UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer | |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
| ☐ |
| 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
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐
As of August 4, 2023, the registrant had
Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Rain Oncology Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(unaudited)
June 30, | December 31, | |||||
2023 | 2022 (1) | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Short-term investments | | | ||||
Prepaid and other current assets | | | ||||
Total current assets | | | ||||
Property and equipment, net | | | ||||
Operating lease right-of-use asset | | | ||||
Other assets | | | ||||
Total assets | $ | | $ | | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued research and development | | | ||||
Other accrued liabilities | | | ||||
Operating lease liability, current portion | | | ||||
Total current liabilities | | | ||||
Operating lease liability, net of current portion | | | ||||
Other long-term liabilities | | | ||||
Total liabilities | | | ||||
Commitments and contingencies | ||||||
Stockholders’ equity: | ||||||
Preferred stock, $ | ||||||
Common stock, $ | | | ||||
Additional paid-in capital | | | ||||
Accumulated other comprehensive loss | ( | ( | ||||
Accumulated deficit | ( | ( | ||||
Total stockholders’ equity | | | ||||
Total liabilities and stockholders’ equity | $ | | $ | | ||
| (1) | The balance sheet at December 31, 2022 has been derived from the audited financial statements included in Rain Oncology Inc.’s Annual Report on Form 10-K filed on March 9, 2023. |
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Rain Oncology Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
(unaudited)
Three Months Ended | Six Months Ended | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Operating expenses: | ||||||||||||
Research and development | $ | | $ | | $ | | $ | | ||||
General and administrative | | | | | ||||||||
Restructuring charges | | — | | — | ||||||||
Total operating expenses | | | | | ||||||||
Loss from operations | ( | ( | ( | ( | ||||||||
Other income: | ||||||||||||
Interest income | | | | | ||||||||
Total other income | | | | | ||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share, basic and diluted | ( | ( | ( | ( | ||||||||
Weighted-average shares used to compute net loss per share, basic and diluted | | | | | ||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive loss: | ||||||||||||
Unrealized gain (loss) on short-term investments | ( | | | ( | ||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Rain Oncology Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share amounts)
(unaudited)
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||
Shares | Amount | Capital | Deficit | Loss | Equity | ||||||||||||
Balance as of December 31, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Exercise of stock options | | — | | — | — | | |||||||||||
Issuance of common stock from employee stock purchase plan | | — | | — | — | | |||||||||||
Issuance of common stock in connection with equity financings, net of issuance costs | | — | | | |||||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized gain on investments | — | — | — | — | | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance as of March 31, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Issuance of common stock from employee stock purchase plan | | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized loss on investments | — | — | — | — | ( | ( | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance as of June 30, 2023 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Accumulated | |||||||||||||||||
Additional | Other | Total | |||||||||||||||
Common Stock | Paid-in | Accumulated | Comprehensive | Stockholders’ | |||||||||||||
Shares | Amount | Capital | Deficit | Loss | Equity | ||||||||||||
Balance as of December 31, 2021 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Exercise of stock options | | — | | — | — | | |||||||||||
Issuance of common stock from employee stock purchase plan | | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized loss on investments | — | — | — | — | ( | ( | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance as of March 31, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
Exercise of stock options | | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Unrealized gain on investments | — | — | — | — | | | |||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||
Balance as of June 30, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
5
Rain Oncology Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended | ||||||
2023 | 2022 | |||||
Operating activities | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||
Stock-based compensation expense | | | ||||
Depreciation and amortization expense | | | ||||
Amortization of premium and accretion of discounts on short-term investments, net | ( | | ||||
Fair value gain on investments | | — | ||||
Changes in operating assets and liabilities: | ||||||
Prepaid and other current assets | ( | | ||||
Operating lease right-of-use asset and liability, net | ( | ( | ||||
Other assets | | ( | ||||
Accounts payable | ( | ( | ||||
Accrued research and development | ( | | ||||
Other accrued liabilities | ( | ( | ||||
Net cash used in operating activities | ( | ( | ||||
| ||||||
Investing activities | ||||||
Purchases of short-term investments | ( | ( | ||||
Maturities of short-term investments | | | ||||
Purchases of property and equipment, net | ( | — | ||||
Net cash provided by investing activities | | | ||||
| ||||||
Financing Activities | ||||||
Proceeds from the issuance of common stock under the Company’s equity incentive plans and employee stock purchase plan | | | ||||
Proceeds from issuance of common stock in connection with the Company’s at-the-market facility | | — | ||||
Payments of issuance costs related to equity financings | ( | — | ||||
Net cash provided by financing activities | | | ||||
Net (decrease) increase in cash and cash equivalents | ( | | ||||
Cash and cash equivalents at beginning of period | | | ||||
Cash and cash equivalents at end of period | $ | | $ | | ||
| ||||||
See accompanying Notes to Condensed Consolidated Financial Statements.
6
Rain Oncology Inc.
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1 – Organization and Nature of Operations
Description of Business
Rain Oncology Inc. (“Rain” or the “Company”), formerly known as Rain Therapeutics Inc., was incorporated in the state of Delaware in April 2017. Rain is a precision oncology company developing therapies that target oncogenic drivers for which the Company is able to genetically select patients the Company believes will most likely benefit. Rain’s product candidate, milademetan, is a small molecule, oral inhibitor of the MDM2-p53 complex that reactivates p53. The Company operates in one business segment and its principal operations are in the United States, with its headquarters in Newark, California.
On June 22, 2022, the Company formed Rain Oncology Australia Pty Ltd (“Rain Oncology Australia”), a wholly owned subsidiary incorporated under the laws of Australia.
On December 22, 2022, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a change of the Company’s name from “Rain Therapeutics Inc.” to “Rain Oncology Inc.” effective as of December 30, 2022.
Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) related to a Quarterly Report on Form 10-Q. These condensed consolidated financial statements include the accounts of the Company and Rain Oncology Australia. All significant inter-company transactions, balances and expenses have been eliminated upon consolidation. Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The year-end balance sheet data was derived from the Company’s audited financial statements but does not include all disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K, filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited financial information for the interim periods presented herein reflects all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operation for the periods presented, with such adjustments consisting only of normal recurring adjustments.
Liquidity and Capital Resources
The Company has devoted substantially all of its efforts to drug discovery and development, raising capital and building operations. The Company has a limited operating history and has not generated any revenue since its inception, and the sales and income potential of the Company’s business is unproven. The Company has incurred net losses and negative cash flows from operating activities since its inception and expects to continue to incur net losses into the foreseeable future as it continues the development of its product candidates. From inception through June 30, 2023, the Company has funded its operations through net proceeds from its initial public offering in April 2021, the offering, issuance and sale of its common stock in November 2022, as well as the issuance of convertible promissory notes and convertible preferred stock.
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. Management believes that the Company’s current cash, cash equivalents and short-term investments will provide sufficient funds to enable the Company to meet its obligations for at least twelve months from the filing date of this report.
7
Note 2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with U.S. GAAP 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 condensed consolidated financial statements and accompanying notes. The most significant estimate in the Company’s condensed consolidated financial statements relates to the clinical trial expense accruals. Management evaluates its estimates on an ongoing basis. Although these estimates are based on the Company’s historical experience, knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents include commercial paper and money market funds.
Available-for-Sale Investments
The Company holds investment grade securities consisting of commercial paper, corporate debt securities, U.S. government securities and U.S. agency bonds, classified as available-for-sale (AFS) securities at the time of purchase, since it is the Company’s intent that these investments be available for current operations. The Company has classified all of its AFS securities as current assets in the condensed consolidated balance sheets even though the stated maturity date may be one year or more beyond the current condensed consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund its operations, as necessary.
The Company carries these securities at fair value and reports unrealized gains and losses, if any, as a separate component of accumulated other comprehensive loss. The cost of debt securities is adjusted for amortization of purchase premiums and accretion of discounts to maturity. Such amortization and accretion are included in interest income in the condensed consolidated statements of operations and comprehensive loss. Realized gains and losses on sales of securities are determined using the specific identification method and recorded in interest income in the condensed consolidated statement of operations and comprehensive loss.
Allowance for Credit Losses
For AFS securities in an unrealized loss position, the Company first assesses whether it intends to sell, or if it is more likely than not that the Company will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the severity of the impairment, any changes in interest rates, market conditions, changes to the underlying credit ratings and forecasted recovery, among other factors. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Any impairment that has not been recorded through an allowance for credit losses is included in other comprehensive loss in the condensed consolidated statement of operations and comprehensive loss.
The Company elected the practical expedient to exclude the applicable accrued interest from both the fair value and amortized costs basis of its AFS securities for purposes of identifying and measuring an impairment. Accrued interest receivable on AFS securities is recorded in prepaid and other current assets in the condensed consolidated balance sheets. The Company’s accounting policy is to not measure an allowance for credit loss for accrued interest receivable and to write-off any uncollectible accrued interest receivable as a reversal of interest income in a timely manner, which the Company considers to be in the period in which it determines the accrued interest will not be collected by the Company.
8
Research and Development Costs
Research and development costs primarily consist of costs associated with the Company’s research and development activities, including its drug discovery efforts, and the preclinical and clinical development of its product candidates. Research and development costs are expensed as incurred.
Preclinical Studies and Clinical Trial Accruals
The Company is required to estimate its expenses resulting from its obligations under contracts with vendors, consultants, clinical research organizations and clinical site agreements in connection with conducting preclinical activities and clinical trials. The financial terms of these contracts are subject to negotiations which vary from contract to contract and may result in payment flows that do not match the periods over which materials or services are provided under such contracts. The Company reflects preclinical study and clinical trial expenses in its condensed consolidated financial statements by matching those expenses with the period in which services and efforts are expended. The Company accounts for these expenses according to the progress of the preclinical study or clinical trial as measured by the timing of various aspects of the preclinical study, clinical trial or related activities. The Company determines accrual and prepaid estimates through review of the underlying contracts along with preparation of financial models taking into account correspondence with clinical and other key personnel and third-party service providers as to the progress of preclinical studies, clinical trials or other services being conducted. During the course of a preclinical study or clinical trial, the Company adjusts its expense recognition if actual results differ from its estimates. To date, the Company has not experienced any material differences between accrued costs and actual costs incurred.
Stock-Based Compensation
Stock-based compensation expense represents the grant date fair value of equity awards recognized over the requisite service period of the awards (generally the vesting period) on a straight-line basis. The Company recognizes forfeitures as they occur. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model. The fair value of restricted stock units (“RSUs”) granted is based on the Company’s closing stock price on the date of grant.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, management considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies and results of recent operations. If management determines that the Company would be able to realize its deferred tax assets in the future in excess of their recorded amount, management would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The Company records uncertain tax positions on the basis of a two-step process whereby (1) management determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. Any accrued interest and penalties are included within the related tax liability.
Restructuring
Restructuring costs comprised of severance, other termination benefit costs and stock-based compensation expense for stock option modifications related to workforce reductions. The Company recognizes restructuring charges
9
when the liability is probable, and the amount is estimable. Employee termination benefits are accrued at the date management has committed to a plan of termination and affected employees have been notified of their termination date and expected severance benefits.
Comprehensive Loss
Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss includes unrealized gains and losses from short-term investments.
Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period, without consideration of potential dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted-average number of shares of common stock plus the potential dilutive effects of potential dilutive securities outstanding during the period. Potential dilutive securities are excluded from diluted earnings or loss per share if the effect of such inclusion is antidilutive. The Company’s potentially dilutive securities, which include shares from the 2021 Employee Stock Purchase Plan (the “ESPP”) and outstanding stock options and RSUs under the Company’s equity incentive plan, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For the periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.
Recent Accounting Pronouncements
Financial Instruments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The objective of the standard is to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior U.S. GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses, and establishes additional disclosures related to credit risks. The Company adopted Topic 326 on January 1, 2023. The adoption did not have a significant impact on the Company’s condensed consolidated financial statements or the related disclosures.
There were no other significant updates to the recently issued accounting standards other than as disclosed herein for the three and six months ended June 30, 2023. Although there are several other new accounting pronouncements issued or proposed by the FASB, based on the Company’s preliminary assessment, the Company does not believe any of those accounting pronouncements have had or will have a material impact on its financial position or operating results.
Note 3 – Fair Value Measurements
The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.
10
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and AFS securities. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.
Investments are classified as Level 1 within the fair value hierarchy if their quoted prices are available in active markets for identical securities. Investments in money market funds and U.S. government securities were classified as Level 1 instruments.
Investments in commercial paper, corporate debt securities and U.S. agency bonds are valued using Level 2 inputs. The Company classifies investments within Level 2 if the investments are valued using model driven valuations using observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Investments are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset pricing models.
The carrying amounts of cash, prepaid expenses and other current assets, other assets, accounts payable, accrued research and development, other current liabilities and other long-term liabilities are reasonable estimates of their fair value due to the short-term nature of these accounts.
The Company’s money market funds under cash and cash equivalents are classified using Level 1 inputs within the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. There were
The following tables summarize financial assets that the Company measured at fair value on a recurring basis, classified in accordance with the fair value hierarchy (in thousands):
Fair Value Measurements at Reporting Date Using: | ||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||
As of June 30, 2023: | ||||||||||||
Money market funds | $ | | $ | — | $ | — | $ | | ||||
Commercial paper | — | | — | | ||||||||
U.S. government securities | | — | — | | ||||||||
U.S. agency bonds | — | | — | | ||||||||
Total cash equivalents and short-term investments | $ | | $ | | $ | — | $ | | ||||
Reported as: | ||||||||||||
Cash and cash equivalents (include cash of $ | $ | | ||||||||||
Short-term investments | | |||||||||||
Total cash, cash equivalents and short-term investments | $ | | ||||||||||
11
Fair Value Measurements at Reporting Date Using: | ||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||
As of December 31, 2022: | ||||||||||||
Money market funds | $ | | $ | — | $ | — | $ | | ||||
Commercial paper | — | | — | | ||||||||
U.S. government securities | | — | — | | ||||||||
U.S. agency bonds | — | | — | | ||||||||
Corporate debt securities | — | | — | | ||||||||
Total cash equivalents and short-term investments | $ | | $ | | $ | — | $ | | ||||
Reported as: | ||||||||||||
Cash and cash equivalents (include cash of $ | $ | | ||||||||||
Short-term investments | | |||||||||||
Total cash, cash equivalents and short-term investments | $ | | ||||||||||
There were
Note 4 – Investments
The Company invests in available-for-sale securities consisting of money market funds, commercial paper, U.S. government securities, U.S. agency bonds and corporate debt securities. Available-for-sale securities are classified as either cash and cash equivalents or short-term investments in the condensed consolidated balance sheets.
The following tables summarize, by major types of cash equivalents, and investments that are measured at fair value on a recurring basis (in thousands):
As of June 30, 2023 | ||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||
Cost | Gains | Losses | Fair Value | |||||||||
Money market funds | $ | | $ | — | $ | — | $ | | ||||
Commercial paper | | | ( | | ||||||||
U.S. government securities | | | ( | | ||||||||
U.S. agency bonds | | — | ( | | ||||||||
Cash equivalents and short-term investments | $ | | $ | | $ | ( | $ | | ||||
As of December 31, 2022 | ||||||||||||
Amortized | Unrealized | Unrealized | Estimated | |||||||||
Cost | Gains | Losses | Fair Value | |||||||||
Money market funds | $ | | $ | — | $ | — | $ | | ||||
Commercial paper | | | ( | | ||||||||
U.S. government securities | | — | ( | | ||||||||
U.S. agency bonds | | | ( | | ||||||||
Corporate debt securities | | — | ( | | ||||||||
Cash equivalents and short-term investments | $ | | $ | | $ | ( | $ | | ||||
The contractual maturities of the Company’s AFS securities were as follows (in thousands):
As of | As of | |||||
Due within one year | $ | | $ | | ||
Due within one to two years | — | | ||||
Total | $ | | $ | | ||
12
The AFS investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current condensed consolidated balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund the Company’s operations, as necessary. There were
The Company does not intend to sell its AFS investments before maturity, and it is unlikely that the Company will be required to sell such investments before recovery of their amortized cost basis. Based on the Company’s review of these AFS securities, the unrealized losses as of June 30, 2023 were primarily due to changes in interest rates and not due to increased credit risks associated with specific securities. The Company has
Accrued interest receivables on AFS securities were $
Note 5 - Condensed Consolidated Balance Sheet Details
Prepaid and Other Current Assets
Prepaid and other current assets consist of the following (in thousands):
As of | As of | |||||
Prepaid insurance | $ | | $ | | ||
Prepaid research and development | | | ||||
Prepaid other | | | ||||
FICA tax credit receivable | | | ||||
Other current assets | | | ||||
Deposits | | | ||||
Prepaid and other current assets | $ | | $ | | ||
Property and Equipment, Net
Property and equipment, net, consist of the following (in thousands):
As of | As of | |||||
Furniture and equipment | $ | | $ | | ||
Leasehold improvements | | | ||||
Computer equipment | | | ||||
Construction in progress | | | ||||
| | | ||||
Less: accumulated depreciation and amortization expense | ( | ( | ||||
Property and equipment, net | $ | | $ | | ||
Depreciation and amortization expense for the three months ended June 30, 2023 and 2022 was $
13
Other Non-Current Assets
Other non-current assets consist of the following (in thousands):
As of | As of | |||||
Deposits | $ | | $ | | ||
FICA tax credit receivable | — | | ||||
Other | | | ||||
Other non-current assets | $ | | $ | | ||
Other Accrued Liabilities
Other accrued liabilities consist of the following (in thousands):
As of | As of | |||||
Accrued payroll and related | $ | | $ | | ||
Accrued bonus | | | ||||
ESPP liability | — | | ||||
Other | | | ||||
Other accrued liabilities | $ | | $ | | ||
Note 6 – Stockholders’ Equity
In April 2021, the Company filed a certificate of amendment to its certificate of incorporation, which authorized
Equity Incentive Plan
In August 2020, the Board of Directors amended the Amended and Restated 2018 Stock Option—Stock Issuance Plan (the “2018 Plan”) to increase the maximum number of shares of common stock that may be issued over the term of the plan. The 2018 Plan provided for the grant of stock options, non-statutory stock options, incentive stock options and stock issuances to employees, nonemployees and consultants of the Company.
In April 2021, the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was approved by the Board of Directors and became effective on April 15, 2021. Upon the effectiveness of the 2021 Plan,
The 2021 Plan allows the Company to grant equity-based awards to its officers, employees, directors and other key persons (including consultants). The Company initially reserved up to
14
Stock Options
A summary of the Company’s stock option activities during the six months ended June 30, 2023 is as follows:
Weighted- | Weighted- | |||||||||
Average | Average | Aggregate | ||||||||
Exercise | Remaining | Intrinsic | ||||||||
Price Per | Contract Term | Value | ||||||||
Total Options | Share | (in years) | (in millions) | |||||||
Outstanding as of December 31, 2022 | | $ | | $ | — | |||||
Granted | | $ | | |||||||
Exercised | ( | $ | | |||||||
Forfeited or cancelled | ( | $ | ( | |||||||
Outstanding as of June 30, 2023 | | $ | | $ | — | |||||
Vested and expected to vest as of June 30, 2023 | | $ | | $ | — | |||||
Vested and exercisable as of June 30, 2023 | | $ | | $ | — | |||||
The weighted-average grant date fair values of option grants during the six months ended June 30, 2023 and 2022 were $
Restricted Stock Units
A summary of the Company’s RSU activities during the six months ended June 30, 2023 is as follows:
Weighted- | Aggregate | |||||||
Total | Average | Intrinsic | ||||||
Restricted | Grant Date | Value | ||||||
Stock Units | Fair Values | (in millions) | ||||||
Outstanding as of December 31, 2022 | | $ | | $ | — | |||
Granted | | $ | | |||||
Vested | — | $ | — | |||||
Forfeited or cancelled | ( | $ | | |||||
Outstanding as of June 30, 2023 | | $ | | $ | | |||
Employee Stock Purchase Plan
The ESPP was approved by the Board of Directors and became effective on April 15, 2021. The ESPP initially reserved and authorized the issuance of up to
15
Stock-Based Compensation Expense
The Company recognized stock-based compensation expense as follows (in thousands):
Three Months Ended | Six Months Ended | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Research and development | $ | | $ | | $ | | $ | | ||||
General and administrative | | | | | ||||||||
Restructuring charges | | - | | - | ||||||||
Total stock-based compensation expense | $ | | $ | | $ | | $ | | ||||
As of June 30, 2023, the total unrecognized compensation cost was $
The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the stock option grants were as follows: