10-Q
trueQ2P3Y0001708493false--12-31false0001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300001708493us-gaap:ShortTermInvestmentsMemberharp:USGovermentSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-06-300001708493us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001708493harp:LongTermInvestments1Memberus-gaap:ConvertibleDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310001708493us-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2020-12-310001708493harp:AbbVieRestatedCollaborationAgreementMemberharp:AbbVieIncMember2019-01-012019-12-310001708493us-gaap:LandAndBuildingMember2018-08-012018-08-310001708493us-gaap:CashEquivalentsMemberus-gaap:MoneyMarketFundsMember2020-12-310001708493us-gaap:CollaborativeArrangementMember2021-01-012021-06-300001708493us-gaap:LicenseAgreementTermsMemberharp:DevelopmentAndOptionAgreementMemberharp:AbbVieIncMember2019-01-012019-12-310001708493harp:TwoThousandNineteenPlanMember2021-01-012021-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001708493harp:TaxYear2022Member2021-01-012021-06-300001708493harp:CollaborationAndLicenseMember2020-01-012020-06-300001708493harp:WerewolfTherapeuticsIncMemberus-gaap:CollaborativeArrangementMember2021-01-012021-06-3000017084932020-01-012020-06-300001708493us-gaap:RetainedEarningsMember2020-12-310001708493harp:AccountingStandardsUpdateSevenFourZeroTenMember2021-01-012021-06-300001708493harp:LongTermInvestments1Memberus-gaap:ConvertibleDebtSecuritiesMember2020-12-310001708493us-gaap:RetainedEarningsMember2021-06-300001708493harp:TwoThousandNineteenPlanAndTwoThousandFifteenPlanMember2020-01-012020-12-310001708493us-gaap:AdditionalPaidInCapitalMember2020-03-310001708493us-gaap:CollaborativeArrangementMemberharp:AbbVieIncMember2021-06-300001708493us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CashEquivalentsMember2020-12-310001708493harp:EarlyExercisedStockOptionsSubjectToFutureVestingMember2020-01-012020-12-310001708493harp:TwoThousandAndNineteenEmployeeStockPurchasePlanMember2021-01-012021-06-300001708493harp:AbbVieDevelopmentAndOptionAgreementMemberharp:CollaborationAndLicenseMember2020-01-012020-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493harp:TwoThousandAndNineteenEmployeeStockPurchasePlanMember2020-01-012020-12-3100017084932021-06-300001708493harp:USGovermentSecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-12-310001708493us-gaap:CommonStockMember2020-12-310001708493harp:AbbVieRestatedCollaborationAgreementMemberharp:CollaborationAndLicenseMember2021-04-012021-06-300001708493us-gaap:ShortTermInvestmentsMember2021-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001708493harp:ComputerEquipmentAndSoftwareMember2020-12-310001708493harp:TwoThousandNineteenPlanAndTwoThousandFifteenPlanMember2021-06-300001708493harp:USGovermentSecuritiesMemberus-gaap:ShortTermInvestmentsMember2021-06-300001708493harp:CommonStockOptionsIssuedAndOutstandingMember2020-01-012020-12-3100017084932021-01-012021-01-310001708493us-gaap:TaxYear2020Member2021-01-012021-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300001708493us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2021-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMember2021-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310001708493us-gaap:CommonStockMember2020-04-012020-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMemberharp:USGovermentSecuritiesMember2020-12-310001708493harp:DevelopmentAndOptionAgreementMemberharp:AbbVieIncMember2021-01-012021-06-300001708493us-gaap:ShortTermInvestmentsMemberharp:USGovermentSecuritiesMember2021-06-300001708493harp:AbbVieDevelopmentAndOptionAgreementMemberharp:CollaborationAndLicenseMember2020-04-012020-06-300001708493us-gaap:EmployeeStockOptionMemberharp:TwoThousandNineteenPlanMember2021-01-012021-06-300001708493us-gaap:ShortTermInvestmentsMemberharp:USGovermentSecuritiesMemberus-gaap:FairValueInputsLevel1Member2021-06-300001708493us-gaap:LeaseholdImprovementsMember2020-12-310001708493us-gaap:CommonStockMember2021-01-012021-03-310001708493us-gaap:GeneralAndAdministrativeExpenseMember2021-04-012021-06-300001708493harp:LongTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493harp:LongTermInvestments1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493us-gaap:ShortTermInvestmentsMemberus-gaap:USTreasurySecuritiesMember2020-12-310001708493us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493harp:LongTermInvestmentsMember2020-12-310001708493us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-12-310001708493harp:EarlyExercisedStockOptionsMember2020-12-310001708493harp:CollaborationAndLicenseMember2020-04-012020-06-300001708493us-gaap:RetainedEarningsMember2019-12-310001708493harp:LongTermInvestments1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493harp:WerewolfTherapeuticsIncMemberus-gaap:CollaborativeArrangementMember2021-04-012021-06-300001708493srt:MaximumMember2021-01-012021-06-300001708493harp:DevelopmentRegulatoryAndCommercialSaleMilestonesForLicensedProductsMemberharp:AbbVieIncMember2021-01-012021-06-300001708493us-gaap:AdditionalPaidInCapitalMember2020-12-310001708493us-gaap:CollaborativeArrangementMemberharp:AbbVieRestatedCollaborationAgreementMemberharp:AbbVieIncMember2021-04-012021-06-300001708493country:US2021-01-012021-06-300001708493harp:AbbVieRestatedCollaborationAgreementMemberharp:CollaborationAndLicenseMember2020-04-012020-06-300001708493us-gaap:FairValueInputsLevel3Memberharp:LongTermInvestments1Memberus-gaap:ConvertibleDebtSecuritiesMember2020-12-310001708493us-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMemberharp:USGovermentSecuritiesMember2021-06-300001708493harp:USGovermentSecuritiesMemberharp:LongTermInvestmentsMember2020-12-3100017084932021-03-310001708493us-gaap:FairValueInputsLevel1Member2020-12-310001708493us-gaap:AdditionalPaidInCapitalMember2021-06-300001708493us-gaap:OfficeEquipmentMember2021-06-300001708493us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Member2020-12-310001708493us-gaap:AdditionalPaidInCapitalMember2019-12-310001708493us-gaap:CommonStockMember2020-03-310001708493us-gaap:FairValueInputsLevel1Member2021-06-300001708493us-gaap:ConvertibleDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2021-06-300001708493us-gaap:RetainedEarningsMember2020-04-012020-06-3000017084932021-04-012021-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2021-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001708493us-gaap:RetainedEarningsMember2021-03-310001708493srt:MaximumMemberharp:DevelopmentAndOptionAgreementMemberharp:AbbVieIncMember2021-01-012021-06-300001708493srt:MinimumMember2021-01-012021-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2021-06-300001708493us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-06-300001708493harp:TwoThousandNineteenPlanMember2020-04-012020-06-300001708493harp:LongTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493harp:CollaborationAndLicenseMember2021-01-012021-06-3000017084932020-04-012020-06-300001708493harp:LongTermInvestments1Memberharp:USGovermentSecuritiesMember2020-12-310001708493harp:TwoThousandAndNineteenEmployeeStockPurchasePlanMembersrt:MaximumMember2020-12-310001708493us-gaap:CommonStockMember2021-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493harp:LongTermInvestments1Memberus-gaap:FairValueInputsLevel1Memberharp:USGovermentSecuritiesMember2020-12-310001708493us-gaap:CollaborativeArrangementMemberharp:AbbVieRestatedCollaborationAgreementMemberharp:AbbVieIncMember2021-01-012021-06-300001708493us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-06-300001708493us-gaap:CashEquivalentsMember2021-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2020-12-310001708493harp:EarlyExercisedStockOptionsMember2021-06-3000017084932020-01-012020-12-310001708493harp:TwoThousandNineteenPlanAndTwoThousandFifteenPlanMember2021-01-012021-06-300001708493us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CashEquivalentsMember2020-12-310001708493harp:LongTermInvestments1Memberus-gaap:FairValueInputsLevel1Memberus-gaap:ConvertibleDebtSecuritiesMember2020-12-310001708493us-gaap:EmployeeStockOptionMember2021-01-012021-06-300001708493harp:TwoThousandAndNineteenEmployeeStockPurchasePlanMember2021-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001708493us-gaap:ShortTermInvestmentsMemberharp:USGovermentSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001708493us-gaap:FairValueInputsLevel2Member2021-06-300001708493us-gaap:FairValueInputsLevel3Memberharp:LongTermInvestments1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CashEquivalentsMember2021-06-300001708493harp:LongTermInvestments1Memberus-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Memberharp:USGovermentSecuritiesMember2020-12-310001708493us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CashEquivalentsMember2021-06-300001708493us-gaap:CollaborativeArrangementMemberharp:AbbVieIncMember2021-01-012021-06-300001708493us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-12-310001708493us-gaap:CommonStockMember2019-12-310001708493us-gaap:EquipmentMember2020-12-310001708493harp:TwoThousandAndNineteenEmployeeStockPurchasePlanMember2020-12-310001708493harp:LongTermInvestments1Memberus-gaap:FairValueInputsLevel1Memberus-gaap:ConvertibleDebtSecuritiesMember2021-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:ConvertibleDebtSecuritiesMember2021-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493harp:AbbVieRestatedCollaborationAgreementMemberharp:AbbVieIncMember2021-01-012021-06-3000017084932021-04-232021-04-230001708493us-gaap:ConvertibleDebtSecuritiesMemberharp:LongTermInvestmentsMember2020-12-310001708493us-gaap:RetainedEarningsMember2020-06-300001708493harp:TwoThousandNineteenPlanMember2021-04-012021-06-300001708493harp:ComputerEquipmentAndSoftwareMember2021-06-300001708493harp:NonEmployeeAwardMember2021-01-012021-06-300001708493harp:TwoThousandNineteenPlanAndTwoThousandFifteenPlanMember2020-12-310001708493harp:CollaborationAndLicenseMember2021-04-012021-06-300001708493harp:TwoThousandNineteenPlanMember2021-06-300001708493harp:AbbVieDevelopmentAndOptionAgreementMemberharp:CollaborationAndLicenseMember2021-01-012021-06-300001708493us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001708493us-gaap:CommonStockMember2020-01-012020-03-310001708493us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Member2021-06-300001708493harp:LongTermInvestments1Memberus-gaap:ConvertibleDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2021-06-300001708493us-gaap:CommonStockMember2021-03-310001708493us-gaap:CommonStockMember2021-04-012021-06-300001708493us-gaap:ShortTermInvestmentsMemberharp:USGovermentSecuritiesMember2020-12-3100017084932020-12-310001708493us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2020-12-310001708493harp:AbbVieRestatedCollaborationAgreementMemberharp:CollaborationAndLicenseMember2020-01-012020-06-300001708493us-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2021-06-300001708493harp:LongTermInvestments1Memberus-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493us-gaap:FurnitureAndFixturesMember2020-12-310001708493us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493us-gaap:FairValueInputsLevel2Member2020-12-310001708493us-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493harp:EmployeeStockPurchasePlanMember2020-01-012020-12-310001708493us-gaap:RetainedEarningsMember2020-03-310001708493us-gaap:EmployeeStockOptionMember2020-01-012020-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-3000017084932021-01-310001708493us-gaap:FurnitureAndFixturesMember2021-06-300001708493harp:DevelopmentRegulatoryAndCommercialSaleMilestonesForLicensedProductsMembersrt:MaximumMemberharp:AbbVieIncMember2021-01-012021-06-3000017084932020-03-310001708493us-gaap:EmployeeStockOptionMemberharp:TwoThousandNineteenPlanMember2020-01-012020-06-300001708493us-gaap:ResearchAndDevelopmentExpenseMember2021-04-012021-06-300001708493us-gaap:FairValueInputsLevel3Memberharp:LongTermInvestments1Memberus-gaap:ConvertibleDebtSecuritiesMember2021-06-300001708493us-gaap:CashEquivalentsMember2020-12-310001708493us-gaap:AdditionalPaidInCapitalMember2021-03-3100017084932020-06-300001708493harp:SettlementAgreementMember2021-05-052021-05-050001708493us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-06-300001708493us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300001708493us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001708493harp:AbbVieDevelopmentAndOptionAgreementMemberharp:CollaborationAndLicenseMember2021-04-012021-06-300001708493us-gaap:ConvertibleDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-12-310001708493us-gaap:EquipmentMember2021-06-300001708493harp:LongTermInvestments1Memberus-gaap:ConvertibleDebtSecuritiesMember2021-06-300001708493us-gaap:CashEquivalentsMemberus-gaap:MoneyMarketFundsMember2021-06-300001708493us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001708493us-gaap:LeaseholdImprovementsMember2021-06-300001708493harp:EmployeeStockPurchasePlanMember2021-01-012021-06-3000017084932021-01-012021-06-300001708493us-gaap:LicenseAgreementTermsMemberharp:DevelopmentAndOptionAgreementMemberharp:AbbVieIncMember2020-04-012020-06-3000017084932021-07-310001708493us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMember2021-06-300001708493us-gaap:ResearchAndDevelopmentExpenseMember2020-04-012020-06-300001708493us-gaap:CollaborativeArrangementMemberharp:AbbVieIncMember2021-04-012021-06-3000017084932019-12-310001708493us-gaap:USTreasurySecuritiesMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel2Member2020-12-310001708493us-gaap:RetainedEarningsMember2021-04-012021-06-300001708493harp:LongTermInvestments1Memberus-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493us-gaap:CommonStockMember2020-06-300001708493us-gaap:FairValueInputsLevel3Member2021-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMember2020-12-310001708493harp:LongTermInvestments1Memberus-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493harp:CommonStockOptionsIssuedAndOutstandingMember2021-01-012021-06-300001708493us-gaap:RetainedEarningsMember2020-01-012020-03-310001708493harp:LongTermInvestmentsMember2021-06-300001708493us-gaap:ConvertibleDebtSecuritiesMemberharp:LongTermInvestmentsMember2021-06-300001708493harp:EarlyExercisedStockOptionsSubjectToFutureVestingMember2021-01-012021-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:ConvertibleDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2021-06-300001708493harp:NonEmployeeAwardMember2020-04-012020-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2020-12-310001708493us-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493us-gaap:FairValueInputsLevel3Memberharp:LongTermInvestments1Memberharp:USGovermentSecuritiesMember2020-12-310001708493us-gaap:GeneralAndAdministrativeExpenseMember2020-04-012020-06-300001708493us-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493harp:NonEmployeeAwardMember2020-01-012020-06-3000017084932020-01-012020-03-3100017084932021-01-012021-03-310001708493us-gaap:ShortTermInvestmentsMember2020-12-310001708493harp:TwoThousandNineteenPlanMember2020-01-012020-06-300001708493us-gaap:FairValueInputsLevel3Member2020-12-310001708493us-gaap:FairValueInputsLevel3Memberharp:LongTermInvestments1Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2021-06-300001708493us-gaap:AdditionalPaidInCapitalMember2020-06-300001708493us-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2020-12-310001708493harp:AbbVieRestatedCollaborationAgreementMemberharp:CollaborationAndLicenseMember2021-01-012021-06-300001708493us-gaap:LicenseAgreementTermsMembersrt:MaximumMemberharp:DevelopmentAndOptionAgreementMemberharp:AbbVieIncMember2019-01-012019-12-310001708493us-gaap:RetainedEarningsMember2021-01-012021-03-310001708493us-gaap:CollaborativeArrangementMemberharp:AbbVieRestatedCollaborationAgreementMemberharp:AbbVieIncMember2021-06-300001708493harp:NonEmployeeAwardMember2021-04-012021-06-30xbrli:purexbrli:sharesiso4217:USDxbrli:sharesiso4217:USDharp:Segment

 

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 June 30, 2021 

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission File 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.)

 

131 Oyster Point Blvd, Suite 300

South San Francisco, CA 94080

(Address of principal executive offices)

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

 

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

 

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 

The number of outstanding shares of the Registrant’s common stock, par value $0.0001, as of July 31, 2021 was 32,669,806.

 

 


 

HARPOON THERAPEUTICS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021

 

TABLE OF CONTENTS

 

Page

 

Special Note Regarding Forward-Looking Statements

3

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

Item

 

 

1.

Condensed Financial Statements (unaudited):

6

 

 

a.    Condensed Balance Sheets as of June 30, 2021 and December 31, 2020

6

 

 

b.    Condensed Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2021 and 2020

7

 

 

c.    Condensed Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020

8

 

 

d.    Condensed Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020

9

 

 

e.    Notes to Condensed Financial Statements

10

2.

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

26

3.

Quantitative and Qualitative Disclosures About Market Risk

36

4.

Controls and Procedures

37

 

 

 

 

PART II. OTHER INFORMATION

 

1.

Legal Proceedings

38

1A.

Risk Factors

38

2.

Unregistered Sales of Equity Securities and Use of Proceeds

87

3.

Defaults Upon Senior Securities

87

4.

Mine Safety Disclosures

87

5.

Other Information

87

6.

Exhibits

88

 

Signatures

89

 

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 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 our 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 ability to retain the continued service of our key executives and to identify, hire and retain additional qualified professionals;
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;
the potential effects of the COVID-19 pandemic on our business and operations, results of operations and 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.

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.“TriTAC” is a registered trademark and “Harpoon Therapeutics,” “Harpoon,” the Harpoon logo and ProTriTAC are among the trademarks owned by Harpoon Therapeutics, Inc. This report also contains trademarks and trade names that are property of their respective owners.

3


 

RISK FACTOR SUMMARY

 

All of our product candidates are in preclinical or early-stage clinical development. Clinical drug development is a lengthy and expensive process with uncertain timelines and uncertain outcomes. If clinical trials of our product candidates are prolonged or delayed, we or any collaborators may be unable to obtain required regulatory approvals, and therefore be unable to commercialize our product candidates on a timely basis or at all.
Interim, topline or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
Our TriTAC and ProTriTAC platforms are unproven, novel classes of T cell engagers and may not result in approvable or marketable products, which exposes us to unforeseen risks and makes it difficult for us to predict the time and cost of product development and potential for regulatory approval.
Results of earlier preclinical studies of our product candidates may not be predictive of future trial results.
We depend on enrollment of patients in our clinical trials for our product candidates. If we experience delays or difficulties enrolling in our clinical trials, our research and development efforts and business, financial condition and results of operations could be materially adversely affected.
Our product candidates may have serious adverse, undesirable or unacceptable side effects or other properties which may delay or prevent marketing approval. If such side effects are identified during the development of our product candidates or following approval, if any, we may need to abandon our development of such product candidates, the commercial profile of any approved label may be limited, or we may be subject to other significant negative consequences following marketing approval, if any.
Monitoring safety of patients receiving our product candidates is challenging, which could adversely affect our ability to obtain regulatory approval and commercialize.
We may not be successful in our efforts to use and expand our technology platforms, including TriTAC and ProTriTAC, to build a pipeline of product candidates.
We are an early clinical-stage company and have incurred significant losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.
We will require additional funding in order to complete development of our product candidates and commercialize our products, if approved. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.
We depend heavily on the success of our current product candidates, and we cannot guarantee that any of these product candidates will receive regulatory approval, which is necessary before they can be commercialized. If we, or any strategic partners we may enter into collaboration agreements with for the development and commercialization of our product candidates, are unable to commercialize our product candidates, or experience significant delays in doing so, our business, financial condition and results of operations will be materially adversely affected.
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
Our business operations and current and future relationships with healthcare professionals, principal investigators, consultants, vendors, customers and third-party payors in the United States and elsewhere are subject to applicable anti-kickback, fraud and abuse, false claims, physician payment transparency, information privacy and security and other healthcare laws and regulations, which could expose us to substantial penalties.
The development and commercialization of biopharmaceutical products is subject to extensive regulation, and the regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates on a timely basis if at all, our business will be substantially harmed. An investment in our common stock involves a high degree of risk. Below is a summary of material factors that make an investment in our common stock speculative or risky. Importantly, this summary does not address all of the risks that we face.

 

4


 

Failure or perceived failure to comply with existing or future laws, and regulations, contracts, self-regulatory schemes, standards and other obligations related to data privacy or security could lead to government enforcement actions (which could include civil or criminal fines or penalties), investigations, private litigation, other liabilities, and/or adverse publicity. Compliance or the actual or perceived failure to comply with such laws could increase the costs of our products, could limit their use or adoption, and could otherwise negatively affect our operating results and business.

 

Please refer to the section entitled “Risk Factors” below for additional discussion of the risks summarized in this risk factor summary, as well as other risks that we face.

5


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

 

HARPOON THERAPEUTICS, INC.

Condensed Balance Sheets

(unaudited)

(in thousands, except share and per share data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

77,413

 

 

$

21,170

 

Short-term marketable securities

 

 

93,604

 

 

 

104,860

 

Prepaid expenses and other current assets

 

 

4,661

 

 

 

3,724

 

Total current assets

 

 

175,678

 

 

 

129,754

 

Property and equipment, net

 

 

9,136

 

 

 

10,188

 

Long-term marketable securities

 

 

4,194

 

 

 

23,946

 

Operating lease right-of-use asset

 

 

6,422

 

 

 

6,583

 

Other assets

 

 

747

 

 

 

1,121

 

Total assets

 

$

196,177

 

 

$

171,592

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

 

1,997

 

 

 

1,572

 

Accrued liabilities

 

 

16,342

 

 

 

13,845

 

Deferred revenue, current

 

 

34,819

 

 

 

31,299

 

Operating lease liabilities, current

 

 

1,536

 

 

 

1,202

 

Total current liabilities

 

 

54,694

 

 

 

47,918

 

Deferred revenue, noncurrent

 

 

39,156

 

 

 

57,522

 

Operating lease liabilities, net of current portion

 

 

11,399

 

 

 

12,313

 

Total liabilities

 

 

105,249

 

 

 

117,753

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Common stock, $0.0001 par value; 150,000,000 shares authorized at June 30, 2021 and December 31, 2020; 32,639,276 shares and 25,553,172 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

 

 

4

 

 

 

3

 

Additional paid-in capital

 

 

337,484

 

 

 

221,904

 

Accumulated other comprehensive income

 

 

(2

)

 

 

3

 

Accumulated deficit

 

 

(246,558

)

 

 

(168,071

)

Total stockholders' equity

 

 

90,928

 

 

 

53,839

 

Total liabilities and stockholders' equity

 

$

196,177

 

 

$

171,592

 

 

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

6


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration and license revenue

 

$

5,838

 

 

$

2,762

 

 

$

14,845

 

 

$

6,059

 

Total revenue

 

 

5,838

 

 

 

2,762

 

 

 

14,845

 

 

 

6,059

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

18,271

 

 

 

11,924

 

 

 

34,487

 

 

 

24,443

 

General and administrative

 

 

4,335

 

 

 

3,945

 

 

 

8,939

 

 

 

7,858

 

Litigation settlement

 

 

 

 

 

 

 

 

49,954

 

 

 

 

Total operating expenses

 

 

22,606

 

 

 

15,869

 

 

 

93,380

 

 

 

32,301

 

Loss from operations

 

 

(16,768

)

 

 

(13,107

)

 

 

(78,535

)

 

 

(26,242

)

Interest income, net

 

 

62

 

 

 

415

 

 

 

156

 

 

 

999

 

Other expense, net

 

 

(58

)

 

 

 

 

 

(108

)

 

 

(1

)

Net loss

 

 

(16,764

)

 

 

(12,692

)

 

 

(78,487

)

 

 

(25,244

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized (loss) gain on marketable securities

 

 

16

 

 

 

(229

)

 

 

(4

)

 

 

201

 

Comprehensive loss

 

$

(16,748

)

 

$

(12,921

)

 

$

(78,491

)

 

$

(25,043

)

Net loss per share, basic and diluted

 

 

(0.52

)

 

 

(0.51

)

 

$

(2.45

)

 

$

(1.01

)

Weighted-average shares used in computing net loss per share, basic and diluted

 

 

32,505,777

 

 

 

24,961,183

 

 

 

32,044,767

 

 

 

24,902,229

 

 

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

7


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

Total

 

 

Common Stock

 

Paid-In

 

Comprehensive

 

Accumulated

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

25,553,172

 

 

$

3

 

 

$

221,904

 

 

$

3

 

 

$

(168,071

)

 

$

53,839

 

Issuance of common stock in follow-on offering,
   net of underwriter discounts, commissions and
   issuance costs of $
7,400  

 

6,764,704

 

 

 

1

 

 

 

107,581

 

 

 

 

 

 

 

 

 

107,582

 

Issuance of common stock under equity incentive plans
   including exercise of stock options 

 

113,538

 

 

 

 

 

 

561

 

 

 

 

 

 

 

 

 

561

 

Vesting of early exercised stock options 

 

7,319

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Stock-based compensation

 

 

 

 

 

 

 

2,136

 

 

 

 

 

 

 

 

 

2,136

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(61,724

)

 

 

(61,724

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

 

 

(20

)

Balances at March 30, 2021

 

32,438,733

 

 

 

4

 

 

 

332,188

 

 

 

(17

)

 

 

(229,795

)

 

 

102,380

 

Issuance of common stock pursuant to ATM facility,
  net of offering costs

 

138,153

 

 

 

 

 

 

2,767

 

 

 

 

 

 

 

 

 

2,767

 

Issuance of common stock under equity incentive plans
   including exercise of stock options 

 

56,934

 

 

 

 

 

 

186

 

 

 

 

 

 

 

 

 

186

 

Vesting of early exercised stock options 

 

5,456

 

 

 

 

 

 

5

 

 

 

 

 

 

 

 

 

5

 

Stock-based compensation

 

 

 

 

 

 

 

2,338

 

 

 

 

 

 

 

 

 

2,338

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,764

)

 

 

(16,764

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

16

 

Balances at June 30, 2021

 

32,639,276

 

 

 

4

 

 

$

337,484

 

 

$

(1

)

 

$

(246,559

)

 

$

90,928

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Accumulated Other

 

 

 

 

 

Total

 

 

Common Stock

 

Paid-In

 

Comprehensive

 

Accumulated

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2019

 

24,850,064

 

 

$

3

 

 

$

212,339

 

 

$

41

 

 

$

(118,163

)

 

$

94,220

 

Issuance of common stock under equity incentive plans
   including exercise of stock options

 

76,619

 

 

 

 

 

 

340

 

 

 

 

 

 

 

 

 

340

 

Vesting of early exercised stock options 

 

11,891

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

9

 

Stock-based compensation

 

 

 

 

 

 

 

847

 

 

 

 

 

 

 

 

 

847

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,552

)

 

 

(12,552

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

430

 

 

 

 

 

 

430

 

Balances at March 31, 2020

 

24,938,574

 

 

 

3

 

 

 

213,535

 

 

 

471

 

 

 

(130,715

)

 

 

83,294

 

Issuance of common stock under equity incentive plans
   including exercise of stock options

 

144,731

 

 

 

 

 

 

347

 

 

 

 

 

 

 

 

 

347

 

Vesting of early exercised stock options 

 

8,843

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Stock-based compensation

 

 

 

 

 

 

 

1,178

 

 

 

 

 

 

 

 

 

1,178

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,692

)

 

 

(12,692

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

(229

)

 

 

 

 

 

(229

)

Balances at June 30, 2020

 

25,092,148

 

 

 

3

 

 

$

215,068

 

 

$

242

 

 

$

(143,407

)

 

$

71,906

 

 

8


 

HARPOON THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(78,487

)

 

$

(25,244

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

 

 

 

 

 

 

Stock-based compensation expense

 

 

4,473

 

 

 

2,025

 

Depreciation and amortization

 

 

1,098

 

 

 

1,015

 

Non-cash lease expense

 

 

160

 

 

 

202

 

Net amortization of discounts on marketable securities

 

 

1,168

 

 

 

130

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(937

)

 

 

(620

)

Other assets

 

 

382

 

 

 

13

 

Accounts payable

 

 

426

 

 

 

(1,032

)

Accrued liabilities

 

 

2,500

 

 

 

1,270

 

Deferred revenue

 

 

(14,846

)

 

 

42,855

 

Operating lease liabilities

 

 

(580

)

 

 

(576

)

Net cash (used in) provided by operating activities

 

 

(84,643

)

 

 

20,038

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(45

)

 

 

(155

)

Purchases of marketable securities

 

 

(100,469

)

 

 

(106,568

)

Maturities of marketable securities

 

 

130,304

 

 

 

32,321

 

Net cash provided by (used in) investing activities

 

 

29,790

 

 

 

(74,402

)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from follow-on offering, net of issuance costs

 

 

107,581

 

 

 

 

Deferred offering costs

 

 

 

 

 

(321

)

Proceeds from issuance of common stock in connection with employee benefit plans

 

 

748

 

 

 

687

 

Proceeds from issuance of common stock, net of issuance cost

 

 

2,767

 

 

 

 

Net cash provided by financing activities

 

 

111,096

 

 

 

366

 

Net decrease in cash, cash equivalents, and restricted cash

 

 

56,243

 

 

 

(53,998

)

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

 

 

21,637

 

 

 

89,203

 

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

 

$

77,880

 

 

$

35,205

 

Supplemental disclosures of non-cash investing and financing information

 

 

 

 

 

 

Purchases of property and equipment included in accrued liabilities and accounts payable

 

$

 

 

$

305

 

Reclassification of employee stock liability to equity upon vesting

 

$

12

 

 

$

17

 

Deferred offering costs included in accounts payable and accrued liabilities

 

$

8

 

 

$

27

 

 

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

9


 

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. In addition, the Company is also developing its ProTriTAC platform, which builds upon the core elements of the TriTAC platform by utilizing a prodrug approach designed to allow T cell engagers to address cancer targets that would otherwise be limited by on-target toxicities. The Company was incorporated in Delaware in March 2015 and is headquartered in South San Francisco, California.

Follow-On Offering

In January 2021, the Company sold an aggregate of 6,764,704 shares of its common stock for $107.6 million in net proceeds after deducting underwriting discounts and commissions and offering expenses. The offering was made pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-237175), declared effective by the SEC on April 23, 2020, a base prospectus dated April 23, 2020 and the related prospectus supplement dated January 6, 2021.

Liquidity

Since inception, the Company has incurred significant losses and has negative cash flows from operations. As of June 30, 2021, the Company had an accumulated deficit of $246.6 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 June 30, 2021, the Company had cash, cash equivalents, and marketable securities of $175.2 million, which is available to fund future operations. The Company believes as of June 30, 2021 that its cash, cash equivalents and marketable securities 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.

The global pandemic caused by an outbreak of a novel strain of coronavirus (“COVID-19”) has resulted, and is likely to continue to result, in national and global economic disruption and may adversely affect the Company’s business. As of June 30, 2021, the Company has not experienced a significant financial impact directly related to the COVID-19 pandemic but has experienced some minor disruptions to clinical operations, including patient enrollment in some of its clinical trials and delays in collecting, receiving, and analyzing data from patients enrolled in our clinical trials for due to limited staff at our clinical trial sites. The Company is actively monitoring this situation and the possible effects on its financial condition, liquidity, operations, industry, and personnel. Management continues to actively monitor this situation and the possible effects on its financial condition, liquidity, operations, suppliers, industry, and personnel. The impact of the Company’s business will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or mitigate its impact.

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 annual financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 10, 2021 (the “2020 Annual Report on Form 10-K”). The condensed Balance Sheet as of December 31, 2020 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 annual financial statements have been condensed or omitted. The

10


 

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.

During the six months ended June 30, 2021, there were no material changes to the Company's significant accounting and financial reporting policies from those reflected in the 2020 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 annual financial statements included in the 2020 Annual Report on Form 10-K which have been prepared in accordance with GAAP.

Use of Estimates 

The preparation of condensed 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 condensed 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 stock options, the research period of the collaboration agreements with AbbVie Biotechnology Ltd., (“AbbVie”), operating lease asset and lease liabilities, income tax uncertainties and certain accruals. As of June 30, 2021, the Company has not experienced a significant financial impact directly related to the COVID-19 pandemic. See Note 1 Organization – Liquidity for more information.

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. There are no significant unrealized gains or losses on the money market funds for the periods presented.

For the periods ended June 30, 2021 and December 31, 2020, the Company classified $0.5 million as restricted cash related to a letter of credit established for an operating lease entered into in August 2018. The restricted cash is classified in “Other assets” in the condensed balance sheets and is comprised of a letter of credit required pursuant to the lease for the Company’s corporate headquarters entered into in August 2018. See Note 6 Commitments and Contingencies for more information.

 

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

 

 

 

As of

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

 

(in thousands)

 

Balance Sheets

 

 

 

 

 

 

Cash and cash equivalents

 

$

77,413

 

 

$

34,738

 

Restricted cash (included in other assets)

 

 

467

 

 

 

467

 

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

 

$

77,880

 

 

$

35,205

 

 

11


 

Marketable Securities

The Company generally invests its excess cash in money market funds and investment grade short-term 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 condensed balance sheets. Marketable securities with a maturity date greater than 90 days and less than one year at each condensed balance sheet date are classified as short-term. Marketable securities with a maturity date greater than one year at each condensed balance sheet date are classified as long-term. All of the Company’s 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 condensed 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 condensed 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 amortized cost 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

The Company is subject to credit risk from its portfolio of cash equivalents and marketable securities. The Company invests in money market funds through a major U.S. bank and is exposed to credit risk in the event of default by the financial institution to the extent of amounts recorded on the condensed balance sheets. The Company invests in money market funds and investment grade short- to intermediate-term fixed income securities. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. The Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company’s investment policy, in order of priority, are as follows: preservation of principal, liquidity of investments, fiduciary control of cash and investments, prevention of inappropriate concentrations of investments, and obtaining the best yields. 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. The Company recognizes lease expenses on a straight-line basis over the lease term. 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.

12


 

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;

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 condensed balance sheets for cash and cash equivalents, restricted cash, short-term marketable securities, 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 condensed balance sheet and the resulting gain or loss is reflected in operations. There were no sales or retirement of assets for any of the periods presented.

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.

Revenue Recognition

In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“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.

13


 

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. The Company recognizes collaboration revenue by measuring the progress toward complete satisfaction of the performance obligation using an input measure. In order to recognize revenue over the research and development period, the Company measures actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation. Revenues are recognized as the program costs are incurred. The Company will re-evaluate the estimate of expected costs to satisfy the performance obligation each reporting period and make adjustments for any significant changes.

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 (i.e. research and development services) under these arrangements. Amounts due to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional. Amounts recognized as revenue prior to receipt are recorded as contract assets included in prepaid expenses and other current assets on the Company’s condensed balance sheet. If the Company expects to have an unconditional right to receive the consideration in the next twelve months, this will be classified in current assets.

 

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, production of materials for clinical trials, 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 and manufacturing organizations in connection with the production of materials for clinical trials 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

14


 

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 non-employees.

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, directors and consultants 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 option-pricing 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 yield. The Company has elected to recognize forfeitures of share-based payment awards as they occur.

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.

CARES Act

In March 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which includes modifications to the limitation on business interest expense and net operating loss provisions and provides a payment delay of employer payroll taxes during 2020 after the date of enactment. The Company has not taken advantage of the benefits provided by the CARES Act. Whether or not the Company takes advantage of the credit and other applicable provisions of the CARES Act will not change the amount of income tax paid on the 2021 income tax returns, nor will this impact the GAAP tax expense/benefit expected to be recorded in 2021. As such, the Company does not expect the CARES Act to have a material impact on the Company’s condensed financial statements.

Assembly Bill 85 (A.B. 85)

15


 

On June 29, 2020, California’s Governor Newsom signed Assembly Bill 85 suspending California net operating loss (“NOL”) utilization and imposing a cap on the amount of business incentives tax credits (R&D credit) for tax years 2020-2022. Given a projected GAAP and tax loss for 2021, the suspension does not have a significant impact on the Company’s tax position or condensed financial statements.

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 Net Loss Per Share, 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 Loss

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

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.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles of ASC 740 in order to reduce cost and complexity of its application. The ASU removes the exception related to the incremental approach for intraperiod tax allocation as well as two exceptions related to accounting for outside basis differences of equity method investments and foreign subsidiaries. The ASU also amends the scope of ASC 740 related to a franchise tax (or similar tax) that is partially based on income; clarifies when a step-up in the tax basis of goodwill should be considered part of the business combination in which the book goodwill was originally recognized and when it should be considered a separate transaction; specifies that an entity is not required to allocate income tax expense to a legal entity that is both not subject to tax and disregarded by the taxing authority; and clarifies that all tax effects, both deferred and current, should be accounted for in the interim period that includes the enactment date. The ASU became effective for the Company on January 1, 2021, and did not have a material impact on the Company’s financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19 and ASU 2019-04 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The amendments apply to entities which hold financial assets that are not accounted for at fair value through net income as well as loans, debt securities, accounts receivables and any other financial assets not excluded from the scope that have the contractual right to receive cash. Topic 326 requires entities to record expected credit losses for certain financial instruments, including available-for-sale securities, as an allowance that reflect the entity’s current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, ASU 2016-13 requires allowances to be recorded instead of reducing the amortized cost of the investment. Under ASU 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, the effective date for ASU 2016-13 has been deferred for credit losses for SEC filers that are eligible as a smaller reporting company. As such, the amended effective date for ASU 2016-13 is January 1, 2023. The Company is currently evaluating the effect of the adoption of this guidance 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:

 

 

 

June 30, 2021

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

 </