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Convertible Preferred Stock | 12 Months Ended
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Dec. 31, 2024
Equity [Abstract] |
Convertible Preferred Stock | 9. Convertible Preferred Stock Immediately prior to the closing of the Company's IPO in October 2024, the Company’s outstanding convertible preferred stock automatically converted into 22,839,774 shares of common stock. Converted preferred stock outstanding as of the date of the IPO consisted of 196,657,452 shares. Each share of outstanding convertible preferred stock was converted into common stock at a ratio of 8.6103 convertible preferred shares to 1 common share. No shares of convertible preferred stock were authorized, issued or outstanding at December 31, 2024. As of December 31, 2023, convertible preferred stock consisted of the following (in thousands, except for share and per share amounts):
Series |  | Authorized Shares |  |  | Issued and Outstanding |  |  | Carrying Value |  |  | Liquidation Preference |  |  | Conversion Price Per Share |
Series A |  |  | 75,000,000 |  |  |  | 75,000,000 |  |  | $ | 74,694 |  |  | $ | 75,000 |  |  | $ | 1.00000 |
Series B |  |  | 121,657,452 |  |  |  | 60,828,720 |  |  |  | 74,521 |  |  |  | 75,000 |  |  |  | 1.23297 |
In November 2021, the Company executed a Series A Convertible Preferred Stock financing arrangement that would provide financing of up to $100.0 million over an initial tranche and subsequent callable tranches through the issuance of up to 100.0 million shares of Series A Convertible Preferred Stock at an issuance price of $1.00 per share. In the initial tranche, the Company issued 45.0 million shares of Series A Convertible Preferred Stock for net proceeds of $44.7 million, of which $30.0 million was received in cash, net of issuance costs, and $14.7 million was for the conversion of the then outstanding convertible promissory notes plus accrued interest. The Series A Convertible Preferred Stock financing arrangement represented an equity financing, per the terms of the outstanding convertible promissory notes, and as such the unpaid principal and accrued interest outstanding of $14.7 million was converted into 14.7 million shares of Series A Convertible Preferred Stock. Additionally, in November 2022, the Company executed the second tranche and issued 30.0 million shares of Series A Convertible Preferred Stock and received net cash proceeds of $30.0 million. The Series A Convertible Preferred Stock Purchase Agreement provided that, upon the fulfillment of certain conditions, each investor would purchase its pro rata portion of the shares to be issued in additional Series A Convertible Preferred Stock closings. Further, the Company agreed to sell, and issue said shares of Series A Convertible Preferred Stock on the same terms as the first tranche in the Purchase Agreement. The Company did not separately account for tranche purchase rights described above as they were not freestanding from the associated shares of convertible preferred stock. In June 2023, the Company amended and restated its certificate of incorporation to, among other things, increase the authorized number of shares of the Company’s convertible preferred stock to 196.7 million shares, of which 121.7 million shares are designated as Series B Convertible Preferred Stock, and to establish the rights, preferences, privileges and restrictions of the Series B Convertible Preferred Stock. In June 2023, the Company entered into a Series B Convertible Preferred Stock financing arrangement in which 121,657,452 shares of Series B Convertible Preferred Stock were authorized to be issued at an issuance price of $1.23297 per share over two tranches, for total proceeds of up to $150.0 million. In June 2023 and July 2023, the Company issued an aggregate of 60.8 million shares of Series B Convertible Preferred Stock at an issuance price of $1.23297 per share for net proceeds of $74.5 million related to the first tranche, with a potential second tranche of additional funding for up to $75.0 million based on approval of the Board of Directors and consent of the majority of the holders of the then-outstanding Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock Purchase Agreement provides that, upon the fulfillment of certain conditions, each investor will purchase its pro rata portion of the shares to be issued in additional Series B Convertible Preferred Stock closings. Further, the Company agreed to sell, and issue said shares of Series B Convertible Preferred Stock on the same terms as the first tranche in the Purchase Agreement. The Company did not separately account for tranche purchase rights described above as they were not freestanding from the associated shares of convertible preferred stock. Upon issuance of the Series B Convertible Preferred Stock, the Company also amended the Series A Convertible Preferred Stock agreement to cancel the remaining 25.0 million unissued shares of Series A Convertible Preferred Stock originally authorized under the agreement. In May 2024, the Company executed the second tranche of the Series B Convertible Preferred Stock financing arrangement and issued the remaining 60.8 million shares of Series B Convertible Preferred Stock for net proceeds of $74.9 million. The rights, privileges, and preferences of the Series A and Series B Convertible Preferred Stock (together, the “Convertible Preferred Stock”) are as follows: Redemption The Convertible Preferred Stock does not have redemption rights, except for the contingent redemption upon the occurrence of a Deemed Liquidation Event. Conversion Each share of the Convertible Preferred Stock is initially convertible, at the option of the holder at any time after all authorized shares of the Convertible Preferred Stock have been issued or if otherwise approved by the holders representing at least a majority of the then outstanding shares of the Convertible Preferred Stock, including at least one holder that, together with its affiliates, holds only shares of Series B Convertible Preferred Stock and is a major investor, as defined in the Company’s amended and restated investors’ rights agreement (the “Required Vote”), into shares of common stock as determined by dividing the original issue price by the conversion price in effect at the time of conversion. The Series A Convertible Preferred Stock conversion price is initially $1.00, and the Series B Convertible Preferred Stock conversion price is initially $1.23297. The conversion prices are subject to adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Convertible Preferred Stock. The conversion prices are subject to adjustment in the event the Company issues additional shares of common stock without consideration or for a consideration per share less than the conversion price in effect prior to such issuance, unless the Required Vote determines that no such adjustment shall be made to the conversion price. Special mandatory conversion will occur if a convertible preferred stockholder fails to purchase their agreed upon share, as originally allocated to such holder in the purchase agreement, in additional closings of the Convertible Preferred Stock as defined in the purchase agreement, and such failure is not cured as specified in the purchase agreement following receipt of the subsequent closing notification. Holders of Series B Convertible Preferred Stock have the option to waive the special mandatory conversion as specified in the purchase agreement. Upon such event, each share of the Convertible Preferred Stock held by such holder will be automatically converted into that number of shares of common stock equal to 10% of the original issue price divided by the conversion price in effect. Mandatory conversion of all outstanding shares of the Convertible Preferred Stock at the then effective conversion rate will also occur automatically upon (i) consent of holders representing the Required Vote or (ii) the closing of the sale of shares of common stock to the public at a price of at least $1.849455 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the common stock), in a firm commitment underwritten public offering resulting in at least $50.0 million in gross proceeds to the Company, after deducting underwriting discounts and commissions, and in connection with such offering the common stock is listed for trading on the Nasdaq, the New York Stock Exchange or another exchange approved by the board of directors, including the approval of at least a majority of the Convertible Preferred Stock directors. Dividends The Company shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Company, other than dividends on shares of common stock payable in shares of common stock, unless the holders of the Convertible Preferred Stock first receive, or simultaneously receive, a dividend on outstanding shares of the Convertible Preferred Stock in an amount at least equal to the dividend payable based on the number of shares of common stock at the then conversion rate, such that the calculation should result in the highest preferred stock dividend. The board of directors has not declared any dividends to-date. Voting and Board Representation Each holder of outstanding shares of the Convertible Preferred Stock is entitled to one vote for each share of common stock into which such shares of preferred stock are convertible and shall vote together with the holders of common stock as a single class and on an as-converted to common stock basis, except as provided by law or by the other provisions of the Company’s certificate of incorporation. The holders of shares of Series A Convertible Preferred Stock, exclusively and as a separate class, are entitled to elect three directors of the Company. The holders of shares of Series B Convertible Preferred Stock, exclusively and as a separate class, are entitled to elect one director of the Company. The holders of record of the shares of common stock and any other class or series of voting stock (including the Convertible Preferred Stock), as a single class, are entitled to elect the remaining directors. The size of the board shall be set and remain at seven directors. Protective Provisions At any time when shares of the Convertible Preferred Stock are outstanding, the Company shall first obtain the approval of the Required Vote, voting separately as a class, with respect to the following actions: (i) consummation of a liquidation, dissolution or winding up of the Company, or effect any merger, acquisition or consolidation or any other deemed liquidation event, (ii) amend, alter or repeal any provision of the Company’s certificate of incorporation or bylaws, (iii) create, authorize, issue or obligate the Company to issue shares of any equity security or increase the authorized number of shares of the Convertible Preferred Stock or of any additional class or series of stock unless it ranks junior to the Convertible Preferred Stock, (iv) reclassify, alter or amend any existing security of the Company that is pari passu with the Convertible Preferred Stock, or is junior with the Convertible Preferred Stock , in respect of the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends or rights of redemption, if such reclassification alteration or amendment would render such other security senior to the Convertible Preferred Stock, or in the case of a previously junior security would render such security senior to or pari passu with the Convertible Preferred Stock, (v) pay or declare any dividend, other than dividends on the Convertible Preferred Stock, or make any distribution on any shares of capital stock prior to the Convertible Preferred Stock, other than common stock or options to acquire common stock repurchased from former employees or consultants in connection with the cessation of their employment/services, pursuant to the provisions of existing plans or agreements, (vi) create, adopt, amend, terminate or repeal any equity or equity-linked compensation plan, (vii) increase or decrease the authorized number of directors constituting the Board of Directors, change the number of votes entitled to be cast by any director or directors on any matter, or adopt any provision inconsistent with Article Sixth; (viii) create or hold (or permit any subsidiary to create, or authorize the creation of, or issue or obligate itself to issue) any shares of capital stock in any subsidiary that is not a wholly-owned subsidiary of the Corporation, or sell, lease, transfer, exclusively license or otherwise dispose of any direct or indirect subsidiary capital stock or all or substantially all of any direct or indirect subsidiary assets; or (ix) sell, assign, license, pledge or encumber material technology or intellectual property, or enter into or grant any royalty streams related thereto, other than licenses granted in the ordinary course of business. Liquidation Preference In the event of any voluntary or involuntary liquidation, dissolution or winding up, or in the event of a deemed liquidation event of the Company, the holders of shares of the Convertible Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders, or out of the consideration payable to stockholders, as applicable, before any payment shall be made to the holders of common stock, an amount per share equal to the greater of (i) the original issue price, plus any dividends declared but unpaid, or (ii) such amount per share as would have been payable had all shares of the Convertible Preferred Stock been converted into common stock immediately prior to such event. If, upon the occurrence of such event, the assets of the Company available for distribution to its stockholders are insufficient to pay the holders of the Convertible Preferred Stock the full amount to which they are entitled, the holders of the Convertible Preferred Stock shall share ratably in any distribution of the assets available for distribution. Classification The Company has classified the Convertible Preferred Stock outside of permanent equity on the balance sheet as these shares can be redeemed upon the occurrence of certain change in control events that are outside of the Company’s control, including liquidation, sale or transfer of the Company. The Company has not adjusted the carrying values of the convertible preferred stock to the liquidation preferences of such shares because it is uncertain whether or when an event would occur that would obligate the Company to pay the liquidation preferences to holders of shares of convertible preferred stock, and at the balance sheet dates these circumstances were not probable. Subsequent adjustments to the carrying values of the liquidation preferences will be made only when it becomes probable that such a liquidation event will occur. As of December 31, 2023, it was not probable that such a redemption would occur.

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