPark.
Provisions in our charter documents and under Delaware law could discourage a takeover stockholders may consider favorable and may lead to entrenchment of management.
Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could delay or prevent changes in control or changes in our management without the consent of our board of directors. These provisions include the following:
•a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
•no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
•the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
•the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror;
• the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval;
•the required approval of at least 66 2/3% of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors;
• a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
• the requirement that a special meeting of stockholders may be called only by our chief executive officer or president or chairperson of the board of directors or by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and
•advance notice procedures stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror's own slate of directors or otherwise attempting to obtain control of us.
We are also subject to the anti-takeover provisions contained in Section 203 of the DGCL. Under Section 203, a corporation may not, in general, engage in a business combination with any holder of 15% or more of our capital
stock unless the holder has held the stock for three years or, among other exceptions, our Board has approved the transaction.
Our amended and restated certificate of incorporation and amended and restated bylaws provide for an exclusive forum in the Court of Chancery of the State of Delaware for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation and amended and restated bylaws provide that the Court of Chancery of the State of Delaware (or, in the event that the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a claim of breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. Our amended and restated certificate of incorporation and amended and restated bylaws also provide the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the Securities Act. Nothing in our amended and restated certificate of incorporation or amended and restated bylaws precludes stockholders that assert claims under the Exchange Act from bringing such claims in state or federal court, subject to applicable law.
We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible a court could find these types of provisions to be inapplicable or unenforceable. While the Delaware courts have determined such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive-forum provisions, and there can be no assurance such provisions will be enforced by a court in those other jurisdictions. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation and amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
Security breaches, cyber-attacks or other disruptions or incidents could expose us to liability and affect our business and reputation.
We are increasingly dependent on our information technology systems and infrastructure for our business. We, our collaborators and our service providers collect, store, and transmit sensitive information including intellectual property, proprietary business information, clinical trial data and personal information in connection with our business operations. The secure maintenance of this information is critical to our operations and business strategy. Some of this information could be an attractive target of criminal attack by third parties with a wide range of motives and expertise, including organized criminal groups, "hacktivists," patient groups, disgruntled current or former employees, nation-state and nation-state supported actors and others. Cyber-attacks are of ever-increasing levels of sophistication, and despite our security measures, our information technology and infrastructure may be vulnerable to such attacks or may be breached, including due to employee error or malfeasance. We have implemented information security measures to protect our systems, proprietary information and sensitive data, including the personal information of clinical trial participants against the risk of inappropriate and unauthorized external use and disclosure and other types of compromise. However, despite these measures, and due to the ever changing information cyber-threat landscape, we cannot guarantee these measures will be adequate to detect,
prevent or mitigate security breaches and other incidents and we may be subject to data breaches through cyber-attacks, malicious code (such as viruses and worms), phishing attacks, social engineering schemes, and insider theft or misuse. Any such breach could compromise our networks and the information stored there could be accessed, modified, destroyed, publicly disclosed, lost or stolen. If our systems become compromised, we may not promptly discover the intrusion. Like other companies in our industry, we have experienced attacks to our data and systems, including malware and computer viruses. Any security breach or other incident, whether real or perceived, would cause us to lose product sales, if any, and suffer reputational damage and loss of customer confidence. Such incidents could result in costs to respond to, investigate and remedy such incidents, notification obligations to affected individuals, government agencies, credit reporting agencies and other third parties, legal claims or proceedings, and liability under our contracts with other parties and federal and state laws that protect the privacy and security of personal information. If a security breach, cyber-attack, or other disruption is the result of state-sponsored activities, it may be considered an "act-of-war", potentially making us ineligible for reimbursement under our insurance policies covering such attacks. Any one of these events could cause our business to be materially harmed and our results of operations would be adversely impacted.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None.

---

ITEM 2. PROPERTIES
Item 2. Properties
Prior to March 2023, our corporate headquarters were located in Uniondale, New York. In March 2023, we surrendered our lease of that property and moved our headquarters to Newton, Massachusetts, where we currently lease 6,157 square feet of clinical development and operations space under a lease that expires June 2024. See Note 15 to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information.

---

ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of our business. In addition, following announcement of the merger agreement with Elicio on January 17, 2023, and the filing of a Registration Statement on Form S-4 on February 13, 2023, a lawsuit was filed in the United States District Court for the Eastern District of New York on February 17, 2023 by a purported stockholder of Angion in connection with the proposed merger between Angion and Elicio. The lawsuit was captioned Klein v. Angion Biomedica Corp., et al., No. 1:23-cv-01313 (E.D.N.Y.). The Klein complaint named as defendants Angion, and the members of the Angion Board. The Klein complaint alleged claims for breaches of fiduciary duty against the members of the Angion Board, aiding and abetting breaches of fiduciary duty against Angion, violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the members of the Angion Board. The plaintiff contended that the proposed merger between Angion and Elicio is unfair and undervalues Angion, and that the registration statement on Form S-4 filed on February 13, 2023 omitted or misrepresented material information regarding the proposed merger between Angion and Elicio, rendering the registration statement false and misleading. The Klein complaint sought injunctive and declaratory relief, as well as damages. On February 21, 2023, the plaintiff filed a notice of voluntary dismissal of the Klein lawsuit. Although the plaintiffs voluntarily dismissed this case, litigation of this type is prevalent in mergers involving public companies, and other potential plaintiffs may file lawsuits challenging the Merger.

---

ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures
None.
Part II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock trades under the symbol “ANGN” on the Nasdaq Global Select Market and has been publicly traded since February 5, 2021. Prior to this time, there was no public market for our common stock.
Use of Proceeds from the Initial Public Offering and the Concurrent Private Placement
On February 9, 2021, we closed our Initial Public Offering of 5,750,000 shares of our common stock at a public offering price of $16.00 per share, which includes the full exercise by the underwriters (Cowen and Company, LLC, Stifel, Nicolaus & Company, Incorporated, H.C. Wainwright & Co., LLC and Oppenheimer & Co. Inc) of their option to purchase an additional 750,000 shares of common stock. Concurrently, we entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Vifor Pharma, pursuant to which we agreed to sell 1,562,500 shares of our common stock to Vifor Pharma at a purchase price of $16.00 per share (the Concurrent Private Placement), equal to the offering price per share in our IPO. All of the shares of common stock issued and sold in our IPO were registered under the Securities Act pursuant to registration statements on Form S-1, as amended (Registration No. 333-252177), which were declared effective by the SEC on February 4, 2021.
The Initial Public Offering and Concurrent Private Placement, which both closed on February 9, 2021, generated aggregate net proceeds of approximately $107.0 million, after deducting the underwriting discounts and commissions, private placement fee and estimated offering expenses of $10.0 million. As of December 31, 2022, we have used approximately 79% of the aggregate net proceeds from our IPO.
There has been no material changes in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on February 5, 2021 pursuant to Rule 424(b)(4), except that given the clinical trial data on ANG-3777 reported in the fourth quarter of 2021, the termination of the JUNIPER trial and the suspension of certain of our clinical development activities as a result of our 2022 Strategic Realignment, we no longer intend to use the Use of Proceeds for the clinical development of ANG-3777 or ANG-3070, or any of our other product candidates if the Merger occurs.
Holders of Record
As of March 15, 2023, there were approximately 136 holders of record of shares of our common stock. This number does not reflect the beneficial holders of our common stock who hold shares in street name through brokerage accounts or other nominees.
Dividend Policy
We have never declared or paid cash dividends on our common stock. We intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our board of directors after considering our financial condition, results of operations, capital requirements, business prospects and other factors the board of directors deems relevant, and subject to the restrictions contained in any future financing instruments.

---

ITEM 6. SELECTED FINANCIAL DATA
Item 6. [Reserved]

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. In addition to the historical financial information, this discussion contains forward-looking statements that involve risk, assumptions and uncertainties, such as statements of our plans, objectives, expectations, intentions, forecasts and projections. Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of several factors, including those set forth under
the section of this Annual Report on Form 10-K titled "Risk Factors," which you should carefully read to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled "Forward-Looking Statements" at the beginning of this report.
Overview
Prior to our 2022 Strategic Realignment, we had been a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel small molecule therapeutics to address chronic and progressive fibrotic diseases. Our goal was to transform the treatment paradigm for patients suffering from these potentially life-threatening conditions for which there are no approved medicines or where existing approved medicines have known limitations. Our product candidates and programs included ANG-3070, a TKI formerly in development as a treatment for fibrotic diseases; a ROCK2 preclinical program targeted towards the treatment of fibrotic diseases; a CYP11B2 preclinical program targeted towards diseases related to aldosterone synthase dysregulation; and a CYP26 (retinoic acid metabolism) inhibitor program targeted towards a number of indications, including cancer; and ANG-3777, a HGF mimetic.
Our 2022 Strategic Realignment was announced following our June 2022 termination of our Phase 2 “JUNIPER” dose-finding trial for ANG-3070 in patients with primary proteinuric kidney diseases, specifically FSGS and IgAN. The JUNIPER trial was terminated in the interests of patient safety based upon a reassessment of the risk/benefit profile of ANG-3070 in patients with established serious kidney disease. We completed the data collection work necessary related to the JUNIPER trial to ascertain whether the drug had any effect, positive or negative, in patients with fibrotic kidney diseases and determined there was no economically-viable path forward for ANG-3070 in primary proteinuric kidney diseases.
On January 17, 2023, we entered into and announced a definitive merger agreement with Elicio Therapeutics Inc. (Elicio) under which Elicio will merge with a wholly-owned subsidiary of Angion in an all-stock transaction (Merger). Upon completion of the Merger, the combined company will focus on advancing Elicio’s proprietary lymph node AMP technology to develop immunotherapies, with a focus on ELI-002, a therapeutic cancer vaccine targeting mKRAS-driven tumors.
We have currently suspended clinical development activities in anticipation of the announced Merger, and do not have any products approved for sale and have not generated any revenue from product sales since our inception and do not expect to generate revenue from product sales unless we successfully develop, and we or our collaborators commercialize, our product candidates, which we do not expect to occur in the near future, if ever. Our net losses were $38.8 million and $54.6 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $253.9 million. We expect to continue to incur net losses for the foreseeable future.
In addition, if we resume clinical development of our product candidates absent the completion of the announced Merger and if we seek regulatory approval for any of our product candidates or those for which we retain the right to commercialize in the future, we would need to incur additional expenses as we develop and expand our clinical, regulatory, quality, manufacturing and commercialization capabilities, and incur significant commercialization expenses for marketing, sales, manufacturing and distribution if we obtain marketing approval for such product candidates.
We have relied on third parties in the conduct of our preclinical studies and clinical trials and for manufacturing and supply of our product candidates. We have no internal manufacturing capabilities, and if we continue to develop product candidates, we expect to continue to rely on third parties, many of whom are single-source suppliers, for our preclinical study and clinical trial materials. In addition, we do not have a marketing or sales organization or commercial infrastructure. Accordingly, if we are able to develop and obtain approval for one or more product candidates, we will incur significant expenses to develop a marketing and sales organization and commercial infrastructure in advance of generating any product sales of wholly-owned product candidates or those for which we retain the right to commercialize.
Furthermore, we would need to make continued investment in development studies, registration activities and the development of commercial support functions including quality assurance and safety pharmacovigilance before we would be in a position to sell any of our product candidates, if approved.
The Initial Public Offering and Concurrent Private Placement
The Initial Public Offering (IPO) and Concurrent Private Placement, which both closed on February 9, 2021, generated aggregate net proceeds of approximately $107.0 million, after deducting the underwriting discounts and commissions, private placement fee and estimated offering expenses payable by us.
Restructuring and Long-Lived Asset impairment
On January 4, 2022, we announced a reduction in force impacting less than half of our employees at that time. Our decision to engage in this reduction resulted from an assessment of our internal resource needs, given the results of the Phase 3 study of ANG-3777 in patients at risk for DGF would likely not support a regulatory approval in that population and the Phase 2 study in CSA-AKI would not support a Phase 3 trial in that indication. This reduction was a cost-cutting measure across the organization to support our 2022 primary focus on the clinical development of our investigational asset ANG-3070, a highly selective, oral tyrosine kinase receptor inhibitor in development as a treatment for fibrotic diseases, as well as advancing preclinical assets to IND-enabling studies. In connection with the reduction in force, which we completed in the first half of 2022, we incurred termination costs, which include severance, benefits and related costs, of approximately $3.2 million,of which $2.4 million were paid during the year ended December 31, 2022 and we expect to pay the remaining $0.8 million on or before September 2023.
On July 25, 2022, we announced an additional reduction in force of the majority of our 37 employees. This reduction in force, completed as of December 31, 2022, was a cash preservation measure and impacted employees across the organization. In connection with the reduction in force, we recorded a charge of approximately $3.0 million in the year ended December 31, 2022. We paid $2.2 million during the year ended December 31, 2022 and the remaining $0.8 million was paid in in the first quarter of 2023. These charges are primarily one-time termination benefits payable in cash.
The significant cut in the number of employees from the reduction in force announced on July 25, 2022 and the suspension of certain of our operations in deference to our 2022 Strategic Realignment impacted the use of our leased facilities. As of December 31, 2022, we were no longer conducting operations in our Newton, Massachusetts facility or our leased facility in Uniondale, New York, other than to store equipment. We determined that the right-of-use assets related to each facility were impaired. As a result, we recognized an impairment of $3.0 million related to the leases to write down the right-of-use assets to our fair value based on estimated future cash flows (see Note 10 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information).
License, Collaboration and Grant Agreements
License Agreement with Vifor Pharma
In November 2020, we granted Vifor Pharma, an exclusive, global (excluding Greater China), royalty-bearing license, for the commercialization of ANG-3777 in all Renal Indications, beginning with DGF and CSA-AKI. The Vifor License also grants Vifor Pharma exclusive rights, with a right to sublicense subject to our consent for certain specified conditions, to develop and manufacture ANG-3777 for commercialization in Renal Indications worldwide (excluding Greater China) in cooperation with us or independently. We retain the right to develop and commercialize combination therapy products combining ANG-3777 with our other proprietary molecules, subject to Vifor Pharma's right of first negotiation with respect to global (excluding Greater China) rights to such combination therapy products in the Renal Indications.
Pursuant to the Vifor License and specifically based upon the clinical development plan for ANG-3777 set forth in the Vifor License, we are entitled to receive $80 million in upfront and near-term clinical milestone payments, including $30 million in up-front cash that was received in November 2020, and a $30 million equity investment, a $5 million convertible note that subsequently converted into common stock with the IPO and $25 million of which was received in the Concurrent Private Placement with our IPO. We are also eligible to receive post-approval milestones of up to approximately $260.0 million and sales-related milestones of up to $1.585 billion, providing a total potential deal value of up to $1.925 billion (subject to certain specified reductions and offsets), plus tiered royalties on net sales of ANG-3777 at royalty rates of up to 40%. Under the Vifor License, we are responsible for executing a pre-specified clinical development plan designed to obtain regulatory approvals of ANG-3777 for DGF and CSA-AKI. For the years ended December 31, 2022 and 2021, we recognized license revenue related to the Vifor License of $2.3 million and $27.5 million, respectively. As of December 31, 2022, we had completed our
performance obligations under the Vifor License agreement and recognized all remaining deferred revenue as of December 31, 2022.
On October 26, 2021, we announced that the Phase 3 trial of ANG-3777 in DGF did not achieve its primary endpoint and the data were not expected to be sufficient evidence to support an indication in the studied DGF population. On December 14, 2021, we announced that the Phase 2 trial of ANG-3777 in CSA-AKI did not achieve its primary endpoint. The Vifor License includes additional milestone and royalty objectives related to the clinical development plan for ANG-3777 which had included a Phase 3 study for CSA-AKI and a Phase 4 confirmatory study in DGF. We do not expect to receive any clinical, post-approval, or sales milestones, or royalties, as we do not intend to continue to pursue the current clinical development plan for ANG-3777. In 2022, we continue to discuss with Vifor Pharma the planned analyses of the results of the clinical trials announced in the fourth quarter of 2021 and the future of our collaboration.
Components of Results of Operations
The following discussion summarizes the key factors our management believes are necessary for an understanding of our financial statements.
Revenue
We do not have any products approved for sale and have not generated any revenue from product sales. Our revenue to date primarily has been derived from government funding consisting of U.S. government grants and contracts, and revenue under our license agreements, specifically the Vifor License.
Grant Revenue
Our grants and contracts reimburse us for direct and indirect costs relating to the grant projects and also provide us with a pre-negotiated profit margin on total direct and indirect costs of the grant award, excluding subcontractor costs, after giving effect to directly attributable costs and allowable overhead costs. Funds received from grants and contracts are generally deemed to be earned and recognized as revenue as allowable costs are incurred during the grant or contract period and the right to payment is realized.
Contract Revenue
Our license agreements comprise elements of upfront license fees, milestone payments based on development and royalties based on net product sales. The timing of our operating cash flows may vary significantly from the recognition of the related revenue. Income from upfront payments is recognized when we satisfy the performance obligations in the contract, which can result in recognition at either a point in time or over the period of continued involvement. Other revenue, such as milestone payments, are recognized when achieved.
Our revenue to date has been generated from payments received pursuant to the Vifor License Agreement. We recognize revenue from upfront payments over the term of our estimated period of performance using a cost-based input method under Topic 606, Revenue from Contracts with Customers.
In addition to receiving an upfront payment, we may also be entitled to milestones and other contingent payments upon achieving predefined objectives. If a milestone is considered probable of being reached, and if it is probable that a significant revenue reversal would not occur, the associated milestone amount would also be included in the transaction price.
We expect that any license revenue we generate from any future collaboration partners, will fluctuate in the future as a result of the timing and amount of upfront, milestones and other collaboration agreement payments and other factors.
Operating Expenses
Cost of Grant Revenue
Our cost of grant revenue primarily relates to personnel-related costs and expenses for grant projects.
Research and Development Expenses
To date, our research and development expenses have primarily related to discovery efforts and preclinical and clinical development of our product candidates. We recognize research and development expenses as they are incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. Our research and development expenses consist primarily of:
▪personnel costs, including salaries, payroll taxes, employee benefits and stock-based compensation, for personnel in research and development functions;
▪costs associated with medical affairs activities;
▪fees paid to consultants, clinical testing sites and contract research organizations (CROs), including in connection with our preclinical studies and clinical trials, and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation, analysis and reporting;
▪contracted research and license agreement fees with no alternative future use;
▪costs related to acquiring, manufacturing and maintaining clinical trial materials and laboratory supplies;
▪depreciation of equipment and facilities;
▪legal expenses related to clinical trial agreements and material transfer agreements; and
▪costs related to preparation of regulatory submissions and compliance with regulatory requirements.
Other than with respect to reimbursable expenses required to be recorded under our government grants and contracts, we do not allocate our expenses by product candidates. A significant amount of our direct research and development expenses include payroll and other personnel expenses for our departments that support multiple product candidate research and development programs and, other than as specified above, we do not record research and development expenses by product. However, research and development expenses were primarily driven by expenses relating to the development of ANG-3777 and ANG-3070 in 2022 and 2021. For the year ended December 31, 2022, our total research and development expense includes a reduction to stock-based compensation expense of $1.3 million due to the forfeiture of stock-based awards for employees terminated as a result of the 2022 Strategic Realignment. Of our total research and development expenses for the years ended December 31, 2022 and 2021, 79% and 62%, respectively, of such expenses were from external third-party sources and the remaining 21% and 38%, respectively, were from internal sources.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related expenses, such as salaries, payroll taxes, employee benefits and stock-based compensation, for personnel in executive, operational, finance and human resources functions. Other significant general and administrative expenses include allocation of facilities costs, accounting and legal services and expenses associated with obtaining and maintaining patents. A portion of the general and administrative expenses are reimbursed through the overhead rates contained in our grants with the U.S. Government.
Restructuring and impairment expenses
Restructuring and impairment expenses include costs associated with the significant cut in the number of employees from the reductions in force announced in January and July 2022 and our suspension of certain of our operations in deference to our 2022 Strategic Realignment impacted the use of our leased facilities. These costs consist of termination benefits to our former employees and impairment of the right-of-use assets for our leased facilities. See Note 10 in our consolidated financial statements included in this Annual Report on Form 10-K for more information on the restructuring expenses and long-lived asset impairments.
Other Income (Expense)
Convertible Notes Recorded at Fair Value
We elected the fair value option for recognition of our convertible notes. Our convertible notes were subject to re-measurement each reporting period with gains and losses reported through our consolidated statements of operations. All of our convertible notes were converted into shares of our common stock upon the closing of our initial public offering.
Liability Classified Series C Convertible Preferred Stock Recorded at Fair Value
Series C convertible preferred stock includes settlement features that result in liability classification. The initial carrying value of the Series C convertible preferred stock was accreted to the settlement value, the fair value of the securities to be issued upon the conversion of the Series C Preferred Stock. The discount to the settlement value was accreted to interest expense using the effective interest method. During 2020, certain of the convertible notes were exchanged for Series C convertible preferred stock. As the exchange was accounted for as a modification, the Series C convertible preferred stock that was exchanged for the convertible notes (the Exchanged Series C Shares) continued to be recorded at fair value. The Exchanged Series C Shares were subject to re-measurement each reporting with gains and losses reported through our consolidated statements of operations. All shares of our Series C convertible preferred stock converted into common stock in connection with the IPO.
Warrant Liability
We have accounted for certain of our freestanding warrants to purchase shares of our common stock as liabilities measured at fair value, in accordance with ASC 815, Derivatives and Hedging (ASC 815). The warrants are subject to re-measurement at each reporting period with gains and losses reported through our consolidated statements of operations.
Foreign Exchange Transaction Gain
Foreign currency transaction gains, primarily related to intercompany loans, are recorded as a component of other income (expense) in our consolidated statements of operations.
Earnings in Equity Method Investment
Earnings in equity method investment represents our 10% interest in NovaPark that is accounted for under the equity method.
Interest Income
Interest income consists of interest earned on our cash and cash equivalents.
Results of Operations
Comparison for the Years Ended December 31, 2022 and 2021
The following table summarizes our results of operations for the periods indicated:
Year Ended December 31,
2022 2021 $ Change
% Change
(In thousands, except percentages)
Revenue:
Contract revenue
$ 2,301 $ 27,506 $ (25,205) (91.6) %
Grant revenue
- 806 (806) (100.0) %
Total revenue
2,301 28,312 (26,011) (91.9) %
Operating expenses:
Cost of grant revenue - 433 (433) (100.0) %
Research and development 18,100 48,698 (30,598) (62.8) %
General and administrative 14,637 18,488 (3,851) (20.8) %
Restructuring and impairment expenses 9,185 - 9,185 100.0 %
Total operating expenses
41,922 67,619 (25,697) (38.0) %
Loss from operations
(39,621) (39,307) (314) 0.8 %
Other income (expense), net
814 (15,266) 16,080 (105.3) %
Net loss
$ (38,807) $ (54,573) $ 15,766 (28.9) %
_______________________
Contract Revenue
Contract revenue decreased by $25.2 million, for the year ended December 31, 2022 compared to the same period in 2021. Since we do not intend to continue the clinical development plan for ANG-3777 currently set forth under our Vifor License agreement, which had included a Phase 3 study in cardiac surgery involving CSA-AKI and a Phase 4 confirmatory study in DGF, we performed a reassessment of the performance period and estimated costs for the completion of the performance obligations. This accelerated the revenue recognition, in the year ended December 31, 2022, related to the upfront payment we received from Vifor Pharma when the license agreement with Vifor Pharma was entered into in 2020.
As of December 31, 2022, we have completed all our performance obligations under the Vifor License and recognized all remaining deferred revenue under the agreement.
Grant Revenue
Grant revenue decreased by $0.8 million, or 100%, for the year ended December 31, 2022 compared to the same period in 2021. The decrease is attributable to a decrease in reimbursable costs relating to our grant from the U.S. Department of Defense in the year ended December 31, 2022. We do not expect to receive any grant revenues for the foreseeable future.
Cost of Grant Revenue
Cost of grant revenue decreased by $0.4 million, or 100%, for the year ended December 31, 2022 compared to the same period in 2021. The decrease is primarily due to a decrease in personnel-related costs and expenses applied as we believe the work under U.S. Department of Defense grant had been completed in the year ended December 31, 2021.
Research and Development Expenses
Research and development expenses decreased by $30.6 million, or 62.8%, from the year ended December 31, 2022 compared to the year ended December 31, 2021. The net decrease in research and development expenses was primarily due to a $16.1 million reduction in clinical trial related expenses and R&D
consulting and subcontractor expenses as a result of the completion of ANG-3777 trials, and a $14.8 million decrease in salary, bonus and stock-based compensation primarily due to lower headcount following the reductions in force announced in January and July 2022. These decreases were offset in part by a net increase of $0.3 million in other operating expenses.
General and Administrative Expenses
General and administrative expenses decreased by $3.9 million, or 20.8%, from the year ended December 31, 2022 compared to the year ended December 31, 2021. The decrease was primarily due to a net decrease of $5.0 million in salary, bonus and stock-based compensation due to the reductions in force announced in January and July 2022 as well as a decrease of $0.6 million in consultant expenses. These decreases were offset in part by a net increase of $1.7 million in professional services expense, including audit, tax, legal and insurance due to our 2022 Strategic Alignment.
Restructuring and Impairment Expenses
During the year ended December 31, 2022, we incurred restructuring and impairment expenses in the amount of $9.2 million. Included in restructuring expenses were $6.2 million one-time termination benefit charges incurred in connection with the reductions in force announced in January and July 2022 and noncash impairment charges of $3.0 million in connection with our long-lived assets primarily associated with our leased facility in Uniondale, New York (see Note 10 and Note 15 to the consolidated financial statements in this Annual Report on form 10-K for additional information). There were no restructuring and impairment expenses incurred during the year ended December 31, 2021.
Other Income (Expense), Net
Other income (expense) increased by $16.1 million for the year ending December 31, 2022 compared to the same period in 2021. The increase is primarily due to an increase in earned interest income of $0.5 million, a decrease of $14.1 million of loss from the first quarter of 2021 as a result of the increase in fair value related to our warrant liability, convertible notes, and Series C convertible preferred stock for which we elected the fair value option as most of these instruments were no longer outstanding after our IPO in February 2021. There was also a reduction of $2.1 million in interest expense, primarily related to interest associated with convertible notes and Series C convertible preferred stock in 2020 that were converted into equity upon our IPO in February 2021. The convertible notes and warrants both require re-measurement at each balance sheet date with gains and losses reported through our consolidated statement of operations. These increases were offset in part by a $0.9 million gain from the forgiveness of our PPP loan in the second quarter of 2021.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We have incurred losses and negative cash flows from operations since inception, and we anticipate that we will incur losses for the foreseeable future. To date, we have not generated any revenue from product sales. We have funded our operations primarily through the receipt of grants, the sale of debt and equity securities, and proceeds from license agreements. In February 2021, we generated aggregate net proceeds of approximately $107.0 million from our IPO and Concurrent Private Placement, after deducting the underwriting discounts and commissions. As of December 31, 2022, we had $50.5 million of cash and cash equivalents and an accumulated deficit of $253.9 million, compared to $88.8 million of cash and cash equivalents and an accumulated deficit of $215.1 million as of December 31, 2021.
On March 10, 2023, Silicon Valley Bank (SVB), at which we maintain cash and cash equivalents in multiple accounts, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The failure of SVB exposed us to liquidity and credit risk prior to the completion of the FDIC resolution of SVB in a manner that fully protects all depositors. As a result, we do not anticipate any losses with respect to our funds that had been deposited with SVB.
Future Cash Needs and Funding Requirements
Based on our current operating plan, we believe our cash and cash equivalents are expected to be sufficient to fund planned operations for at least 12 months, well into 2024, following the issuance date of our consolidated
financial statements. However, we have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect. We are unable to estimate the exact amount of our operating capital requirements. The amount and timing of our future funding requirements will depend on many factors, including, but not limited to:
•our ability to complete the Merger or, if the Merger is not completed, identify and consummate another strategic transaction;
•the scope, progress, results and costs of researching and developing ANG-3070 or any other product candidates, and conducting preclinical studies and clinical trials;
•the outcome of ongoing and future clinical trials, including the Phase 2 clinical trial of ANG-3070 in patients with PPKD;
•whether we are able to take advantage of any FDA expedited development and approval programs for any of our product candidates;
•the extent to which COVID-19 may impact our business, including our clinical trials and financial condition;
•the outcome, costs and timing of seeking and obtaining and maintaining FDA and any foreign regulatory approvals;
•the number and characteristics of product candidates we pursue, including product candidates in preclinical development;
•the ability of our product candidates to progress through clinical development successfully;
•our need to expand our research and development activities, including to conduct additional clinical trials;
•market acceptance of our product candidates, including physician adoption, market access, pricing and reimbursement;
•the costs of acquiring, licensing or investing in businesses, products, product candidates and technologies;
•our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments potentially required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
•our need and ability to hire additional personnel, including management, clinical development, medical and commercial personnel;
•the effect of competing technological, market developments and government policy;
•the costs associated with being a public company, including our need to implement additional internal systems and infrastructure, including financial and reporting systems;
•the costs associated with securing and establishing commercialization and manufacturing capabilities, as well as those associated with packaging, warehousing and distribution;
•the economic and other terms, timing of and success of our existing licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future and timing and amount of payments thereunder; and
•the timing, receipt and amount of sales and general commercial success of any future approved products, if any.
Until such time as we or our collaborators can generate significant revenue from sales of product candidates, if ever, we expect to finance our operations through public or private equity offerings or debt financings or other sources of capital, including collaborations, licenses, credit or loan facilities, receipt of research contributions or grants, tax credit revenue or a combination of one or more of these funding sources. Adequate funding may not be available to us on acceptable terms, or at all. To the extent we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through additional collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to and/or
may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.
Summary Statement of Cash Flows
The following table sets forth a summary of our net cash flow activity for the years ended December 31, 2022 and 2021 (in thousands):
Year Ended December 31,
2022 2021
Net cash provided by (used in)
Operating activities
$ (38,390) $ (52,643)
Investing activities
- (382)
Financing activities
(60) 107,171
Effect of foreign currency on cash
181 3
Net (decrease) increase in cash
$ (38,269) $ 54,149
Operating activities
For the year ended December 31, 2022, net cash used in operating activities was $38.4 million, which primarily consisted of a net loss of $38.8 million and a use of cash from the change in net operating assets and liabilities of $4.2 million, partially offset by net non-cash charges of $4.6 million. The change in net operating assets and liabilities of $4.2 million was the result of a decrease in deferred revenue of $2.3 million resulting from revenue recognized in the period, a decrease of $2.1 million in accounts payable due to the timing of vendor payments, a decrease of $0.6 million in accrued expenses due to timing of invoices, and a decrease of $0.9 million due to lease liabilities payments. These decreases in net cash used were offset in part by a decrease of $0.8 million in grants receivable from cash collected for the grant contract with the U.S. Department of Defense and a decrease of $0.8 million in prepaid expenses and other current assets due to suspended clinical development activities. The remaining net fluctuations of $0.1 million were individually insignificant. The $4.6 million of net non-cash charges primarily include an impairment of $3.0 million related to our long-lived assets primarily associated with our leased facility in Uniondale, New York, stock-based compensation of $0.9 million and amortization of operating lease right-of-use assets of $0.8 million. The remaining net non-cash charges fluctuations of $0.1 million were individually insignificant.
For the year ended December 31, 2021, net cash used in operating activities was $52.6 million, which primarily consisted of a net loss of $54.6 million and a change in net operating assets and liabilities of $26.0 million, partially offset by net non-cash charges of $27.8 million. The net non-cash charges were primarily related to a $14.0 million change in fair value of convertible notes, Series C convertible preferred stock and warrant liabilities, amortization of debt issuance costs of $1.9 million, and stock-based compensation expense of $12.0 million, partially offset by a gain of $0.9 million from the forgiveness of our PPP loan. The change in net operating assets and liabilities was due to a decrease of $27.5 million in deferred revenue due to substantial satisfaction of our performance obligation under the Vifor License Agreement, a decrease of $0.9 million in accounts payable and accrued expenses due to timing of invoices and an increase of $0.8 million in grants receivable due to the recognition of the qualified Australian tax credit, partially offset by a decrease of $4.0 million in prepaid expenses and other current assets, primarily due to the subsequent receipt of a $5.0 million convertible note receivable under Vifor License Agreement in 2021.
Investing activities
For the year ended December 31, 2022 no cash was provided or used in investing activities, and for the year ended December 31, 2021, net cash used in investing activities was $0.4 million, primarily used to purchase fixed assets for research activities.
Financing activities
For the year ended December 31, 2022 net cash used in financing activities was immaterial.
For the year ended December 31, 2021, net cash provided by financing activities was $107.2 million, primarily due to net proceeds of $107.5 million from the IPO and Concurrent Private Placement, $1.8 million from the exercise of warrants and stock options, and $0.3 million from a sale and leaseback arrangement, partially offset by taxes paid related to net share settlement upon vesting of restricted stock awards of $2.5 million.
Material Cash Requirements
Our material cash requirements from known contractual obligations consisted primarily of our lease obligations. We continued to lease office and laboratory space in Uniondale, New York from NovaPark, a related party, under an agreement classified as an operating lease with monthly rent expense of approximately $0.1 million pursuant to our lease agreement that was scheduled to expire on June 20, 2026.
In March 2023, we entered into a Surrender Agreement with NovaPark LLC which terminated our Uniondale, New York lease for a termination fee of $3.03 million and entered into a Membership Interest Redemption Agreement with NovaPark to relinquish our 10% membership interest in NovaPark, accounted as Investment in Related Parties in our Consolidated Balance Sheets. The Surrender Agreement also provides that no other rent or charges will be due from us with respect to any period prior to or subsequent to the surrender of the property to NovaPark, thereby relieving us of lease payments equal to approximately $3.86 million, plus other amounts for facility fees and utilities with respect to the Property.
Critical Accounting Policies and Significant Judgments and Estimates
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report.
The critical accounting policies requiring estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.
Contract Revenue
We account for revenue earned from contracts with customers under Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). Under ASC 606, we recognize revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, we perform the following five steps:
(1) Identify the contract(s) with a customer;
(2) Identify the performance obligations in the contract;
(3) Determine the transaction price;
(4) Allocate the transaction price to the performance obligations in the contract; and
(5) Recognize revenue when (or as) we satisfy a performance obligation.
At contract inception, we assess the goods or services promised within each contract, whether each promised good or service is distinct, and determine those that are performance obligations. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied.
We enter into agreements under which we may obtain upfront payments, milestone payments, royalty payments and other fees. Promises under these arrangements may include licenses of intellectual property, research services, including selection campaign research services for certain replacement targets, the obligation to share information during the research and the participation of alliance managers and in joint research committees,
joint patent committees and joint steering committees. We assess these promises within the context of the agreements to determine the performance obligations.
Licenses of Intellectual Property: If a license to our intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, we recognize revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront payments. We evaluate the measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.
Milestone payments: We evaluate whether the regulatory and development milestones are considered probable of being reached and estimate the amounts to be included in the transaction price using the most likely amount method. We evaluate factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. At the end of each reporting period, we re-evaluate the probability of achievement of milestones and any related constraint, and if necessary, adjusts the estimate of the overall transaction price.
Sales-based milestones and royalties: For sales-based royalties, including milestone payments based on the level of sales, we determine whether the sole or predominant item to which the royalties relate is a license. When the license is the sole or predominant item to which the sales-based royalty relates, we recognize revenue at the later of: (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have not recognized any sales-based royalty revenue resulting from any license agreement.
Deferred revenue, which is a contract liability, represents amounts received by us for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount expected to be recognized within one year from the consolidated balance sheet date based on the estimated performance period of the underlying performance obligation. The noncurrent portion of deferred revenue represents amounts expected to be recognized after one year through the end of the performance period of the performance obligation.
Using the cost-based input method, we recognize revenue based on actual costs incurred as a percentage of total estimated costs as we complete each performance obligation. As such, we use significant assumptions to determine the total estimated costs for us to complete the performance obligation identified under the Vifor License Agreement as well as the performance period. We reassess the total estimated costs and performance period at each reporting period. See Note 3 to our consolidated financial statements included in this Annual Report on Form 10-K for more information.
Grant Revenue
We concluded that our government grants are not within the scope of ASC 606 as they do not meet the definition of a contract with a customer. We have concluded that the grants meet the definition of a contribution and are non-reciprocal transactions, and have also concluded that Subtopic 958-605, Not-for-Profit-Entities-Revenue Recognition, does not apply, as we are a business entity and the grants are with governmental agencies.
In the absence of applicable guidance under GAAP, we developed a policy for the recognition of grant revenue when the allowable costs are incurred and the right to payment is realized.
We believe this policy is consistent with the overarching premise in ASC 606, to ensure that revenue recognition reflects the transfer of promised goods or services to customers in an amount that reflects the consideration that we expect to be entitled to in exchange for those goods or services, even though there is no exchange as defined in ASC 606. We believe the recognition of revenue as costs are incurred and amounts become realizable is analogous to the concept of transfer of control of a service over time under ASC 606.
Research and Development
Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, preclinical studies, compound manufacturing costs, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities. Research and development cost may be offset by research and development refundable tax rebates received by our wholly-owned Australian subsidiary.
We have agreements with various Contract Research Organizations ("CROs") and third-party vendors. We estimate research and development accruals of amounts due to the CRO based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. We include the estimated costs of research and development provided, but not yet invoiced, in accrued liabilities on the consolidated balance sheet. We record payments made to CROs under this arrangement in advance of the performance of the related services as prepaid expenses and other current assets until the services are rendered. We make judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, we adjust our accrued liabilities. For the years ended December 31, 2022 and 2021, we have not experienced any material differences between accrued costs and actual costs incurred.
Stock-Based Compensation
We account for all stock-based payments to employees and non-employees, including grants of stock options, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), including restricted stock units with non-market performance and service conditions ("PSUs") to be recognized in the financial statements, based on their respective grant date fair values. We estimate the fair value of stock option grants using the Black-Scholes option pricing model. We value the RSAs, RSUs and PSUs based on the fair value of our common stock on the date of grant. The assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. We record expense for stock-based compensation related to stock options, RSAs and RSUs over the requisite service period. As the PSUs have a performance condition, we recognize compensation expense for each vesting tranche over the respective requisite service period of each tranche if and when our management deems probable that the performance conditions will be satisfied. We may recognize a cumulative true-up adjustment related to PSUs once a condition becomes probable of being satisfied if the related service period had commenced in a prior period. We record all stock-based compensation costs in general and administrative or research and development costs in the consolidated statements of operations based upon the respective employee or non-employee's roles within our company. We record forfeitures as they occur.
See Note 7 to our consolidated financial statements included in this Annual Report on Form 10-K for more information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options. Certain of such assumptions involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation could be materially different.
Restructuring and Long-Lived Asset Impairment
Restructuring charges
We recognize restructuring charges related to reorganization plans that have been committed by management. In connection with these activities, we record restructuring charges at fair value for one-time employee termination benefits on the communication date from management to the employees provided that management has committed to a plan of termination, the plan identifies the employees and their expected termination dates, the details of termination benefits are complete, and it is unlikely that changes to the plan will be made or the plan will be withdrawn.
For one-time employee terminations benefits, we recognize the liability in full on the communication date when future services are not required or amortize the liability ratably over the service period, if required. The fair value of termination benefits reflects our estimates of expected utilization of certain Company-funded post-employment benefits. See Note 10 to our consolidated financial statements included in this Annual Report on Form 10-K for additional information on the severance expense that we recognized for employees terminated in connection with our reductions in force.
Long-Lived Asset impairment
Long-lived assets, such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, we first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary See Note 10 to our consolidated financial statements included in this Annual Report on Form 10-K for more information regarding the impairment charge we recorded in connection with the long-lived assets.
Warrant Liability
We account for certain common stock warrants outstanding as a liability, in accordance with ASC 815, at fair value and adjust the instruments to fair value at each reporting period. This liability is subject to re-measurement at each reporting period until exercised, and we recognize any change in fair value in the consolidated statements of operations as a component of other income (expense). We have estimated the fair value of the warrants issued by us using a variant of the Black Scholes option pricing model. We valued the underlying equity included in the Black Scholes option pricing model based on the equity value implied from sales of preferred and common stock.
Income Taxes
We record income taxes in accordance with ASC 740, Income Taxes (ASC 740), which provides for deferred taxes using an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. We determine deferred tax assets and liabilities based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which we expect the differences to reverse. We provide valuation allowances if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
We account for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements set forth in Item 8 of this Annual Report on Form 10-K for a full description of recent accounting standards.
Emerging Growth Company and Smaller Reporting Company Status
We are a smaller reporting company and an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay the adoption of new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for emerging growth companies include presentation of only two years of audited financial statements in a registration statement for an initial public offering, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Sarbanes-Oxley Act of 2002, as amended (Sarbanes-Oxley) an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation, and less extensive disclosure about our executive compensation arrangements. We have elected to use the extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that (i) we are no longer an emerging growth company or (ii) we affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting standards as of public company effective dates.
We will remain an emerging growth company until the earliest of (i) December 31, 2026, (ii) the last day of our first fiscal year in which we have total annual gross revenue of $1.235 billion or more, (iii) the date on which we are deemed to be a "large accelerated filer," as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (Exchange Act), which means the market value of equity securities that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" and/or “non-accelerated filer” which may allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply for a period of time with the auditor attestation requirements of Section 404 of Sarbanes-Oxley, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

---

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
The financial statements of Angion Biomedica Corp, listed below are set forth in Item 8 of this Annual Report for the years ended December 31, 2022 and 2021:
ANGION BIOMEDICA CORP.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm (Moss Adams LLP, Seattle, Washington, PCAOB ID: 659)
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Stockholders' Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
To the Board of Directors and Stockholders of
Angion Biomedica Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Angion Biomedica Corp. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit) and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Moss Adams LLP
Seattle, Washington
March 17, 2023
We have served as the Company's auditor since 2018.
ANGION BIOMEDICA CORP.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
December 31,
2022 2021
ASSETS
Current assets
Cash and cash equivalents $ 50,487 $ 88,756
Grants receivable - 806
Prepaid expenses and other current assets 943 1,685
Total current assets 51,430 91,247
Property and equipment, net 273 451
Right of use assets 152 3,986
Investments in related parties 874 723
Other assets 61 106
Total assets $ 52,790 $ 96,513
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,720 $ 4,710
Accrued expenses 2,569 3,219
Lease liability-current 994 894
Financing obligation-current 67 58
Deferred revenue-current - 2,301
Warrant liability 19 114
Total current liabilities 6,369 11,296
Lease liability-noncurrent 2,481 3,475
Financing obligation-noncurrent 168 235
Total liabilities 9,018 15,006
Commitments and contingencies-Note 9
Stockholders' equity
Common stock, $0.01 par value per share; 300,000,000 authorized shares; 30,113,946 and 29,959,060 shares issued and outstanding as of December 31, 2022 and 2021, respectively
301 300
Additional paid-in capital 297,327 296,445
Accumulated other comprehensive income (loss) 86 (103)
Accumulated deficit (253,942) (215,135)
Total stockholders' equity 43,772 81,507
Total liabilities and stockholders' equity $ 52,790 $ 96,513
The accompanying notes are an integral part of these consolidated financial statements.
ANGION BIOMEDICA CORP.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share amounts)
Year Ended December 31,
2022 2021
Revenue:
Contract revenue
$ 2,301 $ 27,506
Grant revenue
- 806
Total revenue
2,301 28,312
Operating expenses:
Cost of grant revenue
- 433
Research and development
18,100 48,698
General and administrative
14,637 18,488
Restructuring and impairment expenses
9,185 -
Total operating expenses
41,922 67,619
Loss from operations
(39,621) (39,307)
Other income (expense)
Change in fair value of warrant liability
95 (2,919)
Change in fair value of convertible notes
- (7,469)
Change in fair value of Series C convertible preferred stock - (3,592)
Foreign exchange transaction loss (237) (245)
Gain upon debt extinguishment - 905
Gain (loss) in equity method investment
151 (99)
Interest income (expense), net
805 (1,847)
Total other income (expense)
814 (15,266)
Net loss
(38,807) (54,573)
Other comprehensive loss:
Foreign currency translation adjustment
189 230
Comprehensive loss
$ (38,618) $ (54,343)
Net loss per common share, basic and diluted
$ (1.29) $ (1.93)
Weighted average common shares outstanding, basic and diluted
30,040,703 28,244,825
The accompanying notes are an integral part of these consolidated financial statements.
ANGION BIOMEDICA CORP.
Consolidated Statements of Stockholders' Equity (Deficit)
(in thousands, except share amounts)
Common Stock
Treasury Stock
Additional
Paid-in
Capital
Accumulated Other Comprehensive Income (Loss) Accumulated
Deficit
Total
Stockholders'
Equity
Shares
Amount
Shares
Amount
Balance as of December 31, 2021 29,959,060 $ 300 - $ - $ 296,445 $ (103) $ (215,135) $ 81,507
Issuance of common stock upon net settlement of restricted stock units and performance stock units 154,886 1 - - (3) - - (2)
Stock-based compensation - - - - 885 - - 885
Foreign currency translation adjustment - - - - - 189 - 189
Net loss - - - - - - (38,807) (38,807)
Balance as of December 31, 2022 $ 30,113,946 301 - $ - $ 297,327 $ 86 $ (253,942) $ 43,772
The accompanying notes are an integral part of these consolidated financial statements.
ANGION BIOMEDICA CORP.
Consolidated Statements of Stockholders' Equity (Deficit)
(in thousands, except share amounts)
Common Stock
Treasury Stock
Additional
Paid-in
Capital
Accumulated Other Comprehensive income (loss) Accumulated
Deficit
Total
Stockholders'
Equity
Shares
Amount
Shares
Amount
Balance as of December 31, 2020 15,632,809 $ 156 (316,088) $ (1,846) $ 72,136 $ (333) $ (160,562) $ (90,449)
Issuance of common stock upon initial public offering, net of issuance costs, discount, and commissions of $9.3 million
5,750,000 58 - - 82,657 - - 82,715
Issuance of common stock upon Concurrent Private Placement, net of issuance costs of $0.7 million
1,562,500 16 - - 24,234 - - 24,250
Conversion of convertible preferred stock into common stock upon IPO 2,234,640 22 - - 35,732 - - 35,754
Conversion of convertible notes into common stock upon initial public offering 3,636,189 36 - - 58,143 - - 58,179
Conversion of convertible notes prior to IPO 33,978 - - - 460 - - 460
Net exercise of warrants upon initial public offering 844,335 9 - - 13,500 - - 13,509
Fractional shares paid out related to the forward stock split - - - - (10) - - (10)
Exercise of broker warrants
47,188 - - - - - - -
Exercise of warrants 130,529 2 - - 859 - - 861
Exercise of stock options 152,939 1 - - 979 - - 980
Restricted stock units releases 414,896 4 - - 14 - - 18
Return of common stock to pay withholding taxes on restricted stock - - (164,855) (2,364) (94) - - (2,458)
Retirement of treasury stock (480,943) (4) 480,943 4,210 (4,206) - - -
Stock-based compensation
- - - - 12,041 - - 12,041
Foreign currency translation adjustment - - - - - 230 - 230
Net loss
- - - - - - (54,573) (54,573)
Balance as of December 31, 2021 29,959,060 $ 300 - $ - $ 296,445 $ (103) $ (215,135) $ 81,507
The accompanying notes are an integral part of these consolidated financial statements.
ANGION BIOMEDICA CORP.
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
2022 2021
Cash flows from operating activities
Net loss
$ (38,807) $ (54,573)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 178 91
Amortization of right of use assets 813 710
Amortization of debt issuance costs - 1,884
PPP Loan forgiveness - (905)
Stock-based compensation 885 12,041
Change in fair value of convertible notes - 7,469
Change in fair value of Series C convertible preferred stock - 3,592
Change in fair value of warrant liability (95) 2,919
Impairment of leased assets 3,021 -
Losses from equity investment (151) 96
Distribution from equity investment - 3
Changes in operating assets and liabilities:
Grants receivable
806 (806)
Prepaid expenses and other current assets
806 4,016
Other assets 45 (106)
Accounts payable
(2,050) (866)
Accrued expenses
(646) 11
Lease liabilities
(894) (713)
Deferred revenue (2,301) (27,506)
Net cash used in operating activities
(38,390) (52,643)
Cash flows from investing activities
Purchase of fixed assets
- (382)
Net cash used in investing activities
- (382)
Cash flows from financing activities
Net proceeds from issuance of common stock upon IPO and Concurrent PrivatePlacement, net of discount, commissions and offering costs
- 107,487
Proceeds from financing obligation - 302
Proceeds from RSU settlement, net of payment of taxes (2) 18
Payment of financing obligation (58) (9)
Fractional share payments related to the forward stock split - (10)
Taxes paid related to net share settlement upon vesting of restricted stock awards - (2,458)
Exercise of warrants - 861
Exercise of stock options - 980
Net cash (used in) provided by financing activities
(60) 107,171
Effect of foreign currency on cash 181 3
Net (decrease) increase in cash and cash equivalents
(38,269) 54,149
Cash and cash equivalents at the beginning of the period
88,756 34,607
Cash and cash equivalents at the end of the period
$ 50,487 $ 88,756
Supplemental disclosure of cash flow information:
Cash paid for interest
$ - $ 7
Supplemental disclosure of noncash investing and financing activities:
Retirement of treasury stock $ - $ 4,210
Conversion of convertible notes into common stock prior to IPO $ - $ 460
Conversion of convertible notes to common stock $ - $ 58,639
Conversion of Series C preferred stock to common stock upon IPO $ - $ 35,754
Net exercise of warrants upon IPO $ - $ 13,509
Right of use assets exchanged for operating lease liabilities $ - $ 624
Fixed assets purchased in accrued expenses or accounts payable $ - $ 4
The accompanying notes are an integral part of these consolidated financial statements.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements
Note 1-Description of the Business and Financial Condition
Angion Biomedica Corp. ("Angion" or the "Company") had been a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel small molecule therapeutics to address chronic and progressive fibrotic diseases, prior to its 2022 Strategic Realignment announced in July 2022 whereby the Company announced its process to explore strategic options for enhancing and preserving shareholder value (“2022 Strategic Realignment”). The Company was incorporated in Delaware in 1998.
On January 17, 2023, the Company entered into a definitive merger agreement with Elicio Therapeutices, Inc. (Elicio) under which Elicio will merge with a wholly-owned subsidiary of Angion in an all-stock transaction (the “Merger”). Upon completion of the Merger, the combined company will focus on advancing Elicio’s proprietary lymph node AMP technology to develop immunotherapies, with a focus on ELI-002, a therapeutic cancer vaccine targeting mKRAS-driven tumors.
Angion has suspended clinical development activities in anticipation of the announced Merger, and does not have any products approved for sale.
Forward Stock Split
On January 25, 2021, the board of directors of the Company (Board or the Angion Board) approved an amendment to the Company's certificate of incorporation to effect a forward stock split ("Forward Split") of shares of the Company's common stock on a one-for 1.55583 basis, which was effected on February 1, 2021. All references to common stock, convertible preferred stock, warrants to purchase common stock, stock options, restricted stock awards ("RSAs"), restricted stock units ("RSUs"), including restricted stock units with non-market performance and service conditions ("PSUs"), per share amounts and related information contained in the consolidated financial statements have been retroactively adjusted to reflect the effect of the forward stock split for all periods presented. No fractional shares of the Company's common stock were issued in connection with the Forward Split. Any fractional share resulting from the Forward Split was rounded down to the nearest whole share, and any stockholder entitled to fractional shares as a result of the Forward Split will received a cash payment in lieu of receiving fractional shares.
Initial Public Offering and the Concurrent Private Placement
On February 9, 2021, the Company’s registration statement on Form S-1 (File No. 333-252177) relating to its initial public offering (IPO) of common stock became effective. The IPO closed on February 9, 2021 at which time the Company issued 5,750,000 shares of its common stock at a price to the public of $16.00 per share, which includes the full exercise by the underwriters of their option to purchase an additional 750,000 shares of common stock. In addition to the shares being sold in the IPO, the Company sold an additional 1,562,500 shares of its common stock at the public offering price of $16.00 per share to entities affiliated with Vifor International, Ltd., an existing stockholder (the “Concurrent Private Placement”) for gross proceeds of $25.0 million. Subsequent to the closing of the IPO, all of the outstanding shares of convertible preferred stock and outstanding convertible notes automatically converted into shares of common stock.
The IPO and Concurrent Private Placement generated aggregate net proceeds of approximately $107.0 million, after deducting the underwriting discounts and commissions, private placement fee and estimated offering expenses payable by the Company.
Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding and there were no convertible notes outstanding. In connection with the closing of the IPO, the Company restated its Restated Certificate of Incorporation to change the authorized capital stock to 300,000,000 shares designated as common stock, and 10,000,000 shares designated as preferred stock, with a par value of $0.01 per share and $0.01 per share, respectively.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Liquidity and Capital Resources
Since inception, the Company has devoted substantially all of its efforts and financial resources to conducting research and development activities, including drug discovery and pre-clinical studies and clinical trials, establishing and maintaining its intellectual property portfolio, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur substantial losses for the next several years as it continues to fully develop and, if approved, commercialize its product candidates. As of December 31, 2022, the Company had $50.5 million in cash and cash equivalents and an accumulated deficit of $253.9 million.
The Company has evaluated and concluded there are no conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern for a period of one year following the date these consolidated financial statements are issued and believes its existing cash and cash equivalents will be sufficient to meet the projected operating requirements for at least 12 months following the issuance date of its consolidated financial statements.
Note 2-Summary of Significant Accounting Policies
Basis of Presentation
The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company, its wholly owned subsidiary, Angion Biomedica Europe Limited, which was dissolved on March 16, 2021, and its wholly owned subsidiary, Angion Pty Ltd., which was established on August 22, 2019. The Company established Angion Pty Ltd., an Australian subsidiary, for the purpose of qualifying for research credits for studies conducted in Australia. All significant intercompany balances and transactions have been eliminated in consolidation.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to the useful lives of long-lived assets, fair value of the long-lived assets, the measurement of stock-based compensation, change in fair value of warrant liabilities prior to IPO, accruals for research and development activities, income taxes and revenue recognition. The Company bases its estimates on historical experience and on other relevant assumptions that are reasonable under the circumstances. Actual results could materially differ from those estimates.
Foreign Currency Translation and Transactions
The United States Dollar (“USD”) is the functional currency for the Company’s operations outside the United States. Accordingly, nonmonetary assets and liabilities originally acquired or assumed in other currencies are recorded in USD at the exchange rates in effect at the date they were acquired or assumed. Monetary assets and liabilities denominated in other currencies are translated into USD at the exchange rates in effect at the balance sheet date. Translation adjustments are recorded in other comprehensive income (loss) in the consolidated statements of operations. Gains and losses realized from non-USD transactions, including intercompany balances not considered as permanent investments, denominated in currencies other than an entity’s functional currency are included in other income (expense) in the accompanying consolidated statements of operations.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Concentrations of Credit Risk and Off-Balance Sheet Risk
Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company maintains its cash equivalents in securities and money market funds with original maturities less than three months. Substantially all of the Company's cash and cash equivalents are held at Silicon Valley Bank (SVB), and the amounts frequently exceed federally insured limits. On March 10, 2023, the Federal Deposit Insurance Corporation (FDIC) announced that SVB had been closed by the California Department of Financial Protection and Innovation. The United States Department of the Treasury announced in a joint statement with the Federal Reserve and FDIC that depositors of SVB will have access to all of their money starting March 13, 2023, including funds exceeding federally insured limits. The Company is exposed to credit risk in the event of default by the financial institutions holding its cash and cash equivalents. If the Company is unable to access our cash and cash equivalents as needed, its financial position and ability to operate its business will be adversely affected.
Additionally, the Company established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity.
The Company has no financial instruments with off-balance sheet risk of loss.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of December 31, 2022 and 2021, the Company’s cash equivalents were held in institutions in the United States and included deposits in a money market fund which were unrestricted as to withdrawal or use.
Grants Receivable
Grants receivable is comprised of unbilled amounts due from various grants from the National Institutes of Health ("NIH") and other U.S. government agencies for costs incurred prior to the period end under reimbursement contracts. All amounts are readily available for draw from the Federal Government Payment Management System and, accordingly, no allowance for doubtful amounts has been established. If amounts become uncollectible, they are charged to operations.
Property and Equipment
Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over their estimated useful lives as follows:
Asset Classification Estimated Useful Life
Equipment
5 years
Furniture and fixtures
3 years
Leasehold improvements
Shorter of useful life or lease term
Normal repairs and maintenance costs are expensed as incurred.
Restructuring and Long-Lived Asset Impairment
Restructuring charges
The Company recognizes restructuring charges related to reorganization plans that have been committed by management. In connection with these activities, the company records restructuring charges at fair value for one-time employee termination benefits on the communication date from management to the employees provided that management has committed to a plan of termination, the plan identifies the employees and their expected termination dates, the details of termination benefits are complete, and it is unlikely that changes to the plan will be made or the plan will be withdrawn.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
For one-time employee terminations benefits, the Company recognizes the liability in full on the communication date when future services are not required or amortize the liability ratably over the service period, if required. The fair value of termination benefits reflects our estimates of expected utilization of certain Company-funded post-employment benefits. See Note 10 for additional information on the severance expenses recognized for employees terminated in connection with reductions in force.
Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. The impairment losses as of December 31, 2022 and 2021 were $3.0 million and zero, respectively. See Note 10 for additional information regarding the impairment charges the Company recorded in connection with the long-lived assets.
Fair Value Measurement
Certain assets and liabilities are carried at fair value under GAAP. Fair value is determined using the principles of ASC 820, Fair Value Measurement. Fair value is described as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes and defines the inputs to valuation techniques as follows:
Level 1: Observable inputs such as quoted prices in active markets.
Level 2: Inputs are observable for the asset or liability either directly or through corroboration with observable market data.
Level 3: Unobservable inputs.
The inputs used to measure the fair value of an asset or a liability are categorized within levels of the fair value hierarchy. The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the measurement.
The Company's cash and cash equivalents, accounts payable and accrued expenses are carried at cost, which approximates fair value due to the short-term nature of these instruments.
Leases
The Company accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or finance leases, and are recorded on the consolidated balance sheets as both a right of use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company's incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.
In calculating the right of use assets and lease liabilities, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial terms of 12 months or less from the new guidance as an accounting policy election, and recognizes rent expense on a straight-line basis over the lease term.
Investments in Related Party Entities
The Company holds a 10% and a 2.4% interest in two entities, NovaPark, LLC ("NovaPark") and Ohr Cosmetics, LLC ("Ohr"), respectively. There is common ownership between the Director and Chairman Emeritus of
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
the Company and each entity, and our Chief Executive Officer and the Company’s Lead Independent Director of the Board each own approximately 1.6% of the membership interests in Ohr. See Note 14. In accordance with ASC 323, Investments -Equity Method and Joint Ventures, the Company has significant influence but not control over NovaPark as its ownership in the limited liability company exceeds 3-5%. Accordingly, the Company records the NovaPark investment under the equity method of accounting. The Ohr investment is recorded at cost.
In March 2023, the Company entered into a Membership interest redemption Agreement with NovaPark which resulted in the relinquishment of its interest in NovaPark. See Note 15.
Warrant Liability
The Company accounts for certain common stock warrants outstanding as a liability, in accordance with ASC 815, Derivatives and Hedging, at fair value and adjusts the instruments to fair value at each reporting period. This liability is subject to re-measurement at each reporting period until exercised, and any change in fair value is recognized in the consolidated statements of operations as a component of other income (expense). The fair value of the warrants issued by the Company has been estimated using a variant of the Black Scholes option pricing model. The underlying equity included in the Black Scholes option pricing model was valued based on the closing price of common stock at each measurement date.
Treasury Stock
The Company records the repurchase of shares of common stock at cost based on the settlement date of the transaction. These shares are classified as treasury stock, which is a reduction to stockholders' equity. Treasury stock is included in authorized and issued shares but excluded from outstanding shares. All outstanding treasury shares were retired in October 2021 upon approval by the Board of Directors.
Revenue
The Company does not have any products approved for sale and has not generated any revenue from product sales. The Company’s revenue to date has been primarily derived from government funding consisting of U.S. government grants and contracts, and revenue under its license agreements.
Contract Revenue
The Company accounts for revenue earned from contracts with customers under Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC 606"). Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:
(1) Identify the contract(s) with a customer;
(2) Identify the performance obligations in the contract;
(3) Determine the transaction price;
(4) Allocate the transaction price to the performance obligations in the contract; and
(5) Recognize revenue when (or as) the Company satisfies a performance obligation.
At contract inception, the Company assesses the goods or services promised within each contract, whether each promised good or service is distinct, and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied.
The Company enters into agreements under which it may obtain upfront payments, milestone payments, royalty payments and other fees. Promises under these arrangements may include research licenses, research services, including selection campaign research services for certain replacement targets, the obligation to share
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
information during the research and the participation of alliance managers and in joint research committees, joint patent committees and joint steering committees. The Company assesses these promises within the context of the agreements to determine the performance obligations.
Licenses of Intellectual Property: If a license to its intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront payments. The Company evaluates the measure of proportional performance each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone payments: The Company evaluates whether the regulatory and development milestones are considered probable of being reached and estimate the amounts to be included in the transaction price using the most likely amount method. The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones and any related constraint, and if necessary, adjust the estimate of the overall transaction price.
Sales-based milestones and royalties: For sales-based royalties, including milestone payments based on the level of sales, the Company determines whether the sole or predominant item to which the royalties relate is a license. When the license is the sole or predominant item to which the sales-based royalty relates, the Company recognize revenue at the later of: (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any sales-based royalty revenue resulting from any license agreement.
Deferred revenue, which is a contract liability, represents amounts received by the Company for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount expected to be recognized within one year from the consolidated balance sheet date based on the estimated performance period of the underlying performance obligation. The noncurrent portion of deferred revenue represents amounts expected to be recognized after one year through the end of the performance period of the performance obligation.
Grant Revenue
The Company concluded that the Company's government grants are not within the scope of ASC Topic 606 as they do not meet the definition of a contract with a customer. The Company has concluded that the grants meet the definition of a contribution and are non-reciprocal transactions, and has also concluded that Subtopic 958-605, Not-for-Profit-Entities-Revenue Recognition, does not apply, as the Company is a business entity and the grants are with governmental agencies.
In the absence of applicable guidance under GAAP, the Company developed a policy for the recognition of grant revenue when the allowable costs are incurred and the right to payment is realized.
The Company believes this policy is consistent with the overarching premise in ASC Topic 606, to ensure that revenue recognition reflects the transfer of promised goods or services to customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services, even though there is no exchange as defined in ASC Topic 606. The Company believes the recognition of revenue as costs are incurred and amounts become realizable is analogous to the concept of transfer of control of a service over time under ASC Topic 606.
Research and Development
Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, preclinical studies, compound manufacturing costs, consulting costs and allocated overhead, including
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
rent, equipment, depreciation and utilities. Research and development cost maybe offset by research and development refundable tax rebates received by our wholly-owned Australian subsidiary.
The Company has agreements with various Contract Research Organizations ("CROs") and third-party vendors. Research and development accruals of amounts due to the CRO are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development provided, but not yet invoiced, are included in accrued liabilities on the consolidated balance sheet. Payments made to CROs under such arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets until the services are rendered. The Company makes judgments and estimates in determining the accrued expenses balance in each reporting period. As actual costs become known, the Company adjusts its accrued expenses. For the years ended December 31, 2022 and 2021, the Company has not experienced any material differences between accrued costs and actual costs incurred.
Stock-Based Compensation
The Company accounts for all stock-based payments to employees and non-employees, including grants of stock options, RSAs, RSUs, including "PSUs" to be recognized in the financial statements, based on their respective grant date fair values. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The RSAs, RSUs and PSUs are valued based on the fair value of the Company's common stock on the date of grant. The assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment. The Company records expense for stock-based compensation related to stock options, RSAs and RSUs over the requisite service period. As the PSUs have a performance condition, compensation expense is recognized for each vesting tranche over the respective requisite service period of each tranche if and when the Company's management deems probable that the performance conditions will be satisfied. The Company may recognize a cumulative true-up adjustment related to PSUs once a condition becomes probable of being satisfied if the related service period had commenced in a prior period. All share-based compensation costs are recorded in general and administrative or research and development expenses in the consolidated statements of operations based upon the respective employee’s or non-employee's role within the Company. Forfeitures are recorded as they occur.
Income Taxes
Income taxes are recorded in accordance with ASC 740, Income Taxes ("ASC 740"), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.
Net Loss Per Share
Basic net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share excludes the potential impact of convertible preferred stock, common stock options, warrants and unvested shares of restricted stock and restricted stock units because their effect would be anti-dilutive due to the Company's net loss. Since the Company had net losses for the years ended December 31, 2022 and 2021, basic and diluted net loss per common share are the same.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Comprehensive Loss
Comprehensive loss represents the net loss for the period and other comprehensive income. Other comprehensive income reflects certain gains and losses that are recorded as a component of stockholders’ deficit and are not reflected in the statements of operations. The Company’s other comprehensive income consists of foreign currency translation adjustments.
Recently Adopted Accounting Pronouncements
In November 2021, the FASB issued Accounting Standards Update (ASU) 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. ASU 2021-10 requires business entities to disclose, in notes to their financial statements, information about certain types of government assistance they receive. ASU 2021-10 also adds a new Topic 832, Government Assistance, to the FASB’s Codification. ASU 2021-10 is effective for financial statements of all entities, including private companies, for annual periods beginning after December 15, 2021, with early application permitted. The Company adopted this standard as of January 1, 2021, which did not have material impact on its consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (ASU No. 2016-13), which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. As an emerging growth company, ASU No. 2016-13 is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its consolidated financial statements and does not believe there will be an material impact on its consolidated financial statements and related disclosures.
Note 3-Revenue and Deferred Revenue
Grant Revenue
Our grants and contracts reimburse us for direct and indirect costs relating to the grant projects and also provide us with a pre-negotiated profit margin on total direct and indirect costs of the grant award, excluding subcontractor costs, after giving effect to directly attributable costs and allowable overhead costs. Funds received from grants and contracts are generally deemed to be earned and recognized as revenue as allowable costs are incurred during the grant or contract period and the right to payment is realized.
For the years ended December 31, 2022 and 2021, the Company recognized grant revenue of zero and $0.8 million, respectively.
Contract Revenue
The Company’s contract revenue has been generated from payments received pursuant to a license agreement (the "Vifor License") with Vifor International, Ltd. ("Vifor Pharma") with headquarters located in Switzerland. The Company recognized revenue from upfront payments over the term of our estimated period of performance using a cost-based input method under Topic 606.
Vifor License Agreement
In November 2020, the Company entered into a license agreement with Vifor Pharma, granting Vifor Pharma global rights (excluding China, Taiwan, Hong Kong and Macau) to develop, manufacture and commercialize ANG-3777 in all therapeutic, prophylactic and diagnostic uses for renal indications, including forms of acute kidney injury (AKI), and congestive heart failure (collectively, the Renal Indications). Pursuant to the Vifor License, the Company received $60 million in upfront and equity payments, including $30 million in up-front cash received in November 2020, and a $30 million equity investment, $5 million of which was a convertible note that subsequently
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
converted into common stock with the IPO and $25 million of which was received in the Concurrent Private Placement with the Company’s IPO. The Company is also eligible to receive post-approval milestones of up to approximately $260.0 million and sales-related milestones of up to $1.585 billion, providing a total potential deal value of up to $1.925 billion (subject to certain specified reductions and offsets), plus tiered royalties on net sales of ANG-3777 at royalty rates of up to 40%. Under the Vifor License, the Company is responsible for executing a pre-specified clinical development plan designed to obtain regulatory approvals of ANG-3777 for delayed graft function (DGF) and AKI associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI). Based on the ANG-3777 clinical trial data disclosed in the fourth quarter of 2021, the Company does not expect to receive any additional clinical, post-approval, or sales milestones, or royalties, as it does not intend to continue to pursue the clinical development plan for ANG-3777 set forth in the Vifor License.
On October 26, 2021, the Company announced that its Phase 3 trial of ANG-3777 in DGF did not achieve its primary endpoint and the data from the Phase 3 trial was not expected to provide sufficient evidence to support an indication in the studied DGF population. On December 9, 2021, the Company announced its Phase 2 trial of ANG-3777 in CSA-AKI did not achieve its primary endpoint and the data from the Phase 2 trial was not expected to provide sufficient evidence to support a Phase 3 trial in the studied CSA-AKI population. Angion and Vifor continue to analyze data from the CSA-AKI trial. The Company does not intend to continue the clinical development plan for ANG-3777 set forth in the Vifor License, which had included a Phase 3 study in CSA-AKI and a Phase 4 confirmatory study in DGF. In 2022, the Company and Vifor Pharma continue to discuss the planned analyses of the results of the clinical trials announced in the fourth quarter of 2021 and to discuss the future of the collaboration .
Vifor Pharma may terminate the Vifor License at its sole discretion upon the earlier of (i) the acceptance for filing of an NDA covering products incorporating ANG-3777 filed with the FDA (after completion of the relevant Phase 3 clinical trial for such products), or (ii) the third anniversary of the effective date of the Vifor License. Both the Company and Vifor Pharma may terminate the Vifor License in its entirety if the other is in material breach of the Vifor License and has not cured the breach (if curable) within 60 days, or 90 days for incurable breach. In certain circumstances, in the event of the Company’s material breach of the Vifor License, Vifor Pharma may terminate the Vifor License with respect to certain major markets. In addition, both parties have the right to terminate the Vifor License upon insolvency of the other party.
The Company identified the following performance obligations in the Vifor License based upon the clinical development plan for ANG-3777: (1) the global license (excluding greater China), (2) the development services, including the clinical development services including a post-approval confirmatory study, the technical development services and regulatory services and (3) the required participation on Joint Committees for coordination and oversight. The Company determined that the license is not capable of being distinct due to the specialized nature of the development services to be provided by the Company, and, accordingly, this promise was combined with the development services and participation in the joint committees as one single performance obligation.
In order to determine the transaction price, the Company evaluated all the payments to be received during the duration of the contract. Certain milestones and additional fees were considered variable consideration, which were not included in the transaction price at contract inception. The Company determined that the transaction price at the inception of the Vifor License is $15.0 million, which is 50% of the $30.0 million upfront payment due to the potential setoff defined in the contract.
Based on the ANG-3777 clinical trial data in the fourth quarter of 2021 and the Company’s decision to discontinue the current clinical development plan for ANG-3777 DGF as described above, the Company adjusted the transaction price to include $15.0 million in previously constrained variable consideration. The Company also reassessed the performance period as the Company is currently closing out the planned analyses from both trials. As of December 31, 2022, the Company has completed all performance obligations under the Vifor License and had recognized all deferred revenue under the agreement.
Using the cost-based input method, the Company recognizes revenue based on actual costs incurred as a percentage of total estimated costs as the Company completes its performance obligation. The cumulative effect of revisions to estimated costs to complete the Company’s performance obligation will be recorded in the period in which changes are identified and amounts can be reasonably estimated. These actual costs consist primarily of internal full time equivalent (FTE) efforts and third-party contract costs related to the Vifor License.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
For the years ended December 31, 2022 and 2021, the Company recognized license revenue related to the Vifor License of $2.3 million and $27.5 million, respectively. As of December 31, 2022 and 2021, zero and $2.3 million, respectively, was recorded as deferred revenue, current, on the consolidated balance sheet related to the Vifor License.
Note 4-Fair Value Measurements
The following table classifies the Company's financial assets and liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2022 and 2021 (in thousands):
Fair Value Measured at December 31, 2022
Quoted Prices in
Active Markets for
Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Money market funds (1)
$ 9,860 $ - $ - $ 9,860
Total assets
$ 9,860 $ - $ - $ 9,860
Warrants liabilities $ - $ - $ 19 $ 19
Total Liabilities
$ - $ - $ 19 $ 19
Fair Value Measured at December 31, 2021
Quoted Prices in
Active Markets for
Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Money market funds (1)
$ 87,252 $ - $ - $ 87,252
Total assets
$ 87,252 $ - $ - $ 87,252
Warrant liabilities
$ - $ - $ 114 $ 114
Total liabilities
$ - $ - $ 114 $ 114
___________________
(1) Included in cash and cash equivalents on the consolidated balance sheets. This balance includes cash requirements settled on a nightly basis.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
There were no transfers made among the three levels in the fair value hierarchy during periods presented.
The following table presents a summary of changes in the fair value of the Company’s common stock warrant liability (in thousands):
As of December 31, 2022 As of December 31, 2021
Balance, beginning of period $ 114 $ 10,704
Net exercise of warrants - (13,509)
Change in fair value (95) 2,919
Balance, end of period $ 19 $ 114
The fair value of the warrants issued by the Company has been estimated using a variant of the Black Scholes option pricing model. The underlying equity included in the Black Scholes option pricing model was valued based on the equity value implied from sales of preferred and common stock at each measurement date. The fair value of the warrants was impacted by the model selected as well as assumptions surrounding unobservable inputs including the underlying equity value, expected volatility of the underlying equity, risk free interest rate and the expected term.
The Company records the change in the fair value of common stock warrants in change in fair value of warrant liability in the consolidated statements of operations.
The fair value of the common stock warrant liability was estimated using the following assumptions:
December 31,
2022 2021
Strike price
$ 7.60 $ 7.60
Contractual term (years)
5.7 6.7
Volatility (annual)
112.4 % 124.0 %
Risk-free rate
4.3 % 1.4 %
Dividend yield (per share)
0.0 % 0.0 %
Note 5-Balance Sheet Components
Prepaid and Other Current Assets
Prepaid and other current assets were comprised of the following (in thousands):
December 31,
2022 2021
Prepaid insurance $ 291 $ 275
Security deposit 101 131
Angion Pty tax receivable 305 781
Other 246 498
Total prepaid and other current assets
$ 943 $ 1,685
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Property and Equipment, Net
The Company's property and equipment, net was comprised of the following (in thousands):
December 31,
2022 2021
Equipment
$ 866 $ 866
Furniture and fixtures
34 34
Leasehold improvements
68 68
Total property and equipment
968 968
Less: accumulated depreciation
(695) (517)
Property and equipment, net
$ 273 $ 451
Depreciation expense for the years ended December 31, 2022 and 2021 was $0.2 million and $0.1 million, respectively.
Accrued Expenses
Accrued expenses were comprised of the following (in thousands):
December 31,
2022 2021
Accrued compensation
$ 112 $ 1,274
Accrued restructuring (Note 10) 1,572 -
Accrued direct research costs
774 1,196
Accrued operating expenses
111 749
Total accrued expenses
$ 2,569 $ 3,219
Note 6-Stockholders' Equity
Common Stock
Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the Board of Directors.
Treasury stock
The retirement of treasury stock was recorded as a reduction of common stock and additional paid-in capital at the time such retirement was approved by our Board of Directors in October 2021.
As of December 31, 2022 and 2021, no treasury stock was included in the consolidated balance sheets.
Note 7-Stock-Based Compensation
2015 Plan
In June 2019, the Company approved an Amended and Restated 2015 Equity Incentive Plan (the "2015 Plan") permitting the granting of incentive stock options, non-statutory stock options, restricted stock and other stock-based awards. Following the effectiveness of the 2021 Equity Incentive Plan ("2021 Plan"), the Company ceased making grants under the 2015 Plan. However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Shares of common stock subject to awards granted under the 2015 Plan that cease to be subject to such awards by forfeiture or otherwise after the termination of the 2015 Plan will be available for issuance under the 2021 Plan.
2021 Plan
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
On January 25, 2021, the Company's board of directors approved the 2021 Plan which permits the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, directors, officers and consultants. On January 25, 2021, shares of common stock equal to 11% of the post-IPO capitalization were authorized for issuance under the 2021 Plan. The 2021 Plan provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022, by the lesser of 5% of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s board of directors. As of December 31, 2022, 3,799,357 shares under the 2021 Plan remain available for future grants.
Stock Options
The fair value of each employee and non-employee stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the following inputs:
Year Ended December 31,
2022 2021
Risk-free interest rate 1.7% 0.7%
Expected dividend yield - -
Expected term in years 5.9 6.0
Expected volatility 70.8% - 72.5%
71.8% - 73.1%
Each of these inputs is subjective and generally requires significant judgment.
Expected Term-The expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method, which is based on the mid-point between the contractual term and vesting period.
Volatility-The Company determines volatility based on the historical volatilities of comparable publicly traded life science companies over a period equal to the expected term because it does not have sufficient trading history for its common stock price. The comparable companies were chosen based on the similar size, stage in the life cycle, or area of specialty. The Company will continue to apply this process until a sufficient amount of historical information regarding volatility on its own stock becomes available.
Risk-Free Interest Rate-The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.
Dividend Yield-The Company has never paid and has no plans to pay any dividends on its common stock. Therefore, the Company has used an expected dividend yield of zero.
Fair Value of Common Stock-For periods prior to the IPO, the Company determined the estimated fair value of its common stock using the Subject Company Transaction Method which includes the back-solve and scenario-based methods (Probability Weighted Expected Return Method) to arrive at estimated fair values. Subsequent to the IPO, the fair value was based on the closing price of the Company’s common stock on the grant date.
The following table summarizes information and activity related to the Company’s stock options:
Number of
Shares Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life (in years) Total
Intrinsic
Value
(in thousands)
Outstanding as of December 31, 2021 4,230,162 $ 8.92 7.8 $ -
Options granted 2,257,100 1.93
Options forfeited (2,761,015) 6.73
Outstanding as of December 31, 2022 3,726,247 $ 6.30 7.0 $ -
Options vested and exercisable 2,493,026 $ 6.78 6.2 $ -
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
The aggregate intrinsic value in the above table is calculated as the difference between the estimated fair value of the Company's common stock price and the exercise price of the stock options. The weighted average grant date fair value per share for the stock option grants during the years ended December 31, 2022 and 2021 were $1.18 and $10.25, respectively. As of December 31, 2022, the total unrecognized compensation related to unvested stock option awards granted was $1.4 million, which the Company expects to recognize over a weighted-average period of approximately 2.5 years.
Restricted Stock Units
The Company's RSU activity for the year ended December 31, 2022 was as follows:
Restricted
Stock Units Weighted
Average Grant
Date Fair Value
Per Share
Outstanding at December 31, 2021 17,504 $ 9.51
Vested (1,458) $ 9.51
Outstanding at December 31, 2022 16,046 $ 9.51
Performance-based Restricted Stock Units
The Company had 556,530 PSUs outstanding that were granted in June 2019. Vesting of the PSUs is dependent upon the satisfaction of both a service condition and a performance condition, an initial public offering or a change of control, as defined in the 2015 Plan. As the IPO occurred in February 2021, the performance condition was met and 185,510 PSUs vested and were released upon the closing of the IPO. Another 185,510 PSUs vested and released in June 2021 and July 2022 upon the second and third anniversary of the grants, respectively, therefore, as of December 31, 2022, the Company had no PSUs outstanding.
Stock-based Compensation Expense
The following table summarizes the total stock-based compensation expense recorded in the consolidated statements of operations (in thousands):
Year Ended December 31,
2022 2021
Research and development
$ (1,289) $ 5,898
General and administrative
2,174 6,143
Total
$ 885 $ 12,041
The decrease in total stock-based compensation expense for the year ended December 31, 2022 is primarily due to the reversal of expense upon the forfeiture of awards in connection with the restructuring events that occurred on January 4, 2022 and July 25, 2022. See Note 10 for additional information.
Employee Stock Purchase Plan
In January 2021, the board of directors of the Company approved the Employee Stock Purchase Plan (the "ESPP"). The ESPP was effective on the date immediately prior to the effectiveness of the Company's registration statement relating to the IPO. A total of 390,000 shares of common stock were initially reserved for issuance under the ESPP. The offering period and purchase period will be determined by the Board of Directors. As of December 31, 2022, 689,583 shares under the ESPP remain available for purchase and no offerings had been authorized.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 8-Warrants
As of December 31, 2022 and 2021, the outstanding warrants to purchase the Company's common stock were comprised of the following:
Classification Exercise
Price Expiration
Date Warrants at December 31,
2022 2021
Warrants issued with Conversion of Notes to Common Stock Equity $ 8.03 8/31/28 232,287 232,287
Warrants issued with Units in the Equity Offering Equity $ 8.03 8/31/28 875,034 875,034
Broker Warrants issued with Equity Offering Equity $ 0.01 8/31/25 1,297 1,297
Consultant Warrants Liability $ 7.60 8/31/28 39,505 39,505
Total Warrants 1,148,123 1,148,123
In accordance with ASC 815, the warrants classified as liabilities are recorded at fair value at the issuance date, with changes in the fair value recognized in the consolidated statements of operations at the end of each reporting period. Refer to Note 4 for changes in the fair value recognized during the periods reported.
In accordance with ASC 815, the warrants classified as equity do not meet the definition of a derivative and are classified in stockholders' equity (deficit) in the consolidated balance sheets.
There was no warrant activity during the year ended December 31, 2022.
Note 9-Commitments and Contingencies
Operating Leases
As of December 31, 2022, the Company continued to lease office and laboratory space in Uniondale, New York from NovaPark, a related party, under an agreement classified as an operating lease that expires on June 20, 2026. The Company's lease does not require any contingent rental payments, impose any financial restrictions, or contain any residual value guarantees. Variable expenses generally represent the Company's share of the landlord's operating expenses, including management fees. The Company does not act as a lessor or have any leases classified as financing leases. In March 2023, the Company entered into a Surrender Agreement with NovaPark LLC which terminated its Uniondale, New York lease. See Note 15 for additional information.
The Company leased office space in Fort Lee, New Jersey, comprising approximately 2,105 square feet for approximately $0.1 million per year, under a non-cancelable operating lease through March 31, 2022. However, this arrangement is excluded from the calculation of lease liabilities and right of use assets as its term is less than one year. The lease is subject to charges for common area maintenance and other costs. The Company did not renew the New Jersey lease after March 31, 2022.
In July 2020, the Company entered into a lease for office furniture in San Francisco, California set to expire in July 2025, with an immaterial annual lease payment.
In February 2021, the Company entered into a lease for clinical development and operations space in Newton, Massachusetts (the “Newton lease”), comprising approximately 6,157 square feet for approximately $0.2 million per year, under a non-cancelable operating lease through June 30, 2024. Pursuant to the Newton lease, the Company had 4 months of free rent starting from February 15, 2021 to June 14, 2021. The Company has one option to extend the term of the lease for 3 years with 9 months’ notice.
As of December 31, 2022, the Company was no longer conducting operations in its leased facility in Newton, Massachusetts or Uniondale, New York. See Note 10 for additional information regarding the impairment charges the Company recorded in connection with the long-lived assets.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
The following table provides the components of the Company's rent expense (in thousands):
For the Year Ended
December 31,
2022 2021
Operating leases
Operating lease cost
$ 1,317 $ 1,142
Variable cost
350 473
Short-term lease rent expense 18 44
Total rent expense
$ 1,685 $ 1,659
The following table summarizes quantitative information about the Company's operating leases (dollars in thousands):
For the Year Ended
December 31,
2022 2021
Operating cash outflows from operating leases
$ 1,289 $ 1,179
Right-of-use assets exchanged for operating lease liabilities
$ - $ 624
Weighted-average remaining lease term-operating leases (in years)
3.1 3.8
Weighted-average discount rate-operating leases
9.5 % 10.1 %
As of December 31, 2022, maturities of lease liabilities were as follows (in thousands):
Year Ended December 31, Amounts
2023 $ 1,305
2024 1,209
2025 1,104
2026 516
Total
4,134
Less present value discount
(659)
Operating lease liabilities
$ 3,475
Financing obligation
In 2021, the Company entered into a sale and leaseback arrangement with a third-party financing institution as a financing mechanism to fund certain of its capital expenditures primarily related to operating equipment, whereby the physical asset is sold concurrent with an agreement to lease the asset back. The initial leaseback term is 42 months starting from November 2021. The arrangement includes a renewal option as well as a repurchase option at fair value with a cap at the end of the term. The arrangement does not qualify as an asset sale as control of the equipment did not transfer to the third party and is accounted for as a failed sale-leaseback. Therefore, the Company accounts for the arrangement as a financing transaction and records the proceeds received as a financing obligation. The leased assets are included in property and equipment, net on the consolidated balance sheets and are subject to depreciation.
During the year ended December 31, 2021, the Company received $0.3 million in connection with the sale and leaseback of certain equipment.
In March 2023, the Company terminated its sale and leaseback arrangement with the third-party financing institution and exercised its repurchase option to buy back the previously leased assets. See Note 15 for additional information.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
The following table summarizes quantitative information about the Company's financing obligation (dollars in thousands):
For the Year Ended December 31,
Cash flow information:
Payments of financing obligation
Operating cash flows from financing obligation $ 36
Financing cash flows from financing obligation $ 58
Other information:
Weighted-average remaining lease term (in years)
2.3
Weighted-average discount rate (in percent)
1.1 %
Carrying value of leased asset included in Property and Equipment, net $ 208
Depreciation associated with the leased asset $ 62
As of December 31, 2022, maturities of financing obligation were as follows (in thousands):
Year Ended December 31, Amounts
2023 $ 94
2024 94
2025 31
Total
$ 219
Litigation
From time to time, the Company may be involved in legal proceedings, as well as demands, claims and threatened litigation, which arise in the normal course of its business or otherwise. Following announcement of the merger agreement with Elicio on January 17, 2023, and the filing of a Registration Statement on Form S-4 on February 13, 2023, a lawsuit was filed in the United States District Court for the Eastern District of New York on February 17, 2023 by a purported stockholder of Angion in connection with the proposed merger between Angion and Elicio. The lawsuit was captioned Klein v. Angion Biomedica Corp., et al., No. 1:23-cv-01313 (E.D.N.Y.). The Klein complaint named as defendants Angion, and the members of the Angion Board. The Klein complaint alleged claims for violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants, and violations of Section 20(a) of the Exchange Act against the members of the Angion Board. The plaintiff contended that registration statement on Form S-4 filed on February 13, 2023 omitted or misrepresented material information regarding the proposed merger between Angion and Elicio, rendering the registration statement false and misleading. The Klein complaint sought injunctive and declaratory relief, as well as damages. On February 21, 2023, the plaintiff filed a notice of voluntary dismissal of the Klein lawsuit. Although the plaintiffs voluntarily dismissed this case, litigation of this type is prevalent in mergers involving public companies, and other potential plaintiffs may file lawsuits challenging the Merger.
The outcome of any additional future litigation is uncertain. Such litigation, if not resolved, could prevent or delay completion of the Merger and result in substantial costs to Angion, including any costs associated with the indemnification of directors and officers. One of the conditions to the completion of the Merger is the absence of any lawsuits or order from a governmental entity (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits the consummation of the Merger. Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the Merger on the agreed-upon terms, then such injunction may prevent the Merger from being completed, or from being completed within the expected timeframe. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is completed may adversely affect Angion’s business, financial condition, results of operations and cash flows.
Indemnification
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these arrangements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is minimal.
Paycheck Protection Program
In April 2020, the Company received funds in the amount of $0.9 million pursuant to a loan under the Paycheck Protection Program of the 2020 CARES Act ("PPP") administered by the Small Business Association. The loan has an interest rate of 1.0% and a term of 24 months. No payments were due for the first 16 months, although interest accrued, and monthly payments were due over the next 8 months to retire the loan plus accrued interest. Funds from the loan could only be used for certain purposes, including payroll, benefits, rent and utilities, and a portion of the loan used to pay certain costs were forgivable, all as provided by the terms of the PPP. The loan was evidenced by a promissory note, which contained customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The SBA approved the Company's PPP Loan forgiveness application on May 26, 2021 for the entire principal amount of the PPP Loan and accrued interest. As a result, the Company recorded a gain on the forgiveness of the loan in the amount of $0.9 million.
Employee Retention Credit ("ERC")
The Employee Retention Credit ("ERC") under the CARES Act is a refundable tax credit which encourages businesses to keep employees on the payroll during the COVID-19 pandemic. Eligible employers could qualify for up to $5,000 of credit for each employee based on qualified wages paid after March 12, 2020 and before January 1, 2021. The Internal Revenue Service ("IRS") subsequently issued Notice 2021-23 and Notice 2021-49 which collectively extended the ERC eligibility to cover qualified wages paid after December 31, 2020 and before January 1, 2022. Qualified wages are the wages paid to an employee for the time that the employee is not providing services due to an economic hardship, specifically, either (1) a full or partial suspension of operations by order of a governmental authority due to COVID-19, or (2) a significant decline in gross receipts.
During the years ended December 31, 2022 and 2021, the Company received zero and $1.5 million, respectively for ERC and applied the benefit as a reduction to the payroll expenses in the consolidated statement of operations.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 10-Restructuring and Long-Lived Asset impairment
Severance and Benefit Expense
On January 4, 2022, the Company announced a reduction in force impacting somewhat less than half of its employees. The Company’s decision to engage in this reduction resulted from an assessment of its internal resource needs, given the results of the Phase 3 study of ANG-3777 in patients at risk for delayed graft function (DGF) would likely not support a regulatory approval in that population and the Phase 2 study in acute kidney injury associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI) would not support a Phase 3 trial in that indication. This reduction was a cost-cutting measure across the organization to support the Company’s 2022 primary focus on the clinical development of its investigational asset ANG-3070, a highly selective, oral tyrosine kinase receptor inhibitor in development as a treatment for fibrotic diseases, as well as advancing preclinical assets to IND-enabling studies. In connection with the reduction in force, the Company incurred termination costs, which include severance, benefits, and related costs of approximately $3.2 million for the year ended December 31, 2022, which were recorded in restructuring expense on the consolidated statement of operations. The Company paid $2.4 million during the year ended December 31, 2022 and expects to pay the remaining $0.8 million on or before September 2023.
On July 25, 2022, the Company announced a process to explore strategic options for enhancing and preserving shareholder value (the “2022 Strategic Realignment”). Potential strategic options to be explored or evaluated as part of the process may include, but are not limited to merger, reverse merger, other business combination, sale of assets, licensing, or other strategic transactions. In connection with the 2022 Strategic Realignment, the Company also announced the discontinuation of development of ANG-3070 for all indications and the discontinuation of most other development activities pending conclusion of the strategic process. In connection with the foregoing, the Company also announced an additional reduction in force of the majority of its 37 employees. This reduction in force, completed in 2022, is a cash preservation measure and impacts employees across the organization. In connection with the reduction in force, the Company recorded a charge of $3.0 million in restructuring expense on the consolidated statement of operations of which $2.2 million was paid during the year ended December 31, 2022 and the remaining $0.8 million was paid in first quarter of 2023. These charges are primarily one-time termination benefits payable in cash.
Long-Lived Asset Impairment
The significant cut in the number of employees from the reduction in force announced on July 25, 2022 and the Company’s suspension of certain of its operations in deference to its 2022 Strategic Realignment impacted the Company’s use of its leased facilities. As of December 31, 2022, the Company was no longer conducting operations in its Newton, Massachusetts facility or its leased facility in Uniondale, New York, other than to store equipment. The Company determined that the right-of-use assets related to each facility were impaired. As a result, the Company recognized an impairment of $3.0 million related to the leases to write down the right-of-use assets to their fair value.
The Company has currently suspended clinical development activities in anticipation of the announced merger, and does not have any products approved for sale and has not generated any revenue from product sales since its inception and does not expect to generate revenue from product sales unless it successfully develops, and Angion or its collaborators commercialize, its product candidates, which the Company does not expect to occur in the near future, if ever.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 11-Income Taxes
The Company recognized an insignificant amount of income tax provision for the year ended December 31, 2022 and December 31, 2021. The difference between the Company's effective tax rate of 0% and the U.S. federal statutory tax rate of 21% is largely due to the Company's net operating losses, which are offset by the corresponding valuation allowance. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred assets. At such time as it is determined that it is more likely than not that the deferred tax asset will be realized, the valuation allowance will be reduced.
Losses before income taxes includes the following components:
Year Ended December 31,
2022 2021
United States $ (38,302) $ (53,547)
Foreign (496) (1,026)
Total $ (38,798) $ (54,573)
The provision for income taxes provision (benefit) for the years ended December 31, 2022 and 2021 consists of the following (in thousands):
December 31,
2022 2021
Current:
Federal $ - $ -
United States 11 -
Foreign - -
Total Current 11 -
Deferred
Federal (6,710) (5,460)
State (699) (4,779)
Change in valuation allowance
7,409 10,239
Total Deferred - -
Total tax provision $ 11 $ -
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
The reconciliations between the federal statutory income tax rate and the Company's effective income tax rate were as follows:
Year Ended December 31,
2022 2021
Federal statutory income tax rate
21.0 % 21.0 %
Stock compensation (2.3) % (2.3) %
Foreign rate differential (0.3) % (0.1) %
Interest - % (4.3) %
R&D and other tax credit changes
1.4 % 2.8 %
Permanent items
(0.3) % (7.3) %
Global Intangible Low-Taxed Income (0.3) % - %
Nontaxable Income - % 0.3 %
Change in valuation allowance
(19.2) % (10.1) %
Effective income tax rate
0.0 % 0.0 %
Significant components of the Company's deferred tax asset at December 31, 2022 and 2021 were as follows (in thousands):
December 31,
2022 2021
Deferred tax assets
Net operating loss carryforwards
$ 32,659 $ 29,211
R&D and other tax credit carryovers
7,444 6,752
Lease liability
879 1,224
Stock-based compensation 1,005 3,070
Accrued compensation and other expenses
149 536
Fixed assets
5,020 -
Total deferred tax assets
47,156 40,793
Deferred tax liabilities
Fixed assets
- (37)
Right of use assets
(38) (1,046)
Valuation allowance
(47,118) (39,710)
Deferred tax assets, net of allowance
$ - $ -
As of December 31, 2022, the Company has federal net operating loss carryforwards of approximately $133.5 million available to reduce future taxable income, if any, for federal income tax purposes. Approximately $9.6 million of federal net operating losses can be carried forward to future tax years and begin to expire in 2035. The federal net operating losses generated for the years beginning after December 31, 2017, approximately $123.8 million in total, can be carried forward indefinitely.
The NOL carryforward may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax respectively. In general, an ownership change as defined by Section 382 and 383, results from the transactions increasing ownership of certain stockholders or public groups in the stock of the corporation of more than 50 percentage points over a three-year period. The Company has not completed a Section 382 and 383 analysis to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company's formation due to the complexity and cost associated with such study and the fact there may be additional such ownership changes in the future. If a change in ownership were to have occurred or occurs in the future, the NOL and tax credits carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company's effective tax rate.
The Company files income tax returns in the United States, California, Massachusetts, New York and New Jersey. Due to the Company's losses incurred, the Company is subject to the income tax examination by authorities since inception. The Company's policy is to recognize interest expense and penalties related to income tax matters as tax expense. As of December 31, 2022 and 2021, there were no significant accruals for interest related to unrecognized tax benefits or tax penalties.
At December 31, 2022, the Company's reserve for unrecognized tax benefits is approximately $4.3 million. Due to the full valuation allowance at December 31, 2022, current adjustments to the unrecognized benefits will have no impact to the Company's effective income tax rate.
Reconciliation of uncertain tax positions as of December 31, 2022 and 2021 was as follows (in thousands):
December 31,
2022 2021
Beginning Balance
$ 3,675 $ 2,579
Additions
Additions for current year
386 1,073
Additions for prior years 246 23
Ending Balance
$ 4,307 $ 3,675
Total amount of unrecognized tax benefits, if recognized, would affect the effective tax rate was as follows (in thousands):
December 31,
2022 2021
Unrecognized benefits that would affect the effective tax rate $ - $ -
Unrecognized benefits that would not affect the effective tax rate 4,307 3,675
Total unrecognized benefits $ 4,307 $ 3,675
The Company does not anticipate material changes to its uncertain tax positions for the next twelve months.
In conjunction with the 2018 Act that amends the Internal Revenue Code that reduced the U.S. corporate tax rate from 35% to 21% effective January 1, 2018 and modified policies, credits, and deductions (the "Tax Act"), the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. The Company has completed its evaluation and determined that there was no net impact on the Company's consolidated financial statements for the years ended December 31, 2022 and 2021 as the corresponding adjustment was made to the valuation allowance.
Note 12-Employee Benefit Plan
Employee Benefit Plan
The Company sponsors a retirement savings plan that is intended to qualify for favorable tax treatment under Section 401(a) of the Code, and contains a cash or deferred feature that is intended to meet the requirements of Section 401(k) of the Code. Participants may make pre-tax and certain after-tax (Roth) salary deferral contributions to the plan from their eligible earnings up to the statutorily prescribed annual limit under the Code. Participants who are 50 years of age or older may contribute additional amounts based on the statutory limits for catch-up
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
contributions. Participant contributions are held in trust as required by law. No minimum benefit is provided under the plan. An employee’s interest in his or her salary deferral contributions is 100% vested when contributed. Contributions, subject to established limits, are matched at a dollar for dollar rate up to 3% of an individual’s earnings and fifty cents on the dollar on the next 4-5% of earnings.
Note 13-Net Loss Per Share
The following table sets forth the computation of the Company’s basic and diluted net loss per share attributable to common stockholders, which excludes shares which are legally outstanding but subject to repurchase by the Company (in thousands, except share and per share data):
Year Ended December 31,
2022 2021
Numerator
Net loss attributable to common stockholders $ (38,807) $ (54,573)
Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
30,040,703 28,244,825
Net loss per share attributable to common stockholders, basic and diluted
$ (1.29) $ (1.93)
The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive:
December 31,
2022 2021
Shares issuable upon exercise of stock options 3,726,247 4,230,162
Shares issuable upon the exercise of warrants 1,148,123 1,148,123
Non-vested shares under restricted stock grants 16,046 203,015
Total 4,890,416 5,581,300
Note 14-Related Party Transactions
On February 25, 2022, the Company entered into a Separation Agreement with Itzhak D. Goldberg, M.D., who formerly served as Executive Chairman and Chief Scientific Officer and currently serves as a director and Chairman Emeritus on the Company’s board of directors. Pursuant to the terms of the Separation Agreement, Dr. Goldberg will receive severance benefits of approximately $1.2 million. As of December 31, 2022, $0.4 million has been paid and the remaining $0.8 million is expected to be paid and on or before September 2023. Under the 2015 Plan and 2021 Plan, Dr. Goldberg has vested his PSUs and stock options and will have the right to exercise vested stock options as long as he remains in continuous service as a director on the board of directors.
On March 1, 2022, the Company entered into a Separation Agreement with Elisha Goldberg, former employee and son of Itzhak D. Goldberg, M.D. Pursuant to the terms of the Separation Agreement, Mr. Goldberg will receive severance benefits of approximately $0.5 million. As of December 31, 2022, $0.4 million has been paid and the remaining $0.1 million is expected to be paid and on or before March 2023. Mr. Goldberg had the right to exercise vested stock options he had received under the 2015 Plan or 2021 Plan for an extended period of 11 months, until December 31, 2022. None of the vested stock options were exercised by Mr. Goldberg.
Ohr Investment
In a series of investments in November 2013 and July 2017, the Company invested a total of $150,000 to acquire a membership interest in Ohr Cosmetics, LLC ("Ohr"), an affiliated company.
The Company owns and the family of the Company's director and Chairman Emeritus owns approximately 2.4% and 78.7%, respectively, of the membership interests in Ohr. The Chairman Emeritus’s son is the manager of
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Ohr. In addition, the Company’s President and Chief Executive Officer and director, and Mr. Ganzi, and the Company’s Lead Independent Director, each own approximately 1.6% of the membership interests in Ohr.
In November 2013, the Company granted Ohr an exclusive worldwide license, with the right to sublicense, under the Company's patent rights covering one of the Company's CYP26 inhibitors, ANG-3522, for the use in treating conditions of the skin or hair. Sublicensees may not grant further sublicenses under the Company's patent rights other than to affiliates of such sublicensees and entities with which sublicensees are collaborating for the research, development, manufacture and commercialization of the products. Ohr will pay the Company a royalty at a rate in the low single digits on gross revenue of products incorporating ANG-3522, and milestone payments potentially totaling up to $9.0 million based on achievement of sales milestones. Royalties and milestone payments will be paid until the later of 15 years from the first commercial sale of a licensed product or the last to expire licensed patent rights. The royalty rate is subject to adjustments under certain circumstances. The Company believes that the Ohr License was made on terms no less favorable to the Company than those that the Company could obtain from unaffiliated third parties.
No revenue from this license agreement was recognized for the years presented.
NovaPark Investment and Lease
As of December 31, 2022, the Company had a 10% interest in NovaPark. Members of the Company's Chairman Emeritus’s immediate family own a majority of the membership interests of NovaPark. The Company accounts for its aggregate 10% investment in NovaPark under the equity method. In March 2023, the Company entered into a Membership Interest Redemption Agreement with NovaPark which resulted in the relinquishment of its related party interest in NovaPark. See Note 15 for additional information.
The following table provides the activity for the NovaPark investment for the years ended December 31, 2022 and 2021 (in thousands):
Year Ended December 31,
2022 2021
Beginning balance
$ 573 $ 672
Losses of equity method investment
151 (96)
Distribution from NovaPark
- (3)
Ending balance
$ 724 $ 573
As of December 31, 2022, the Company continued to rent office and laboratory space in Uniondale, New York from NovaPark under a lease that expires June 20, 2026. The Company recorded rent expense for fixed lease payments of $1.3 million and $1.1 million for the years ended December 31, 2022 and 2021, respectively. The Company recorded rent expense for variable expenses related to the lease of $0.4 million and $0.5 million for the years ended December 31, 2022 and 2021, respectively. See Note 9 for additional information.
As of December 31, 2022, the Company was no longer conducting operations in its leased facility in Uniondale, New York. See Note 10 for additional information regarding the impairment charge the Company recorded in connection with lease facility.
In March 2023, the Company entered into a Surrender Agreement with NovaPark which resulted in the termination of its Uniondale, New York lease for a termination fee. See Note 15 for additional information.
Consultant Fees
The Company paid consulting fees under an agreement with the wife of the director and Chairman Emeritus of the Company for Company management services. Consultant fees paid to the wife were immaterial in the years ended December 31, 2022 and 2021, respectively. This consultant agreement was terminated in February 2022.
ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)
Note 15-Subsequent Events
In January 2023, in connection with the execution of the Merger Agreement, Angion made a bridge loan to Elicio pursuant to a note purchase agreement and promissory notes up to an aggregate principal amount of $12.5 million, issued with a 20% original issue discount, with an initial closing held substantially concurrently with the execution of the Merger Agreement for a principal amount of $6.25 million on account of a $5.0 million loan and an additional closing for a principal amount of $6.25 million on account of a $5.0 million loan to be issued upon delivery by Elicio to Angion of certain financial statements.
In March 2023, Angion terminated its sale and leaseback arrangement with a third-party financing institution that funded certain of its capital expenditures primarily related to operating equipment. The Company also exercised its repurchase option to buy back the previously leased assets for $0.2 million.
In March 2023, Angion also entered into a Surrender Agreement with NovaPark which terminated the Agreement of Lease, dated as of June 21, 2011, as amended, of it’s office and laboratory space in Uniondale, New York (the “Property”, see Note 9) for a termination fee of $3.03 million and entered into a Membership Interest Redemption Agreement with NovaPark to relinquish its 10% membership interest in NovaPark, accounted as Investment in Related Parties in our Consolidated Balance Sheets. The Surrender Agreement also provides that no other rent or charges will be due from the Company with respect to any period prior to or subsequent to the surrender of the Property to NovaPark, thereby relieving Angion of lease payments equal to approximately $3.86 million, plus other amounts for facility fees and utilities with respect to the Property.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, our principal executive officer and principal accounting and financial officer, respectively, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our President and Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act) that occurred during the quarter ended year ended December 31, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except as follows:
Material Weakness Remediation
As previously reported, in connection with the preparation of our consolidated financial statements, we identified control deficiencies in the design and operation of our internal control over financial reporting that constituted material weaknesses. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified in our internal control over financial reporting related to (i) insufficient resources with knowledge and expertise in U.S. GAAP to properly evaluate certain complex transactions, including debt instruments and equity instruments; and (ii) insufficient financial reporting and close controls to ensure that incurred expenses are accrued at period end and deliverables from third party contractors are reviewed for accuracy.
We initiated several steps to remediate these material weaknesses, including:
•engaging SEC compliance and technical accounting consultants to assist in evaluating transactions for conformity with U.S. GAAP;
•hiring additional finance and accounting personnel to augment accounting staff and to provide more resources for complex accounting matters and financial reporting; and
•strengthening our financial reporting and close relating to incurred expenses by ensuring our data capture procedures are clearly defined and that responsible personnel, including supervisory personnel, have adequate training regarding the process and expectation.
As a result of these actions, we have implemented various internal controls over financial reporting and our close process and since then, consistently followed and evaluated these controls in order to address the material weaknesses identified in our previous fiscal year. As a result, we concluded that our material weaknesses were
remediated on September 30, 2022 and our internal control over financial reporting was effective as of December 31, 2022.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 framework). Based on our assessment, management concluded our internal control over financial reporting was effective as of December 31, 2022, based on the COSO criteria.
Inherent Limitation on the Effectiveness Over Financial Reporting
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
None.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
Management
Executive Officers
The following table sets forth information regarding our executive officers and directors as of March 15, 2023:
Name
Age
Position(s)
Executive Officers and Employee Directors:
Jay R. Venkatesan, M.D. 51 President and Chief Executive Officer and Chairman of the Board
Jennifer J. Rhodes, J.D. 52 Executive Vice President, Chief Business Officer, General Counsel, Chief Compliance Officer and Corporate Secretary
Gregory S. Curhan 61 Chief Financial Officer
Non-Employee Directors:
Victor F. Ganzi
75 Director, Lead Independent Director
Itzhak D. Goldberg, M.D.
74 Director and Chairman Emeritus
Allen R. Nissenson, M.D.
76 Director
Gilbert S. Omenn, M.D., Ph.D.
81 Director
Karen J. Wilson
59 Director
Each of Mr. Ganzi, Dr. Nissenson, Dr. Omenn and Ms. Wilson is a member of each of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Ms. Wilson is the Chairperson of the Audit Committee, Dr. Nissenson is the Chairperson of the Compensation Committee, and Dr. Omenn is the chairperson of the Corporate Governance Committee.
Executive Officers and Employee Directors
Jay R. Venkatesan, M.D., President, Chief Executive Officer and Chairman. Dr. Venkatesan was appointed Chairman of the Board in January 2022, and he has been Angion’s President and Chief Executive Officer and director since May 2018. Dr. Venkatesan has served as a Managing Partner of Alpine BioVentures, an investment firm since July 2015. From July 2015 to August 2018, Dr. Venkatesan served as President of Alpine Immune Sciences, an immunotherapy company that he co-founded as a Managing Partner of Alpine BioVentures, and also served as its Chief Executive Officer from July 2015 to June 2016. Additionally, as Managing Partner of Alpine BioVentures, from January 2014 to August 2014, Dr. Venkatesan served as Founder and Chief Executive Officer of Alpine BioSciences, a biotechnology company, which was acquired by Cascadian Therapeutics, where he then served as Executive Vice President and General Manager from August 2014 to May 2015 (subsequently acquired by Seagen, Inc.). Since January 2008, Dr. Venkatesan has served as the founder and managing member of Ayer Capital, a global healthcare fund. Prior to that, he served as a director at Brookside Capital, part of Bain Capital, where he co-managed healthcare investments. He was also a consultant at McKinsey & Co., a consulting firm, and a venture investor with Patricof & Co. Ventures (now Apax Partners), an investment firm. Dr. Venkatesan has served on the board, of Alpine Immune Sciences, Inc. (Nasdaq: ALPN) since June 2015. Dr. Venkatesan previously served on the board of Exicure Inc. (Nasdaq: XCUR) from March 2014 to December 2020 and Iovance Biotherapeutics Inc. (Nasdaq: IOVA) from September 2013 to March 2018. He has an M.D. from the University of Pennsylvania School of Medicine, an M.B.A. from The Wharton School of the University of Pennsylvania, and a B.A. from Williams College. Angion believes that Dr. Venkatesan’s leadership experience and investment experience in the biopharmaceutical industry qualify him to serve as a member of Angion’s Board.
Jennifer J. Rhodes, J.D. Ms. Rhodes was appointed Executive Vice President and Chief Business Officer in March 2022 and she has served as, General Counsel, Chief Compliance Officer and Corporate Secretary since January 2020. From February 2019 to December 2022, Ms. Rhodes also served as a director of Legal Aid at Work, a non-profit legal services organization. Ms. Rhodes previously served as General Counsel and Corporate Secretary at Adamas Pharmaceuticals, Inc., a public pharmaceutical company, from April 2016 until January 2020, during which time she also served as Chief Compliance Officer since August 2016 and Chief Business Officer since
January 2017. Prior to that, Ms. Rhodes served as General Counsel at Medivation, Inc., a biopharmaceutical company, from June 2012 to September 2015, where she was responsible for Medivation’s legal matters, and also served as Corporate Secretary from April 2013 to September 2015 and as Chief Compliance Officer from July 2012 to October 2014. From May 2006 to June 2012, Ms. Rhodes was an Assistant General Counsel at Pfizer Inc., a biopharmaceutical company, where she supported the U.S. Primary Care Business and its Primary Care Medicines Development Group and served as a global product lead for Pfizer Inc.’s primary care medicines. Prior to joining Pfizer Inc., she was an associate in the regulatory law and international trade practice areas at Weil, Gotshal & Manges, LLP from October 2000 to April 2006. Ms. Rhodes has a J.D. from Wake Forest University School of Law and a B.A. in Economics from Newcomb College of Tulane University.
Gregory S. Curhan. Mr. Curhan has served as our Chief Financial Officer since June 2020 through his capacity as a partner at FLG Partners, LLC (FLG Partners), a Silicon Valley chief financial officer services firm. Prior to joining FLG Partners, LLC, Mr. Curhan was Chief Financial Officer and Senior Vice President Corporate Development of Providence Medical Technology, a venture-backed medical device manufacturer, December 2016 until January 2020. Prior to that, Mr. Curhan was a Business Development Officer at Brighton Jones, a financial planning company, from December 2012 to December 2016. Mr. Curhan has a B.A. in Economics from Dartmouth College.
Non-Employee Directors
Victor F. Ganzi. Mr. Ganzi has been a member of Angion’s Board since April 2018, and lead independent director since February 2021. He has served as Non-Executive Chairman of the board of directors of Willis Towers Watson (Nasdaq: WTW), a global advisory, broking, and solutions company since January 2019 and as a director since January 2016. Previously, he served as a director of Towers Watson beginning on January 1, 2010, as Chairman of Towers Watson’s Audit Committee, and a member of its Nominating and Governance Committee. Mr. Ganzi is presently a consultant and corporate director, serving on the public company board of Aveanna Healthcare Holdings Inc., a provider of pediatric and adult home healthcare and hospice care since 2016, and serving on the boards of numerous private and not-for-profit organizations, including PGA Tour, Inc., the Partnership to End Addiction, the Whitney Museum of American Art and the Madison Square Boys and Girls Club. Mr. Ganzi was the President and Chief Executive Officer of The Hearst Corporation, a private diversified communications company, from 2002 to 2008. He served as Hearst’s Executive Vice President from 1997 to 2002 and as its Chief Operating Officer from 1998 to 2002. Prior to joining Hearst in 1990, Mr. Ganzi was the managing partner at the international law firm of Rogers & Wells (now part of Clifford Chance). Mr. Ganzi previously served as a director of Gentiva Health Services, Inc., Wyeth and Hearst-Argyle Television, Inc. Mr. Ganzi has a B.S. in Accounting summa cum laude, from Fordham University, a J.D. from Harvard Law School and an L.L.M. in Taxation from New York University. Angion believes that Mr. Ganzi’s years of experience serving on boards and legal expertise qualify him to serve as a member of Angion’s Board.
Itzhak D. Goldberg, M.D. Dr. Goldberg was appointed Chairman Emeritus in January 2022, after having been a director and Chairman of the Board since March 2018. Dr. Goldberg also served as Executive Chairman and Chief Scientific Officer between March 2018 and March 2022, after serving as Angion’s Chairman, President, Chief Executive Officer and Scientific Director since Angion’s founding in April 1998. Dr. Goldberg was formerly a faculty member at Harvard Medical School, Radiation Oncologist-in-Chief for the North Shore-LIJ (Northwell) Health System, and Professor at the Albert Einstein College of Medicine. He is a Fellow of the American College of Radiology. Dr. Goldberg has an M.D. from Albert Einstein College of Medicine, was a postdoctoral research fellow at Harvard Medical School and was subsequently trained as a radiation oncologist at the Harvard Joint Center for Radiation Therapy. Angion believes that Dr. Goldberg’s extensive experience in the biopharmaceutical industry qualifies him to serve as a member of Angion’s Board.
Allen R. Nissenson, M.D. Dr. Nissenson has been a member of Angion’s Board since January 2020. He completed serving as the Emeritus Chief Medical Officer of DaVita Kidney Care in January 2022, where he has served since January 2020 and where he previously served as Chief Medical Officer from August 2008 to January 2020. He is currently an Emeritus Professor of Medicine at the David Geffen School of Medicine at UCLA, where he has served since August 2008 and where he previously served as Director of the Dialysis Program from July 1977 to August 2008 and Associate Dean from July 2005 to August 2008. Dr. Nissenson is also currently on the board of directors of Rockwell Medical Inc., a public biopharmaceutical company, which he joined in June 2020 and Diality, a private technology development company. Dr. Nissenson is a past chair of Kidney Care Partners and past co-chair of the Kidney Care Quality Alliance. He is a former president of the Renal Physicians Association (RPA) and current
member of the Government Affairs Committee. Dr. Nissenson also previously served as president of the Southern California End-Stage Renal Disease Network, as well as chair of the Medical Review Board. He served as a Robert Wood Johnson Health Policy Fellow of the National Academy of Medicine from 1994 to 1995 and worked in the office of the late Senator Paul Wellstone. Dr. Nissenson has an M.D. from Northwestern University Medical School and is the recipient of various awards, including the President’s Award of the National Kidney Foundation, the Lifetime Achievement Award in Hemodialysis, the American Association of Kidney Patients’ (AAKP) Medal of Excellence Award and, in 2017, the RPA Distinguished Nephrology Service Award. Angion believes that Dr. Nissenson’s years of experience in the healthcare industry qualify him to serve as a member of Angion’s Board.
Gilbert S. Omenn, M.D., Ph.D. Dr. Omenn has been a member of Angion’s Board since January 2020. Since 1997, Dr. Omenn has been a faculty member at the University of Michigan, where he is currently the Harold T. Shapiro Distinguished University Professor of Computational Medicine & Bioinformatics, Internal Medicine, Human Genetics, and Public Health. Earlier, he was the dean of the School of Public Health and Community Medicine and professor of medicine at the University of Washington. Dr. Omenn served as Executive Vice President for Medical Affairs of the University of Michigan and as Chief Executive Officer of the University of Michigan Health System from 1997 to 2002. From 1977 to 1981 he was associate director of the White House Office of Science & Technology Policy and then the Office of Management & Budget. Dr. Omenn is a member of the National Academy of Medicine and the American Academy of Arts and Sciences. He chaired the Presidential/Congressional Commission on Risk Assessment and Risk Management, the NAS/NAE/IOM Committee on Science, Engineering, and Public Policy, and the Advisory Committee for the Agency for Toxic Substances and Disease Registry. He served on the National Commission on the Environment, the NIH Scientific Management Review Board, and the CDC Director’s Advisory Committee. He is a past president of the American Association for the Advancement of Science. Since 2014, Dr. Omenn has served as a director of Galectin Therapeutics Inc., a biotechnology company (Nasdaq: GALT), and since 2020 as a director of Amesite Inc, an AI-based educational technology company (Nasdaq: AMST). Dr. Omenn previously served as a director of Amgen, Inc. for 27 years and Rohm & Haas Company for 22 years. Dr. Omenn was a director of Esperion Therapeutics (Nasdaq: ESPR) from August 2014 to May 2018. He is a director of the Hastings Center for Bioethics and the Center for Public Integrity. Dr. Omenn has a B.A. summa cum laude from Princeton University, M.D. magna cum laude from Harvard Medical School and Ph.D. in genetics from the University of Washington. Angion believes that Dr. Omenn’s years of experience in the healthcare industry qualify him to serve as a member of Angion’s Board.
Karen J. Wilson. Ms. Wilson has been a member of Angion’s Board since April 2020. Ms. Wilson is also currently a member of the boards of directors of Connect Biopharma, and LAVA Therapeutics. Ms. Wilson also served as a member of the board of directors of Vaxart, Inc. between August 2020 to August 2022. Ms. Wilson previously served as Senior Vice President of Finance at Jazz Pharmaceuticals plc, a biopharmaceutical company, until September 2020 after serving as Principal Accounting Officer and Vice President of Finance. Prior to joining the Jazz Pharmaceuticals organization in February 2011, she served as Principal Accounting Officer and Vice President of Finance at PDL BioPharma, Inc., a life sciences company. She also previously served as a Principal at the consulting firm of Wilson Crisler LLC, Chief Financial Officer of ViroLogic, Inc., a biosciences company, Chief Financial Officer and Vice President of Operations for Novare Surgical Systems, Inc., a medical device manufacturer, and as a consultant and auditor for Deloitte & Touche LLP, a professional services firm. Ms. Wilson is a Certified Public Accountant and received a B.S. in Business from the University of California, Berkeley. Angion believes that Ms. Wilson is qualified to serve on Angion’s Board due to her extensive background in financial and accounting matters for public companies and her leadership experience in the life science industry.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons holding more than 10% of our common stock to report their initial ownership of the common stock and other equity securities and any changes in that ownership in reports that must be filed with the SEC. The SEC has designated specific deadlines for these reports, and we must identify in our Annual Report on Form 10-K those persons who did not file these reports when due.
We filed reports on behalf of our directors, executive officers and 10% holders during the year ended December 31, 2022. Such reports were filed consistent with the reporting obligations of Section 16(a) of the Exchange Act, except that: (a) each of Dr. Venkatesan and Dr. Goldberg filed one Form 4 late reporting one transaction; and (b) each of Dr. Venkatesan and Mr. Ganzi filed amended Forms 4 on May 27, 2022, reporting that each Dr. Venkatesan and Mr. Ganzi exercised warrants to purchase shares of Angion common stock through a
cashless exercise transaction in which Angion withheld certain shares upon the close of Angion’s initial public offering on February 9, 2021.
Audit Committee
Our audit committee was established by the board of directors in accordance with Section 3(a)(58)(A) of the Exchange Act, to oversee our corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, the audit committee performs several functions, including among other things:
•appoints our independent registered public accounting firm;
•evaluates the independent registered public accounting firm's qualifications, independence and performance;
•determines the engagement of the independent registered public accounting firm;
•reviews and approves the scope of the annual audit and pre-approves the audit and non-audit fees and services;
•reviews and approves all related party transactions on an ongoing basis;
•establishes procedures for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters;
•discusses with management and the independent registered public accounting firm the results of the annual audit and the review of our quarterly financial statements;
•approves the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services;
•monitors the rotation of partners of the independent registered public accounting firm on our engagement team in accordance with requirements established by the SEC;
•discusses on a periodic basis, or as appropriate, with management our policies and procedures with respect to risk assessment and risk management;
•reviews our financial statements and our management's discussion and analysis of financial condition and results of operations to be included in our annual and quarterly reports to be filed with the SEC;
•annually reviews and assesses internal controls and treasury functions including cash management procedures;
•investigates any reports received through the ethics helpline and report to the Board of Directors periodically with respect to the information received through the ethics helpline and any related investigations;
•consults with management to establish procedures and internal controls relating to cybersecurity;
•reviews our critical accounting policies and estimates; and
•reviews the audit committee charter and the committee's performance at least annually.
The members of our audit committee are Karen Wilson, Victor Ganzi, Allen Nissenson and Gilbert Omenn. Ms. Wilson serves as the chairperson of the committee. All members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and The Nasdaq Stock Market. Our board of directors has determined that Ms. Wilson is an audit committee financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the applicable rules and regulations of The Nasdaq Stock Market. Under the rules of the SEC, members of the audit committee must also meet heightened independence standards. Our board of directors has determined that each of Ms. Wilson, Mr. Ganzi, Dr. Nissenson and Dr. Omenn are independent under the applicable rules of the SEC and The Nasdaq Stock Market. The audit committee operates under a written charter that satisfies the applicable standards of the SEC and The Nasdaq Stock Market.
The Audit Committee met five times during 2022. Our board of directors has adopted a written Audit Committee charter available to stockholders on our website at https://ir.angion.com/corporate-governance/governance-overview.
Compensation Committee
The Compensation Committee is composed of Allen Nissenson, M.D., Victor Ganzi, J.D., Gilbert Omenn, M.D., Ph.D., and Karen Wilson. Dr. Nissenson serves as the chairperson of the committee. Each of the members of our compensation committee is independent under the applicable rules and regulations of Nasdaq and is a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. The Compensation Committee met eight times during 2022. Our board of directors has adopted a written Compensation Committee charter available to stockholders on our website at https://ir.angion.com/corporate-governance/governance-overview.
The compensation committee oversees policies relating to compensation and benefits of our officers and employees. The compensation committee reviews and approves or recommends to our board of directors the corporate goals and objectives relevant to compensation of our executive officers (other than our Chief Executive Officer), evaluates the performance of these officers in light of those goals and objectives and approves the compensation of these officers based on such evaluations. The compensation committee also reviews and approves or makes recommendations to our board of directors regarding the issuance of stock options and other awards under our stock plans to our executive officers (other than our Chief Executive Officer). The compensation committee reviews the performance of our Chief Executive Officer and makes recommendations to our board of directors with respect to his compensation and our board of directors retains the authority to make compensation decisions relative to our Chief Executive Officer. The compensation committee will review and evaluate, at least annually, the performance of the compensation committee and its members, including compliance by the compensation committee with its charter.
Typically, the Compensation Committee meets at least four times annually and with greater frequency if necessary. The Compensation Committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Chief Executive Officer may not participate in, or be present during, any deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. The charter of the Compensation Committee grants the Compensation Committee full access to all our books, records, facilities and personnel. In addition, under the charter, the Compensation Committee has the authority to obtain, at our expense, advice and assistance from compensation consultants and internal and external legal, accounting or other advisors and other external resources the Compensation Committee considers necessary or appropriate in the performance of its duties. The Compensation Committee has direct responsibility for the oversight of the work of any consultants or advisers engaged for the purpose of advising the Committee. In particular, the Compensation Committee has the sole authority to retain, in its sole discretion, compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. Under the charter, the Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the compensation committee, other than in-house legal counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent.
During 2022, after taking into consideration the six factors prescribed by the SEC and Nasdaq described above, the Compensation Committee engaged Aon as compensation consultants. The Compensation Committee requested that Aon:
•evaluate the efficacy of our existing compensation strategy and practices in supporting and reinforcing our long-term strategic goals; and
•assist in refining our compensation strategy and in developing and implementing an executive compensation program to execute that strategy.
At the request of the Compensation Committee, Aon also conducted an individual interviews with the chairperson of the Compensation Committee and management to learn more about our business operations and strategy, key performance metrics and strategic goals, as well as the labor markets in which we compete. Aon ultimately developed recommendations that were presented to the Compensation Committee for its consideration. Following an active dialogue with Aon, the Compensation Committee approved the recommendations of Aon.
Our board of directors, at the recommendation of our Compensation Committee, has also delegated to our Chief Executive Officer the authority to determine and approve the equity compensation payable to our employees and consultants who are not “officers” (as defined in Section 16 of the Exchange Act).
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee of our board of directors is responsible for making recommendations to our board of directors regarding candidates for directorships and the size and composition of our board of directors. In addition, the nominating and corporate governance committee will be responsible for overseeing our corporate governance policies and reporting and making recommendations to our board of directors concerning governance matters.
The Nominating and Corporate Governance Committee is composed of Gilbert Omenn, M.D., Ph.D., Victor Ganzi, J.D., Allen Nissenson, M.D., and Karen Wilson. Dr. Omenn serves as the chairperson of the committee.
Each of the members of our nominating and corporate governance committee is independent under the applicable rules and regulations of Nasdaq relating to nominating and corporate governance committee independence. The Nominating and Corporate Governance Committee met one time during 2022, in light of our 2022 Strategic Realignment. Our board of directors has adopted a written Nominating and Corporate Governance Committee charter available to stockholders on our website at https://ir.angion.com/corporate-governance/governance-overview.
The Nominating and Corporate Governance Committee believes candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, and have the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also considers such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to our affairs, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of our stockholders. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of our board of directors, our operating requirements and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee typically considers diversity (including gender, racial and ethnic diversity), age, skills and such other factors as it deems appropriate, given the current needs of us and our board of directors, to maintain a balance of knowledge, experience and capability. The Nominating and Corporate Governance Committee appreciates the value of thoughtful Board refreshment, and regularly identifies and considers qualities, skills and other director attributes that would enhance the composition of our board of directors. The Committee takes into account the results of the self-evaluation of our board of directors, conducted annually on a group and individual basis. Due to our 2022 Strategic Realignment, on November 17, 2022, the Board deferred the conduct of the annual Board and Committee self-evaluations until at least the completion of that process. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our board of directors. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to our board of directors by majority vote.
Procedures by Which Security holders May Recommend Nominees to the Board of Directors
The Nominating and Corporate Governance Committee of the Board has adopted procedures for considering director candidates recommended by stockholders. Stockholders who wish to recommend individuals for consideration by the Committee as candidates for potential election by the Board as directors, can deliver a written recommendation to the Corporate at Angion Biomedica Corp., 7-57 Wells Avenue, Newton, Massachusetts 02459, at least 120 days prior to the anniversary date of the mailing of the proxy statement for the last annual meeting of stockholders and must include the following information: name and address of the nominating stockholder; a representation that the nominating stockholder is a record holder; a representation that the nominating stockholder intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified; information regarding each nominee that would be required to be included in a proxy statement; a description of any arrangements or understandings between the nominating stockholder and the nominee; and the consent of each nominee to serve as a director, if elected.
The Nominating and Corporate Governance Committee will evaluate candidates recommended by a stockholder in the same manner as candidates identified any other person, including members of the Board.
Code of Business Conduct and Ethics
Our Board of directors has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of business conduct and ethics is available on our website. We intend that any amendments to the code, or any waivers of its requirements, will be disclosed on our website.
Corporate Governance Guidelines
In January 2021, our board of directors documented the governance practices followed by us by adopting Corporate Governance Guidelines to assure our board of directors will have the necessary authority and practices
in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The guidelines are also intended to align the interests of directors and management with those of our stockholders. The Corporate Governance Guidelines set forth the practices our board of directors intends to follow with respect to board composition and selection including diversity, board meetings and involvement of senior management, and board committees and compensation. The Corporate Governance Guidelines, as well as the charters for each committee of our board of directors, may be viewed at https://ir.angion.com/corporate-governance/governance-overview.
Hedging Policy
As part of our insider trading policy, all employees, including our executive officers, and non-employee directors are prohibited from engaging in short sales of our securities, establishing margin accounts, pledging our securities as collateral for a loan, buying or selling puts or calls on our securities or otherwise engaging in hedging transactions (such as zero-cost dollars, exchange funds, and forward sale contracts) involving our securities.

---

ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
The following is a discussion and analysis of compensation arrangements of our named executive officers (NEOs). This discussion contains forward looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt may differ materially from currently planned programs as summarized in this discussion. As an “emerging growth company” as defined in the JOBS Act, we are not required to include a Compensation Discussion and Analysis section and have elected to comply with the scaled disclosure requirements applicable to emerging growth companies.
We seek to ensure that the total compensation paid to our executive officers is reasonable and competitive. Compensation of our executives is structured around the achievement of individual performance and near-term corporate targets as well as long-term business objectives.
Our NEOs for fiscal year 2022 were as follows:
▪Jay R. Venkatesan, M.D., President and Chief Executive Officer and Chairman of the Board(1) ;
▪Itzhak Goldberg, Director and Chairman Emeritus(2)
▪John Neylan, Executive Vice President, Chief Medical Officer and Head of Research(3)
▪Jennifer Rhodes, Executive Vice President, Chief Business Officer, General Counsel, Chief Compliance Officer and Secretary(4)
________
(1) Dr. Venkatesan was appointed Chairman of the Board in January 2022.
(2) After serving as Executive Chairman and Chief Scientific Officer for Angion during the year ended December 31, 2021. Dr. Goldberg resigned his employment in February 2022, and no longer serves as an Executive Officer of Angion.
(3) After being appointed Executive Vice President and Head of Research in March 2022, and serving in that role and as Chief Medical Officer until August 2022, Dr. Neylan departed from Angion in August 2022 as part of a reduction in force.
(4) Ms. Rhodes appointed Chief Business Officer in March 2022, and continues to serve as General Counsel, Chief Compliance Officer and Secretary.
2022 Summary Compensation Table
The following table sets forth total compensation paid to our NEOs for the fiscal years ending on December 31, 2022 and 2021, other than Ms. Rhodes, who was not a named executive officer for 2021 and, accordingly, her compensation for 2021 is omitted.
Name and Principal Position
Year
Salary
($)
Option Awards(1) ($)
All other compensation(2) ($)
Total (3)
($)
Jay R. Venkatesan, M.D.,
President and Chief Executive Officer and Chairman of the Board(4)
2022 608,000 898,973 11,876 1,518,849
2021 587,100 1,952,099 11,600 2,550,799
Itzhak D. Goldberg, M.D.,
Executive Chairman and Chief Scientific Officer(3)
2022 80,670 - 773,663 854,333
2021 484,018 763,863 11,600 1,259,481
John F. Neylan, M.D.,
Executive Vice President, Chief Medical Officer and Head of Research (4)
2022 343,613 320,613 403,716 1,067,942
2021 468,650 763,863 11,600 1,244,113
Jennifer Rhodes
Executive Vice President, Chief Business Officer, General Counsel, Chief Compliance Officer and Secretary(5)
2022 440,840 320,613 12,200 773,653
___________________________________
(1)Amounts shown represents the grant date fair value of options granted as calculated in accordance with ASC Topic 718. See Note 2 of the financial statements included in Angion’s Annual Report on Form 10-K for the year ended December 31, 2022, to be filed with the SEC for the year ended December 31, 2022 for the assumptions used in calculating this amount.
(2)All other compensation includes severance benefits in the form of cash severance of $363,825 and COBRA payments equal to $28,842 paid to Dr. Neylan in 2022 pursuant to Angion’s Executive Separation Benefits Plan dated August 15, 2022, and severance benefits in the form of cash payments tied to salary of $484,018 and tied to bonus of $363,014, and COBRA payments equal to $2,174 paid to Dr. Goldberg pursuant to his severance agreement with Angion dated February 25, 2022. Amounts also include a company match under Angion’s 401(k) plan in the following amounts: Dr. Venkatesan, $11,876 and $11,600 for 2022 and 2021; Dr. Goldberg, $5,125 and $11,600 for 2022 and 2021; Dr. Neylan, $11,049 and $11,600 for 2022 and 2021; and Ms. Rhodes, $12,200 for 2022.
(3)After serving as Executive Chairman and Chief Scientific Officer for Angion during the year ended December 31, 2021, Dr. Goldberg resigned his employment in February 2022, and no longer serves as an Executive Officer of Angion. Dr. Goldberg continues to serve as a Director and Chairman Emeritus.
(4)After being appointed Executive Vice President and Head of Research in March 2022 and serving in that role and as Chief Medical Officer until August 2022, Dr. Neylan departed from Angion in August 2022 as part of a reduction in force.
(5)Ms. Rhodes was appointed Executive Vice President, Chief Business Officer in March 2022, and continues to serve as General Counsel, Chief Compliance Officer and Secretary.
Narrative to Summary Compensation Table
2022 Salaries
Our Named Executive Officers (NEO) each receive a base salary to compensate them for services rendered to our company. The base salary payable to each NEO is intended to provide a fixed component of compensation reflecting the executive's skill set, experience, role and responsibilities. Dr. Venkatesan’s annual base salary in 2021 was $587,100 and was increased to $608,000, effective as of January 1, 2022. Dr. Goldberg’s annual base salary in 2021 was $484,018 and remained the same through the end of his employment with Angion in February of 2022. Dr. Neylan’s annual base salary in 2021 was $468,650 and was increased to $485,100 effective as of January 1, 2022 and remained the same through the end of his employment with Angion in August 2022. Angion’s Board and compensation committee may adjust base salaries from time to time in their discretion.
2022 Bonuses
Our NEOs did not receive a discretionary cash bonus in 2021 or 2022 (except for the bonus paid to Dr. Goldberg for as required by Dr. Goldberg’s severance agreement with Angion dated February 25, 2022). The bonus targets for Angion’s Named Executive Officers were 55% of base salary for Dr. Venkatesan, and 40% of base salary for Dr. Goldberg, Dr. Neylan, and Ms. Rhodes.
Equity-Based Compensation
In March 2022, Angion granted each of Dr. Venkatesan, Dr. Neylan and Ms. Rhodes an option to purchase 760,000, 275,000, and 275,000 shares of its common stock, respectively, under Angion’s 2021 Incentive Award Plan (Angion’s 2021 Plan). Of Dr. Venkatesan’s grant of options, 600,000 vest as to 1/48th of the shares subject to the option on each monthly anniversary of March 3, 2022, and 160,000 vest in two tranches of 50% on July 31, 2022, and December 31, 2022. Of Dr. Neylan’s and Ms. Rhodes’ grants of options, 175,000 vest as to 1/48th of the shares subject to the option on each monthly anniversary of March 2, 2022, and 100,000 vest in two tranches of 50% on July 31, 2022, and December 31, 2022. All vesting by the Named Executive Officer is subject to being employed or in continuous service to Angion as defined in the 2021 Plan through such vesting date. Dr. Neylan is no longer employed by Angion as of August 2022, and he had no outstanding options as of December 31, 2022, issued under the 2021 Plan or the Amended and Second Restated 2015 Equity Award Plan (Angion’s 2015 Plan).
In February 2021, we granted each of Dr. Venkatesan, Dr. Goldberg and Dr. Neylan an option to purchase 178,920, 70,012 and 70,012 shares of our common stock, respectively, under our 2021 Incentive Award Plan (the “2021 Plan”). Each of Dr. Venkatesan's, Dr. Goldberg’s and Dr. Neylan’s options vest as to 1/48th of the shares subject to the option on each monthly anniversary of February 5, 2021, subject to the applicable NEO being employed or in continuous service to us as defined in the 2021 Plan through such vesting date. Upon our IPO in February 2021, Dr. Venkatesan’s and Dr. Goldberg’s performance-based restricted stock units (PSUs) met the performance condition, an initial public offering as defined in the Amended and Second Restated 2015 Equity Award Plan (the “2015 Plan”). Accordingly, the vesting of such PSUs in three equal parts, with the first part vesting commenced upon the IPO in February 2021, the second part vesting for each Dr. Venkatesan and Dr. Goldberg on June 24, 2021, and the third part vested for each on June 24, 2022. As of December 31, 2022, 556,530 shares subject to PSUs have been vested.
Other Elements of Compensation
Severance Plans
For a description of Angion’s severance plans and arrangements, see “Potential Payments Upon Termination or Change of Control” below.
Retirement Savings and Health and Welfare Benefits
On January 1, 2021, we implemented a 401(k) Retirement Savings Program through a third-party provider. Our NEOs are eligible to participate our 401(k) Program on the same terms as other full-time employees. We match 100% of the first 3% of a participant's annual eligible contributions to their 401(k) plan, and 50% of annual eligible contribution between 3% and 5%. We believe that providing a vehicle for tax-deferred retirement savings though 401(k) Plan and our former simple IRA plan adds to the overall desirability of our executive compensation package and further incentivizes our employees, including our NEOs, in accordance with our compensation policies.
All of our full-time employees, including our NEOs, are eligible to participate in our health and welfare plans, including medical, dental and vision benefits; short-term and long-term disability insurance; and life and AD&D insurance.
Perquisites and Other Personal Benefits
We determine perquisites on a case-by-case basis and will provide a perquisite to an NEO when we believe it is necessary to attract or retain the NEO. In 2022 and 2021, we did not provide any perquisites or personal benefits to our NEOs not otherwise made available to our other employees.
Outstanding Equity Awards at 2022 Fiscal Year End
The following table lists all outstanding equity awards held by our NEOs as of December 31, 2022.
Option Awards Stock Awards
Name Vesting
Commencement Date(1)
Number
of
Securities
Underlying Unexercised
Options
Exercisable
(#) Number
of
Securities
Underlying Unexercised
Options Unexercisable
(#) Option
Exercise
Price
($) Option
Expiration
Date Number
of Shares
that
Have Not
Vested
(#) Market
Value of
Shares or
Units of
Shares
that Have
Not Vested
($)(2)
Jay R. Venkatesan, M.D. 5/1/2018 (3)
934,400 - 5.89 5/1/2028 - -
6/18/2020 77,791 46,675 7.77 6/17/2030 - -
2/5/2021 82,005 96,915 16.00 2/4/2031 - -
3/3/2022(6)
272,500 487,500 1.94 3/2/2032 - -
Itzhak Goldberg 12/19/2018(4)
40,600 - 6.05 1/21/2029 - -
6/18/2020 38,895 23,338 7.77 6/17/2030 - -
2/5/2021 32,088 37,924 16.00 2/4/2031 - -
Jennifer J. Rhodes 2/14/2020(4)
113,040 3,647 9.51 2/13/2030 - -
2/14/2020(5)
- - - 2/13/2030 15,802 12,831
6/18/2020 36,464 21,879 7.77 6/17/2030 - -
2/5/2021 32,088 37,924 16.00 2/4/2031 - -
3/2/2022(6)
132,812 142,188 1.99 3/1/2032 - -
John Neylan (7)
- - - - - - -
___________________________________
(1)Except as otherwise noted, options and stock awards vest as to 1/48th of the shares subject to the award on each monthly anniversary of the vesting commencement date, subject to the holder's continued service to Angion through each vesting date.
(2)The market value of shares that have not vested is calculated based on a value of $0.812 per share, the closing price of Angion’s common stock as of December 30, 2022, the last trading day of 2022.
(3)The stock option award vests as to 25% of the shares on the vesting commencement date and thereafter 10% of the shares vest on each quarterly anniversary, subject to Dr. Venkatesan’s continued service to Angion through such vesting date; provided that an additional 25% of the shares can vest if certain financing goals are achieved. This award is fully vested.
(4)The stock option award vests as to 25% of the shares on the first anniversary of the vesting commencement date and vest as to the remaining 75% of the shares in 24 substantially equal monthly installments thereafter, such that all awards will be vested on the anniversary of the vesting commencement date, subject to the Named Executive Officer’s continued service to Angion through such vesting date.
(5)The restricted stock units shall vest as to 25% of the shares on the first anniversary of the vesting commencement date and vest as to the remaining 75% of the shares in 24 substantially equal monthly installments thereafter, such that all awards will be vested on the third anniversary of the vesting commencement date. In January 2022, the vesting schedule for this grant was modified to vest annually on January 13, 2023, and then the vesting schedule was subsequently modified in December 2022 so that vesting shall occur upon certain triggering events in an amount equal to what she would have other vested on the original monthly schedule, including if Ms. Rhodes is involuntary terminated, Ms. Rhodes resigned her employment with Angion, or if the current merger transaction announced by Angion on January 17, 2023 is abandoned.
(6)Dr. Venkatesan and Ms. Rhodes each received two stock option awards in March of 2022. The first award granted Dr. Venkatesan of 600,000 share and Ms. Rhodes of 160,000 shares, all vest at a rate of 1/48th of the shares subject to the award each month following the vesting commencement date. The second award granted Dr. Venkatesan of 160,000 shares and Ms. Rhodes of 100,000 shares, all vest at a rate of 50% on July 31, 2022 and December 31, 2022. Both awards are subject to subject to the Named Executive Officer’s continued service to Angion through each vesting date.
(7)Dr. Neylan has no outstanding equity awards as of December 31, 2022, due to the end of his employment on August 15, 2022 and consistent with the term of the 2021 and 2015 Plans.
Executive Compensation Arrangements
We previously entered into offer letter agreements with each of our named executive officers in connection with his or her employment with us. These agreements set forth the terms and conditions of employment of each named executive officer, including initial base salary, equity grants and employee benefits eligibility.
Service Agreements
Jay R. Venkatesan, M.D.
In March 2019, Angion entered into an amended and restated employment agreement with Dr. Venkatesan, which set forth his base salary going forward, an additional stock grant of 45,419 shares of Angion’s common stock
as compensation for service previously rendered and eligibility to participate in Angion’s benefit plans. Dr. Venkatesan was also eligible to receive an additional equity award that was granted by Angion in June 2019.
Jennifer J. Rhodes, J.D.
In November 2019, Angion entered into an offer letter agreement with Ms. Rhodes (as amended in February 2020), which sets forth the terms and conditions of her employment as Angion’s Senior Vice President, General Counsel effective as of January 2020. In addition to her base salary and an annual target bonus, Ms. Rhodes is also eligible to receive an option grant and a restricted stock unit grant, each of which was granted by Angion in February 2020. The offer letter also provides for a sign-on bonus of $100,000 payable with respect to 50% of such amount in March 2020 and the remaining 50% in September 2020. Ms. Rhodes is entitled to participate in all applicable health and welfare benefit programs for which other executive employees of Angion are generally eligible. Pursuant to the terms of such agreement and the accompanying confidential information, non-disclosure and assignment of inventions agreement, Ms. Rhodes is subject to indefinite confidentiality restrictions, standard intellectual property provisions and non-solicitation restrictions effective during and 12 months post-employment.
Gregory Curhan
In June 2020, Angion entered into a consulting agreement (which was subsequently amended for the last time in March 2022) setting forth the terms and conditions for Mr. Curhan’s service to Angion as its Chief Financial Officer. Pursuant to the consulting agreement, Mr. Curhan provides part-time consulting services to Angion as Angion’s Chief Financial Officer. Mr. Curhan receives $550 per hour for his services.
Potential Payments Upon Termination or Change of Control
In connection with Angion’s initial public offering, Angion entered into new severance and change in control plan covering all of Angion’s Named Executive Officers superseding and replacing the severance benefits they would otherwise be entitled to receive, other than Dr. Goldberg, as further described below.
Under Angion’s severance plan encompassing each of Angion’s Named Executive Officers, if such Named Executive Officer’s employment with Angion is terminated without “cause” or such Named Executive Officer resigns for “good reason” (as each is defined in the severance plan), the applicable Named Executive Officer will be entitled to receive: (i) nine months of continued base salary (or 12 months for Dr. Venkatesan) and (ii) payment or reimbursement of the cost of continued healthcare coverage for nine months (or 12 months for Dr. Venkatesan). In lieu of the foregoing benefits, if each Named Executive Officer’s employment with Angion is terminated without “cause” or such Named Executive Officer resigns for “good reason” during the 12-month period following a Change in Control (as defined in the 2021 Plan), the applicable Named Executive Officer will be entitled to receive: (i) 12 months of continued base salary (or 18 months for Dr. Venkatesan), (ii) payment or reimbursement of the cost of continued healthcare coverage for 12 months (or 18 months for Dr. Venkatesan), (iii) an amount equal to 12 months of such Named Executive Officer’s annual bonus for the year of termination assuming 100% of target performance (or 18 months for Dr. Venkatesan) and (iv) full accelerated vesting of any of unvested equity awards (except for any performance awards). The foregoing severance benefits are subject to the applicable Named Executive Officer’s delivery of an executed release of claims against Angion and continued compliance with the Named Executive Officer’s confidentiality obligations under the severance plan.
Until February 28, 2022, Dr. Goldberg had separate severance arrangements with Angion set forth in his Employment Agreement with Angion dated May 1, 2018, providing him severance pay, annual bonus payments and COBRA reimbursements for eighteen (18) months for any termination without “cause”, resignation for “good reason”, or “change of control” as defined by his Employment Agreement. On February 25, 2022, Angion and Dr. Goldberg entered into a Separation Agreement on such terms.
On January 13, 2023, the Angion Board adopted the Angion Biomedica Corp. Retention Bonus Plan (Retention Bonus Plan). Participants in the Retention Bonus Plan include Dr. Venkatesan and Ms. Rhodes. The Retention Bonus Plan provides for the payment of a cash retention bonus equal to 100% of a participant’s base salary, 65% of which becomes earned and payable upon the occurrence of a corporate triggering event (defined to include a change in control (as defined in Angion’s 2021 Plan), a reverse merger or a dissolution) and 35% of which becomes earned and payable three months after the occurrence of such corporate triggering event, subject in each case to earlier payment upon the occurrence of a qualifying termination of the participant’s employment by Angion without “cause” or by the participant for “good reason,” each as defined in the Retention Bonus Plan. Upon the earlier of a
corporate triggering event or a qualifying termination, time-based equity awards will vest in full, the post-termination exercise period of options held by the participant will be extended by four years (but no later than the original term of the option) and participants will receive an additional lump sum cash payment (approximately $1,464,000 in the case of Dr. Venkatesan and $642,000 in the case of Ms. Rhodes, in each case less applicable withholding). Participants will no longer have the right to receive any payments under Angion’s Executive Separation Benefits Plan. The receipt of payments under the Retention Bonus Plan is subject to the execution of a general release of claims by the participant. Concurrently, the Angion Board approved modifications of the Angion stock options held by Mr. Curhan, such that, upon the earlier of a corporate triggering event or a qualifying termination and subject to Mr. Curhan’s execution of a general release of claims, one option granted in 2022 will vest in full and the post-termination exercise period of all options will be extended by four years (but no later than the original term of the option).
Director Compensation
We approved a compensation policy for our non-employee directors (Director Compensation Program) that became effective in connection with the consummation of the IPO in February 2021 and is subject to amendment by the board of directors as appropriate. Pursuant to the Director Compensation Program, our non-employee directors receive cash compensation as follows:
•Each non-employee director will receive an annual cash retainer in the amount of $40,000 per year.
•The Non-Executive Chairperson will receive an additional annual cash retainer in the amount of $35,000 per year.
•The lead non-employee director will receive an additional annual cash retained in the amount of $20,000 per year.
•The chairperson of the audit committee will receive additional annual cash compensation in the amount of $15,000 per year for such chairperson's service on the audit committee. Each non-chairperson member of the audit committee will receive additional annual cash compensation in the amount of $7,500 per year for such member's service on the audit committee.
•The chairperson of the compensation committee will receive additional annual cash compensation in the amount of $10,000 per year for such chairperson's service on the compensation committee. Each non-chairperson member of the compensation committee will receive additional annual cash compensation in the amount of $5,000 per year for such member's service on the compensation committee.
•The chairperson of the nominating and corporate governance committee will receive additional annual cash compensation in the amount of $8,000 per year for such chairperson's service on the nominating and corporate governance committee. Each non-chairperson member of the nominating and corporate governance committee will receive additional annual cash compensation in the amount of $5,000 per year for such member's service on the nominating and corporate governance committee.
Under the Director Compensation Program, as amended by the board of directors on March 8, 2021 and on June 9, 2022, each non-employee director will automatically be granted an option to purchase 30,000 shares of our common stock upon the director's initial appointment or election to our board of directors (Initial Grant) and an option to purchase 15,000 shares of our common stock automatically on the date of each annual stockholder's meeting thereafter, (Annual Grant), unless otherwise approved by the Board of Directors. The Director Compensation Program also provides for accelerated vesting of unvested director awards upon a change of control.
The Initial Grant will vest as to 1/36th of the underlying shares on a monthly basis over three years, subject to continued service through each applicable vesting date. The Annual Grant will vest on the earlier of the first anniversary of the date of grant or the date of the next annual stockholder's meeting to the extent unvested as of such date, subject to continued service through each applicable vesting date. The exercise price per share of director options is equal to the fair market value of a share of our common stock on the grant date, and the director options will vest in full upon (i) a termination of service due to the director's death or Disability (as defined in the 2021 Plan) and (ii) the consummation of a Change in Control (as defined in the 2021 Plan).
The following table sets forth information concerning the compensation earned by our non-employee directors during the year ended December 31, 2022.
Name
Fees Earned or Paid in Cash ($)
Option Awards(1)
($)
Total(2)
($)
Victor Ganzi, J.D. 77,500 16,275 93,775
Allen Nissenson, M.D. 62,500 16,275 78,775
Gilbert S. Omenn, M.D., Ph.D
60,500 16,275 76,775
Karen Wilson
65,000 16,275 81,275
__________________________
(1) Amounts shown represents the grant date fair value of options granted during fiscal year 2022 as calculated in accordance with ASC Topic 718. See note 2 of the financial statements included in Angion’s Annual Report on Form 10-K for the year ended December 31, 2022, to be filed with the SEC, for the assumptions used in calculating this amount. As of December 31, 2022, Messrs. Ganzi, Nissenson and Omenn and Ms. Wilson each held options to purchase an aggregate of 68,895 shares of Angion’s common stock
(2) Non-employee directors only received cash fees and stock awards as compensation for their service on the Board of Directors.
The Compensation Committee of the Board has reviewed and assessed Angion’s compensation policies and practices as they related to risk management are not reasonably likely to have a material adverse effect on Angion.

---

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security ownership of certain beneficial owners and management and related stockholder matters.
The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 15, 2023 by:
•each person, or group of affiliated persons, known by us to beneficially own more than 5% of our outstanding shares of our common stock;
•each of our directors;
•each of our named executive officers; and
•all directors and executive officers as a group.
The number of shares beneficially owned by each entity, person, director or executive officer is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days after March 15, 2023 through the exercise of any stock option, warrants or other rights. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of our common stock held by that person.
The percentage of shares beneficially owned is computed on the basis of 30,113,484 shares of our common stock outstanding as of March 15, 2023. Shares of our common stock that a person has the right to acquire within 60 days after March 15, 2023 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all directors and executive officers as a group.
Unless otherwise indicated below, the address for each beneficial owner listed is c/o Angion Biomedica Corp., 7-57 Wells Avenue, Newton, Massachusetts 02459.
Beneficiary Ownership Table
as of March 15, 2023 (1)
Number Percentage
5% and Greater Stockholders:
Jay R. Venkatesan, M.D. (2)
2,655,703 8.4 %
Thomas A. Satterfield, Jr.(3)
2,213,383 7.4 %
Entities associated with Vifor (International), Ltd.(4)
1,995,643 6.6 %
Itzhak D. Goldberg, M.D.(5)
1,812,048 6.0 %
EISA-ABC, LLC (6)
1,722,237 5.7 %
Named Executive Officers and Directors:
Jay R. Venkatesan, M.D. (2)
2,655,703 8.4 %
Itzhak D. Goldberg, M.D.(5)
1,812,048 6.0 %
Victor F. Ganzi (7)
1,032,593 3.4 %
Jennifer J. Rhodes, J.D.(8)
363,032 1.2 %
Gilbert S. Omenn, M.D., Ph.D.(9)
134,221 *
Karen J. Wilson (10)
72,613 *
Allen R. Nissenson (11)
63,278 *
John Neylan, M.D.(12)
35,136 *
All directors and executive officers as a group (9 persons) (13)
6,365,149 19.6 %
_______________________________________________________
* Represents beneficial ownership of less than 1% of the shares of our common stock.
(1) This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Applicable percentages are based on 30,113,362 shares outstanding on March 15, 2023, adjusted as required by rules promulgated by the SEC. Unless otherwise noted below, the address for persons listed in the table is c/o Angion Biomedica Corp. 7-57 Wells Avenue, Newton, Massachusetts 02459.
(2) Consists of (i) 1,192,730 shares of Angion’s common stock held directly by Jay R. Venkatesan, M.D., (ii) 1,458,205 shares of Angion’s common stock that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023, and (iii) 4,768 shares of Angion’s common stock held by the Venkatesan Family Trust.
(3) Based upon a Schedule 13G/A filed on February 10, 2023 as of December 31, 2022, Mr. Satterfield has sole voting and investment power with respect to 308,647 of these shares, and shared voting and investment power with respect to 1,904,796 of these shares. With respect to the beneficial ownership reported for Thomas A. Satterfield, Jr., 300,000 shares are held by Tomsat Investment & Trading Co., Inc., a corporation controlled by Mr. Satterfield and of which he serves as President; 732,178 shares are held by Caldwell Mill Opportunity Fund, which fund is managed by an entity of which Mr. Satterfield owns a 50% interest and serves as Chief Investment Manager; and 600,000 shares are held by A.G. Family L.P., a partnership managed by a general partner controlled by Mr. Satterfield. Additionally, Mr. Satterfield has limited powers of attorney for voting and disposition purposes with respect to the following securities: Satterfield Vintage Investments LP (200,000 shares and 15,558 warrants); Rebecca A. Satterfield (25,000 shares); and George and Laura Thaggard Pontikes (32,000 shares). These individuals and entities have the right to receive or the power to direct the receipt of the proceeds from the sale of their respective shares. The address for Mr. Satterfield is 15 Colley Cove Drive, Gulf Breeze, FL 32561.
(4) The shares are owned directly by Vifor (International) Ltd., a Swiss joint stock corporation, which is a wholly owned subsidiary of Vifor Pharma Participations Ltd., a Swiss joint stock corporation, which is a wholly owned subsidiary of Vifor Pharma Ltd., a Swiss joint stock corporation. Vifor Pharma Ltd. is a wholly owned subsidiary of CSL Behring AG, a Swiss joint stock corporation, which is a wholly owned subsidiary of CSL Behring Holdings Limited, an English private limited company. CSL Behring Holdings Limited is a wholly owned subsidiary of CSL Behring (Holdings) Pty Ltd, an Australian private limited company, which is a wholly owned subsidiary of CSL Limited, an Australian public limited company listed on the Australian Securities Exchange (ASX). Each of Vifor Pharma Participations Ltd., Vifor Pharma Ltd., CSL Behring AG, CSL Behring Holdings Limited, CSL Behring (Holdings) Pty Ltd and CSL Limited may be deemed to beneficially own the shares by virtue of the relationships described above. Voting and investment decisions are made by management at the direction of the Board of Directors of CSL Limited. The Board of Directors of CSL Limited comprise nine members, which exercises its voting and dispositive power by majority vote. The address of CSL Limited is 45 Poplar Road, Parkville VIC 3052, Australia. The address for Vifor (International) Ltd. is Rechenstrasse 37, CH-9014 St. Gallen, Switzerland.
(5) Consists of (i) 1,687,986 shares of Angion’s common stock held directly by Dr. Goldberg, and (ii) 119,849 shares of Angion’s
common stock that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023. The address of Dr. Goldberg is 41 Brayton Street, Englewood, NJ 07631.
(6) Based upon information provided by EISA-ABC. The address of EISA-ABC, LLC is 41 Brayton Street, Englewood, NJ 07631.
(7) Consists of (i) 823,117 shares of Angion’s common stock held directly by Victor F. Ganzi, J.D., (ii) 155,581 shares of Angion’s common stock held by Victor F Ganzi 2012 GST Family Trust held by Victor Ganzi, and (iii) 53,895 shares of Angion’s common stock that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023.
(8) Consists of (i) 14,597 shares of Angion’s common stock held directly by Jennifer J. Rhodes, J.D., and (ii) 348,435 that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023.
(9) Consists of (i) 80,326 shares of Angion’s common stock held by the Gilbert S. Omenn Revocable Trust, and (ii) 53,895 shares of common stock that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023.
(10) Consists of (i) 18,718 shares of Angion’s common stock held directly by Karen Wilson, and (ii) 53,895 shares of Angion’s common stock that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023.
(11) Consists of (i) 9,383 shares of Angion’s common stock held directly by Allen R. Nissenson, and (ii) 53,895 shares of Angion’s common stock that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023.
(12) Consists solely of shares of Angion’s common stock held directly by John Neylan, M.D.
(13) Consists of the shares described in footnotes 6 through 12 above, plus (i) 4,000 shares of Angion’s common stock held directly by Greg Curhan, and (ii) 192,525 that may be acquired pursuant to the exercise of stock options within 60 days of March 15, 2023.
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of December 31, 2022. Information is included for equity compensation plans approved by our stockholders. As of December 31, 2022, we did not have any equity compensation plans that were not approved by our stockholders.
Name Number of
Securities to
be Issued
Upon Exercise
of Outstanding
Options,
Warrants
and Rights(1)
Weighted
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights(2)
Number of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
Equity compensation plans approved by stockholders 4,890,416 $ 6.68 3,799,357
Equity compensation plans not approved by stockholders - - -
Total 4,890,416 $ 6.68 3,799,357
(1) Consists of shares subject to our 2015 Equity Incentive Plan (the “2015 Plan”), our 2021 Incentive Award Plan. (the “2021 Plan”), and 2021 Employee Stock Purchase Plan (the “ESPP”). The 2021 Plan contains an “evergreen” provision, pursuant to which the number of shares of common stock reserved for issuance pursuant to awards under such plan shall be increased on the first day of each year equal to the lesser of (i) 5% of the number of shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year, or (ii) if our Board acts prior to the first day of the fiscal year, such lesser amount that our Board determines for purposes of the annual increase of the fiscal year. As of January 1, 2022, the 2021 Plan was increased by 1,497,917 pursuant to such evergreen provision. The ESPP contains an “evergreen” provision, pursuant to which the number of shares of common stock reserved for issuance pursuant to awards under such plan shall be increased on the first day of each year equal to the lesser of (i) 299,583 (on an as converted basis) on the last day of the immediately preceding fiscal year, or (ii) if our Board acts prior to the first day of the fiscal year, such lesser amount that our Board determines for purposes of the annual increase of the fiscal year. As of January 1, 2022, the ESPP was increased by 1% of share outstanding shares as of January 1, 2022 pursuant to such evergreen provision. No shares are reflected as being subject to rights as of December 31, 2022 as we have not started any offering periods under the ESPP and, even if we did, such number of shares could not be calculated.
(2) Shares subject to RSUs do not have an exercise price. The weighted average exercise price for just the stock options outstanding was $6.30.

---

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence
The following is a description of transactions since January 1, 2022 to which we have been a party, in which the amount involved exceeds or will exceed $120,000, and in which any of our directors, executive officers or beneficial owners of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest, other than compensation, termination and change-in-control arrangements, which are described under "Executive Compensation." We also describe below certain other transactions with our directors, executive officers and stockholders.
All of the transactions set forth below were approved by a majority of our board of directors. We believe that we have executed all of the transactions set forth below on terms no less favorable to us than we could have obtained from unaffiliated third parties. It is our intention to ensure that all future transactions between us and our officers, directors and principal stockholders and their affiliates are approved by our audit committee and a majority of the members of our board of directors, including a majority of the independent and disinterested members of our board of directors, and are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.
Convertible Note Financings
All of our issued convertible promissory notes were converted to common stock in February 2021 upon our IPO. During 2020, $1.8 million convertible notes from Dr. Venkatesan were exchanged into convertible preferred stock in August 2020 which were then converted into common stock upon IPO.
In the first nine months of 2020, we issued convertible promissory notes (the Convertible Notes) to certain investors in aggregate principal amount of $34.8 million. The Convertible Notes accrued interest at a rate of 12% per annum, and convert into shares of our common stock upon the consummation of our IPO. In December 2020, we issued Vifor Pharma a convertible promissory note in aggregate principal amount of $5.0 million as part of the
equity investment with a maturity date of three years, 2% interest and a conversion price of $11.57 per share, which was automatically converted into shares of our common stock upon our IPO.
The table below sets forth the principal amount, and number of shares of issuable upon conversion of the Convertible Notes issued in 2020 to our directors, executive officers or owners of more than 5% of a class of our capital stock, or an affiliate or immediate family member thereof:
Name Convertible Note Issued and Outstanding as of December 31, 2020 ( Principal Amount) Number of
Shares of Our
Common Stock
Issuable Upon
Conversion(2)
Gilbert S. Omenn, M.D., Ph.D.(2)
$ 661,540 61,657
Jay R. Venkatesan, M.D.(3)(4)
$ 2,965 262
Victor F. Ganzi(3)(5)
$ 747,671 68,863
Karen Wilson(6)
$ 200,000 18,718
Vifor (International) Ltd.(7)
$ 5,000,000 433,143
_____________________________________
(1)The terms of the Convertible Notes provide that the notes and accrued dividends will convert at a price that is equal to a 20% discount to the price of the common stock offered in our IPO. The number of shares reflected are based on an initial public offering price of $16.00 per share and assumed the conversion occurs on February 9, 2021.
(2)Dr. Omenn is a member of our board of directors. Amount shown includes Convertible Notes held by the Gilbert S. Omenn Revocable Trust, an estate planning instrument for which Mr. Omenn is trustee.
(3)Consists of common stock converted from both convertible notes outstanding and convertible preferred stock outstanding.
(4)Dr. Venkatesan is our chief executive officer and a member of our board of directors.
(5)Mr. Ganzi is a member of our board of directors.
(6)Ms. Wilson is a member of our board of directors.
(7)Vifor (International) Ltd. is our licensing partner.
Transactions with NovaPark LLC
We rent office and laboratory space in Uniondale, New York from NovaPark LLC (NovaPark), an affiliated company, under a lease that expires on June 20, 2026. The space that we rent is part of a 110,000-square-foot general laboratory and development facility (the NovaPark Facility) for biological and chemistry research owned by NovaPark. We recorded rent expense for fixed lease payments of $1.3 million for the year ended December 31, 2022. We recorded rent expense for variable expenses related to the lease of $0.4 million for the year ended December 31, 2022.
In March 2023, we entered into a Surrender Agreement with NovaPark pursuant to which (a) we shall pay to NovaPark a termination fee of $3.03 million, and (b) we thereby enter into a Membership Interest Redemption Agreement pursuant to which we relinquish our 10% membership interest in NovaPark. The Surrender Agreement provides that, except for the payment of the termination fee described above, no other rent or charges (whether or not now accruing or in arrears) will be due from us with respect to any period prior to or subsequent to the surrender of the Property to NovaPark, thereby relieving us of rent payments equal to approximately $3.86 million, plus other amounts for facility fees and utilities with respect to the Property. Prior to entering into the Surrender Agreement, we owned, Dr. Goldberg and Rina Kurz, Dr. Goldberg's spouse, owned 10%, 45% and 45%, respectively, of the membership interests in NovaPark LLC. The transactions were approved by the Audit Committee of Angion’s Board of Directors as this transaction was a related party transaction.
Consultant Fees and Employment of Immediate Family
We have paid consulting fees under an agreement with Rina Kurz, Dr. Goldberg's spouse, for management and administrative services relating to our U.S. government grants and contracts. For the year ended December 31, 2022, consultant fees paid to Ms. Kurz were immaterial. We believe the consulting arrangement with Ms. Kurz was made on terms no less favorable to us than those that we could obtain from unaffiliated third parties. We terminated Ms. Kurz’s consultant agreement in February 2022.
Elisha Goldberg, Dr. Goldberg's son, who formerly served as our Vice President and Director of Strategy, was separated from his employment with us on January 31, 2022 as part of our reduction in force announced in January
2022. For the year ended December 31, 2022, Elisha Goldberg was paid $0.3 million in salary and other compensation pursuant to Mr. Goldberg’s separation agreement with us dated March 1, 2022. Pursuant to the terms of the Separation Agreement, Mr. Goldberg will receive total severance benefits of approximately $0.4 million. Mr. Goldberg also had the right to exercise vested stock options he received under our Amended and Second Restated 2015 Equity Incentive Plan or our 2021 Incentive Award Plan for an extended period of 11 months, until December 31, 2022. None of the vested stock options were exercised by Mr. Goldberg.
Ohr Investment
We and the family of Dr. Goldberg own approximately 2.4% and 78.7%, respectively, of the membership interests in Ohr, an affiliated company. Dr. Goldberg’s son, Elisha Goldberg, is the manager of Ohr. In addition, Dr. Venkatesan and Mr. Ganzi each own approximately 1.6% of the membership interests in Ohr.
In November 2013, we granted Ohr an exclusive worldwide license, with the right to sublicense, under our patent rights covering one of Angion's CYP26 inhibitors, ANG-3522, for the use in treating conditions of the skin or hair. Sublicensees may not grant further sublicenses under our patent rights other than to affiliates of such sublicensees and entities with which sublicensees are collaborating for the research, development, manufacture and commercialization of the products. Ohr will pay us a royalty at a rate in the low single digits on gross revenue of products incorporating ANG-3522, and milestone payments potentially totaling up to $9.0 million based on achievement of sales milestones. Royalties and milestone payments will be paid until the later of 15 years from the first commercial sale of a licensed product or the last to expire licensed patent rights. The royalty rate is subject to adjustments under certain circumstances. We believe the Ohr License was made on terms no less favorable to us than those we could obtain from unaffiliated third parties. On February 5, 2023, we executed the First Amendment to the Ohr license agreement. Such amendment allows Ohr access to our CYP26 inhibitors beyond ANG-3522 for the use in of treating conditions of the skin and hair, eliminates our obligation to prosecute or maintain the patents rights licensed to Ohr at its principal expense, and allows Ohr to prosecute and maintain such patent rights its sole own expense. No revenue from this license agreement was recognized in 2022 and 2021.
Policies and Procedures for Related Party Transactions
Our board of directors has adopted a related party transaction policy setting forth the policies and procedures for the identification, review and approval or ratification of related party transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and a related party were or will be participants and the amount involved exceeds $120,000, including purchases of goods or services by or from the related party or entities in which the related party has a material interest, indebtedness and guarantees of indebtedness. In reviewing and approving any such transactions, our audit committee will consider all relevant facts and circumstances as appropriate, such as the purpose of the transaction, the availability of other sources of comparable products or services, whether the transaction is on terms comparable to those that could be obtained in an arm's length transaction, management's recommendation with respect to the proposed related party transaction, and the extent of the related party's interest in the transaction.
Director Independence
Our board of directors currently consists of six members. Our board of directors has determined that all of our directors, other than Dr. Venkatesan and Dr. Goldberg, qualify as "independent" directors in accordance with The Nasdaq Stock Market listing requirements. Dr. Venkatesan and Dr. Goldberg are not considered independent because they were employees of Angion Biomedica Corp. in 2022. As of March 2022, Dr. Goldberg was no longer an employee of Angion. In addition, as required by The Nasdaq Stock Market rules, our board of directors has made a subjective determination as to each independent director that no relationships exist that, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director's business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.

---

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees
The following table sets forth all fees billed for professional audit, tax and other services rendered by Moss Adams LLP (in thousands):
Year Ended December 31,
2022 2021
Audit Fees (1)
$ 497 $ 408
Tax Fees (2)
33 22
Other (3)
29 31
Total Fees $ 559 $ 461
__________________________
(1) Audit fees are for professional services for the audit of our financial statements, the review of quarterly interim financial statements, and for services that are normally provided by the accountant in connection with other regulatory filings or engagements. Fees for the year ended December 31, 2022 include services associated with our S-3, S-4 and S-8 filings. Fees for the year ended December 31, 2021 include services associated with our IPO and services rendered for the 2021 audit.
(2) Tax fees are for compliance and consultation.
(3) Other fees are for admin fees and grant compliance audit fees.
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by Angion’s independent registered public accounting firm, Moss Adams LLP. The policy generally pre-approves specified services in the defined categories of audit services, audit-related services and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the independent auditor is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting.
The Audit Committee has determined the rendering of services other than audit services by Moss Adams LLP is compatible with maintaining the principal accountant’s independence.
Part IV

---

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules
(a)Financial Statements: See “Index to Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10-K
(b)Exhibits.
Exhibit
Number Exhibit
Description Incorporated by
Reference Filed Herewith
Form Date Number
2.1 Agreement and Plan of Merger and Reorganization, dated January 17, 2023, by and among Angion Biomedica Corp., Arkham Merger Sub, Inc. and Elicio Therapeutics, Inc.
8-K 1/17/2023 2.1
3.1 Amended and Restated Certificate of Incorporation
8-K 2/9/2021 3.1
3.2 Amended and Restated Bylaws
8-K 2/9/2021 3.2
4.1 Reference is made to exhibits 3.1 through 3.2.
4.2 Form of Common Stock Certificate.
S-1/A 2/1/2021 4.2
4.3 Form of Warrant to Purchase Common Stock.
S-1 1/15/2021 4.3
4.4 Registration Rights Agreement, dated as of March 31, 2020, by and among Angion Biomedica Corp. and the investors party thereto.
S-1 1/15/2021 4.6
4.5 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
10K 3/30/2022 4.5
10.1 Agreement of Lease, dated June 21, 2011, by and between Angion Biomedica Corp. and NovaPark LLC, as amended.
S-1 1/15/2021 10.1
10.2† Licensing Agreement, dated November 6, 2020, by and between Angion Biomedica Corp. and Vifor (International) Ltd.
S-1 1/15/2021 10.4
10.2(a)† Amendment - First Amendment dated July 1, 2021 to Licensing Agreement, dated November 6, 2020, by and between Angion Biomedica Corp. and Vifor (International) Ltd.
10K 3/30/2022 10.2(a)
10.3(a)# Second Amended and Restated 2015 Equity Incentive Plan.
S-1 1/15/2021 10.5(a)
10.3(b)#
Form of Incentive Stock Option Grant under 2015 Equity Incentive Plan.
S-1 1/15/2021 10.5(b)
10.3(c)#
Form of Non-Qualified Stock Option Grant under 2015 Equity Incentive Plan.
S-1 1/15/2021 10.5(c)
10.3(d)#
Form of Stock Option Exercise under 2015 Equity Incentive Plan.
S-1 1/15/2021 10.5(d)
10.4(a)#
2021 Incentive Award Plan.
S-1/A 2/1/2021 10.6(a)
10.4(b)#
Form of Stock Option Grant Notice and Stock Option Agreement under the 2021 Incentive Award Plan.
S-1/A 2/1/2021 10.6(b)
10.4(c)#
Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under the 2021 Incentive Award Plan.
S-1/A 2/1/2021 10.6(c)
10.4(d)#
Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under the 2021 Incentive Award Plan.
S-1/A 2/1/2021 10.6(d)
10.5# 2021 Employee Stock Purchase Plan.
S-1/A 2/1/2021 10.7
10.6# Amended and Restated Employment Agreement, dated March 29, 2019, by and between Angion Biomedica Corp. and Jay R. Venkatesan.
S-1 1/15/2021 10.8
10.7# Executive Employment Agreement, dated May 1, 2018, by and between Angion Biomedica Corp. and Itzhak D. Goldberg.
S-1 1/15/2021 10.9
10.7(a) Separation Agreement, dated February 25, 2022, by and between Angion Biomedica Corp. and Itzhak D. Goldberg
10-K 3/30/2022 10.7(a)
10.8(b) Separation Agreement, dated March 1, 2022, by and between Angion Biomedica Corp. and Elisha Goldberg
10-K 3/30/2022 10.8(b)
Exhibit
Number Exhibit
Description Incorporated by
Reference Filed Herewith
Form Date Number
10.9# Executive Employment Agreement, dated December 17, 2018, by and between Angion Biomedica Corp. and John F. Neylan.
S-1 1/15/2021 10.10
10.10# Offer Letter, dated November 27, 2019, as amended, by and between Angion Biomedica Corp. and Jennifer J. Rhodes.
S-1 1/15/2021 10.11
10.11# Consulting Agreement, dated June 3, 2020, as amended, by and between Angion Biomedica Corp. and Gregory S. Curhan.
S-1 1/15/2021 10.12
10.11(a)# First Amendment dated September 9, 2022 to Consulting Agreement, dated June 3, 2020, as amended, by and between Angion Biomedica Corp. and Gregory S. Curhan.
10-K 3/30/2022 10.11(a)
10.11(b)# Second Amendment dated December 1, 2021 to Consulting Agreement, dated June 3, 2020, as amended, by and between Angion Biomedica Corp. and Gregory S. Curhan.
10-K 3/30/2022 10.11(b)
10.11(c)# Third Amendment dated March 17, 2022 to Consulting Agreement, dated June 3, 2020, as amended, by and between Angion Biomedica Corp. and Gregory S. Curhan.
10-K 3/30/2022 10.11(c)
10.12# Non-Employee Director Compensation Program.
10-K 3/30/2022 10.12
10.13 Form of Indemnification Agreement for directors and officers.
S-1 1/15/2021 10.14
10.14# Amended and Restated Executive Separation Benefits Plan dated November 19, 2021.
10-K 3/30/2022 10.14
10.15# Supply Agreement, dated December 10, 2021, by and between Angion Biomedica Corp. and Solara Active Pharma Sciences, Ltd.
10-K 3/30/2022 10.15
10.16# Angion Biomedica Corp. Retention Bonus Plan
S-4 2/13/2023 10.23
10.17# License Agreement dated November 15, 2013, as amended, by and between Angion Biomedica Corp. and Ohr Cosmetics LLC.
X
10.17(a)# First Amendment dated February 5, 2023 to License Agreement dated November 15, 2013, by and between Angion Biomedica Corp. and Ohr Cosmetics LLC.
X
10.18# Surrender Agreement dated March 9, 2023, by and between Angion Biomedica Corp. and Novapark LLC
X
10.19# Membership Redemption Interest Agreement dated March 9, 2023, by and between Angion Biomedica Corp. and Novapark LLC
X
2015 Stock Purchase Agreement, dated February 4, 2021, by and among Angion Biomedica Corp. and the purchasers named therein.
8-K 2/09/2021 10.1
2016# 2022 Compensation Decisions with Executive Officers
8-K 3/04/2022 Item 5.02
21.1 Subsidiaries of the registrant.
S-1 1/15/2021 21.1
23.1 Consent of independent registered public accounting firm.
X
24.1 Power of Attorney (reference is made to the signature page hereto)
X
31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1^ Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2^ Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INS Inline XBRL Instance Document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
Exhibit
Number Exhibit
Description Incorporated by
Reference Filed Herewith
Form Date Number
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File X
__________________________________
†Portions of this exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K.
# Indicates management contract or compensatory plan.
^ The certification that accompanies this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is not deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.