10-Q
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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 September 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 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 November 2, 2021 the registrant had 49,479,508 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 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

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

29

Item 1A.

Risk Factors

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3.

Defaults Upon Senior Securities

73

Item 4.

Mine Safety Disclosures

73

Item 5.

Other Information

73

Item 6.

Exhibits

74

SIGNATURES

75

 

 

 

2


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

 

Turning Point Therapeutics, Inc.

Condensed Balance Sheets

(In thousands, except share and par value amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

Unaudited

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

404,203

 

 

$

554,101

 

Marketable securities

 

 

631,811

 

 

 

568,407

 

Prepaid and other current assets

 

 

11,127

 

 

 

8,171

 

Total current assets

 

 

1,047,141

 

 

 

1,130,679

 

Property and equipment, net

 

 

3,858

 

 

 

2,604

 

Right-of-use lease assets

 

 

5,965

 

 

 

3,357

 

Other assets

 

 

2,021

 

 

 

73

 

Total assets

 

$

1,058,985

 

 

$

1,136,713

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,188

 

 

$

5,225

 

Accrued expenses and other current liabilities

 

 

23,045

 

 

 

9,183

 

Accrued compensation

 

 

9,025

 

 

 

8,588

 

Current portion of operating lease liabilities

 

 

3,495

 

 

 

1,396

 

Total current liabilities

 

 

38,753

 

 

 

24,392

 

Operating lease liabilities, long-term

 

 

2,895

 

 

 

2,423

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized at September 30, 2021 and December 31, 2020, zero shares outstanding at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized at September 30, 2021 and December 31, 2020; 49,464,156 and 48,678,540 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

1,455,626

 

 

 

1,389,860

 

Accumulated other comprehensive (loss)/income

 

 

(16

)

 

 

209

 

Accumulated deficit

 

 

(438,278

)

 

 

(280,176

)

Total stockholders' equity

 

 

1,017,337

 

 

 

1,109,898

 

Total liabilities and stockholders’ equity

 

$

1,058,985

 

 

$

1,136,713

 

 

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 September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

460

 

 

$

25,000

 

 

$

30,829

 

 

$

25,000

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

48,889

 

 

 

32,213

 

 

 

134,802

 

 

 

79,136

 

General and administrative

 

 

18,224

 

 

 

11,326

 

 

 

55,386

 

 

 

59,761

 

Total operating expenses

 

 

67,113

 

 

 

43,539

 

 

 

190,188

 

 

 

138,897

 

Loss from operations

 

 

(66,653

)

 

 

(18,539

)

 

 

(159,359

)

 

 

(113,897

)

Other income, net

 

 

328

 

 

 

834

 

 

 

1,257

 

 

 

3,981

 

Net loss

 

 

(66,325

)

 

 

(17,705

)

 

 

(158,102

)

 

 

(109,916

)

Unrealized (loss)/gain on marketable securities, net of tax

 

 

(18

)

 

 

(606

)

 

 

(225

)

 

 

141

 

Comprehensive loss

 

$

(66,343

)

 

$

(18,311

)

 

$

(158,327

)

 

$

(109,775

)

Net loss per share, basic and diluted

 

$

(1.34

)

 

$

(0.42

)

 

$

(3.21

)

 

$

(2.82

)

Weighted-average common shares outstanding, basic and diluted

 

 

49,426,496

 

 

 

42,185,824

 

 

 

49,185,693

 

 

 

38,914,789

 

 

See accompanying notes.

4


Turning Point Therapeutics, Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

 

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

48,678,540

 

 

$

5

 

 

$

1,389,860

 

 

$

209

 

 

$

(280,176

)

 

$

1,109,898

 

Option exercises

 

 

438,500

 

 

 

 

 

 

9,679

 

 

 

 

 

 

 

 

 

9,679

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

17,278

 

 

 

 

 

 

 

 

 

17,278

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,504

)

 

 

(35,504

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(186

)

 

 

 

 

 

(186

)

Balance at March 31, 2021

 

 

49,117,040

 

 

 

5

 

 

 

1,416,817

 

 

 

23

 

 

 

(315,680

)

 

 

1,101,165

 

Option exercises

 

 

253,037

 

 

 

 

 

 

8,398

 

 

 

 

 

 

 

 

 

8,398

 

Shares issued under employee stock purchase plan

 

 

21,661

 

 

 

 

 

 

943

 

 

 

 

 

 

 

 

 

943

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

13,295

 

 

 

 

 

 

 

 

 

13,295

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(56,273

)

 

 

(56,273

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

(21

)

Balance at June 30, 2021

 

 

49,391,738

 

 

 

5

 

 

 

1,439,453

 

 

 

2

 

 

 

(371,953

)

 

 

1,067,507

 

Option exercises

 

 

72,418

 

 

 

 

 

 

2,379

 

 

 

 

 

 

 

 

 

2,379

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

13,794

 

 

 

 

 

 

 

 

 

13,794

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(66,325

)

 

 

(66,325

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

 

 

 

(18

)

Balance at September 30, 2021

 

 

49,464,156

 

 

$

5

 

 

$

1,455,626

 

 

$

(16

)

 

$

(438,278

)

 

$

1,017,337

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

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

 

Option exercises

 

 

44,475

 

 

 

 

 

 

508

 

 

 

 

 

 

 

 

 

508

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

8,564

 

 

 

 

 

 

 

 

 

8,564

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,705

)

 

 

(17,705

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(606

)

 

 

 

 

 

(606

)

Balance at September 30, 2020

 

 

42,213,364

 

 

$

5

 

 

$

933,971

 

 

$

412

 

 

$

(232,800

)

 

$

701,588

 

 

 

 

See accompanying notes.

 

5


Turning Point Therapeutics, Inc.

Condensed Statements of Cash Flows

(In thousands)

 

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(158,102

)

 

$

(109,916

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

44,367

 

 

 

54,333

 

Depreciation

 

 

846

 

 

 

647

 

Accretion of premium on marketable securities

 

 

4,093

 

 

 

175

 

Amortization of right-of-use operating lease asset

 

 

1,847

 

 

 

1,139

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(3,102

)

 

 

(905

)

Accounts payable

 

 

(2,099

)

 

 

2,686

 

Accrued expenses and other current liabilities

 

 

11,979

 

 

 

3,423

 

Accrued compensation

 

 

437

 

 

 

(929

)

Net cash used in operating activities

 

 

(99,734

)

 

 

(49,347

)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of marketable securities

 

 

(391,344

)

 

 

(351,167

)

Sales and maturities of marketable securities

 

 

323,624

 

 

 

312,986

 

Purchases of property and equipment

 

 

(2,040

)

 

 

(874

)

Net cash used in investing activities

 

 

(69,760

)

 

 

(39,055

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock under equity incentive plans

 

 

21,399

 

 

 

1,068

 

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

 

 

 

 

 

351,611

 

Costs paid in connection with financing

 

 

 

 

 

(114

)

Net cash provided by financing activities

 

 

21,399

 

 

 

352,565

 

 

 

 

 

 

 

 

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

 

 

(148,095

)

 

 

264,163

 

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

 

 

554,174

 

 

 

48,188

 

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

 

$

406,079

 

 

$

312,351

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

1

 

 

$

1

 

Supplemental disclosure of non-cash investing and financing information:

 

 

 

 

 

 

Purchases of property and equipment in accounts payable

 

$

68

 

 

$

108

 

Costs incurred in connection with a public offering included in accounts payable and accrued expenses

 

$

 

 

$

81

 

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

 

$

4,007

 

 

$

 

 

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 precision oncology 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, 2020 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, 2020 included in the Company’s Annual Report on Form 10-K for the year ended December 31 2020 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 September 30, 2021 are issued.

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 further disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the pandemic. If such further disruption occurs, 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, 2020.

 

Revenue

The Company recognizes revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue From Contracts With Customers (ASC 606). Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements within the scope of ASC 606, the entity 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, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

7

 


 

The Company assesses the goods or services promised within each contract and determines those that are performance obligations. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if these options provide a material right to the customer and if so, they are considered performance obligations.

The Company assesses whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. Promised goods and services are considered distinct provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). In assessing whether a promised good or service is distinct, the Company considers factors such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct.

The transaction price is then determined and allocated to the identified performance obligations in proportion to their standalone selling prices (SSP) on a relative SSP basis. SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. In developing the SSP for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs.

If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the unconstrained amount of estimated variable consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment.

If an arrangement includes development and regulatory 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 using the most likely amount method. 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 control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.

 

For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time, and if over time, recognition is based on the use of an output or input method.

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

8

 


 

Company’s financial statements relate to determining the SSP of performance obligations associated with license arrangements, preclinical and clinical trial costs and 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 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.

Cash, Cash Equivalents and Restricted Cash

The following table presents a reconciliation of cash, cash equivalents and restricted cash to amounts shown in the unaudited condensed statement of cash flows (in thousands):

 

 

September 30, 2021

 

 

September 30, 2020

 

Cash and cash equivalents

 

$

404,203

 

 

$

312,278

 

Restricted cash, as part of other assets

 

 

1,876

 

 

 

73

 

Total cash, cash equivalents and restricted cash

 

$

406,079

 

 

$

312,351

 

Concentration of Credit Risk

Substantially all of the Company’s cash, cash equivalents, and marketable securities are held at two financial institutions. Due to the financial strength of the depository institutions, 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 September 30, 2021, cash and cash equivalents and marketable securities totaling $1,035.8 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 credit quality securities, and as a result, the Company believes represent a minimal credit risk.

Clinical Trial Costs and Accruals

A significant portion of the Company’s clinical trial costs relate to contracts with contract research organizations (CROs). The financial terms of the Company’s CRO contracts may result in payment flows that do not match the periods over which materials or services are provided to the Company under such contracts. The Company’s objective is to reflect the appropriate clinical trial expenses in the Company’s financial statements by matching those expenses with the period in which services and efforts are expended. As part of the process of preparing the Company’s financial statements, the Company evaluates cost information provided by the Company’s CROs concerning estimated monthly expenses for services rendered and unbilled obligations as the sponsor of the Company’s clinical trials. Accordingly, the Company’s clinical trial accrual is dependent upon the timely and accurate reporting of CROs and other third-party vendors, and the Company’s ability to accurately estimate any unbilled obligations. If the contracted amounts are modified, for instance, as a result of changes in the clinical trial protocol or scope of work to be performed, the Company modifies its accruals accordingly on a prospective basis. Revisions in the scope of a contract are charged to research and development expense in the period in which the facts that give rise to the revision become reasonably certain.

Research and Development Expenses

Research and development costs are expensed as incurred. These costs consist primarily of salaries and other personnel-related expenses, including stock-based compensation; facility-related expenses; depreciation of facilities and equipment; laboratory consumables; and services performed by clinical research organizations, research institutions, and other outside service providers.

The Company recorded the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and include these costs in accrued expenses and other current liabilities in the balance sheet and within research and development expense in the statement of operations and comprehensive loss. As actual costs become known, the Company will adjust its accrued expenses and other current liabilities.

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, restricted stock units (RSUs) and contingently issuable shares. The Company excluded stock options to purchase common stock, RSUs and contingently issuable shares from the number of shares used to calculate diluted shares outstanding because the inclusion of these potentially dilutive securities would have been antidilutive.

9

 


 

Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following:

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

Options to purchase common stock

 

 

5,436,104

 

 

 

6,669,220

 

RSUs

 

 

220,231

 

 

 

21,500

 

Total

 

 

5,656,335

 

 

 

6,690,720

 

 

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 September 30, 2021, marketable securities consisted of the following (in thousands):