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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 10-Q
_____________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
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)
Delaware11-3430072
(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)
(415) 655-4899
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01ANGNThe Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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
The number of shares of the issuer’s common stock outstanding as of August 10, 2021 was 29,798,399.

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iii


Forward-Looking Statements

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:

the potential benefits, activity, effectiveness and safety of our product candidates;
the success and timing of our preclinical studies and clinical trials, including the timing and availability of data from such clinical trials;
the primary endpoints to be utilized in our clinical trials;
our and our collaborators' ability to obtain and maintain regulatory approval of ANG-3777 and any other product candidates we may develop, and the labeling under any approval we may obtain;
the scope, progress, expansion, and costs of developing and commercializing our product candidates;
our dependence on existing and future collaborators for commercializing product candidates in the collaboration;
our receipt and timing of any milestone payments or royalties under any existing or future research collaboration and license agreements or arrangements;
the potential effects of the COVID-19 pandemic on our business and operations, results of operations and financial performance;
the size and growth of the potential markets for our product candidates and the ability to serve those markets;
our expectations regarding our expenses and revenue, the sufficiency of our cash resources, and needs for additional financing;
regulatory developments in the United States and other countries;
the rate and degree of market acceptance of any future products;
the implementation of our business model and strategic plans for our business and product candidates, including additional indications for which we may pursue approval;
our expectations regarding competition;
our anticipated growth strategies;
the performance of third-party manufacturers;
our ability to establish and maintain development partnerships;
our expectations regarding federal, state, and foreign regulatory requirements;
our ability to obtain and maintain intellectual property protection for our product candidates;
the successful development for our sales and marketing capabilities;
the hiring and retention of key scientific or management personnel; and
the anticipated trends and challenges in our business and the market in which we operate.

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.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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
1


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.

Trademarks

This Quarterly Report on Form 10-Q includes trademarks, service marks and trade names owned by us or other companies. All trademarks, service marks and trade names included in this Quarterly Report on Form 10-Q are the property of their respective owners.




2


Part I FINANCIAL INFORMATION
Item 1. Financial Statements
ANGION BIOMEDICA CORP.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)
June 30,December 31,
20212020
ASSETS
Current assets
Cash and cash equivalents$117,313 $34,607 
Prepaid expenses and other current assets2,389 7,690 
Total current assets119,702 42,297 
Property and equipment, net412 156 
Right of use assets4,364 4,072 
Investments in related parties843 822 
Other assets38  
Total assets$125,359 $47,347 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable$9,307 $5,578 
Accrued expenses4,675 6,665 
Lease liability—current847 611 
Deferred revenue—current5,181 3,942 
Warrant liability514 10,704 
Convertible promissory notes payable at fair value 51,170 
Series C convertible preferred stock at amortized cost 26,001 
Series C convertible preferred stock at fair value 2,518 
Other short-term debt 260 
Total current liabilities20,524 107,449 
Lease liability—noncurrent3,932 3,847 
Deferred revenue—noncurrent23,714 25,865 
Other long-term debt 635 
Total liabilities48,170 137,796 
Commitments and contingencies—Note 11
Stockholders' equity (deficit)
Common stock, $0.01 par value per share; 300,000,000 and 30,000,000 authorized shares as of June 30, 2021 and December 31, 2020; 30,278,530 and 15,632,809 shares issued as of June 30, 2021 and December 31, 2020, respectively; 29,797,587 and 15,316,721 shares outstanding as of June 30, 2021 and December 31, 2020, respectively
303 156 
Treasury stock, 480,943 and 316,088 shares outstanding as of June 30, 2021 and December 31, 2020, respectively
(4,210)(1,846)
Additional paid-in capital295,636 72,136 
Accumulated other comprehensive loss(219)(333)
Accumulated deficit(214,321)(160,562)
Total stockholders' equity (deficit)77,189 (90,449)
Total liabilities and stockholders' equity (deficit)$125,359 $47,347 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Operations and Comprehensive Income
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Revenue:
Contract revenue
$540 $ $911 $ 
Grant revenue
 729  1,594 
Total revenue
540 729 911 1,594 
Operating expenses:
Cost of grant revenue
 333  716 
Research and development
14,444 12,230 28,742 21,826 
General and administrative
4,340 5,435 10,352 8,890 
Total operating expenses
18,784 17,998 39,094 31,432 
Loss from operations
(18,244)(17,269)(38,183)(29,838)
Other income (expense)
Change in fair value of warrant liability
200 (456)(3,319)(748)
Change in fair value of convertible notes
 (1,918)(7,469)(2,372)
Change in fair value of Series C convertible preferred stock  (3,592) 
Gain upon debt extinguishment905  905  
Foreign exchange transaction (loss) gain(22)(239)(75)6 
(Losses) earnings from equity method investment
(35)28 20 56 
Interest income (expense), net
124 (487)(2,046)(667)
Total other income (expense)
1,172 (3,072)(15,576)(3,725)
Net loss
(17,072)(20,341)(53,759)(33,563)
Other comprehensive income:
Foreign currency translation adjustment
68 (196)114 (47)
Comprehensive loss
$(17,004)$(20,537)$(53,645)$(33,610)
Net loss per common share, basic and diluted
$(0.58)$(1.40)$(2.02)$(2.32)
Weighted average common shares outstanding, basic and diluted
29,670,329 14,514,670 26,574,290 14,488,746 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
(in thousands, except share amounts)
(unaudited)
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, 202015,632,809$156 (316,088)$(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
5,750,0005882,65782,715
Issuance of common stock upon Concurrent Private Placement, net of issuance costs of $0.7 million
1,562,5001624,23424,250
Conversion of convertible preferred stock into common stock upon initial public offering2,234,6402235,73235,754
Conversion of convertible notes into common stock upon initial public offering3,636,1893658,14358,179
Conversion of convertible notes prior to IPO33,978460460
Net exercise of warrants upon initial public offering844,335913,50013,509
Exercise of broker warrants47,188
Exercise of warrants107,0381679680
Exercise of stock options15511
Issuance of common stock upon vesting of restricted stock units and performance stock units204,77421113
Return of common stock to pay withholding taxes on restricted stock(77,060)(1,145)(1,145)
Stock-based compensation5,1175,117
Foreign currency translation adjustment4646
Net loss(36,687)(36,687)
Balance as of March 31, 202130,053,606$300 (393,148)$(2,991)$292,670 $(287)$(197,249)$92,443 
Fractional shares paid out related to the forward stock split— — (10)— — (10)
Exercise of broker warrants— — — — — — 
Exercise of warrants22,7141 — 175 — — 176 
Exercise of stock options8,495— — 79 — — 79 
Issuance of common stock upon vesting of restricted stock units and performance stock units193,7152 — 4 — — 6 
Return of common stock to pay withholding taxes on restricted 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, 202130,278,530$303 (480,943)$(4,210)$295,636 $(219)$(214,321)$77,189 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
(in thousands, except share amounts)
(unaudited)
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, 201914,758,718$148 (312,164)$(1,810)$63,531 $ $(80,455)$(18,586)
Issuance of broker warrants151151
Exercise of broker warrants58,41511
Exercise of stock options192,8721(2)(1)
Repurchase of common stock
Stock-based compensation832832
Foreign currency translation adjustment149149
Net loss(13,222)(13,222)
Balance as of March 31, 202015,010,005$150 (312,164)$(1,810)$64,512 $149 $(93,677)$(30,676)
Issuance of broker warrants— — 1,017 — — 1,017 
Exercise of broker warrants249,8152 — 2 — — 4 
Stock-based compensation— — 1,095 — — 1,095 
Foreign currency translation adjustment— — — (196)— (196)
Net loss— — — — (20,341)(20,341)
Balance as of June 30, 202015,259,820$152 (312,164)$(1,810)$66,626 $(47)$(114,018)$(49,097)

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












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ANGION BIOMEDICA CORP.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30,
20212020
Cash flows from operating activities
Net loss
$(53,759)$(33,563)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation29 74 
Amortization of right of use assets332 267 
Amortization of debt issuance costs1,884 553 
Stock-based compensation7,835 1,927 
PPP Loan forgiveness (905) 
Change in fair value of convertible notes7,469 2,372 
Change in fair value of Series C convertible preferred stock3,592  
Change in fair value of warrant liability3,319 748 
Earnings from equity investment(45)(56)
Distribution from equity investment24  
Changes in operating assets and liabilities:
Grants receivable
 156 
Prepaid expenses and other current assets
3,315 (2,248)
Other assets(38) 
Accounts payable
3,736 5,815 
Accrued expenses
1,345 2,702 
Lease liabilities
(303)(284)
Deferred revenue(912) 
Net cash used in operating activities
(23,082)(21,537)
Cash flows from investing activities
Purchase of fixed assets
(285)(30)
Net cash used in investing activities
(285)(30)
Cash flows from financing activities
Proceeds from issuance of convertible notes and warrants
 13,938 
Net proceeds from issuance of common stock upon IPO and Concurrent Private Placement, net of discount and commissions110,560  
Proceeds from issuance of Series C convertible preferred stock, net of issuance costs 6,270 
Proceeds from loan from Paycheck Protection Program of the 2020 CARES Act 895 
Payment of deferred offering costs(3,073)(117)
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 19  
Exercise of broker warrants 3 
Exercise of warrants856  
Exercise of stock options80 1 
Net cash provided by financing activities
106,068 20,990 
Effect of foreign currency on cash5 47 
Net increase (decrease) in cash and cash equivalents
82,706 (530)
Cash and cash equivalents at the beginning of the period
34,607 5,571 
Cash and cash equivalents at the end of the period
$117,313 $5,041 
Supplemental disclosure of noncash investing and financing activities:
Conversion of convertible notes into common stock upon IPO$58,179 $ 
Conversion of Series C preferred stock into common stock upon IPO$35,754 $ 
Net exercise of warrants upon IPO$13,509 $ 
Accrued interest premium for Series C convertible preferred stock$ $29 
Right of use assets exchanged for operating lease liabilities$624 $27 
Conversion of convertible notes into common stock prior to IPO$460 $ 
Deferred offering costs in accrued expenses or accounts payable$ $430 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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ANGION BIOMEDICA CORP.
Notes to Unaudited Interim Condensed Consolidated Financial Statements


Note 1—Description of the Business and Financial Condition
Angion Biomedica Corp. ("Angion", the "Company" or “we”) is a late-stage biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule therapeutics to address acute organ injuries and fibrotic diseases. The Company was incorporated in Delaware in 1998.
Forward Stock Split
On January 25, 2021, the board of directors of the Company approved an amendment to the Company's certificate of incorporation to effect a forward stock split ("Forward Split") of shares of the Company's common stock on a one-for-1.55583 basis, which was effected on February 1, 2021. All references to common stock, convertible preferred stock, warrants to purchase common stock, stock options, RSAs, RSUs, PSUs, per share amounts and related information contained in the condensed consolidated financial statements have been retroactively adjusted to reflect the effect of the forward stock split for all periods presented. No fractional shares of the Company's common stock were issued in connection with the Forward Split. Any fractional share resulting from the Forward Split was rounded down to the nearest whole share, and any stockholder entitled to fractional shares as a result of the Forward Split will receive a cash payment in lieu of receiving fractional shares.
Initial Public Offering and the Concurrent Private Placement
On February 9, 2021, the Company closed its Initial Public Offering (“IPO”) of 5,750,000 shares of common stock at a public offering price of $16.00 per share, which includes the full exercise by the underwriters of their option to purchase an additional 750,000 shares of common stock. Aggregate net proceeds to Angion were $85.6 million, after deducting underwriting discounts, commissions and offering expenses of $6.4 million. In addition to the shares being sold in the IPO, Angion 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 aggregate net proceeds of $24.3 million, after deducting a 3% private placement agent fee of $0.7 million. Subsequent to the closing of the IPO, all of the outstanding shares of convertible preferred stock and outstanding convertible notes automatically converted into shares of common stock.
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.
Liquidity and Capital Resources
Since inception, the Company has devoted substantially all of its efforts and financial resources to conducting research and development activities, including drug discovery and pre-clinical studies and clinical trials, establishing and maintaining its intellectual property portfolio, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur substantial losses for the next several years as it continues to fully develop and, if approved, commercialize its product candidates. As of June 30, 2021, the Company had $117.3 million in cash and cash equivalents and an accumulated deficit of $214.3 million. Prior to its IPO completed in February 2021, the Company has funded its operations through United States government grants, the issuance of convertible notes (see Note 6), sales of convertible preferred stock and common stock (see Notes 7) and warrants (see Note 10) and licensing agreements (see Note 12).
The planned expansion of the Company's clinical and discovery programs will require significant funds. Management expects to continue to incur significant expenses and to incur operating losses for the foreseeable future. The Company believes that its existing cash and cash equivalents will be sufficient to meet the projected operating requirements for at least 12 months from the date of issuance of its financial statements. The Company has evaluated and concluded there are no conditions or events, considered in the aggregate, that raise substantial
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
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.
The Company’s remaining significant accounting policies are described in Note 2 to its consolidated financial statements for the year ended December 31, 2020, included in its Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies during the three and six months ended June 30, 2021.
Unaudited interim financial information
The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (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, 2020 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, 2020 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 as filed with the SEC on March 30, 2021. The results for any interim period are not necessarily indicative of results for any future period.
Segments
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as one operating segment.
Use of Estimates
The preparation of 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.
Concentrations of Credit Risk and Off-Balance Sheet Risk
Cash and cash equivalents are financial instruments that are potentially subject to concentrations of credit risk. The Company's cash and cash equivalents are deposited in accounts at large financial institutions, and amounts
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. As of June 30, 2021 and December 31, 2020, 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.
Deferred Offering Costs
Deferred offering costs consist of legal and accounting fees incurred through the balance sheet date that are directly related to the Company's IPO and have been reflected as issuance costs upon the completion of the offering. As of December 31, 2020, $2.0 million of deferred offering costs were included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Subsequent to the closing of the IPO, $2.8 million of deferred costs previously included in prepaid expenses and other current assets was netted with additional paid in capital in the condensed consolidated balance sheets.
Fair Value Measurement
Certain assets and liabilities are carried at fair value under GAAP. Fair value is determined using the principles of ASC 820, Fair Value Measurement. Fair value is described as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes and defines the inputs to valuation techniques as follows:
Level 1:    Observable inputs such as quoted prices in active markets.
Level 2:    Inputs are observable for the asset or liability either directly or through corroboration with observable market data.
Level 3:    Unobservable inputs.
The inputs used to measure the fair value of an asset or a liability are categorized within levels of the fair value hierarchy. The fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the measurement.
The Company's cash and cash equivalents, accounts payable and accrued expenses are carried at cost, which approximates fair value due to the short-term nature of these instruments.
Convertible Notes Payable at Fair Value
As permitted under ASC 825, Financial Instruments ("ASC 825"), the Company has elected the fair value option for recognition of its convertible notes. In accordance with ASC 825, the Company recognizes these convertible notes at fair value with changes in fair value recognized in the condensed consolidated statements of operations. The fair value option may be applied instrument by instrument, but it is irrevocable. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in general and administrative expense in earnings as incurred and not deferred. The estimated fair value of the convertible notes is determined by utilizing a present value cash flow model and the values of the equity underlying the conversion options were estimated using company equity values implied from the Subject Company Transaction Method which includes the back-solve and scenario-based methods (Probability Weighted Expected Return Method). See Note 4.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Accrued interest for the notes has been included in the change in fair value of convertible notes in the condensed consolidated statements of operations. All outstanding convertible notes were converted into common stock upon the close of the IPO on February 9, 2021 and no balances remained outstanding as of June 30, 2021. See Note 6.
Convertible Preferred Stock
Series C convertible preferred stock includes settlement features that result in liability classification. The initial carrying value of the Series C convertible preferred stock is 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 is accreted to interest expense using the effective interest method. During 2020, certain convertible notes were exchanged for Series C convertible preferred stock. As the exchange was accounted for as a modification, the Series C convertible preferred stock that was exchanged for the convertible notes was recorded at fair value and are subject to re-measurement at each reporting period with gains and losses reported through the Company’s condensed consolidated statements of operations. All outstanding shares of convertible preferred stock were converted into common stock upon the close of the Company’s IPO on February 9, 2021. See Note 7. As of June 30, 2021, there was no convertible preferred stock outstanding.
Revenue
The Company does not have any products approved for sale and has not generated any revenue from product sales. The Company’s revenue to date has been primarily derived from government funding consisting of U.S. government grants and contracts, and revenue under its license agreements.
Contract Revenue
The Company accounts for revenue earned from contracts with customers under Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASC Topic 606"). Under ASC Topic 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 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 entity satisfies a performance obligation.
At contract inception, the Company assesses the goods or services promised within each contract, whether each promised good or service is distinct, and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when or as the performance obligation is satisfied.
The Company enters into agreements under which it may obtain upfront payments, milestone payments, royalty payments and other fees. Promises under these arrangements may include research licenses, research services, including selection campaign research services for certain replacement targets, the obligation to share information during the research and the participation of alliance managers and in joint research committees, joint patent committees and joint steering committees. The Company assesses these promises within the context of the agreements to determine the performance obligations.
Licenses of Intellectual Property: If a license to its intellectual property is determined to be distinct from the other promises or performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront payments. The Company evaluates the measure of proportional performance each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone payments: The Company evaluates whether the regulatory and development milestones are considered probable of being reached and estimate the amounts to be included in the transaction price using the most likely amount method. The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to achieve the particular milestone in making this assessment. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones and any related constraint, and if necessary, adjust the estimate of the overall transaction price.
Sales-based milestones and royalties: For sales-based royalties, including milestone payments based on the level of sales, the Company determines whether the sole or predominant item to which the royalties relate is a license. When the license is the sole or predominant item to which the sales-based royalty relates, the Company recognize revenue at the later of: (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any sales-based royalty revenue resulting from any license agreement.
Deferred revenue, which is a contract liability, represents amounts received by the Company for which the related revenues have not been recognized because one or more of the revenue recognition criteria have not been met. The current portion of deferred revenue represents the amount expected to be recognized within one year from the consolidated balance sheet date based on the estimated performance period of the underlying performance obligation. The noncurrent portion of deferred revenue represents amounts expected to be recognized after one year through the end of the performance period of the performance obligation.
Grant Revenue
The Company concluded that the Company's government grants are not within the scope of ASC Topic 606 as they do not meet the definition of a contract with a customer. The Company has concluded that the grants meet the definition of a contribution and are non-reciprocal transactions, and has also concluded that Subtopic 958-605, Not-for-Profit-Entities-Revenue Recognition, does not apply, as the Company is a business entity and the grants are with governmental agencies.
In the absence of applicable guidance under GAAP, the Company developed a policy for the recognition of grant revenue when the allowable costs are incurred and the right to payment is realized.
The Company believes this policy is consistent with the overarching premise in ASC Topic 606, to ensure that revenue recognition reflects the transfer of promised goods or services to customers in an amount that reflects the consideration that the Company expects to be entitled to in exchange for those goods or services, even though there is no exchange as defined in ASC Topic 606. The Company believes the recognition of revenue as costs are incurred and amounts become realizable is analogous to the concept of transfer of control of a service over time under ASC Topic 606.
Research and Development
Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, preclinical studies, compound manufacturing costs, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities.
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
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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, 2021 and 2020, the Company has not experienced any material differences between accrued costs and actual costs incurred.
Advertising Costs
Advertising costs are expensed as incurred. For the three and six months ended June 30, 2021 and 2020, advertising costs were not significant.
Net Loss Per Share
Basic net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share excludes the potential impact of convertible preferred stock, common stock options, warrants and unvested shares of restricted stock and restricted stock units because their effect would be anti-dilutive due to the Company's net loss. Since the Company had net losses for the three and six months ended June 30, 2021 and 2020, basic and diluted net loss per common share are the same.
Recently Adopted Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU No. 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted this standard as of January 1, 2021, which did not have material impact on its condensed consolidated financial statements and related disclosures.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)-Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for the Company for fiscal years beginning after December 15, 2020, including interim periods therein. The Company adopted this standard as of January 1, 2021, which did not have material impact on its condensed consolidated financial statements and related disclosures.
In January 2020, the FASB issued ASU No. 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force). This update clarifies whether an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative and how to account for certain forward contracts and purchased options to purchase securities. For public entities, this guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted this standard as of January 1, 2021, which did not have material impact on its condensed consolidated financial statements and related disclosures.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. LIBOR is expected to phased out by 2021. The amendments in this ASU are effective as of
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

March 12, 2020 through December 31, 2022. The Company adopted this standard as of January 1, 2021, which did not have material impact on its condensed consolidated financial statements and related disclosures.
In October 2020, the FASB issued ASU No. 2020-10,Codification Improvements. ASU 2020-10 provides amendments to a wide variety of topics in the FASB’s Accounting Standards Codification, which applies to all reporting entities within the scope of the affected accounting guidance. ASU 2020-10 is effective for the Company for fiscal years beginning after December 15, 2020, including interim periods therein. The Company adopted this standard as of January 1, 2021, which did not have material impact on its condensed consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments (ASU No. 2016-13), which requires an entity to utilize a new impairment model known as the current expected credit loss (“CECL”) model to estimate its lifetime “expected credit loss” and record an allowance that, when deducted from the amortized cost basis of the financial assets and certain other instruments, including but not limited to available-for-sale debt securities. Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a direct write-down to the security. As an emerging growth company, ASU No. 2016-13 is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its condensed consolidated financial statements.

Note 3—Revenue and Deferred Revenue
Grant Revenue
Our grants and contracts reimburse us for direct and indirect costs relating to the grant projects and also provide us with a pre-negotiated profit margin on total direct and indirect costs of the grant award, excluding subcontractor costs, after giving effect to directly attributable costs and allowable overhead costs. Funds received from grants and contracts are generally deemed to be earned and recognized as revenue as allowable costs are incurred during the grant or contract period and the right to payment is realized.
Contract Revenue

The Company’s contract revenue has been generated from payments received pursuant to a license agreement (the "Vifor License") with Vifor International, Ltd. ("Vifor Pharma"), headquartered 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. The Company expects to continue recognizing revenue from upfront payments related to the Vifor License using the cost-based input method for the foreseeable future.
Vifor License Agreement

In November 2020, the Company entered into a license agreement with Vifor Pharma, granting Vifor Pharma global rights (excluding China, Taiwan, Hong Kong and Macau) to develop, manufacture and commercialize ANG-3777 in all therapeutic, prophylactic and diagnostic uses for renal indications, including forms of acute kidney injury (AKI), and congestive heart failure (collectively, the Renal Indications). Pursuant to the Vifor License, the Company is entitled to receive $80.0 million in upfront and near-term clinical milestone payments, including $30.0 million in up-front cash that was 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 our IPO. The Company is also eligible to receive post-approval milestones of up to approximately $260.0 million and sales-related milestones of up to $1.585 billion, providing a total potential deal value of up to $1.925 billion (subject to certain specified reductions and offsets), plus tiered royalties on net sales of ANG-3777 at royalty rates of up to 40%. Under the Vifor License, the Company is responsible for executing a pre-specified clinical development plan designed to obtain regulatory
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

approvals of ANG-3777 for delayed graft function (DGF) and AKI associated with cardiac surgery involving cardiopulmonary bypass (CSA-AKI).
The Vifor License will continue until the expiration of the last royalty term for a licensed product in the licensed territory, unless earlier terminated. The royalty term for a licensed product is, on a country-by-country basis, shall start with the first commercial sale of such licensed product in such country and expire at the latest of (i) expiration of all licensed patents covering the composition of matter of such licensed product or method of use for such licensed product that has obtained regulatory approval in such country, (ii) expiration of all regulatory and data exclusivity applicable to such licensed product in such country, or (iii) the tenth (10th) anniversary of the date of the first commercial sale of such licensed product in such country.
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: (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 as of June 30, 2021. The Company determined that the transaction price at the inception of the Vifor License is $15.0 million, which is 50% of the $30.0 million upfront payment due to the potential setoff defined in the contract. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. The transaction price is recognized as license revenue using the cost-based input method over the estimated performance period of approximately 9.5 years beginning on November 6, 2020. The performance period represents the estimated timing of completion of the identified performance obligation. In June 2021, the Company determined that the performance period should be extended to 2030 from 2027 based on the management’s best estimate for the completion of the post-approval confirmatory study.
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 and six months ended June 30, 2021, the Company recognized contract revenue related to the Vifor License of $0.5 million and $0.9 million, respectively. As of June 30, 2021, $28.9 million was recorded as deferred revenue, of which $5.2 million was current, on the condensed consolidated balance sheets related to the Vifor License.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Note 4—Fair Value Measurements
The following table classifies the Company's financial assets and liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2021 and December 31, 2020 (in thousands):
Fair Value Measured at June 30, 2021
Quoted Prices in
Active Markets for
Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Assets included in:
Cash and cash equivalents—Money market securities (1)
$1 $ $ $1 
Total fair value
$1 $ $ $1 
Liabilities included in:
Warrants$ $ $514 $514 
Total fair value
$ $ $514 $514 

Fair Value Measured at December 31, 2020
Quoted Prices in
Active Markets for
Identical
Assets (Level 1)
Significant
Other
Observable
Inputs (Level 2)
Significant
Unobservable
Inputs (Level 3)
Total
Assets included in:
Cash and cash equivalents—Money market securities (1)
$1 $ $ $1 
Total fair value
$1 $ $ $1 
Liabilities included in:
Convertible notes$ $ $51,170 $51,170 
Warrants  10,704 10,704 
Series C convertible preferred stock2,518 2,518 
Total fair value
$ $ $64,392 $64,392 
__________________
(1) Included in cash and cash equivalents on the condensed consolidated balance sheets. This balance includes cash requirements settled on a nightly basis.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

There were no transfers made among the three levels in the fair value hierarchy during periods presented.
The following table presents changes in Level 3 liabilities measured at fair value (in thousands):
Warrant
Liability
Convertible
Notes
Series C Convertible Preferred Stock at Fair ValueTotal
Balance—December 31, 202010,704 51,170 2,518 64,392 
Conversion of convertible notes into common stock— (58,639)— (58,639)
Conversion of convertible Series C convertible preferred stock into common stock — — (6,110)(6,110)
Net exercise of warrants (13,509)— — (13,509)
Change in fair value3,319 7,469 3,592 14,380 
Balance—June 30, 2021$514 $— $— $514 
Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs.
The Company used an option model to measure the fair value of the Notes (on conversion date). The values of the equity underlying the conversion options in the model were estimated using equity values implied from sales of convertible preferred stock. The fair value of the Notes was impacted by the model selected as well as assumptions surrounding unobservable inputs. Key unobservable inputs include the expected volatility of the underlying equity, and the timing of an expected liquidity event.
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.
Convertible Notes
The fair value adjustment during the six months ended June 30, 2021 is based on the final settlement amount using a conversion price of $11.57 per share on February 9, 2021. Subsequent to the closing of the IPO, there were no convertible notes outstanding.
Series C Preferred Stock
The fair value adjustment during the six months ended June 30, 2021 is based on the final settlement amount using a conversion price of $11.57 per share on February 9, 2021. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding.
Warrant Liability
The fair value adjustment for the net exercise of warrants with an exercise price of $6.43 during the six months ended June 30, 2021 is based on the final settlement amount using the IPO price on February 9, 2021. Subsequent to the closing of the IPO, the fair value of the warrants issued by the Company has been estimated using a variant of the Black Scholes option pricing model. The underlying equity included in the Black Scholes option pricing model was valued based on the closing price of common stock at each measurement date.
During the three months ended June 30, 2021 and 2020, the fair value of the warrants decreased by $0.2 million and increased by $0.5 million, respectively. The change in fair value of warrant liability in both periods are recognized in the condensed consolidated statements of operations. During the six months ended June 30,
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

2021 and 2020, the increase in the fair value of the warrants of $3.3 million and $0.7 million, respectively, are recognized in change in fair value of warrant liability in the condensed consolidated statements of operations.

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company's warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of June 30, 2021 and December 31, 2020 was as follows:
June 30,December 31,
20212020
Strike price
$8.01 $0.01 
Contractual term (years)
2.24.9
Volatility (annual)
86.8 %86.8 %
Risk-free rate
0.7 %0.1 %
Dividend yield (per share)
0.0 %0.0 %

Note 5—Balance Sheet Components
Property and Equipment, Net
The Company's property and equipment, net comprised the following (in thousands):
June 30,December 31,
20212020
Equipment
$775 $512 
Furniture and fixtures
33 27 
Leasehold improvements
59 43 
Total property and equipment
867 582 
Less: accumulated depreciation
(455)(426)
Property and equipment, net
$412 $156 
Depreciation expense for the three months ended June 30, 2021 and 2020 was $23 thousand and $47 thousand, respectively. Depreciation expense for the six months ended June 30, 2021 and 2020 was $29 thousand and $74 thousand, respectively.

Prepaid and Other Current Assets
Prepaid and other current assets comprised the following (in thousands):
June 30,December 31,
20212020
Deferred offering costs$ $1,978 
Convertible note receivable 5,000 
Angion Pty tax 352 
Prepaid insurance1,761  
Security deposit 90  
Other538 360 
Total prepaid and other current assets$2,389 $7,690 
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Accrued Expenses
Accrued expenses comprised the following (in thousands):
June 30,December 31,
20212020
Accrued compensation
$4,093 $3,154 
Accrued direct research costs
71 1,321 
Accrued operating expenses
511 707 
Accrued interest 1,483 
Total accrued expenses
$4,675 $6,665 

Note 6—Convertible Notes Payable
As of December 31, 2020, the Company had convertible notes with an aggregate principal amount of $39.8 million and $1.8 million accrued interest outstanding.
Conversion of Convertible Notes Payable
In January 2021, the Company issued 33,978 shares of common stock upon the conversion of certain of the outstanding 2020 Notes. In connection with the IPO in February 2021, with an IPO price of $16.00 per share, the remaining outstanding Additional Convertible Notes and Vifor Convertible Note were converted into 3,636,189 shares of the Company’s common stock based on a conversion price of $11.57 per share. There were no convertible notes outstanding as of June 30, 2021.

Note 7— Series C Convertible Preferred Stock

The following table summarizes the aggregate values recorded for the Series C Preferred Stock as of December 31, 2020 (in thousands):
At issuance December 31, 2020
Series C convertible preferred stock recorded at amortized cost
Principal
$22,308 $22,308 
Settlement premium5,577 5,577 
Unamortized discounts and fees(9,250)(1,884)
Net carrying amount$18,635 $26,001 
Series C convertible preferred stock recorded at fair value
Series C convertible preferred stock issued in exchange for convertible notes2,254 
Change in fair value of Series C convertible preferred stock exchanged for convertible notes264 
Total Series C convertible preferred stock$28,519 
Conversion of Series C Convertible Preferred Stock
In connection with the IPO in February 2021, with an initial public offering price of $16.00 per share, all Series C convertible preferred stock outstanding plus accrued dividends were automatically converted into an aggregate of 2,234,640 shares of common stock on February 9, 2021 with a conversion price of $11.57 per share. There were no shares of convertible preferred stock outstanding as of June 30, 2021.

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Note 8—Stockholders' Equity
Common Stock
Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors.
On February 9, 2021, in connection with the IPO, the Company filed a restated Certificate of Incorporation, which, among other things, restated the number of shares of all classes of stock that the Company had authority to issue to 310,000,000 shares, of which (i) 300,000,000 shares shall be a class designated as common stock, par value $0.01 per share, and (ii) 10,000,000 shares shall be a class designated as undesignated preferred stock, par value $0.01 per share.
Treasury Stock
At June 30, 2021 and December 31, 2020, the balance on the treasury stock was approximately $4.2 million and $1.8 million, respectively.

Note 9—Stock-Based Compensation
2015 Plan
In June 2019, the Company approved an Amended and Restated 2015 Equity Incentive Plan (the "2015 Plan") permitting the granting of incentive stock options, non-statutory stock options, restricted stock and other stock-based awards. Following the effectiveness of the 2021 Equity Incentive Plan ("2021 Plan"), the Company ceased making grants under the 2015 Plan. However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Shares of common stock subject to awards granted under the 2015 Plan that cease to be subject to such awards by forfeiture or otherwise after the termination of the 2015 Plan will be available for issuance under the 2021 Plan.
2021 Plan
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, with annual increases, up to a maximum of 60,000,000 shares of common stock were authorized for issuance under the 2021 Plan.
Stock Options
The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company determines 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. Prior to the IPO, the Company was a private company and lacked company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Due to the lack of historical exercise history, the expected term of the Company's stock options for employees has been determined utilizing the "simplified" method for awards. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. 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. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Subsequent to the IPO, the Company determines the fair value and exercise price using the market closing price of the Company’s common stock on the date of grant.
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The following assumptions were used to estimate the fair value of stock option awards:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Risk-free interest rate1.1%0.4%0.7%0.7%
Expected dividend yield
Expected term in years 6.056.025.995.98
Expected volatility
74.3%-74.8%
73.0%-73.4%
73.8%-86.8%
70.8%-73.4%
The following table summarizes information activity related to the Company’s share option plans:
Number of
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Life (in years)
Total
Intrinsic
Value
(in thousands)
Outstanding as of December 31, 20203,479,731 $6.97 8.4$15,140 
Options granted1,024,121 15.89 —