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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, 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)
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 8, 2022 was 30,113,339.



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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:
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;
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;
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 potential adverse effects of any regional armed conflicts 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 which we may pursue;
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, retention, or separation 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. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for
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these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.
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.
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.




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Table of Contents
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,
2022
December 31,
2021
Assets
Current assets
Cash and cash equivalents$63,372 $88,756 
Grants receivable 806 
Prepaid expenses and other current assets2,513 1,685 
Total current assets65,885 91,247 
Property and equipment, net388 451 
Operating lease right-of-use assets3,589 3,986 
Investments in related parties865 723 
Other assets86 106 
Total assets$70,813 $96,513 
Liabilities and stockholders’ equity
Current liabilities
Accounts payable$2,656 $4,710 
Accrued expenses4,086 3,219 
Operating lease liabilities, current943 894 
Financing obligation, current62 58 
Deferred revenue, current 2,301 
Warrant liability33 114 
Total current liabilities7,780 11,296 
Operating lease liabilities, noncurrent2,990 3,475 
Financing obligation, noncurrent202 235 
Other liabilities, noncurrent81  
Total liabilities11,053 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 capital297,875 296,445 
Accumulated other comprehensive income (loss)98 (103)
Accumulated deficit(238,514)(215,135)
Total stockholders' equity59,760 81,507 
Total liabilities and stockholders' equity$70,813 $96,513 
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 Loss
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
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 
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
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 units365— — — — — — 
Stock-based compensation— — 31 — 31 
Foreign currency translation adjustment— — — (96)— (96)
Net loss— — — — (14,240)(14,240)
Balance as of March 31, 202229,959,425 $300   $296,476 $(199)$(229,375)$67,202 
Issuance of common stock upon net settlement of restricted stock units and performance stock units93,119 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, 202230,052,544 $301 $ $ $297,875 $98 $(238,514)$59,760 
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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
5,750,00058 — 82,657 — — 82,715 
Issuance of common stock upon Concurrent Private Placement, net of issuance costs of $0.7 million
1,562,50016 — 24,234 — — 24,250 
Conversion of convertible preferred stock into common stock upon initial public offering2,234,64022 — 35,732 — — 35,754 
Conversion of convertible notes into common stock upon initial public offering3,636,18936 — 58,143 — — 58,179 
Conversion of convertible notes prior to initial public offering33,978— — 460 — — 460 
Net exercise of warrants upon initial public offering844,3359 — 13,500 — — 13,509 
Exercise of broker warrants47,188— — — — — — 
Exercise of warrants107,0381 — 679 — — 680 
Exercise of stock options155— — 1 — — 1 
Issuance of common stock upon vesting of restricted stock units and performance stock units204,7742 — 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, 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)
Issuance of broker warrants— —  
Exercise of broker warrants— — — — — — — — 
Exercise of warrants22,714 1 — — 175 — — 176 
Exercise of stock options8,495 — — — 79 — — 79 
Issuance of common stock upon net settlement of restricted stock units and performance stock units193,715 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, 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 Cash Flows
(in thousands)
(unaudited)
Six Months Ended June 30,
20222021
Cash flows from operating activities:
Net loss
$(23,379)$(53,759)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation63 29 
Amortization of right-of-use assets397 332 
Amortization of debt issuance costs 1,884 
Stock-based compensation1,430 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 assets19 (38)
Accounts payable
(2,086)3,736 
Accrued expenses
867 1,345 
Lease liabilities
(436)(303)
Deferred revenue(2,301)(912)
Other liabilities, noncurrent81  
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 cash202 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 
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” or, the “Company”) is a biopharmaceutical company that has 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.
Initial Public Offering and the Concurrent Private Placement
On February 9, 2021, the Company’s registration statement on Form S-1 (File No. 333-252177) relating to its initial public offering (“IPO”) of common stock became effective. The IPO closed on February 9, 2021 at which time the Company issued 5,750,000 shares of its common stock at a price to the public of $16.00 per share, which 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.
Reduction in Force
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
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

organization. The Company expects 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.
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. 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.
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. 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.
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 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.
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.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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 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.
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, 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.
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.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Revenue
The Company does not have any products approved for sale and has not generated any revenue from product sales. The Company’s revenue to date has been primarily derived from government funding consisting of U.S. government grants and contracts and revenue under its license agreements.
Contract Revenue
The Company accounts for revenue earned from contracts with customers under Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). Under ASC 606, the Company recognizes revenue when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps:     
(1)    Identify the contract(s) with a customer;
(2)    Identify the performance obligations in the contract;
(3)    Determine the transaction price;
(4)    Allocate the transaction price to the performance obligations in the contract; and
(5)    Recognize revenue when (or as) the Company satisfies a performance obligation.
At contract inception, the Company assesses the goods or services promised within each contract, whether each promised good or service is distinct, and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price 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.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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.
Grant Revenue
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.
Research and Development
Research and development costs include, but are not limited to, payroll and personnel expenses, laboratory supplies, preclinical studies, compound manufacturing costs, consulting costs and allocated overhead, including rent, equipment, depreciation and utilities. Research and development costs may be offset by research and development refundable tax rebates received by the Company’s wholly-owned Australian subsidiary.
The Company has agreements with various Contract Research Organizations (“CROs") and third-party vendors. Research and development accruals of amounts due to the CRO are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development provided, but not yet invoiced, are included in accrued 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
Advertising costs are expensed as incurred. For the three and six months ended June 30, 2022 and 2021, advertising costs were not material.
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 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.
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
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Note 3—Revenue and Deferred Revenue
Contract Revenue
The Company’s contract revenue has been generated from payments received pursuant to a license agreement (the “Vifor License”) with Vifor International, Ltd. (“Vifor Pharma”), with headquarters located in Switzerland. The Company recognized revenue from upfront payments over the term of its estimated period of performance using a cost-based input method under Topic 606.
Vifor License Agreement
In November 2020, the Company entered into a license agreement with Vifor Pharma, granting Vifor Pharma global rights (excluding China, Taiwan, Hong Kong and Macau) to develop, manufacture and commercialize ANG-3777 in all therapeutic, prophylactic and diagnostic uses for renal indications, including forms of acute kidney injury (AKI), and congestive heart failure (collectively, the Renal Indications). Pursuant to the Vifor License, the Company received $60.0 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.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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.
Note 4—Fair Value Measurements
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 1Level 2Level 3Total
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 2Level 3Total
Money market funds(1)
$87,252 $ $ $87,252 
Total assets
$87,252 $ $ $87,252 
Warrant liabilities  114 114 
Total liabilities
$ $ $114 $114 
_________________
(1) Included in cash and cash equivalents on the condensed consolidated balance sheets. This balance includes cash requirements settled on a nightly basis.
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 
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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.
The fair value of the common stock warrant liability was estimated using the following assumptions:
June 30,
2022
December 31,
2021
Weighted average strike price
$7.60$7.60
Contractual term (years)
6.26.7
Volatility (annual)
125.7%124.0%
Risk-free rate
3.0%1.4%
Dividend yield (per share)
0.0%0.0%
Note 5—Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
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.
Prepaid and Other Current Assets
Prepaid and other current assets consisted of the following (in thousands):
June 30,
2022
December 31,
2021
Angion Pty tax receivable$3 $781 
Prepaid insurance1,942 275 
Security deposit 105 131 
Other463 498 
Total prepaid and other current assets$2,513 $1,685 
Accrued Expenses
Accrued expenses consisted of the following (in thousands):
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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 

Note 6—Stockholders' Equity
Common Stock
Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors.
Note 7—Stock-Based Compensation
2015 Plan
In June 2019, the Company approved an Amended and Restated 2015 Equity Incentive Plan (the “2015 Plan”) permitting the granting of incentive stock options, non-statutory stock options, restricted stock and other stock-based awards. Following the effectiveness of the 2021 Equity Incentive Plan (“2021 Plan”), the Company ceased making grants under the 2015 Plan. However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Shares of common stock subject to awards granted under the 2015 Plan that cease to be subject to such awards by forfeiture or otherwise after the termination of the 2015 Plan will be available for issuance under the 2021 Plan.
2021 Plan
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.
Stock Options
The fair value of each employee and non-employee stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model based on the following assumptions:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Risk-free interest rate3.1%1.1%1.7%0.7%
Expected dividend yield0.0%0.0%0.0%0.0%
Expected term in years 5.486.055.905.99
Expected volatility70.8%
74.3%-74.8%
70.8%-72.5%
73.8%-86.8%
Each of these inputs is subjective and generally requires significant judgment.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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.
The following table summarizes information and activity related to the Company’s stock options:
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, 20214,230,162 $8.92 8.4$ 
Options granted2,248,700 1.93 
Options forfeited(626,950)10.35 
Outstanding as of June 30, 20225,851,912 $6.08 7.7$ 
Options vested and exercisable2,799,721 $7.34 6.1$ 
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.
Restricted Stock Units (RSUs)
The following table summarizes information and activity related to the Company’s RSUs:
Number of
Restricted Stock Units
Weighted
Average Grant
Date Fair Value
Per Share
Outstanding at December 31, 202117,504 $9.51 
Vested(729)$9.51 
Outstanding as of June 30, 202216,775 $9.51 
Vested as of June 30, 2022729 $9.51 
Performance-based Restricted Stock Units (PSUs)
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
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

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,
2022202120222021
Research and development$535 $1,409 $87 $3,952 
General and administrative866 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.
Employee Stock Purchase Plan
In January 2021, the board of directors of the Company approved the Employee Stock Purchase Plan (the “ESPP”). The ESPP was effective on the date immediately prior to the effectiveness of the Company's registration statement relating to the IPO. A total of 390,000 shares of common stock were initially reserved for issuance under the ESPP. The 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.
Note 8—Warrants
As of June 30, 2022 and December 31, 2021, outstanding warrants to purchase the Company's common stock consisted of the following:
ClassificationExercise PriceExpiration DateJune 30,
2022
December 31,
2021
Warrants issued with Conversion of Notes to Common StockEquity$8.03 8/31/23232,287 232,287 
Warrants issued with Units in the Equity OfferingEquity$8.03 8/31/23875,034 875,034 
Broker Warrants issued with Equity OfferingEquity$0.01 8/31/251,297 1,297 
Consultant WarrantsLiability$7.60 8/31/2839,505 39,505 
Total Warrants1,148,123 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.
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ANGION BIOMEDICA CORP.
Notes to Consolidated Financial Statements (Continued)

Note 9—Commitments and Contingencies
Operating Leases
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 July 2020, the Company entered into a lease for office furniture in San Francisco, California set to expire in July 2025, with an immaterial annual lease payment.
In February 2021, the Company entered into a lease for clinical 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.
The following table summarizes the components of the Company's operating lease costs (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Operating lease cost
$302 $317 $714 $590 
Variable lease cost
91 85 144 215 
Short-term lease cost6 3 12 42 
Total operating lease cost
$399 $