UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2020
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: 001-38470
Unity Biotechnology, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
26-4726035 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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|
285 East Grand Ave. South San Francisco, CA |
94080 |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (650) 416-1192
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $0.0001 |
UBX |
The 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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth 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 filer |
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Accelerated filer |
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☒ |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
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☒ |
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Emerging growth company |
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☒ |
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 Exchange Act). Yes ☐ No ☒
As of May 4, 2020, the registrant had 49,143,141 shares of common stock outstanding.
QUARTERLY REPORT ON FORM 10-Q
Table of Contents
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Item 1 |
2 |
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Condensed Balance Sheets as of March 31, 2020 (unaudited) and December 31, 2019 |
2 |
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3 |
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4 |
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Condensed Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019 (unaudited) |
5 |
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6 |
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Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 3 |
34 |
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Item 4 |
34 |
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Item 1 |
35 |
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Item 1A |
35 |
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Item 2 |
82 |
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Item 3 |
83 |
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Item 4 |
83 |
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Item 5 |
83 |
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Item 6 |
84 |
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85 |
1
Item 1. Condensed Financial Statements
Unity Biotechnology, Inc.
(In thousands, except for share amounts and par value)
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|
March 31, 2020 |
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December 31, 2019 |
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|
|
(Unaudited) |
|
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|
|
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|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
25,059 |
|
|
$ |
37,473 |
|
Short-term marketable securities |
|
|
84,179 |
|
|
|
84,508 |
|
Strategic investment |
|
|
4,120 |
|
|
|
5,507 |
|
Prepaid expenses and other current assets |
|
|
1,875 |
|
|
|
1,999 |
|
Total current assets |
|
|
115,233 |
|
|
|
129,487 |
|
Property and equipment, net |
|
|
15,067 |
|
|
|
16,636 |
|
Operating lease right of use asset |
|
|
25,443 |
|
|
|
— |
|
Long-term marketable securities |
|
|
— |
|
|
|
3,025 |
|
Restricted cash |
|
|
1,446 |
|
|
|
1,446 |
|
Other long-term assets |
|
|
598 |
|
|
|
627 |
|
Total assets |
|
$ |
157,787 |
|
|
$ |
151,221 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
4,015 |
|
|
$ |
5,185 |
|
Accrued compensation |
|
|
2,222 |
|
|
|
5,905 |
|
Accrued and other current liabilities |
|
|
7,422 |
|
|
|
4,995 |
|
Contingent consideration liability |
|
|
910 |
|
|
|
1,131 |
|
Total current liabilities |
|
|
14,569 |
|
|
|
17,216 |
|
Operating lease liability, net of current portion |
|
|
37,889 |
|
|
|
— |
|
Deferred rent, net of current portion |
|
|
— |
|
|
|
13,298 |
|
Total liabilities |
|
|
52,458 |
|
|
|
30,514 |
|
Commitments and contingencies (Note 6) |
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|
|
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Stockholders’ equity: |
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|
|
|
|
|
|
|
Convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding |
|
|
— |
|
|
|
— |
|
Common stock, $0.0001 par value; 300,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 48,857,504 and 47,227,065 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively |
|
|
5 |
|
|
|
5 |
|
Additional paid-in capital |
|
|
379,072 |
|
|
|
366,695 |
|
Related party promissory notes for purchase of common stock |
|
|
(210 |
) |
|
|
(210 |
) |
Employee promissory notes for purchase of common stock |
|
|
(418 |
) |
|
|
(418 |
) |
Accumulated other comprehensive income |
|
|
373 |
|
|
|
90 |
|
Accumulated deficit |
|
|
(273,493 |
) |
|
|
(245,455 |
) |
Total stockholders’ equity |
|
|
105,329 |
|
|
|
120,707 |
|
Total liabilities and stockholders’ equity |
|
$ |
157,787 |
|
|
$ |
151,221 |
|
See accompanying notes to the condensed financial statements.
2
Condensed Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
(Unaudited)
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Three Months Ended March 31, |
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2020 |
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2019 |
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Operating expenses: |
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|
|
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|
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|
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Research and development |
|
$ |
19,265 |
|
|
$ |
16,505 |
|
General and administrative |
|
|
5,953 |
|
|
|
4,477 |
|
Change in fair value of contingent consideration |
|
|
(221 |
) |
|
|
(1,245 |
) |
Impairment of long-lived assets |
|
|
2,159 |
|
|
|
— |
|
Total operating expenses |
|
|
27,156 |
|
|
|
19,737 |
|
Loss from operations |
|
|
(27,156 |
) |
|
|
(19,737 |
) |
Interest income |
|
|
527 |
|
|
|
1,006 |
|
Other expense, net |
|
|
(1,409 |
) |
|
|
(36 |
) |
Net loss |
|
|
(28,038 |
) |
|
|
(18,767 |
) |
Other comprehensive loss |
|
|
|
|
|
|
|
|
Unrealized gain on marketable debt securities, net of tax |
|
|
283 |
|
|
|
114 |
|
Comprehensive loss |
|
$ |
(27,755 |
) |
|
$ |
(18,653 |
) |
Net loss per share, basic and diluted |
|
$ |
(0.59 |
) |
|
$ |
(0.44 |
) |
Weighted average number of shares used in computing net loss per share, basic and diluted |
|
|
47,544,401 |
|
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|
42,190,457 |
|
See accompanying notes to the condensed financial statements.
3
Condensed Statements of Stockholders’ Equity
(In thousands, except share amounts)
(Unaudited)
For the Three Months Ended March 31, 2020
|
|
Common Stock |
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Additional Paid-In |
|
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Related Party Promissory Notes for Purchase of |
|
|
Employee Promissory Notes for Purchase of |
|
|
Accumulated Other Comprehensive |
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|
Accumulated |
|
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Total Stockholders’ |
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Shares |
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Amount |
|
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Capital |
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Common Stock |
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Common Stock |
|
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Gain (Loss) |
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Deficit |
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Equity |
|
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Balances at December 31, 2019 |
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47,227,065 |
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|
$ |
5 |
|
|
$ |
366,695 |
|
|
$ |
(210 |
) |
|
$ |
(418 |
) |
|
$ |
90 |
|
|
$ |
(245,455 |
) |
|
$ |
120,707 |
|
Issuance of common stock, net of issuance costs, under at-the-market ("ATM") equity offering program |
|
|
1,513,840 |
|
|
|
— |
|
|
|
8,763 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8,763 |
|
Issuance of common stock upon exercise of stock options |
|
|
73,049 |
|
|
|
— |
|
|
|
249 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
249 |
|
Vesting of early exercised stock options |
|
|
— |
|
|
|
— |
|
|
|
40 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
40 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
3,225 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,225 |
|
Common stock issued for services |
|
|
43,550 |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
Change in unrealized gain on available-for-sale marketable securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
283 |
|
|
|
— |
|
|
|
283 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(28,038 |
) |
|
|
(28,038 |
) |
Balances at March 31, 2020 |
|
|
48,857,504 |
|
|
$ |
5 |
|
|
$ |
379,072 |
|
|
$ |
(210 |
) |
|
$ |
(418 |
) |
|
$ |
373 |
|
|
$ |
(273,493 |
) |
|
$ |
105,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March 31,2019
|
|
Common Stock |
|
|
Additional Paid-In |
|
|
Related Party Promissory Notes for Purchase of |
|
|
Employee Promissory Notes for Purchase of |
|
|
Accumulated Other Comprehensive |
|
|
Accumulated |
|
|
Total Stockholders’ |
|
|||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Common Stock |
|
|
Common Stock |
|
|
Gain (Loss) |
|
|
Deficit |
|
|
Equity |
|
||||||||
Balances at December 31, 2018 |
|
|
42,414,294 |
|
|
$ |
4 |
|
|
$ |
324,663 |
|
|
$ |
(201 |
) |
|
$ |
(400 |
) |
|
$ |
(95 |
) |
|
$ |
(163,278 |
) |
|
$ |
160,693 |
|
Issuance of common stock upon exercise of stock options |
|
|
340,731 |
|
|
|
— |
|
|
|
300 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
300 |
|
Vesting of early exercised stock options |
|
|
— |
|
|
|
— |
|
|
|
207 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
207 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
1,997 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,997 |
|
Common stock issued to third parties |
|
|
133,334 |
|
|
|
— |
|
|
|
2,059 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,059 |
|
Change in unrealized gain on available-for-sale marketable securities, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
114 |
|
|
|
— |
|
|
|
114 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(18,767 |
) |
|
|
(18,767 |
) |
Balances at March 31, 2019 |
|
|
42,888,359 |
|
|
$ |
4 |
|
|
$ |
329,226 |
|
|
$ |
(201 |
) |
|
$ |
(400 |
) |
|
$ |
19 |
|
|
$ |
(182,045 |
) |
|
$ |
146,603 |
|
See accompanying notes to the condensed financial statements.
4
Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
|
|
Three Months Ended March 31, |
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|||||
|
|
2020 |
|
|
2019 |
|
||
Operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(28,038 |
) |
|
$ |
(18,767 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
903 |
|
|
|
637 |
|
Net accretion and amortization of premium and discounts on marketable securities |
|
|
(63 |
) |
|
|
(366 |
) |
Stock-based compensation |
|
|
3,317 |
|
|
|
1,997 |
|
Non-cash rent expense |
|
|
461 |
|
|
|
— |
|
Impairment of long-lived assets |
|
|
2,159 |
|
|
|
— |
|
Change in fair value of strategic investment |
|
|
1,387 |
|
|
|
— |
|
Accretion of tenant improvement allowance |
|
|
— |
|
|
|
(152 |
) |
Change in fair value of contingent consideration |
|
|
(221 |
) |
|
|
(1,245 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
123 |
|
|
|
188 |
|
Other long-term assets |
|
|
29 |
|
|
|
(9 |
) |
Accounts payable |
|
|
(1,345 |
) |
|
|
(776 |
) |
Accrued compensation |
|
|
(3,675 |
) |
|
|
(2,117 |
) |
Accrued and other current liabilities |
|
|
(110 |
) |
|
|
65 |
|
Deferred rent, net of current portion |
|
|
— |
|
|
|
(51 |
) |
Net cash used in operating activities |
|
|
(25,073 |
) |
|
|
(20,596 |
) |
Investing activities |
|
|
|
|
|
|
|
|
Purchase of marketable securities |
|
|
(36,950 |
) |
|
|
(18,054 |
) |
Maturities of marketable securities |
|
|
40,650 |
|
|
|
58,321 |
|
Purchase of property and equipment |
|
|
(34 |
) |
|
|
(207 |
) |
Net cash provided by investing activities |
|
|
3,666 |
|
|
|
40,060 |
|
Financing activities |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock under ATM Offering Program, net of issuance costs |
|
|
8,763 |
|
|
|
— |
|
Proceeds from issuance of common stock upon exercise of stock options, net of repurchases |
|
|
249 |
|
|
|
300 |
|
Other financing cash flows |
|
|
(19 |
) |
|
|
(18 |
) |
Net cash provided by financing activities |
|
|
8,993 |
|
|
|
282 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(12,414 |
) |
|
|
19,746 |
|
Cash, cash equivalents and restricted cash at beginning of the period |
|
|
38,919 |
|
|
|
15,949 |
|
Cash, cash equivalents and restricted cash at end of the period |
|
$ |
26,505 |
|
|
$ |
35,695 |
|
Supplemental Disclosures of Non-Cash Investing and Financing Activities |
|
|
|
|
|
|
|
|
Property and equipment included in accounts payable and accrued liabilities |
|
$ |
302 |
|
|
$ |
71 |
|
Issuance of shares in settlement of share-based liability |
|
$ |
100 |
|
|
$ |
— |
|
Issuance of common stock to settle contingent consideration liability |
|
$ |
— |
|
|
$ |
2,059 |
|
See accompanying notes to the condensed financial statements.
5
Notes to Condensed Financial Statements
(Unaudited)
1. Organization
Description of Business
Unity Biotechnology, Inc. (the “Company”) is a biotechnology company engaged in the research and development of therapeutics to extend human healthspan. The Company devotes substantially all of its time and efforts to performing research and development, raising capital and recruiting personnel. The Company’s headquarters are located in South San Francisco, California. The Company was incorporated in the State of Delaware in 2009 and operates in one segment.
Need for Additional Capital
The Company has incurred operating losses and has an accumulated deficit as a result of ongoing efforts to develop drug product candidates, including conducting preclinical and clinical trials and providing general and administrative support for these operations. The Company had an accumulated deficit of $273.5 million and $245.5 million as of March 31, 2020 and December 31, 2019, respectively. The Company had net losses of $28.0 million and $18.8 million for the three months ended March 31, 2020 and 2019, respectively, and net cash used in operating activities of $25.1 million and $20.6 million for the three months ended March 31, 2020 and 2019, respectively. To date, none of the Company’s drug candidates have been approved for sale, and therefore, the Company has not generated any revenue from contracts with customers and does not expect positive cash flows from operations in the foreseeable future. The Company has financed its operations primarily through private placements of preferred stock and promissory notes, public equity issuances and more recently from its ATM Offering Program (as defined below) and will continue to be dependent upon equity and/or debt financing until the Company is able to generate positive cash flows from its operations.
The Company had cash, cash equivalents and marketable securities of $109.2 million as of March 31, 2020. The Company has evaluated and concluded there are no conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year following the date that these condensed financial statements are issued. Management expects operating losses to continue for the foreseeable future. As a result, the Company will need to raise additional capital. If sufficient funds on acceptable terms are not available when needed, the Company could be required to significantly reduce its operating expenses and delay, reduce the scope of, or eliminate one or more of its development programs. Failure to manage discretionary spending or raise additional financing, as needed, may adversely impact the Company’s ability to achieve its intended business objectives.
2. Summary of Significant Accounting Policies
Basis of Presentation
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim reporting.
Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, the unaudited condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC.
6
Unaudited Condensed Financial Statements
The accompanying financial information for the three months ended March 31, 2020 and 2019 are unaudited. The unaudited condensed financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2020 and its results of operations for the three months ended March 31, 2020 and 2019 and cash flows for the three months ended March 31, 2020 and 2019. The results for interim periods are not necessarily indicative of the results expected for the full fiscal year or any other period(s).
Use of Estimates
The condensed financial statements have been prepared in accordance with GAAP, which requires management to make estimates and assumptions that affect the amounts and disclosures reported in the condensed financial statements and accompanying notes. The Company bases its estimates on historical experience and market-specific or other relevant assumptions that it believes are reasonable under the circumstances. The amounts of assets and liabilities reported in the Company’s condensed balance sheets and the amount of expenses and income reported for each of the periods presented are affected by estimates and assumptions, which are used for, but are not limited to, determining the fair value of assets and liabilities, contingent consideration liability and stock-based compensation. Actual results could differ from such estimates or assumptions.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with original maturities of 90 days or less from the date of purchase to be cash equivalents. Cash equivalents primarily include money market funds that invest in U.S. Treasury obligations which are stated at fair value.
The Company has issued letters of credit under lease agreements which have been collateralized. This cash is classified as noncurrent restricted cash on the balance sheet based on the term of the underlying lease.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the balance sheets that sum to the total of the same amounts shown in the condensed statements of cash flows (in thousands).
|
|
March 31, 2020 |
|
|
December 31, 2019 |
|
||
Cash and cash equivalents |
|
$ |
25,059 |
|
|
$ |
37,473 |
|
Restricted cash |
|
|
1,446 |
|
|
|
1,446 |
|
Total cash, cash equivalents and restricted cash |
|
$ |
26,505 |
|
|
$ |
38,919 |
|
Marketable Securities
The Company generally invests its excess cash in investment grade, short to intermediate-term, fixed income securities. Such investments are considered available-for-sale debt securities, and reported at fair value with unrealized gains and losses included as a component of stockholders’ deficit. Marketable securities with original maturities of greater than 90 days from the date of purchase but less than one year from the balance sheet date that are available to be converted into cash to fund current operations are classified as short-term, while marketable securities with maturities in one year or beyond one year from the balance sheet date are classified as long-term. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income on the statements of operations and comprehensive loss. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on marketable securities are included in interest income (expense), net. The cost of securities sold is determined using the specific identification method.
The Company periodically evaluates whether declines in fair values of its marketable securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the marketable security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any marketable securities before recovery of its
7
amortized cost basis. Factors considered include quoted market prices, recent financial results and operating trends, implied values from any recent transactions or offers of investee securities, credit quality of debt instrument issuers, other publicly available information that may affect the value of the marketable security, duration and severity of the decline in value, and management’s strategy and intentions for holding the marketable security. To date, the Company has not recorded any impairment charges on its marketable securities related to other-than-temporary declines in market value.
Strategic Investments
The Company has previously made investments in strategic partners and may do so again in the future. The Company does not intend to have a controlling interest or significant influence when it makes these strategic investments. Investments in equity securities of strategic partners with readily determinable fair values are measured using quoted market prices, with changes recorded through other income (expense), net in the statement of operations and comprehensive loss. The Company currently holds a non-controlling equity investment in the common stock of Ascentage Pharma Group International (“Ascentage International”), an affiliate of a Hong-Kong based clinical-stage biopharmaceutical company called Ascentage Pharma Group Corp. Limited (“Ascentage Pharma”), which was acquired in connection with certain commercial agreements with Ascentage Pharma (see Note 5, “License Agreements”). In October 2019, Ascentage International completed an initial public offering of shares of its common stock on the Hong Kong Stock Exchange. The Company was subject to a lock-up agreement with Ascentage International that precluded the Company from selling shares prior to April 28, 2020.
Concentrations of Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and marketable securities. Substantially all of the Company’s cash and cash equivalents and restricted cash is deposited in accounts with financial institutions that management believes are of high credit quality. Such deposits have and will continue to exceed federally insured limits. The Company maintains its cash with accredited financial institutions and accordingly, such funds are subject to minimal credit risk. The Company has not experienced any losses on its cash deposits.
The Company’s investment policy limits investments to certain types of securities issued by the U.S. government, its agencies and institutions with investment-grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents, restricted cash and marketable securities and issuers of marketable securities to the extent recorded on the balance sheets. As of March 31, 2020, the Company had no off-balance sheet concentrations of credit risk.
The Company is also exposed to market risk in its strategic investments. As of March 31, 2020, the Company held an investment in common stock which is publicly traded.
The Company depends on third-party suppliers for key raw materials used in its manufacturing processes and is subject to certain risks related to the loss of these third-party suppliers or their inability to supply the Company with adequate raw materials.
In March 2020 the World Health Organization declared the global novel coronavirus (“COVID-19”) outbreak a pandemic. To date, the Company’s operations have not been significantly impacted by the COVID-19 pandemic. However, the Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 pandemic will have on its financial condition and results of operations, including ongoing and planned clinical studies. The impact of the COVID-19 pandemic on the financial performance of the Company will depend on future developments, including the duration and spread of the COVID-19 pandemic and related governmental advisories and restrictions. These developments and the impact of COVID-19 on the financial markets and the overall economy are highly uncertain. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s business, financial condition, results of operations and prospects may be adversely affected.
Research and Development Expenses and Accruals
Costs related to research, design and development of drug candidates are charged to research and development expense as incurred. Research and development costs include, but are not limited to, payroll and personnel expenses
8
for personnel contributing to research and development activities, laboratory supplies, outside services, licenses acquired to be used in research and development, manufacturing of clinical material, pre-clinical testing and consultants and allocated overhead, including rent, equipment, depreciation and utilities. Research and development costs are expensed as incurred unless there is an alternative future use in other research and development projects. Payments made prior to the receipt of goods or services to be used in research and development are deferred and recognized as expense in the period in which the related goods are received or services are rendered. Such payments are evaluated for current or long-term classification based on when they will be realized.
As part of the process of preparing its financial statements, the Company is required to estimate expenses resulting from its obligations under contracts with vendors and consultants and clinical site agreements in connection with conducting clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company’s objective is to reflect the appropriate expenses in its financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the production of clinical trial materials or based on progression of the clinical trial, as measured by patient progression and the timing of various aspects of the trial. The Company determines accrual estimates by taking into account discussion with applicable personnel and outside service providers as to the progress or state of consummation of goods and services, or the services completed. During the course of a clinical trial, the Company adjusts the rate of expense recognition if actual results differ from its estimates. The Company makes estimates of accrued expenses as of each balance sheet date in its financial statements based on the facts and circumstances known at that time. The Company’s clinical trial accrual is dependent in part upon the timely and accurate reporting of contract research organizations, contract manufacturers and other third-party vendors. Although the Company does not expect its estimates to be materially different from amounts actually incurred, the Company’s understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and it may result in reporting changes in estimates in any particular period. Adjustments to prior period estimates have not been material for the three-months ended March 31, 2020 and 2019.
Contingent Consideration Liability
The Company has entered into and may continue to enter into, license agreements to access and utilize certain technology. In each case, the Company evaluates whether the license agreement results in the acquisition of an asset or a business. To date, all of the Company’s license agreements have been considered acquisitions of assets and none have been considered acquisitions of a business. For license agreements that are considered to be acquisitions of assets, the upfront payments for such license, as well as any future milestone payments made before product approval, are immediately recognized as research and development expense when due, provided there is no alternative future use of the rights in other research and development projects. Some of the Company’s license agreements also include contingent consideration in the form of an obligation to issue additional issuances of the Company’s common stock based on the achievement of certain milestones. For these licenses, the Company assesses on a continuous basis whether (i) such contingent consideration meets the definition of a derivative, and (ii) whether it can be classified within stockholders’ equity. Until such time when equity classification criteria are met or the milestones expire, the contingent consideration is classified as a liability. The derivative related to this contingent consideration is measured at fair value as of each balance sheet date with the related change in fair value being reflected in operating expenses. Upon a reassessment event that results in the contingent consideration no longer meeting the definition of a derivative and/or meeting equity classification criteria, the final change in fair value of the instrument is recorded within operating expenses and the liability is reclassified into stockholders’ equity.
Leases
Prior to January 1, 2020, the Company accounted for its leases of office space and laboratory facilities under non-cancelable operating lease agreements and recognized related rent expense on a straight-line basis over the term of the lease. Incentives granted under the Company’s facilities lease, including allowances to fund leasehold improvements and rent holidays, were recognized as reductions to rental expense on a straight-line basis over the term of the lease. Lessor funded leasehold improvement incentives not yet received were recorded in prepaid expenses and other current assets on the condensed balance sheets. The Company did not assume renewals in its determination of the lease term unless they were deemed to be reasonably assured at the inception of the lease and began recognizing rent expense on the date that it obtained the legal right to use and control the leased space.
9
Deferred rent consisted of the difference between cash payments and the rent expense recognized. The Company recognized a liability for costs that will continue to be incurred under a lease contract for its remaining term without economic benefit at its fair value when the entity ceases using the right conveyed by the contract, which was when the space is completely vacated. The Company also entered into capital lease agreements for certain equipment with a lease term of three years. The current portion of capital lease obligations was included in accrued and other current liabilities and the noncurrent capital lease obligations was included in other noncurrent liabilities on the condensed balance sheets.
Subsequent to January 1, 2020, the Company determines whether the arrangement is or contains a lease at the inception of the arrangement and if so, whether such a lease is classified as a financing lease or an operating lease. Operating leases are included in operating lease right-of-use assets, (“ROU assets”), operating lease liabilities, net of current portion, and accrued and other current liabilities on the Company’s condensed balance sheets. The Company has elected not to recognize on the condensed balance sheets leases with terms of one year or less. Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and are considered long-lived assets for purposes of identifying, recognizing and measuring impairment. Operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of lease payments over the expected lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment, in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made or incentives received and impairment charges if the Company determines the ROU asset is impaired and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options to extend or terminate the lease. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
The Company has elected to not separate lease and non-lease components for its leased assets and accounts for all lease and non-lease components of its agreements as a single lease component. The lease components resulting in a ROU asset have been recorded on the condensed balance sheets and are amortized as lease expense on a straight-line basis over the lease term.
The Company does not have any material financing leases.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable. If indicators of impairment exist and the undiscounted future cash flows that the assets are expected to generate are less than the carrying value of the assets, the Company reduces the carrying amount of the assets through an impairment charge, to their estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. During the first quarter of 2020, the Company evaluated indicators of impairment for the ROU asset and related leasehold improvements considering the current economic environment, its impact on subleasing activity and the exit of its headquarters previously located in Brisbane, California. The Company concluded the carrying value of these assets were not fully recoverable and recorded an impairment charge of $2.2 million (see Note 6, “Commitments and Contingencies”) during the three months ended March 31, 2020.
Determining estimated discounted cash flows for purposes of an impairment analysis requires the Company to make estimates and assumptions regarding the amount and timing of sublease income. There are often risks and uncertainties associated with the intent to sublease offices and laboratory space. Consequently, the eventual realized sublease revenues may vary from estimates as of the impairment testing date and adjustments may occur in future periods. Furthermore, the Company’s sublease assumptions could be further impacted by the COVID-19 outbreak.
Income Taxes
On March 18, 2020, the Families First Coronavirus Response Act (“FFCR Act”), and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous tax-related provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical
10
corrections to tax depreciation methods for qualified improvement property. The FFCR Act and CARES Act did not have a material impact on the Company’s condensed financial statements as of March 31, 2020; however, the Company continues to examine the impacts the FFCR Act and CARES Act may have on its business, results of operations, financial condition and liquidity.
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. This ASU is effective for the Company for all interim and annual periods beginning January 1, 2022, with early adoption permitted. The Company early adopted ASU 2019-12 beginning January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on its condensed financial statements and related disclosures. The only aspect of ASU 2019-12 that is currently applicable to the Company is the removal of the exception related to intraperiod tax allocation. Beginning in 2020, the Company will apply the general methodology regarding the intraperiod allocation of tax expense. After the adoption of ASU 2019-12, in periods where the Company has a loss from continuing operations, the amount of taxes attributable to continuing operations will be determined without regard to the tax effect of other items, including changes in unrealized gains related to marketable securities.
In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (ASU 2018-18), which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under the guidance for contracts with customers (Topic 606) when the collaborative arrangement participant is a customer in the context of a unit of account. The standard is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted, including adoption in any interim period for public business entities for periods in which financial statements have not been issued. The Company adopted this standard on January 1, 2020. The adoption of this ASU did not have a material impact on the Company’s condensed financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU eliminates, modifies and adds disclosure requirements for fair value measurements. The amendments in this ASU are effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company adopted this standard on January 1, 2020. The adoption of this ASU did not have a material impact on its condensed financial statements but has resulted in enhanced disclosures related to the recurring Level 3 fair value measurements.
In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The amendments in this ASU expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. This new guidance is effective for the Company in fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company adopted this standard on January 1, 2020. The adoption of this ASU did not have a material impact on its condensed financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), and related amendments which supersedes the guidance in former ASC 840, Leases. The new standard, as amended by subsequent ASUs on the Topic, requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. On November 15, 2019, the FASB issued ASU 2019-10 to delay the effective date of this standard, making it effective for the Company for annual reporting
11
periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021, with early adoption permitted.
The Company adopted this standard on January 1, 2020 using the modified retrospective approach with a cumulative effect adjustment to accumulated deficit at the beginning of the period of adoption, if any. The Company elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed the Company to carry forward the historical lease classification, retain the initial direct costs for any leases that existed prior to the adoption of the standard and not reassess whether any contracts entered into prior to the adoption are leases. The Company also elected to account for lease and non-lease components in its lease agreements as a single lease component in determining lease assets and liabilities. In addition, the Company elected not to recognize the right-of-use assets and liabilities for leases with lease terms of one year or less. The Company did not elect the practical expedient allowing the use-of-hindsight, which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date and did not elect the practical expedient pertaining to land easements as this is not applicable to the current contract portfolio.
Upon adoption of Topic 842, the Company recorded $42.4 million of operating lease liabilities and $27.2 million of right-of-use assets after reclassification of deferred rent of $15.3 million, as of January 1, 2020. The adoption did not have a material impact on the Company’s condensed statements of operations and comprehensive loss or condensed statements of cash flows (see Note 6, “Commitments and Contingencies” for additional information).
Recently Issued Accounting Pronouncements Not Yet Adopted
In August 2018, the FASB issued ASU No. 2018-15, Intangibles (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This new standard also requires customers to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. This standard is effective for the Company for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. This new standard can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of adoption on its condensed financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as clarified in subsequent amendments. ASU 2016-13 changes the impairment model for certain financial instruments. The new model is a forward-looking expected loss model and will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance sheet credit exposures. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees and net investments in leases, as well as trade receivables. For available-for-sale debt securities with unrealized losses, credit losses will be measured in a manner similar to today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. In October 2019, the FASB voted to delay the effective date of this standard. Topic 326 will be effective for the Company for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company is currently assessing the effect that this ASU will have on its condensed financial position, results of operations, and disclosures.
3. Fair Value Measurements
The Company determines the fair value of financial and non-financial assets and liabilities based on the assumptions that market participants would use in pricing the asset or liability in an orderly transaction between market participants at the measurement date. The identification of market participant assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritized the inputs into three broad levels as follows:
|
• |
Level 1: Quoted prices in active markets for identical instruments |
12
|
• |
Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments) |
|
• |
Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments) |
The carrying amounts of financial instruments such as cash and cash equivalents, restricted cash, prepaid expenses and other current assets, accounts payable, accrued compensation, accrued and other current liabilities approximate the related fair values due to the short maturities of these instruments.
The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows (in thousands):
|
|
March 31, 2020 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
24,059 |
|
|
$ |
24,059 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. government debt securities |
|
|
1,000 |
|
|
|
— |
|
|
|
1,000 |
|
|
|
— |
|
Total cash equivalents |
|
|
25,059 |
|
|
|
24,059 |
|
|
|
1,000 |
|
|
|
— |
|
Short-term marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. and foreign commercial paper |
|
|
6,227 |
|
|
|
— |
|
|
|
6,227 |
|
|
|
— |
|
U.S. and foreign corporate debt securities |
|
|
12,297 |
|
|
|
— |
|
|
|
12,297 |
|
|
|
— |
|
U.S. government debt securities |
|
|
46,951 |
|
|
|
— |
|
|
|
46,951 |
|
|
|
— |
|
U.S. treasuries |
|
|
18,704 |
|
|
|
— |
|
|
|
18,704 |
|
|
|
— |
|
Total short-term marketable securities |
|
|
84,179 |
|
|
|
— |
|
|
|
84,179 |
|
|
|
— |
|
Strategic investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign equity securities |
|
|
4,120 |
|
|
|
4,120 |
|
|
|
— |
|
|
|
— |
|
Total strategic investment |
|
|
4,120 |
|
|
|
4,120 |
|
|
|
— |
|
|
|
— |
|
Total assets subject to fair value measurements on a recurring basis |
|
$ |
113,358 |
|
|
$ |
28,179 |
|
|
$ |
85,179 |
|
|
$ |
— |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration liability |
|
$ |
910 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
910 |
|
Total liabilities subject to fair value measurements on a recurring basis |
|
$ |
910 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
910 |
|
13
|
|
December 31, 2019 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds |
|
$ |
29,377 |
|
|
$ |
29,377 |
|
|
$ |
— |
|
|
$ |
— |
|
U.S. and foreign commercial paper |
|
|
4,999 |
|
|
|
— |
|
|
|
4,999 |
|
|
|
— |
|
U.S government debt securities |
|
|
2,550 |
|
|
|
— |
|
|
|
2,550 |
|
|
|
— |
|
Total cash equivalents |
|
|
36,926 |
|
|
|
29,377 |
|
|
|
7,549 |
|
|
|
— |
|
Short-term marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasuries |
|
|
15,063 |
|
|
|
— |
|
|
|
15,063 |
|
|
|
— |
|
U.S. and foreign commercial paper |
|
|
11,972 |
|
|
|
— |
|
|
|
11,972 |
|
|
|
— |
|
U.S. and foreign corporate debt securities |
|
|
8,755 |
|
|
|
— |
|
|
|
8,755 |
|
|
|
— |
|
U.S. government debt securities |
|
|
48,718 |
|
|
|
— |
|
|
|
48,718 |
|
|
|
— |
|
Total short-term marketable securities |
|
|
84,508 |
|
|
|
— |
|
|
|
84,508 |
|
|
|
— |
|
Strategic investment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign equity securities |
|
|
5,507 |
|
|
|
5,507 |
|
|
|
— |
|
|
|
— |
|
Total strategic investment |
|
|
5,507 |
|
|
|
5,507 |
|
|
|
— |
|
|
|
— |
|
Long-term marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. treasuries |
|
|
3,025 |
|
|
|
— |
|
|
|
3,025 |
|
|
|
— |
|
Total long-term marketable securities |
|
|
3,025 |
|
|
|
— |
|
|
|
3,025 |
|
|
|
— |
|
Total assets subject to fair value measurements on a recurring basis |
|
$ |
129,966 |
|
|
$ |
34,884 |
|
|
$ |
95,082 |
|
|
$ |
— |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration liability |
|
$ |
1,131 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,131 |
|
Total liabilities subject to fair value measurements on a recurring basis |
|
$ |
1,131 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,131 |
|
The Company estimates the fair value of its money market funds, U.S. and foreign commercial paper, U.S. and foreign corporate debt securities, asset-backed securities, U.S. treasuries, U.S. government debt securities and foreign equity securities by taking into consideration valuations obtained from third-party pricing services. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs.
The Company has recorded a contingent consideration liability related to three agreements (the “Commercial Agreements”) with Ascentage Pharma Group Corp. Limited, a clinical-stage biopharmaceutical company based in Hong Kong China (“Ascentage Pharma”) (see Note 5, “License Agreements”). As of March 31, 2020, these Commercial Agreements included contingent consideration of up to an aggregate of 533,336 additional shares of common stock to be issued in specified portions to Ascentage Pharma and an academic institution from which Ascentage Pharma had previously in-licensed the underlying technology based on achievement of certain specified preclinical and clinical development and sales milestone events. The fair value of the contingent consideration liability includes inputs not observable in the market and thus represents a Level 3 measurement. The probability of achieving the defined milestone events under the Commercial Agreements is estimated on a quarterly basis by the Company’s management using a probability-weighted valuation approach model which utilizes current stock price and reflects the probability and timing of future issuances of shares. The probability and timing of future issuances of shares is based on current scenarios and plans to research, develop, and seek to obtain marketing approval for licensed compounds under the Commercial Agreements, with individual probabilities for each defined milestone event ranging from 75% to 90%, and with a cumulative probability of 67.5%. Total contingent consideration may change significantly as preclinical and clinical development related to the compounds covered by the Commercial Agreements progresses and additional data is obtained, impacting the Company’s assumptions regarding
14
probabilities of and timing for successful achievement of the related milestone events. For example, significant increases in the estimated probability of achieving a milestone would result in a significantly higher fair value measurement while significant decreases in the estimated probability of achieving a milestone would result in a significantly lower fair value measurement. The potential outstanding contingent consideration value results in shares to be issued ranging from zero, if none of the milestones are achieved, to a maximum of $3.7 million (using the Company’s stock price as of March 31, 2020). As of March 31, 2020, and December 31, 2019, none of the commercial milestones had been achieved and no royalties were due from the sales of licensed products.
The following table provides a reconciliation of assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at March 31, 2020 and 2019 (in thousands):
|
|
Amount |
|
|
Balance at December 31, 2019 |
|
$ |
1,131 |
|
Additions |
|
|
— |
|
Settlements |
|
|
— |
|
Change in fair value |
|
|
(221 |
) |
Balance at March 31, 2020 |
|
$ |
910 |
|
|
|
Amount |
|
|
Balance at December 31, 2018 |
|
$ |
2,483 |
|
Additions |
|
|
— |