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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from    to

Commission file number 001-39990

ANGION BIOMEDICA CORP

(Exact name of registrant as specified in its charter)

Delaware									11-3430072
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)
51 Charles Lindbergh Boulevard Uniondale, New York									11553
(Address of Principal Executive Offices)									(Zip Code)

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, par value $0.01			ANGN			The Nasdaq Global Select Market

Large accelerated filer			☐			Accelerated filer			☐
Non-accelerated filer			☒			Smaller reporting company			☒
						Emerging growth company			☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

TABLE OF CONTENTS
PART I FINANCIAL INFORMATION			Page
Item 1. Financial Statements			5
Condensed Consolidated Balance Sheets (unaudited)			5
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)			6
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (unaudited)			7
Condensed Consolidated Statements of Cash Flows (unaudited)			9
Notes to Unaudited Interim Condensed Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures			37
Item 4. Controls and Procedures			37
PART II OTHER INFORMATION
Item 1. Legal Proceedings			39
Item 1A. Risk Factors			39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			41
Item 3. Defaults Upon Senior Securities			41
Item 4. Mine Safety Disclosures			41
Item 5. Other Information			41
Item 6. Exhibits			42
Signatures			43

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•our intention to explore strategic options, including but not limited to merger, reverse merger, other business combinations, sale of assets, licensing, or other strategic alternatives to enhance value for shareholders;

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for certain drugs, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

			June 30, 2022						December 31, 2021
Assets
Current assets
Cash and cash equivalents			$	63,372					$	88,756
Grants receivable			—						806
Prepaid expenses and other current assets			2,513						1,685
Total current assets			65,885						91,247
Property and equipment, net			388						451
Operating lease right-of-use assets			3,589						3,986
Investments in related parties			865						723
Other assets			86						106
Total assets			$	70,813					$	96,513
Liabilities and stockholders’ equity
Current liabilities
Accounts payable			$	2,656					$	4,710
Accrued expenses			4,086						3,219
Operating lease liabilities, current			943						894
Financing obligation, current			62						58
Deferred revenue, current			—						2,301
Warrant liability			33						114
Total current liabilities			7,780						11,296
Operating lease liabilities, noncurrent			2,990						3,475
Financing obligation, noncurrent			202						235
Other liabilities, noncurrent			81						—
Total liabilities			11,053						15,006
Commitments and contingencies (Note 9)
Stockholders' equity
Common stock, $0.01 par value per share; 300,000,000 and 300,000,000 shares authorized, 30,052,544 and 29,959,060 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively			301						300
Additional paid-in capital			297,875						296,445
Accumulated other comprehensive income (loss)			98						(103)
Accumulated deficit			(238,514)						(215,135)
Total stockholders' equity			59,760						81,507
Total liabilities and stockholders' equity			$	70,813					$	96,513

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Revenue:
Contract revenue			$	653					$	540					$	2,301					$	911
Total revenue			653						540						2,301						911
Operating expenses:
Research and development			6,073						14,444						17,740						28,742
General and administrative			3,615						4,340						8,081						10,352
Total operating expenses			9,688						18,784						25,821						39,094
Loss from operations			(9,035)						(18,244)						(23,520)						(38,183)
Other income (expense)
Change in fair value of warrant liability			42						200						81						(3,319)
Change in fair value of convertible notes			—						—						—						(7,469)
Change in fair value of Series C convertible preferred stock			—						—						—						(3,592)
Gain upon debt extinguishment			—						905						—						905
Foreign exchange transaction loss			(337)						(22)						(226)						(75)
Earnings from equity method investment			133						(35)						142						20
Interest income (expense), net			58						124						144						(2,046)
Total other income (expense)			(104)						1,172						141						(15,576)
Net loss			(9,139)						(17,072)						(23,379)						(53,759)
Other comprehensive income:
Foreign currency translation adjustment			297						68						201						114
Comprehensive loss			$	(8,842)					$	(17,004)					$	(23,178)					$	(53,645)
Net loss per common share, basic and diluted			$	(0.30)					$	(0.58)					$	(0.78)					$	(2.02)
Weighted average common shares outstanding, basic and diluted			29,973,886						29,670,329						29,966,609						26,574,290

			Common Stock												Treasury Stock												Additional Paid-in Capital						Accumulated Other Comprehensive 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			365						—						—						—						—						—						—						—
Stock-based compensation			—						—						—						—						31												—						31
Foreign currency translation adjustment			—						—						—						—						—						(96)						—						(96)
Net loss			—						—						—						—						—						—						(14,240)						(14,240)
Balance as of March 31, 2022			29,959,425						$	300					—						—						$	296,476					$	(199)					$	(229,375)					$	67,202
Issuance of common stock upon net settlement of restricted stock units and performance stock units			93,119						1						—						—						—						—						—						1
Stock-based compensation			—						—						—						—						1,399						—						—						1,399
Foreign currency translation adjustment			—						—						—						—						—						297						—						297
Net loss			—						—						—						—						—						—						(9,139)						(9,139)
Balance as of June 30, 2022			30,052,544						$	301					$	—					$	—					$	297,875					$	98					$	(238,514)					$	59,760

			Common Stock												Treasury Stock												Additional Paid-in Capital						Accumulated Other Comprehensive Loss						Accumulated Deficit						Total Stockholders' Equity (Deficit)
			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 initial public offering			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 initial public offering			33,978						—						—						—						460						—						—						460
Net exercise of warrants upon initial public offering			844,335						9						—						—						13,500						—						—						13,509
Exercise of broker warrants			47,188						—						—						—						—						—						—						—
Exercise of warrants			107,038						1						—						—						679						—						—						680
Exercise of stock options			155						—						—						—						1						—						—						1
Issuance of common stock upon vesting of restricted stock units and performance stock units			204,774						2						—						—						11						—						—						13
Return of common stock to pay withholding taxes on restricted stock			—						—						(77,060)						(1,145)						—						—						—						(1,145)
Stock-based compensation			—						—						—						—						5,117						—						—						5,117
Foreign currency translation adjustment			—						—						—						—						—						46						—						46
Net loss			—						—						—						—						—						—						(36,687)						(36,687)
Balance as of March 31, 2021			30,053,606						$	300					(393,148)						$	(2,991)					$	292,670					$	(287)					$	(197,249)					$	92,443
Fractional shares paid out related to the forward stock split																											(10)																		(10)
Issuance of broker warrants			—						—																																				—
Exercise of broker warrants			—						—						—						—						—						—						—						—
Exercise of warrants			22,714						1						—						—						175						—						—						176
Exercise of stock options			8,495						—						—						—						79						—						—						79
Issuance of common stock upon net settlement of restricted stock units and performance stock units			193,715						2						—												4						—						—						6
Repurchase of common stock			—						—						(87,795)						(1,219)						—						—						—						(1,219)
Stock-based compensation			—						—						—						—						2,718						—						—						2,718
Foreign currency translation adjustment			—						—						—						—						—						68						—						68
Net loss			—						—						—						—						—						—						(17,072)						(17,072)
Balance as of June 30, 2021			30,278,530						$	303					(480,943)						$	(4,210)					$	295,636					$	(219)					$	(214,321)					$	77,189

			Six Months Ended June 30,
			2022						2021
Cash flows from operating activities:
Net loss			$	(23,379)					$	(53,759)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			63						29
Amortization of right-of-use assets			397						332
Amortization of debt issuance costs			—						1,884
Stock-based compensation			1,430						7,835
PPP Loan forgiveness			—						(905)
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			(81)						3,319
Earnings from equity method investment			(142)						(45)
Distribution from equity investment			—						24
Changes in operating assets and liabilities:
Grants receivable			806						—
Prepaid expenses and other current assets			(796)						3,315
Other assets			19						(38)
Accounts payable			(2,086)						3,736
Accrued expenses			867						1,345
Lease liabilities			(436)						(303)
Deferred revenue			(2,301)						(912)
Other liabilities, noncurrent			81						—
Net cash used in operating activities			(25,558)						(23,082)
Cash flows from investing activities:
Purchases of fixed assets			—						(285)
Net cash used in investing activities			—						(285)
Cash flows from financing activities:
Net proceeds from issuance of common stock upon initial public offering and Concurrent Private Placement, net of discount and commissions			—						110,560
Payment of deferred offering costs			—						(3,073)
Fractional share payments related to the forward stock split			—						(10)
Taxes paid related to net share settlement upon vesting of restricted stock awards			—						(2,364)
Proceeds from RSU settlement			1						19
Payment of financing obligation			(29)						—
Exercise of warrants			—						856
Exercise of stock options			—						80
Net cash (used in) provided by financing activities			(28)						106,068
Effect of foreign currency on cash			202						5
Net (decrease) increase in cash and cash equivalents			(25,384)						82,706
Cash and cash equivalents at the beginning of the period			88,756						34,607
Cash and cash equivalents at the end of the period			$	63,372					$	117,313
Supplemental disclosure of noncash investing and financing activities:
Conversion of convertible notes into common stock upon initial public offering			$	—					$	58,179
Conversion of Series C preferred stock into common stock upon initial public offering			$	—					$	35,754
Net exercise of warrants upon initial public offering			$	—					$	13,509
Right-of-use assets obtained in exchange for operating lease liabilities			$	—					$	624
Conversion of convertible notes into common stock prior to initial public offering			$	—					$	460

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 included 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.

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 offering expenses payable by the Company.

In connection with the closing of the IPO, all outstanding shares of convertible preferred stock and outstanding convertible notes automatically converted into shares of common stock. 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.

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 resources 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 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, of which $2.7 million was research and development expense and $0.5 million was general and administrative expense. The Company paid $1.8 million during the six months ended June 30, 2022 and expects to pay the remaining $1.4 million, of which $1.3 million is included in accrued expenses, and $0.1 million is included in other liabilities, noncurrent, 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. The Company also announced the discontinuation of development of ANG-3070 for all indications and the discontinuation of other development activities pending conclusion of the strategic process, except certain pre-clinical studies of ANG-3777, consistent with ongoing discussions with its license partner Vifor Pharma. In connection with the foregoing, the Company also announced an additional reduction in force of the majority of its current 37 employees. This reduction in force, expected to be completed in October 2022, is a cash preservation measure and impacts employees across the

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. As of June 30, 2022, the Company had $63.4 million in cash and cash equivalents and an accumulated deficit of $238.5 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 condensed 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 condensed consolidated financial statements.

The Company's condensed 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. Certain prior period amounts reported in the Company’s condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period presentation.

The Company’s remaining significant accounting policies are described in Note 2 to its consolidated financial statements for the year ended December 31, 2021, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2022 (the “Annual Report on Form 10-K”). There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2022.

The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the SEC. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2021 and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and comprehensive loss, and cash flows. The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited financial statements as of that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this Quarterly Report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K. The results for any interim period are not necessarily indicative of results for any future period.

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.

The preparation of condensed 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 condensed 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, the measurement of stock-based compensation, 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.

Cash and cash equivalents are financial instruments potentially subject to concentrations of credit risk. The Company's cash and cash equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash balances due to the financial position of the depository institution in which those deposits are held.

Additionally, the Company established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity.

The Company maintains its cash equivalents in securities and money market funds with original maturities less than three months.

The Company has no financial instruments with off-balance sheet risk of loss.

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of June 30, 2022 and December 31, 2021, the Company’s cash equivalents were held in institutions in the United States and include deposits in a money market fund which were unrestricted as to withdrawal or use.

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:

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.

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 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 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 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 the probability of whether regulatory and development milestones will be reached and estimates 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 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 from the condensed consolidated balance sheet date through the end of the performance period of the performance obligation.

The Company concluded that the Company's government grants are not within the scope of ASC 606 as they do not meet the definition of a contract with a customer. The Company has concluded the grants meet the definition of a contribution and are non-reciprocal transactions, and has also concluded 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 recognizing 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 606, to ensure revenue recognition reflects the transfer of promised goods or services to customers in an amount reflecting the consideration the Company expects to be entitled to in exchange for those goods or services, even though there is no exchange as defined in ASC 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 606.

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 expenses on the condensed 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 three and six months ended June 30, 2022 and 2021, the Company has not experienced any material differences between accrued costs and actual costs incurred.

Advertising costs are expensed as incurred. For the three and six months ended June 30, 2022 and 2021, advertising costs were not material.

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 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 three and six months ended June 30, 2022 and 2021, basic and diluted net loss per common share are the same.

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

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 its estimated period of performance using a cost-based input method under Topic 606.

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 $60.0 million in upfront and equity payments, including $30.0 million in up-front cash received in November 2020, and a $30.0 million equity investment, $5.0 million of which was a convertible note that subsequently converted into common stock with the IPO and $25.0 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 $1.905 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. In 2022, the Company and Vifor Pharma continue to work to complete 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 based upon such analyses.

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 the transaction price at the inception of the Vifor License was $15.0 million, which represents 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 disclosed 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 an additional $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 June 30, 2022, the Company has completed substantially all performance obligation under the Vifor License and recognized all remaining deferred revenue under the agreement during the three months ended June 30, 2022.

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.

For the three months ended June 30, 2022 and 2021, the Company recognized contract revenue related to the Vifor License of $0.7 million and $0.5 million, respectively. For the six months ended June 30, 2022 and 2021, the Company recognized contract revenue related to the Vifor License of $2.3 million and $0.9 million, respectively. As of June 30, 2022 and December 31, 2021, zero and $2.3 million, respectively, was recorded as deferred revenue, current, on the condensed consolidated balance sheets related to the Vifor License.

The following tables present the Company's financial assets and liabilities measured at fair value on a recurring basis and their assigned levels within the fair value hierarchy (in thousands):

			June 30, 2022
			Level 1						Level 2						Level 3						Total
Money market funds(1)			$	12,366					$	—					$	—					$	12,366
Total assets			$	12,366					$	—					$	—					$	12,366
Warrant liabilities			$	—					$	—					$	34					$	34
Total liabilities			$	—					$	—					$	34					$	34

			December 31, 2021
			Level 1						Level 2						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

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):

			June 30, 2022						December 31, 2021
Balance, beginning of the period			$	114					$	10,704
Net exercise of warrants			—						(13,509)
Change in fair value			(81)						2,919
Balance, end of the period			$	33					$	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 condensed consolidated statements of operations.

			June 30, 2022						December 31, 2021
Weighted average strike price			$7.60						$7.60
Contractual term (years)			6.2						6.7
Volatility (annual)			125.7%						124.0%
Risk-free rate			3.0%						1.4%
Dividend yield (per share)			0.0%						0.0%

			June 30, 2022						December 31, 2021
Equipment			$	866					$	866
Furniture and fixtures			34						34
Leasehold improvements			68						68
Total property and equipment			968						968
Less: accumulated depreciation			(580)						(517)
Property and equipment, net			$	388					$	451

Depreciation expense for each of the three and six months ended June 30, 2022 and 2021 was immaterial.

			June 30, 2022						December 31, 2021
Angion Pty tax receivable			$	3					$	781
Prepaid insurance			1,942						275
Security deposit			105						131
Other			463						498
Total prepaid and other current assets			$	2,513					$	1,685

			June 30, 2022						December 31, 2021
Accrued compensation			$	722					$	2,023
Accrued restructuring (Note 1)			1,321						—
Accrued direct research costs			1,886						764
Accrued operating expenses			157						432
Total accrued expenses			$	4,086					$	3,219

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.

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.

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.

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 assumptions:

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Risk-free interest rate			3.1%						1.1%						1.7%						0.7%
Expected dividend yield			0.0%						0.0%						0.0%						0.0%
Expected term in years			5.48						6.05						5.90						5.99
Expected volatility			70.8%						74.3%-74.8%						70.8%-72.5%						73.8%-86.8%

Each of these inputs is subjective and generally requires significant judgment.

Expected Term—The expected term represents the period 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.

			Number of Stock Options						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					8.4						$	—
Options granted			2,248,700						1.93
Options forfeited			(626,950)						10.35
Outstanding as of June 30, 2022			5,851,912						$	6.08					7.7						$	—
Options vested and exercisable			2,799,721						$	7.34					6.1						$	—

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 three months ended June 30, 2022 and 2021 was $1.08 and $9.29, and $1.18 and $8.89 during the six months ended June 30, 2022 and 2021 respectively. As of June 30, 2022, the total unrecognized compensation related to unvested stock option awards granted was $4.6 million. The Company expects to reverse $1.7 million in the next six months of 2022 due to the implementation of the reduction in force announced in July 2022. The remaining $2.9 million is expected to be recognized over a weighted-average period of approximately 1.9 years.

															Number of Restricted Stock Units						Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2021															17,504						$	9.51
Vested															(729)						$	9.51
Outstanding as of June 30, 2022															16,775						$	9.51
Vested as of June 30, 2022															729						$	9.51

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 were released in June 2021 upon the second anniversary of the grants. In June 2022, 92,755 PSUs were released upon the third anniversary of the grants, therefore, as of June 30, 2022, the Company had 92,755 PSUs outstanding.

Stock-based Compensation Expense

The following table summarizes total stock-based compensation expense recorded in the condensed consolidated statements of operations (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Research and development			$	535					$	1,409					$	87					$	3,952
General and administrative			866						1,309						1,345						3,883
Total			$	1,401					$	2,718					$	1,432					$	7,835

The decrease in total stock-based compensation expense for three and six months ended June 30, 2022 is primarily due to the reversal of expense upon the forfeiture of awards in connection with the reduction in force event that occurred on January 4, 2022. See Note 1 for additional information.

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 ESPP 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 1% 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. The offering period and purchase period will be determined by the board of directors. As of June 30, 2022, 689,583 shares under the ESPP remain available for purchase and no offerings have been authorized.

			Classification						Exercise Price						Expiration Date						June 30, 2022						December 31, 2021
Warrants issued with Conversion of Notes to Common Stock			Equity						$	8.03					8/31/23						232,287						232,287
Warrants issued with Units in the Equity Offering			Equity						$	8.03					8/31/23						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 condensed 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 in the condensed consolidated balance sheets.

There was no warrant activity during the six months ended June 30, 2022.

The Company leases office and laboratory space in Uniondale, New York from NovaPark, a related party, under an agreement classified as an operating lease expiring 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.

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 was excluded from the calculation of lease liabilities and right of use assets as its term was less than one year. The lease was subject to charges for common area maintenance and other costs. The Company did not renew the New Jersey lease and it expired on March 31, 2022.

In February 2021, the Company entered into a lease for clinical and regulatory 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 four 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 three years with nine months’ notice.

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Operating lease cost			$	302					$	317					$	714					$	590
Variable lease cost			91						85						144						215
Short-term lease cost			6						3						12						42
Total operating lease cost			$	399					$	405					$	870					$	847

			Six Months Ended June 30,
			2022						2021
Operating cash flows from operating leases			$	644					$	543
Right-of-use assets exchanged for operating lease liabilities			$	—					$	624
Weighted-average remaining lease term—operating leases (in years)			3.7						3.5
Weighted-average discount rate—operating leases			9.5		%				9.1		%

Year Ended December 31,						Amounts
2022 (remaining six months)						$	646
2023						1,305
2024						1,209
2025						1,104
2026						516
Total						4,780
Less present value discount						(847)
Operating lease liabilities						$	3,933

In 2021, the Company entered into an immaterial 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 condensed consolidated balance sheets and are subject to depreciation.

The following table summarizes quantitative information about the Company's financing obligation for the six months ended June 30, 2022 (dollars in thousands):

Cash flow information:
Payments of financing obligation
Operating cash flows from financing obligation			$	19
Financing cash flows from financing obligation			$	29
Other information:
Weighted-average remaining lease term (in years)			2.8
Weighted-average discount rate (in percent)			1.1		%
Carrying value of leased asset included in Property and Equipment, net			$	239
Depreciation associated with the leased asset			$	15

Year Ended December 31,						Amounts
2022 (remaining six months)						$	47
2023						94
2024						94
2025						31
Total						266
Less present value discount						(1)
Financing obligation						$	265

The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

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.

The Company’s income tax provision was immaterial and the effective tax rate was 0% in each of the three and six months ended June 30, 2022 and 2021. The difference between the Company's effective tax rate of 0% and the U.S. federal statutory tax rate of 21% is primarily due to net operating losses in this period which are offset by the corresponding valuation allowance. The Company has provided a full valuation allowance against its net deferred tax assets as it is more likely than not such assets would not be realized.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income in which those temporary differences become deductible. Based on the available objective evidence, management believes it is more likely than not the net deferred tax assets at June 30, 2022 will not be realizable. Accordingly, management has maintained a full valuation allowance against its net deferred tax assets at June 30, 2022. Each reporting period, management evaluates the need for a valuation allowance on the Company’s deferred tax assets by jurisdiction and adjust the Company’s estimates as more information becomes available.

The Company is required to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, the position will be sustained upon examination. Tax years starting from 2015 and forward are subject to examination by the U.S. federal and state tax authorities. These years are open due to net operating losses and tax credits remain unutilized from such years. The Company's policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of June 30, 2022, there were no accruals for interest and penalties related to uncertain tax positions.

The Company sponsors a retirement savings plan intended to qualify for favorable tax treatment under Section 401(a) of the Code, and contains a cash or deferred feature 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 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.

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):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Numerator
Net loss attributable to common stockholders			$	(9,139)					$	(17,072)					$	(23,379)					$	(53,759)
Denominator:
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted			29,973,886						29,670,329						29,966,609						26,574,290
Net loss per share attributable to common stockholders, basic and diluted			$	(0.30)					$	(0.58)					$	(0.78)					$	(2.02)

			Six Months Ended June 30,
			2022						2021
Shares issuable upon exercise of stock options			5,851,912						4,488,202
Shares issuable upon the exercise of warrants			1,148,123						1,148,900
Unvested shares under restricted stock unit grants			109,530						46,675
Unvested shares under restricted stock grants			—						7,292
Total			7,109,565						5,691,069

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 $1.1 million. Under the 2015 Plan and 2021 Plan, Dr. Goldberg will continue to vest his PSUs and stock options and exercisability of his options, so long as he remains in continuous service with the Company as a director on the board of directors or otherwise.

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. Mr. Goldberg will also have the right to exercise any vested stock options he may have received under the 2015 Plan or 2021 Plan until December 31, 2022, which extended the exercise period by 11 months.

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 Chairman Emeritus owns, approximately 2.4% and 81.3%, respectively, of the membership interests in Ohr. The Chairman Emeritus' son is the manager of 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 the Ohr License was made on terms no less favorable to the Company than those the Company could obtain from unaffiliated third parties.

No revenue from this license agreement was recognized for the periods presented.

As of June 30, 2022, the Company had a 10% interest in NovaPark. Members of the Company's Chairman Emeritus’ 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.

The following table provides the activity for the NovaPark investment for the three and six months ended June 30, 2022 and 2021 (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Beginning balance			$	732					$	782					$	723					$	727
Earnings from equity method investment			133						(22)						142						45
Distribution from NovaPark			—						(12)						—						(24)
Ending balance			$	865					$	748					$	865					$	748

In connection with the IPO in February 2021, Victor Ganzi, Gilbert Omenn and Karen Wilson, directors of the Company, and Raj Venkatesan, brother of the Chief Executive Officer and director of the Company, converted all their outstanding convertible notes into an aggregate of 149,500 shares of common stock with a conversion price of $11.57. As of June 30, 2022, there were no convertible notes outstanding.

In connection with the IPO in February 2021, Jay Venkatesan, M.D., the Chief Executive Officer and director of the Company converted all his outstanding preferred stock into an aggregate of 165,094 shares of common stock with a conversion price of $11.57 per share. As of June 30, 2022, there were no shares of convertible preferred stock outstanding.

Angion paid consulting fees under an agreement with the wife of the Company’s Chairman Emeritus for Company management services. Consultant fees paid to the wife were immaterial in each of the three and six months ended June 30, 2022 and 2021. This consultant agreement was terminated in February 2022.

Dr. Michael Yamin, a former member of the board of directors of the Company, is a Scientific Advisor for Pearl Cohen Zedek Latzer Baratz LLP (Pearl Cohen). During the each of the three and six months ended June 30, 2022 and 2021, the Company paid Pearl Cohen an immaterial amount in legal fees, respectively.

In January 2018, the Company also entered into a consulting agreement with Dr. Yamin pursuant to which he agreed to provide consulting services to the Company in the areas of biomedical research and development. Consultant fees paid to Dr. Yamin were immaterial in in each of the three and six months ended June 30, 2022 and 2021. Dr. Yamin resigned from the Company's board of directors in March 2020. Dr. Yamin's resignation was not due to any disagreement with the Company, the board or management of the Company.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021. In addition to the historical financial information, this discussion contains forward-looking statements involving risks, 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 Quarterly Report on Form 10-Q titled “Risk Factors,” which you should carefully 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.

We are a biopharmaceutical company that has focused on the discovery, development, and commercialization of novel small molecule therapeutics to address chronic and progressive fibrotic diseases. Our goal has been 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 limitations. Our product candidates and programs include 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, and a CYP11B2 preclinical program targeted towards diseases related to aldosterone synthase dysregulation.

Prior to January 2022, our lead product was ANG-3777, a hepatocyte growth factor (HGF) mimetic we were evaluating in multiple indications of acute organ injury, including delayed graft function (DGF) and for the treatment of AKI associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI). In 2021, we also studied ANG-3777 in patients with severe COVID-19 related pneumonia at high risk for acute respiratory distress syndrome (ARDS). On October 26, 2021, we announced 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 9, 2021, we announced the Phase 2 trial of ANG-3777 in CSA-AKI did not achieve its primary endpoint. 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 in CSA-AKI and a Phase 4 confirmatory study in donor kidney transplant patients who were at risk for developing DGF, given we do not believe the earlier Phase 2 and Phase 3 clinical trial results in the respective indications support a regulatory approval. We have no funds budgeted for additional clinical trials for ANG-3777.

On May 12, 2022, we were notified by the U.S. Food and Drug Administration (FDA) of the acceptance of an Investigational New Drug (IND) application supporting the clinical development of ANG-3070 in idiopathic pulmonary fibrosis (IPF) and clearance to begin a Phase 1b study of ANG-3070 in patients with IPF.

On June 29, 2022, we announced the 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) 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.

On July 25, 2022, we 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 addition, we announced the discontinuation of development of ANG-3070 for all indications and the discontinuation of other development activities pending conclusion of the strategic process, except certain pre-clinical studies of ANG-3777, consistent with ongoing discussions with our license partner Vifor Pharma. Finally, we also announced a reduction in force across the organization as described below.

We 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 for at least several years, if ever. Our net losses were $9.1 million and $17.1 million for the three months ended June 30, 2022 and 2021, and $23.4 million and $53.8 million for the six months ended June 30, 2022 and 2021 respectively. As of June 30, 2022, we had an accumulated deficit of $238.5 million. We expect to continue to incur net losses for the foreseeable future.

In addition, if we seek regulatory approval for any of our wholly-owned product candidates or those for which we retain the right to commercialize in the future, we would need to incur additional expenses as we expand our clinical, regulatory, quality, manufacturing and commercialization capabilities, incur significant commercialization expenses for marketing, sales, manufacturing and distribution if we obtain marketing approval for such product candidates.

Furthermore, we will 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 will be in a position to sell any of our product candidates, if approved.

On January 4, 2022, we previously announced and completed a reduction in force impacting somewhat less than half of our employees at that time. Our decision to engage in this reduction resulted from an assessment of our internal resources 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, we incurred termination costs, which include severance, benefits and related costs, of approximately $3.2 million, of which $1.8 million were paid during the six months ended June 30, 2022. We expect to pay the remaining $1.4 million on or before September 2023.

On July 25, 2022, we announced an additional reduction in force of the majority of our current 37 employees. This reduction in force, expected to be completed in October 2022, is a cash preservation measure and impacts employees across the organization. In connection with the reduction in force, we expect to record a charge of approximately $3.3 million in the third quarter of 2022 to implement the reduction in force. These charges are primarily one-time termination benefits payable in cash.

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 received in November 2020, and a $30 million equity investment comprising a $5 million convertible note subsequently converting 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 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 three months ended June 30, 2022 and 2021, we recognized license revenue related to the Vifor License of $0.7 million and $0.5 million, respectively. For the six months ended June 30, 2022 and 2021, we recognized license revenue related to the Vifor License of $2.3 million and $0.9 million, respectively. The Company has completed substantially all performance under the Vifor License and recognized all remaining deferred revenue under the agreement during the three months ended June 30, 2022. As of June 30, 2022 and December 31, 2021, we recorded zero and $2.3 million, respectively, as deferred revenue, current on the condensed consolidated balance sheet related to the Vifor License.

On October 26, 2021, we announced 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 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 and Vifor Pharma continue to work to complete 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 based upon such analyses and certain additional pre-clinical studies of ANG-3777.

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.

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.

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 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.

Our cost of grant revenue primarily relates to personnel-related costs and expenses for grant projects.

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 have consisted 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 supporting 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 during the three and six months ended June 30, 2021 and 2022. Of our total research and development expenses for both the three months ended June 30, 2022 and 2021, 68% of such expenses were from external third-party sources and the remaining 32% were from internal sources. For the six months ended June 30, 2022 and 2021, 62% and 61%, respectively, of such expenses were from external third-party sources and the remaining 38% and 39%, 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 facilities costs, insurance costs, and 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.

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 condensed consolidated statements of operations. All of our convertible notes were converted into shares of our common stock upon the closing of our IPO.

Our Series C convertible preferred stock included settlement features resulting in classification as a liability. 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 exchanged for the convertible notes (the Exchanged Series C Shares) was recorded at fair value. The Exchanged Series C Shares were subject to re-measurement each reporting period with gains and losses reported through our condensed consolidated statements of operations. All shares of our Series C convertible preferred stock converted into common stock upon the closing of our IPO.

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. The warrants are subject to re-measurement at each reporting period with gains and losses reported through our condensed consolidated statements of operations.

Foreign currency transaction gains, primarily related to intercompany loans, are recorded as a component of other income (expense) in our condensed consolidated statements of operations.

Earnings in equity method investment represents our 10% interest in NovaPark accounted for under the equity method.

Interest income consists of interest earned on our cash and cash equivalents.

			Three Months Ended June 30,
			2022						2021						$ Change						% Change
			(In thousands, except percentages)
Revenue:
Contract revenue			$	653					$	540					$	113					21%
Total revenue			653						540						113						21%
Operating expenses:
Research and development			6,073						14,444						(8,371)						(58)%
General and administrative			3,615						4,340						(725)						(17)%
Total operating expenses			9,688						18,784						(9,096)						(48)%
Loss from operations			(9,035)						(18,244)						9,209						(50)%
Other income (expense), net			(104)						1,172						(1,276)						(109)%
Net loss			$	(9,139)					$	(17,072)					$	7,933

Contract revenue increased by $0.1 million for the three months ended June 30, 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 in Vifor License agreement, which had included a Phase 3 study in cardiac surgery associated with cardiopulmonary bypass (CSA-AKI) and a Phase 4 confirmatory study in delayed graft function (DGF), we performed a reassessment of the performance period and estimated costs for the completion of the performance obligations. This accelerated

As of June 30, 2022 we have completed substantially all our performance obligation under the Vifor License and recognized all remaining deferred revenue under the agreement during the three months ended June 30, 2022.

Research and development expenses decreased by $8.4 million, or 58%, for the three months ended June 30, 2022 compared to the same period in 2021. The decrease in research and development expenses was primarily due to a net decrease of $2.9 million in personnel-related expenses as a result of the reduction in force announced in January 2022, a decrease of $3.5 million in CRO expenses from decreased clinical trial activities, and a decrease of $2.0 million in R&D consulting and subcontractor expenses from reduced clinical and non-clinical trial activities primarily related to the completion of ANG-3777 trials.

We expect our research and development expenses to be significantly lower in the near term due to the discontinuation of development of ANG-3070 for all indications and the discontinuation of other development activities pending conclusion of the strategic process, except for approximately $2.8 million in termination costs related to the reduction in force announced in July 2022 and certain pre-clinical studies of ANG-3777, consistent with ongoing discussions with our license partner Vifor Pharma.

			Six Months Ended June 30,
			2022						2021						$ Change						% Change
			(In thousands, except percentages)
Revenue:
Contract revenue			$	2,301					$	911					$	1,390					153		%
Total revenue			2,301						911						1,390						153		%
Operating expenses:
Research and development			17,740						28,742						(11,002)						(38)		%
General and administrative			8,081						10,352						(2,271)						(22)		%
Total operating expenses			25,821						39,094						(13,273)						(34)		%
Loss from operations			(23,520)						(38,183)						14,663						(38)		%
Other income (expense), net			141						(15,576)						15,717						(101)		%
Net loss			$	(23,379)					$	(53,759)					$	30,380

General and administrative expenses decreased by $2.3 million, or 22%, for the six months ended June 30, 2022 compared to the same period in 2021. The decrease in general and administrative expenses was primarily due to a net decrease of $3.3 million in personnel-related expenses primarily in salary, bonus and stock based compensation related to the reduction in force announced January 4, 2022 and the vesting of performance-based stock units upon IPO in the six months ended June 30, 2021. These decreases were offset in part by the one-time termination benefit charges of $0.6 million (see Note 1 to the condensed consolidated financial statements for additional information) and a net increase of $0.4 million in professional services expense, including audit, tax, legal and insurance.

We have incurred losses and negative cash flows from operations since inception, and we anticipate we will incur losses for at least the next several years. 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. As of June 30, 2022, we had $63.4 million of cash and cash equivalents and an accumulated deficit of $238.5 million, compared to $88.8 million of cash and cash equivalents and an accumulated deficit of $215.1 million as of December 31, 2021.

Based on our current operating plan, we believe our cash and cash equivalents will be sufficient to fund our planned operations for at least 12 months following the issuance date of our condensed 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. Because of the numerous risks and uncertainties associated with the status of our company and the initiation of our 2022 Strategic Realignment process, 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:

▪the amount of time it takes to complete our 2022 Strategic Realignment process, including completing any potential merger or reverse merger transaction;

▪the amount and cost of legal and professional services required to conduct our 2022 Strategic Realignment process, including fees related to the engagement of a strategic advisor; and

▪our need to continue to operate as a public company

The following table sets forth a summary of our net cash flow activity for the six months ended June 30, 2022 and 2021 (in thousands):

			Six Months Ended June 30,
			2022						2021
Net cash provided by (used in)
Operating activities			$	(25,558)					$	(23,082)
Investing activities			—						(285)
Financing activities			(28)						106,068
Effect of foreign currency on cash			202						5
Net increase (decrease) in cash			$	(25,384)					$	82,706