harp-10q_20190331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2019 

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 No. 001-38800

 

Harpoon Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

47-3458693

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

4000 Shoreline Court, Suite 250

South San Francisco, CA 94080

(Address of principal executive offices)

Registrant’s telephone number, including area code: (650) 443-7400

 

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 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

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

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

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

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 per share

HARP

Nasdaq Global Select Market

 

The number of outstanding shares of the Registrant’s common stock, par value $0.0001, as of April 30, 2019 was 24,367,173.

 

 

 

 


 

HARPOON THERAPEUTICS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2019

 

TABLE OF CONTENTS

 

Page

 

Special Note Regarding Forward-Looking Statements

3

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item

 

 

1.

Condensed Financial Statements (unaudited):

5

 

a.

Condensed Balance Sheets as of March 31, 2019 and December 31, 2018

5

 

b.

Condensed Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2019 and 2018

6

 

c.

Condensed Statements of Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2019 and 2018

7

 

d.

Condensed Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018

8

 

e.

Notes to Condensed Financial Statements

9

2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

4.

Controls and Procedures

 

 

 

35

 

PART II. OTHER INFORMATION

 

1.

Legal Proceedings

36

1A.

Risk Factors

36

2.

Unregistered Sales of Equity Securities and Use of Proceeds

82

3.

Defaults Upon Senior Securities

82

4.

Mine Safety Disclosures

82

5.

Other Information

82

6.

Exhibits

83

 

Signatures

84

 


2


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” or “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 

the timing of the initiation, progress and expected results of our preclinical studies, clinical trials and our research and development programs;

 

 

our ability to retain the continued service of our key executives and to identify, hire and retain additional qualified professionals;

 

 

our ability to advance product candidates into, and successfully complete, preclinical studies and clinical trials;

 

 

the timing or likelihood of regulatory filings and approvals;

 

 

the commercialization of our product candidates, if approved;

 

 

the pricing, coverage and reimbursement of our product candidates, if approved;

 

 

the implementation of our business model, strategic plans for our business and product candidates;

 

 

the scope of protection we are able to establish and maintain for intellectual property rights covering our technology platforms, including TriTAC and ProTriTAC, and product candidates, including the projected terms of patent protection;

 

 

our ability to enter into strategic arrangements and/or collaborations and the potential benefits of such arrangements;

 

 

our estimates regarding the market opportunity for our product candidates;

 

 

our estimates regarding expenses, capital requirements and needs for additional financing and our ability to obtain additional capital;

 

 

our financial performance; and

 

 

developments relating to our competitors and our industry, including competing therapies.

These forward-looking statements are based on our management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s beliefs and assumptions and are not guarantees of future performance or development. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described under “Risk Factors” and elsewhere in this report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

3


 

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 report. While we believe that information provides a reasonable basis for 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.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report to conform these statements to new information, actual results or changes in our expectations, except as required by law.

 

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “company,” “Harpoon,” “we,” “us” and “our” refer to Harpoon Therapeutics, Inc.

 

 

4


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 

HARPOON THERAPEUTICS, INC.

Condensed Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,926

 

 

$

89,493

 

Short-term marketable securities

 

 

42,646

 

 

 

 

Prepaid expenses and other current assets

 

 

2,081

 

 

 

730

 

Total current assets

 

 

140,653

 

 

 

90,223

 

Property and equipment, net

 

 

5,502

 

 

 

2,998

 

Long-term marketable securities

 

 

8,978

 

 

 

 

Operating lease right-of-use asset

 

 

8,116

 

 

 

 

Tenant improvement allowance receivable

 

 

3,078

 

 

 

5,784

 

Other assets

 

 

605

 

 

 

3,575

 

Total assets

 

$

166,932

 

 

$

102,580

 

Liabilities, convertible preferred stock and stockholders' deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 

3,411

 

 

 

4,357

 

Accrued liabilities

 

 

3,664

 

 

 

3,341

 

Deferred revenue, current

 

 

4,250

 

 

 

4,250

 

Operating lease liabilities, current

 

 

572

 

 

 

 

Total current liabilities

 

 

11,897

 

 

 

11,948

 

Deferred revenue, noncurrent

 

 

6,729

 

 

 

7,792

 

Operating lease liabilities, net of current portion

 

 

14,712

 

 

 

 

Other long-term liabilities

 

 

 

 

 

6,742

 

Total liabilities

 

 

33,338

 

 

 

26,482

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; no shares and 82,000,000 shares

   authorized at March 31, 2019 and December 31, 2018, respectively; no shares and

   16,618,448 shares issued and outstanding at March 31, 2019 and

   December 31, 2018, respectively; $0 and $130,178 aggregate liquidation preference at March 31, 2019 and December 31, 2018, respectively

 

 

 

 

 

129,577

 

Stockholders' (deficit) equity

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 150,000,000 shares and 114,000,000 shares authorized at March 31, 2019 and December 31, 2018, respectively; 24,351,948 shares and 1,383,221 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

3

 

 

 

1

 

Additional paid-in capital

 

 

209,735

 

 

 

9,111

 

Accumulated other comprehensive income

 

 

26

 

 

 

 

Accumulated deficit

 

 

(76,170

)

 

 

(62,591

)

Total stockholders' equity (deficit)

 

 

133,594

 

 

 

(53,479

)

Total liabilities, convertible preferred stock and stockholders' equity (deficit)

 

$

166,932

 

 

$

102,580

 

 

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

5


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

Collaboration and license revenue

 

$

1,063

 

 

$

1,563

 

Total revenue

 

 

1,063

 

 

 

1,563

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

9,382

 

 

 

5,533

 

General and administrative

 

 

5,832

 

 

 

982

 

Total operating expenses

 

 

15,214

 

 

 

6,515

 

Loss from operations

 

 

(14,151

)

 

 

(4,952

)

Interest income

 

 

532

 

 

 

73

 

Other income (expense)

 

 

40

 

 

 

(2

)

Net loss

 

 

(13,579

)

 

 

(4,881

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

Net unrealized gain on marketable securities

 

 

26

 

 

 

 

Comprehensive loss

 

$

(13,553

)

 

$

(4,881

)

Net loss per share, basic and diluted

 

$

(0.92

)

 

$

(5.04

)

Weighted-average common shares used in computing net loss per share,

   basic and diluted

 

 

14,750,260

 

 

 

969,235

 

 

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

6


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity (Deficit)

(unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Note

Receivable

 

 

Accumulated Other

 

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

 

Common Stock

 

 

Paid-In

 

 

from

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stockholder

 

 

Income

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at December 31, 2018

 

 

16,618,448

 

 

 

129,577

 

 

 

 

1,211,419

 

 

 

1

 

 

 

9,111

 

 

 

 

 

 

 

 

 

 

(62,591

)

 

 

(53,479

)

Conversion of Series A, B, and C convertible preferred stock into common stock

 

 

(16,618,448

)

 

 

(129,577

)

 

 

 

16,618,448

 

 

 

1

 

 

 

129,575

 

 

 

 

 

 

 

 

 

 

 

 

129,576

 

Issuance of common stock upon exercise of warrants

 

 

 

 

 

 

 

 

 

563,043

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon initial public offering, net of offering costs of $10,122

 

 

 

 

 

 

 

 

 

5,769,201

 

 

 

1

 

 

 

70,646

 

 

 

 

 

 

 

 

 

 

 

 

70,647

 

Issuance of common stock for exercise

   of stock options

 

 

 

 

 

 

 

 

 

18,036

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

 

 

 

25

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

11,900

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

9

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

369

 

 

 

 

 

 

 

 

 

 

 

 

369

 

Vesting of Founder's shares

 

 

 

 

 

 

 

 

 

16,302

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,579

)

 

 

(13,579

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

 

26

 

Balances at March 31, 2019

 

 

 

 

 

 

 

 

 

24,208,349

 

 

 

3

 

 

 

209,735

 

 

 

 

 

 

26

 

 

 

(76,170

)

 

 

133,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Note

Receivable

 

 

Accumulated Other

 

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

 

Common Stock

 

 

Paid-In

 

 

from

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stockholder

 

 

Income

 

 

Deficit

 

 

Equity (Deficit)

 

Balances at December 31, 2017

 

 

6,989,973

 

 

 

39,841

 

 

 

 

948,294

 

 

 

1

 

 

 

8,309

 

 

 

(28

)

 

 

 

 

 

(35,225

)

 

 

(26,943

)

Issuance of common stock for exercise

   of stock options

 

 

 

 

 

 

 

 

 

10,248

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

7

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

4,575

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

147

 

 

 

 

 

 

 

 

 

 

 

 

 

147

 

Vesting of Founder's shares

 

 

 

 

 

 

 

 

 

20,980

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,881

)

 

 

(4,881

)

Balances at March 31, 2018

 

 

6,989,973

 

 

 

39,841

 

 

 

 

984,097

 

 

 

1

 

 

 

8,466

 

 

 

(28

)

 

 

 

 

 

(40,106

)

 

 

(31,667

)

 

7


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

Three months ended March 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(13,579

)

 

$

(4,881

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

369

 

 

 

147

 

Depreciation and amortization

 

 

297

 

 

 

139

 

Non cash lease expense

 

 

288

 

 

 

 

Net amortization of discounts on marketable securities

 

 

(45

)

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Accounts receivable

 

 

 

 

 

(500

)

Prepaid expenses and other assets

 

 

(1,350

)

 

 

(121

)

Other assets

 

 

2,969

 

 

 

 

Accounts payable

 

 

(771

)

 

 

(509

)

Accrued liabilities

 

 

323

 

 

 

(359

)

Deferred revenue

 

 

(1,063

)

 

 

(1,063

)

Operating lease liabilities

 

 

137

 

 

 

 

Other long-term liabilities

 

 

 

 

 

6

 

Net cash used in operating activities

 

 

(12,425

)

 

 

(7,141

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(72

)

 

 

(92

)

Purchases of marketable securities

 

 

(51,577

)

 

 

 

Net cash used in investing activities

 

 

(51,649

)

 

 

(92

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from initial public offering of common stock, net of commissions

 

 

70,473

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options, net

 

 

34

 

 

 

10

 

Net cash provided by financing activities

 

 

70,507

 

 

 

10

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

6,433

 

 

 

(7,223

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

89,960

 

 

 

29,423

 

Cash, cash equivalents, and restricted cash at end of period

 

$

96,393

 

 

$

22,200

 

Supplemental disclosures of non-cash investing and financing information

 

 

 

 

 

 

 

 

Conversion of preferred stock to common stock and additional paid-in capital

 

$

129,577

 

 

$

 

Purchases of property and equipment included in accounts payable

 

$

23

 

 

$

210

 

Right-of-use asset obtained in exchange for lease obligation

 

$

8,404

 

 

$

 

Tenant improvements provided by landlord

 

$

2,706

 

 

$

 

Initial public offering costs included in accounts payable

 

$

174

 

 

$

 

 

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

8


 

HARPOON THERAPEUTICS, INC.

Notes to the Condensed Financial Statements

(unaudited)

 

1.

Organization

Description of Business

Harpoon Therapeutics, Inc. (the “Company”) is a clinical-stage immunotherapy company developing a novel class of T cell engagers that harness the power of the body’s immune system to treat patients suffering from cancer and other diseases. T cell engagers are engineered proteins that direct a patient’s own T cells to kill target cells that express specific proteins, or antigens, carried by the target cells. Using a proprietary Tri-specific T cell Activating Construct, (“TriTAC”), platform, the Company is developing a pipeline of novel T cell engagers, or TriTACs, initially focused on the treatment of solid tumors and hematologic malignancies. The Company was incorporated in Delaware in March 2015 and is headquartered in South San Francisco, California.

Initial Public Offering

On February 7, 2019, the Company’s registration statement on Form S-1 relating to its initial public offering (“IPO”) was declared effective by the Securities and Exchange Commission and shares of its common stock began trading on the Nasdaq Global Select Market (“Nasdaq”) on February 8, 2019. The public offering price of the shares sold in the IPO was $14.00 per share. The IPO closed in February 2019, pursuant to which the Company sold 5,769,201 shares of common stock, for gross proceeds of approximately $80.8 million, including the exercise in part of the underwriters’ option to purchase additional shares.  The Company received net proceeds from the IPO of approximately $70.7 million, after underwriting discounts, commissions and offering costs.  

Immediately prior to the completion of the IPO on February 12, 2019, all outstanding shares of redeemable convertible preferred stock, including preferred stock warrants, were converted into 17,181,491 shares of common stock and $129.6 million was reclassified from temporary equity to additional paid-in capital on the balance sheet. Subsequent to the closing of the IPO, there were no shares of redeemable convertible preferred stock outstanding.

Liquidity

The Company has incurred significant losses and has negative cash flows from operations. As of March 31, 2019, the Company had an accumulated deficit of $76.2 million. Management expects to continue to incur additional substantial losses in the foreseeable future as a result of the Company’s research and development activities.

As of March 31, 2019, the Company had cash, cash equivalents, and marketable securities of $147.6 million, which is available to fund future operations. The Company believes that the proceeds from the IPO, along with the Company’s cash and cash equivalents balance as of March 31, 2019, provide sufficient capital resources to continue its operations for at least 12 months from the issuance date of the accompanying condensed financial statements. The Company will need to raise additional capital to support the completion of its research and development activities. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to continue to operationalize the Company’s current technology and to advance the development of its product candidates.

2.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( “GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of SEC Regulation S-X for interim financial information.

The accompanying unaudited condensed financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 14, 2019 (the "2018 Annual Report on Form 10-K"). The condensed Balance Sheet as of December 31, 2018 was derived from the audited annual financial statements as of the period then ended. Certain information and footnote disclosures typically included in the Company's audited financial statements have been condensed or omitted. The accompanying unaudited condensed financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All such adjustments are of a normal recurring nature except for the impacts of adopting new accounting standards discussed below. The accompanying unaudited condensed financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

9


 

During the three months ended March 31, 2019, there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2018 Annual Report on Form 10-K. For further information with regard to the Company’s Significant Accounting Policies, please refer to Note 2, "Summary of Significant Accounting Policies," to the Company’s audited financial statements included in the 2018 Annual Report on Form 10-K which have been prepared in accordance with GAAP.

Reverse Stock Split

On January 28, 2019, the Company filed an amendment to the Company’s amended and restated certificate of incorporation to effect a reverse split of shares of the Company’s common stock and convertible preferred stock on a 4.9175-for-one basis (the “Reverse Stock Split”). The par value and the authorized number of shares of the convertible preferred stock and common stock were not adjusted in connection with the Reverse Stock Split. All references to common stock, convertible preferred stock, warrants to purchase common stock, options to purchase common stock, early exercised options, restricted stock, share data, per share data and related information contained in the accompanying condensed financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented.

Use of Estimates 

The preparation of 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 as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions made in the accompanying condensed financial statements include, but are not limited to, the fair value of common stock, the fair value of stock options, the research period of the collaboration agreement with AbbVie Biotechnology Ltd., operating lease liabilities, income tax uncertainties and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the Company’s Chief Operating Decision Maker in making decisions regarding resource allocation and assessing performance. To date, the Company has viewed its operations and manages its business as one segment operating primarily in the United States.

Cash, Cash Equivalents and Restricted Cash 

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market accounts and are stated at fair value.

The Company maintained restricted cash of $0.5 million for both periods ended as of March 31, 2019 and December 31, 2018, respectively. This amount as of March 31, 2019 and December 31, 2018 are included within “Other assets” in the accompanying balance sheets and is comprised solely of a letter of credit required pursuant to the lease for the Company’s corporate headquarters entered into in August 2018 as discussed in Note 7.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the balance sheets that sum to the total of the same amounts shown in the statement of cash flows.

 

 

 

As of

 

 

 

March 31, 2019

 

 

December 31, 2018

 

 

March 31, 2018

 

 

December 31, 2017

 

 

 

(in thousands)

 

Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

95,926

 

 

$

89,493

 

 

$

22,200

 

 

$

29,423

 

Restricted cash (included in other assets)

 

 

467

 

 

 

467

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash in Statements of Cash Flows

 

$

96,393

 

 

$

89,960

 

 

$

22,200

 

 

$

29,423

 

 

     Marketable Securities

10


 

The Company generally invests its excess cash in money market funds and investment grade short- to intermediate-term fixed income securities. Such investments are included in cash and cash equivalents, short-term marketable securities or long-term marketable securities on the balance sheets. Marketable securities with a maturity date greater than 90 days and less than one year at each balance sheet date are classified as short-term. Marketable securities with a maturity date greater than one year at each balance sheet date are classified as long-term. All of our marketable securities are considered available-for-sale and are reported at fair value with unrealized gains and losses included as a component of stockholders’ equity. The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity, which is included in interest income, net on the statements of operations. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on marketable securities are included in interest income, net on the statements of operations. The cost of securities sold is determined using specific identification.

The Company periodically evaluates whether declines in the 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 marketable security or it is more likely than not it will be required to sell any marketable securities before recovery of its 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 the Company’s strategy and intentions for holding the marketable security.

 

Concentration of Credit Risk

Cash, cash equivalents and marketable securities consist of financial instruments that potentially subject the Company to a concentration of credit risk, to the extent of the amounts recorded on the balance sheets. The Company minimizes the amount of credit exposure by investing cash that is not required for immediate operating needs in money market funds and marketable securities.

Leases

The Company evaluates arrangements at inception to determine if an arrangement is or contains a lease. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company uses an incremental borrowing rate that the Company would expect to incur for a fully collateralized loan over a similar term under similar economic conditions to determine the present value of the lease payments.

The lease payments used to determine the Company’s operating lease assets may include lease incentives and stated rent increases and are recognized in the Company’s operating lease assets in the condensed balance sheets. Operating lease liabilities are accreted over the term of the lease using the incremental borrowing rate and the associated expense is recorded to operating expenses in the condensed statement of operations and comprehensive loss. Operating lease assets are amortized to rent expense over the lease term and included in operating expenses in the condensed statement of operations and comprehensive loss. Variable lease payments are recognized as the associated obligation is incurred.

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for that asset or liability in an orderly transaction between market participants on the measurement date, and established a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

The Company measures fair value based on a three-level hierarchy of inputs, of which the first two are considered observable and the last unobservable. Unobservable inputs reflect the Company’s own assumptions about current market conditions. The three-level hierarchy of inputs is as follows:

Level 1—Observable inputs such as unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

11


 

Level 2—Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and

Level 3— Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The carrying amounts reflected in the accompanying balance sheets for cash and cash equivalents, prepaid expenses, other current assets, accounts payable, accrued expenses and other current liabilities approximate their fair values due to their short-term nature.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets, generally three to five years. Leasehold improvements are amortized using the straight-line method over the shorter of the assets’ estimated useful lives or the remaining term of the lease. Depreciation and amortization begin at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets or group of assets 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 amount of the assets, the Company reduces the carrying amount of the assets through an impairment charge to their estimated fair values based on a discounted cash flow approach or, when available and appropriate, to comparable market values. There were no impairments of long-lived assets for any of the periods presented.

12


 

Revenue Recognition

Effective January 1, 2017, the Company early adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”) on a full retrospective basis. This standard applies to all contracts with customers. In accordance with Topic 606, the Company recognizes revenue when its 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 that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer. At contract inception, the Company assesses the goods or services promised within each contract that falls under the scope of Topic 606, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company enters into corporate collaborations under which it may obtain upfront license fees, research and development funding, and development, regulatory and commercial milestone payments and royalty payments. The Company’s performance obligations under these arrangements may include licenses of intellectual property, distribution rights, research and development services, delivery of manufactured product and/or participation on joint steering committees.

Licenses of intellectual property: If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from upfront license fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgement 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, up-front fees. 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: At the inception of each arrangement that includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price. Topic 606 suggests two alternatives to use when estimating the amount of variable consideration: the expected value method and the most likely amount method. Under the expected value method, an entity considers the sum of probability-weighted amounts in a range of possible consideration amounts. Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts. Whichever method is used, it should be consistently applied throughout the life of the contract; however, it is not necessary for the Company to use the same approach for all contracts. The Company expects to use the most likely amount method for development and regulatory milestone payments. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s or the licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis. The Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability or achievement of each such milestone and any related constraint, and if necessary, adjusts its estimates of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

Commercial milestones and royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and in which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue when the related sales occur. To date, the Company has not recognized any royalty revenue resulting from its collaboration arrangements.

Upfront payments and fees are recorded as deferred revenue upon receipt or when due, and may require deferral of revenue recognition to a future period until the Company performs its obligations under these arrangements. Amounts due to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional.

13


 

Research and Development Expenses and Accrued Research and Development Costs

The Company expenses research and development costs as incurred. Research and development expenses consist of personnel costs for the Company’s research and product development employees. Also included are non-personnel costs such as professional fees payable to third parties for preclinical studies, clinical trials, research services, laboratory supplies and equipment maintenance and depreciation, intellectual property licenses and other consulting costs.

The Company estimates preclinical and clinical study and research expenses based on the services performed, pursuant to contracts with research institutions that conduct and manage preclinical studies, clinical trials and research services on its behalf. The Company estimates these expenses based on discussions with internal management personnel and external service providers as to the progress or stage of completion of services and the contracted fees to be paid for such services. The Company records the estimated costs of research and development activities based upon the estimated amount services provided but not yet invoiced, and includes these costs in development expenses. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service provides under the service agreements. The Company makes significant judgments and estimates in determining the accrued liabilities balance in each reporting period. As actual costs become known, the Company adjusts its accrued liabilities. The Company has not experienced any material differences between accrued costs and actual costs incurred. However, the status and timing of actual services performed may vary from the Company’s estimates, resulting in adjustments to expense in future periods. Changes in these estimates that result in material changes to the Company’s accruals could materially affect the Company’s results of operations. Payments associated with licensing agreements to acquire exclusive license to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternate future use are expensed as incurred.

Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered. Such payments are evaluated for current or long-term classification based on when such services are expected to be received.

Stock-Based Compensation

The Company maintains a stock-based compensation plan as a long-term incentive for employees, consultants and members of the Company’s board of directors (the “Board”). The plan allows for the issuance of non-statutory options (“NSOs”) and incentive stock options to employees and NSOs to nonemployees.

Share-based payments are measured using fair-value-based measurements and recognized as compensation expense over the service period in which the awards are expected to vest. The Company’s fair-value-based measurements of awards to employees and directors as of the grant date utilize the single-option award-valuation approach, and the Company uses the straight-line method for expense attribution. The fair-value-based measurements of options granted to nonemployees are remeasured at each period end until the options vest and are amortized to expense as earned. The valuation model used for calculating the estimated fair value of stock awards is the Black-Scholes option-pricing model. The Black-Scholes model requires the Company to make assumptions and judgments about the variables used in the calculations, including the expected term (weighted-average period of time that the options granted are expected to be outstanding), the expected volatility of the Company’s common stock, the related risk-free interest rate and the expected dividend. The Company has elected to recognize forfeitures of share-based payment awards as they occur.

Effective January 1, 2018, the Company early adopted ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The new guidance requires equity-classified share-based payment awards issued to nonemployees to be measured on the grant date, instead of being measured through the performance completion date under the current guidance. For stock-based awards issued to non-employees, the Company records expense related to stock options based on the fair value of the options calculated using the Black-Scholes option-pricing model based on the measured grant date.

Convertible Preferred Stock

The Company records all shares of convertible preferred stock at their respective fair values less issuance costs on the dates of issuance. The convertible preferred stock is recorded outside of stockholders’ deficit because, in the event of certain deemed liquidation events considered not solely within the Company’s control, such as a merger, acquisition and sale of all or substantially all of the Company’s assets, the convertible preferred stock will become redeemable at the option of the holders. In the event of a change of control of the Company, proceeds received from the sale of such shares will be distributed in accordance with the liquidation preferences set forth in the Company’s Amended and Restated Certificate of Incorporation unless the holders of convertible preferred stock have converted their shares of convertible preferred stock into shares of common stock. The Company has determined not to adjust the carrying values of the convertible preferred stock to the liquidation preferences of such shares because of the uncertainty of whether or when such an event would occur.

14


 

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. Financial statement effects of uncertain tax positions are recognized when it is more-likely-than-not, based on the technical merits of the position, that it will be sustained upon examination. Interest and penalties related to unrecognized tax benefits are included as a component of other expense. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

The Company accounts for uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes. The Company assesses all material positions taken in any income tax return, including all significant uncertain positions, in all tax years that are still subject to assessment or challenge by relevant taxing authorities. Assessing an uncertain tax position begins with the initial determination of the position’s sustainability and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of each balance sheet date, unresolved uncertain tax positions must be reassessed, and the Company will determine whether (i) the factors underlying the sustainability assertion have changed and (ii) the amount of the recognized tax benefit is still appropriate. The recognition and measurement of tax benefits requires significant judgment. Judgment concerning the recognition and measurement of a tax benefit might change as new information becomes available.

The Company includes any penalties and interest expense related to income taxes as a component of provision for income tax as necessary. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. As discussed in Note 9, the unvested portion of early exercised stock options are excluded from the computation of weighted average shares as the continuing vesting of such shares is contingent on the holders’ continued service to the Company. Diluted net loss per share is the same as basic net loss per share for each period presented, since the effects of potentially dilutive securities are antidilutive given the net loss of the Company.

Comprehensive Income (Loss)

Comprehensive loss includes net loss and certain changes in stockholders’ equity (deficit) that are excluded from net loss, primarily unrealized gains or losses on the Company’s marketable securities.

Deferred Offering Costs

The Company had deferred offering costs consisting of legal, accounting and other fees and costs directly attributable to the IPO, which was completed in February 2019. The deferred offering costs were offset against the gross proceeds of the IPO.  As of March 31, 2019 and December 31, 2018, zero and $3.0 million of deferred offering costs were included in other assets on the balance sheets, respectively.

15


 

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the accompanying condensed financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

As described in “Recently Adopted Accounting Pronouncements” below, the Company early adopted ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606), ASU No. 2016-09, Stock Compensation—Improvements to Employee Share-Based Payment Accounting, ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, and ASU No. 2016-02, (Topic 842), Leases, as the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies.

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 (Topic 842), Leases (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. ASU 2016-02 requires new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. As a result of the Company having elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act, ASU 2016-02 is effective for the Company for the year ending December 31, 2020 and all interim periods thereafter. Effective January 1, 2019, the Company early adopted ASU No. 2016-02 using the alternative transition approach provided by ASU No. 2018-11. The Company elected certain practical expedients permitted under the transition guidance, including the election to carryforward historical lease classification. The Company also elected the short-term lease practical expedient, which allowed the Company to not recognize leases with a term of less than 12 months on the balance sheets. In addition, the Company elected the lease and non-lease components practical expedient, which allowed the Company to calculate the present value of the fixed payments without performing an allocation of lease and non-lease components. Adoption of the new standard resulted in recording operating lease right-of-use assets and operating lease liabilities of approximately $8.4 million and $15.1 million, respectively, on the balance sheets as of January 1, 2019. The lease liabilities represent the present value of the remaining lease payments of the Company’s Tizona Lease and Cove Lease (see Note 7), discounted using the Company’s incremental borrowing rate as of January 1, 2019. The corresponding right-of-use lease assets are recorded based on the lease liabilities, adjusted for the unamortized lease incentives received and the cumulative difference between rent expense and amounts paid under the Tizona Lease and Cove Lease. The adoption of ASU 2016-02 did not have a material impact on either the statement of operations or statement of cash flows for the three months ended March 31, 2019.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provided amended guidance to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”). The Company adopted the new standard on January 1, 2019 and did not have income tax effects of the Tax Act related to unrealized gains and losses on its marketable securities.  The adoption of this standard did not have an impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements

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, which modifies the disclosure requirements on fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the effect the new guidance will have on its financial statements.

16


 

3.

Fair Value Measurement

The following table presents information about the Company’s financial assets that are measured at fair value and indicates the fair value hierarchy of the valuation:

 

 

 

Fair Value Measurements at March 31, 2019

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash Equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Money market funds

 

$

61,697

 

 

$

61,697

 

 

$

 

 

$

 

   U.S. government treasuries

 

 

29,925

 

 

 

29,925

 

 

 

 

 

 

 

   Corporate debt securities

 

 

1,074

 

 

 

 

 

 

1,074

 

 

 

 

   U.S. government agency securities

 

 

1,841

 

 

 

 

 

 

1,841

 

 

 

 

    Short-term marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   U.S. government treasuries

 

 

19,834

 

 

 

14,859

 

 

 

4,975

 

 

 

 

   Corporate debt securities

 

 

12,150

 

 

 

 

 

 

12,150

 

 

 

 

   U.S. government agency securities

 

 

10,662

 

 

 

 

 

 

10,662

 

 

 

 

    Long-term marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Corporate debt securities

 

 

8,482

 

 

 

 

 

 

8,482

 

 

 

 

   U.S. government agency securities

 

 

496

 

 

 

 

 

 

496

 

 

 

 

Total assets

 

$

146,161

 

 

$

106,481

 

 

$

39,680

 

 

$

 

 

 

 

Fair Value Measurements at December 31, 2018

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 

(in thousands)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Cash Equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Money market funds

 

$

60,396

 

 

 

60,396

 

 

$

 

 

$

 

Total assets

 

$

60,396

 

 

$

60,396

 

 

$

 

 

$

 

 

The Company’s Level 2 securities are valued using third-party pricing sources. 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.

The Company had no Level 3 assets or liabilities as of March 31, 2019 and December 31, 2018. There were no transfers between Level 1 and Level 2 for the periods ended March 31, 2019 and December 31, 2018.

The Company did not have any financial liabilities subject to fair value measurements on a recurring basis as of March 31, 2019 and December 31, 2018.

17


 

4.

Available-for-Sale Securities

All marketable securities were considered available-for-sale at March 31, 2019. The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s marketable securities by major security type at each balance sheet date are summarized in the tables below:

 

 

 

March 31, 2019

 

 

 

Amortized Cost

 

 

Gross Unrealized

Gain

 

 

Gross Unrealized

Loss

 

 

Fair Value

 

 

 

(in thousands)

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government treasuries

 

$

29,924

 

 

$

1

 

 

$

 

 

$

29,925

 

U.S. government agency securities

 

 

1,841

 

 

 

 

 

 

 

 

 

1,841