tptx-10q_20200630.htm

F

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended June 30, 2020

OR

 

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

 

For the transition period from                      to                     

 

Commission File Number: 001-38871

 

Turning Point Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

46-3826166

( State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer
Identification No.)

10628 Science Center Drive, Ste. 200

San Diego, California

92121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (858) 926-5251

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, $0.0001 par value per share

TPTX

The Nasdaq Stock Market LLC

 

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

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  

 

As of August 6, 2020, the registrant had 42,168,889 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

3

 

Condensed Balance Sheets

3

 

Condensed Statements of Operations and Comprehensive Loss

4

 

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity

5

 

Condensed Statements of Cash Flows

6

 

Notes to the Unaudited Condensed Financial Statements

7

Item 2.

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

14

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.

Controls and Procedures

20

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

20

Item 1A.

Risk Factors

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

68

Item 3.

Defaults Upon Senior Securities

68

Item 4.

Mine Safety Disclosures

68

Item 5.

Other Information

68

Item 6.

Exhibits

69

SIGNATURES

70

 

 

 

2


PART IFINANCIAL INFORMATION

Item 1. Financial Statements

 

Turning Point Therapeutics, Inc.

Condensed Balance Sheets

(In thousands, except share and par value amounts)

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

Assets

Unaudited

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

470,514

 

 

$

48,188

 

 

Marketable securities

 

239,916

 

 

 

360,963

 

 

Prepaid and other current assets

 

8,446

 

 

 

5,796

 

 

Total current assets

 

718,876

 

 

 

414,947

 

 

Property and equipment, net

 

2,537

 

 

 

2,689

 

 

Right-of-use lease assets

 

3,938

 

 

 

4,493

 

 

Security deposits

 

73

 

 

 

73

 

 

Total assets

$

725,424

 

 

$

422,202

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

$

1,330

 

 

$

2,150

 

 

Accrued expenses and other current liabilities

 

4,911

 

 

 

3,910

 

 

Accrued compensation

 

3,894

 

 

 

6,736

 

 

Current portion of operating lease liabilities

 

1,314

 

 

 

1,236

 

 

Total current liabilities

 

11,449

 

 

 

14,032

 

 

Operating lease liabilities, long-term

 

3,148

 

 

 

3,819

 

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value;10,000,000 shares authorized at June 30, 2020 and December 31, 2019; zero shares outstanding at June 30, 2020 and December 31, 2019

 

-

 

 

 

-

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized at June 30, 2020 and December 31, 2019; 42,168,889 and 35,915,119 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 

5

 

 

 

4

 

 

Additional paid-in capital

 

924,899

 

 

 

526,960

 

 

Accumulated other comprehensive income

 

1,018

 

 

 

271

 

 

Accumulated deficit

 

(215,095

)

 

 

(122,884

)

 

Total stockholders' equity

 

710,827

 

 

 

404,351

 

 

Total liabilities and stockholders’ equity

$

725,424

 

 

$

422,202

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

 

3


Turning Point Therapeutics, Inc.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

 

(Unaudited)

 

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

24,154

 

 

$

13,711

 

 

$

46,923

 

 

$

24,162

 

 

General and administrative

 

 

8,578

 

 

 

4,743

 

 

 

48,435

 

 

 

8,357

 

 

Total operating expenses

 

 

32,732

 

 

 

18,454

 

 

 

95,358

 

 

 

32,519

 

 

Loss from operations

 

 

(32,732

)

 

 

(18,454

)

 

 

(95,358

)

 

 

(32,519

)

 

Other income, net

 

 

1,239

 

 

 

1,312

 

 

 

3,147

 

 

 

1,830

 

 

Net loss

 

 

(31,493

)

 

 

(17,142

)

 

 

(92,211

)

 

 

(30,689

)

 

Unrealized gain on marketable securities, net of tax

 

 

1,063

 

 

 

345

 

 

 

747

 

 

 

345

 

 

Comprehensive loss

 

$

(30,430

)

 

$

(16,797

)

 

$

(91,464

)

 

$

(30,344

)

 

Net loss per share, basic and diluted

 

$

(0.82

)

 

$

(0.70

)

 

$

(2.47

)

 

$

(2.19

)

 

Weighted-average common shares outstanding, basic and diluted

 

 

38,603,236

 

 

 

24,479,767

 

 

 

37,261,296

 

 

 

14,004,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.


4


Turning Point Therapeutics, Inc.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity

(In thousands, except share amounts)

 

(Unaudited)

 

 

Convertible

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

 

 

 

$

 

 

 

35,915,119

 

 

$

4

 

 

$

526,960

 

 

$

271

 

 

$

(122,884

)

 

$

404,351

 

Option exercises

 

 

 

 

 

 

 

 

7,129

 

 

 

 

 

 

25

 

 

 

 

 

 

 

 

 

25

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38,365

 

 

 

 

 

 

 

 

 

38,365

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(60,718

)

 

 

(60,718

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(316

)

 

 

 

 

 

(316

)

Balance at March 31, 2020

 

 

 

 

 

 

 

 

35,922,248

 

 

 

4

 

 

 

565,350

 

 

 

(45

)

 

 

(183,602

)

 

 

381,707

 

Option exercises

 

 

 

 

 

 

 

 

3,049

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

 

31

 

Shares issued under employee stock purchase plan

 

 

 

 

 

 

 

 

14,425

 

 

 

 

 

 

504

 

 

 

 

 

 

 

 

 

504

 

Issuance of common stock in connection with a public offering, net of underwriting

  discounts, commissions, and offering costs

 

 

 

 

 

 

 

 

6,229,167

 

 

 

1

 

 

 

351,610

 

 

 

 

 

 

 

 

 

351,611

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,404

 

 

 

 

 

 

 

 

 

7,404

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,493

)

 

 

(31,493

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,063

 

 

 

 

 

 

1,063

 

Balance at June 30, 2020

 

 

 

 

$

 

 

 

42,168,889

 

 

$

5

 

 

$

924,899

 

 

$

1,018

 

 

$

(215,095

)

 

$

710,827

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity (Deficit)

 

Balance at December 31, 2018

 

 

65,423,901

 

 

$

145,916

 

 

 

3,411,516

 

 

$

1

 

 

$

2,346

 

 

$

 

 

$

(50,753

)

 

$

(48,406

)

Option exercises

 

 

 

 

 

 

 

 

12,337

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

22

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,926

 

 

 

 

 

 

 

 

 

1,926

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,547

)

 

 

(13,547

)

Balance at March 31, 2019

 

 

65,423,901

 

 

 

145,916

 

 

 

3,423,853

 

 

 

1

 

 

 

4,294

 

 

 

 

 

 

(64,300

)

 

 

(60,005

)

Issuance of common stock in connection with a public offering, net of underwriting discounts, commissions, and offering costs

 

 

 

 

 

 

 

 

10,637,500

 

 

 

1

 

 

 

175,150

 

 

 

 

 

 

 

 

 

175,151

 

Conversion of preferred stock into

   common stock

 

 

(65,423,901

)

 

 

(145,916

)

 

 

16,993,194

 

 

 

2

 

 

 

145,914

 

 

 

 

 

 

 

 

 

145,916

 

Option exercises

 

 

 

 

 

 

 

 

242,876

 

 

 

 

 

 

591

 

 

 

 

 

 

 

 

 

591

 

Stock-based compensation

   expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,059

 

 

 

 

 

 

 

 

 

3,059

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,142

)

 

 

(17,142

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

345

 

 

 

 

 

 

345

 

Balance at June 30, 2019

 

 

 

 

$

 

 

 

31,297,423

 

 

$

4

 

 

$

329,008

 

 

$

345

 

 

$

(81,442

)

 

$

247,915

 

 

 

See accompanying notes.

 

5


Turning Point Therapeutics, Inc.

Condensed Statements of Cash Flows

(In thousands)

 

(Unaudited)

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(92,211

)

 

$

(30,689

)

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

45,769

 

 

 

4,985

 

Depreciation

 

 

423

 

 

 

233

 

Accretion of discount on marketable securities

 

 

(236

)

 

 

(359

)

Amortization of right-of-use operating lease asset

 

 

759

 

 

 

328

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,650

)

 

 

(3,821

)

Accounts payable

 

 

(378

)

 

 

2,595

 

Accrued expenses and other current liabilities

 

 

204

 

 

 

(669

)

Accrued compensation

 

 

(2,842

)

 

 

258

 

Net cash used in operating activities

 

 

(51,162

)

 

 

(27,139

)

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(118,687

)

 

 

(170,685

)

Sales and maturities of marketable securities

 

 

240,717

 

 

 

 

Purchases of property and equipment

 

 

(713

)

 

 

(188

)

Net cash provided by (used in) investing activities

 

 

121,317

 

 

 

(170,873

)

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock in public offering, net of offering costs

 

 

351,611

 

 

 

175,151

 

Proceeds from issuance of common stock under equity incentive plans

 

 

560

 

 

 

613

 

Net cash provided by financing activities

 

 

352,171

 

 

 

175,764

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

422,326

 

 

 

(22,248

)

Cash and cash equivalents at the beginning of period

 

 

48,188

 

 

 

101,029

 

Cash and cash equivalents at the end of period

 

$

470,514

 

 

$

78,781

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

$

1

 

 

$

1

 

Supplemental disclosure of non-cash investing and financing information:

 

 

 

 

 

 

 

 

Operating lease liabilities arising from obtaining right-of-use assets

 

$

-

 

 

$

1,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes.

 

6


 

Turning Point Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements

1. Formation and Business of the Company; Basis of Presentation

Organization

Turning Point Therapeutics, Inc. (the Company) was organized in 2013 and commenced operations in 2014. The Company is a clinical-stage biopharmaceutical company designing and developing novel small molecule, targeted oncology therapies.  The Company’s principal operations are in the United States and the Company operates in one segment, with its headquarters in San Diego, California.

The Company’s primary activities since inception have been to build infrastructure, conduct research and development, including clinical trials, perform business and financial planning, and raise capital.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, since they are interim statements, the accompanying condensed financial statements do not include all of the information and notes required by GAAP for complete financial statements. The unaudited interim financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the periods presented. All such adjustments are of a normal and recurring nature. The condensed balance sheet at December 31, 2019 has been derived from the audited financial statements at that date, but does not include all information and footnotes required by GAAP for complete financial statements. The operating results presented in these unaudited condensed financial statements are not necessarily indicative of the results that may be expected for any future periods. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC. In the opinion of management, the unaudited condensed financial statements and notes thereto include all adjustments that are of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented.

Liquidity

Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year from the financial statement issuance date. The Company determined that there are no conditions or events that raise substantial doubt about its ability to continue as a going concern within one year after the date that the unaudited condensed financial statements for the quarter ended June 30, 2020 are issued.

In May 2020, the Company completed a public offering under which it sold 6,229,167 shares of common stock at an offering price of $60.00 per share.  The net proceeds from this offering, after deducting underwriting discounts, commissions, and offering costs, were $351.6 million.

The COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets.  The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the pandemic. If the disruption persists and deepens, the Company could experience an inability to access additional capital.

2. Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 of the Notes to Financial Statements included in its Annual Report on Form 10‑K for the year ended December 31, 2019.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and expenses and the disclosure of contingent liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to preclinical and clinical study accruals and stock-based compensation costs. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Although

7

 


 

the impact of the COVID-19 pandemic to the Company’s business and operating results presents additional uncertainty, the Company continues to use the best information available to update its critical accounting estimates.

Concentration of Credit Risk

Substantially all of the Company’s cash, cash equivalents, and marketable securities are held at two financial institutions.  Due to their size, the Company believes these financial institutions represent minimal credit risk. Cash amounts held at financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000.  At June 30, 2020, cash and cash equivalents and marketable securities totaling $710.2 million are either not subject to FDIC insurance, or exceed the FDIC insured limit. The Company’s cash and cash equivalents and marketable securities are invested in short term, high grade securities, and as a result, the Company believes represent a minimal credit risk.

Net Loss Per Share

The Company computes basic loss per share by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options. The Company excluded 6,445,367 and 4,590,804 options to purchase common stock at June 30, 2020 and 2019, respectively, from the number of shares used to calculate diluted shares outstanding because the inclusion of these potentially dilutive securities would have been antidilutive.

Recently Adopted Accounting Standards Updates

 

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments – Credit Losses, which changes the accounting for recognizing impairments of financial assets. Under the new guidance, credit losses for certain types of financial instruments will be estimated based on expected losses. The new guidance also modifies the impairment models for available for sale debt securities and for purchased financial assets with credit deterioration since their origination. The Company adopted ASU 2016-13 on January 1, 2020, using a modified retrospective transition method, which requires a cumulative-effect adjustment, if any, to the opening balance of accumulated deficit to be recognized on the date of adoption with prior periods not restated. The adoption of this standard did not have a material impact to the Company’s financial position, results of operations and cash flows.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which adds and modifies certain disclosure requirements for fair value measurements. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income. The Company adopted the new standard beginning January 1, 2020 and the adoption had an immaterial impact to the Company’s financial position, results of operations and cash flows.

3. Marketable Securities

The Company invests its excess cash in marketable securities, including debt instruments of financial institutions, corporations with investment grade credit ratings, commercial paper and government agencies.

At June 30, 2020, marketable securities consisted of the following (in thousands): 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

Maturity in Years

 

Amortized Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

U.S. government agency securities

 

2 years or less

 

$

44,123

 

 

$

76

 

 

$

-

 

 

$

44,199

 

Corporate debt securities

 

2 years or less

 

 

129,907

 

 

 

790

 

 

 

-

 

 

 

130,697

 

Commercial paper

 

Less than 1

 

 

64,875

 

 

 

145

 

 

 

-

 

 

 

65,020

 

Total marketable securities

 

 

 

$

238,905

 

 

$

1,011

 

 

$

-

 

 

$

239,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 


 

At December 31, 2019, marketable securities consisted of the following (in thousands):

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

Maturity in Years

 

Amortized Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

U.S. government agency securities

 

2 years or less

 

$

90,596

 

 

$

42

 

 

$

(20

)

 

$

90,618

 

Corporate debt securities

 

2 years or less

 

 

173,595

 

 

 

178

 

 

 

(21

)

 

 

173,752

 

Commercial paper

 

Less than 1

 

 

96,501

 

 

 

92

 

 

 

-

 

 

 

96,593

 

Total marketable securities

 

 

 

$

360,692

 

 

$

312

 

 

$

(41

)

 

$

360,963

 

The Company segments its portfolio based on the underlying risk profiles of their current securities being held. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, current and expected future economic conditions. As of June 30, 2020, the Company did not record an allowance for credit loss related to its investment portfolio.

 

4. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. The Company determines the fair value of financial assets and liabilities using three levels of inputs as follows:

Level 1—Inputs which include quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2—Inputs (other than quoted market prices included in Level 1) that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life.

Level 3—Unobservable inputs for assets or liabilities and include little or no market activity.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):

 

 

 

Fair Value Measurements at June 30, 2020 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Money market funds

 

$

314,212

 

 

$

-

 

 

$

-

 

 

$

314,212

 

U.S. government agency securities

 

 

-

 

 

 

44,199

 

 

 

-

 

 

 

44,199

 

Corporate debt securities

 

 

-

 

 

 

136,707

 

 

 

-

 

 

 

136,707

 

Commercial paper

 

 

-

 

 

 

214,488

 

 

 

-

 

 

 

214,488

 

Total cash equivalents and marketable securities

 

$

314,212

 

 

$

395,394

 

 

$

-

 

 

$

709,606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2019 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Money market funds

 

$

45,085

 

 

$

-

 

 

$

-

 

 

$

45,085

 

U.S. government agency securities

 

 

-

 

 

 

90,618

 

 

 

-

 

 

 

90,618

 

Corporate debt securities

 

 

-

 

 

 

173,752

 

 

 

-

 

 

 

173,752

 

Commercial paper

 

 

-

 

 

 

96,593

 

 

 

-

 

 

 

96,593

 

Total cash equivalents and marketable securities

 

$

45,085

 

 

$

360,963

 

 

$

-

 

 

$

406,048

 

 

9

 


 

5. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Laboratory equipment

 

$

1,121

 

 

$

885

 

Computer equipment and software

 

 

944

 

 

 

910

 

Tenant improvements

 

 

1,108

 

 

 

1,108

 

Furniture and fixtures

 

 

357

 

 

 

357

 

Property and equipment

 

 

3,530

 

 

 

3,260

 

Less: accumulated depreciation

 

 

(993

)

 

 

(571

)

Property and equipment, net

 

$

2,537

 

 

$

2,689

 

Depreciation expense for the three months ended June 30, 2020 and 2019 was $0.2 million and $0.1 million, respectively. Depreciation expense for the six months ended June 30, 2020 and 2019 was $0.4 million and $0.2 million, respectively.

 

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

 

 

June 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Accrued research and development expenses

 

$

4,180

 

 

$

3,414

 

Accrued general and administrative expenses

 

 

717

 

 

 

451

 

Other current liabilities

 

 

14

 

 

 

45

 

Total

 

$

4,911

 

 

$

3,910

 

 

7. Commitments and Contingencies

Operating Leases

The Company currently has one lease agreement for the leasing of office and laboratory space with an initial lease term of four years resulting in an initial lease liability of $4.0 million and a right-of-use asset of $3.7 million, which is net of $0.3 million of the Company’s deferred gain from the office and laboratory space surrendered in the prior year.  The right-of-use asset and corresponding lease liability was estimated assuming a remaining lease term of 48 months and an estimated discount rate of 8.5%, which was the Company’s incremental borrowing rate at the date of the lease commencement.

Future minimum payments under the lease as of June 30, 2020 are as follows (in thousands):

 

 

 

 

 

 

2020 (Six months remaining)

 

 

821

 

2021

 

 

1,668