UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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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
(Exact name of registrant as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act |
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Name of Each Exchange on Which Registered |
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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, 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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
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Number of Shares Outstanding as of April 15, 2022 |
Common stock, $0.00001 par value |
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VIKING THERAPEUTICS, INC.
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2022
TABLE OF CONTENTS
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Page |
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Part I. |
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1 |
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Item 1. |
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1 |
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Consolidated Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021 |
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1 |
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2 |
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Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021 (unaudited) |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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26 |
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Item 4. |
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26 |
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Part II. |
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27 |
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Item 1. |
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27 |
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Item 1A. |
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27 |
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Item 2. |
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61 |
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Item 3. |
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61 |
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Item 4. |
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61 |
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Item 5. |
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61 |
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Item 6. |
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62 |
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63 |
PART I. FINANCIAL INFORMATION
Item 1. |
Financial Statements |
Viking Therapeutics, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
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March 31, 2022 |
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December 31, 2021 |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments – available for sale |
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Prepaid clinical trial and preclinical study costs |
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Prepaid expenses and other current assets |
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Total current assets |
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Right-of-use assets |
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Deferred financing costs |
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Deposits |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Other accrued liabilities |
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Lease liability, current |
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Total current liabilities |
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Lease liability, net of current portion |
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- |
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Total long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 7) |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive loss |
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Treasury stock at cost, |
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- |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to the unaudited consolidated financial statements.
1
Viking Therapeutics, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Revenues |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Other income (expense): |
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Amortization of financing costs |
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Interest income, net |
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Total other income, net |
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Net loss |
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Other comprehensive gain (loss), net of tax: |
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Unrealized loss on securities |
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Foreign currency translation gain |
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Comprehensive loss |
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$ |
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$ |
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Basic and diluted net loss per common share |
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$ |
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$ |
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Weighted-average shares used to compute basic and diluted net loss per share |
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See accompanying notes to the unaudited consolidated financial statements.
2
Viking Therapeutics, Inc.
Consolidated Statements of Stockholders’ Equity
(In thousands, except share amounts)
(Unaudited)
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Three-Month Period Ended March 31, 2022 |
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Common Stock |
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Additional Paid-In |
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Accumulated |
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Accumulated Other Comprehensive |
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Treasury Stock |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Amount |
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Total |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
— |
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$ |
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Employee stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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Shares withheld related to employee tax withholding |
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( |
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— |
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— |
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— |
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— |
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Issuance of common stock under employee stock plans |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock from warrant exercises |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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( |
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— |
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— |
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— |
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— |
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( |
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( |
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Unrealized loss on investments |
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— |
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— |
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— |
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— |
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( |
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— |
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( |
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Unrealized currency translation gains |
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— |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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See accompanying notes to the unaudited consolidated financial statements.
3
Viking Therapeutics, Inc.
Consolidated Statements of Stockholders’ Equity
(In thousands, except share amounts)
(Unaudited)
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Three-Month Period Ended March 31, 2021 |
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Common Stock |
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Additional Paid-In |
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Accumulated |
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Accumulated Other Comprehensive |
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Shares |
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Amount |
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Capital |
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Deficit |
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Loss |
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Total |
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Balance at December 31, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Employee stock-based compensation |
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— |
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— |
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— |
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— |
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Shares withheld related to employee tax withholding |
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( |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock under employee stock plans |
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— |
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— |
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— |
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Issuance of common stock from warrant exercises |
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— |
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— |
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— |
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Unrealized loss on investments |
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— |
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— |
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— |
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— |
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( |
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( |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Balance at March 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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See accompanying notes to the unaudited consolidated financial statements.
4
Viking Therapeutics, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities |
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Amortization of investment premiums, net |
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Amortization of financing costs |
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Stock-based compensation |
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Amortization of right-of-use assets |
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Interest expense related to operating lease liability |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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( |
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Accrued interest, net of interest received on maturity of investments |
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Accounts payable |
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Other accrued liabilities |
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( |
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Lease liability |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities |
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Purchases of investments |
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( |
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( |
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Proceeds from maturities of investments |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities |
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Value of shares withheld related to employee tax withholding |
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( |
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( |
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Repurchase of common stock |
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( |
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— |
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Proceeds from warrant and option exercises and stock issuances under employee stock purchase plan |
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Net cash provided by (used in) financing activities |
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( |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents beginning of period |
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Cash and cash equivalents end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing transactions |
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Unpaid deferred public offering and other financing costs |
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$ |
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$ |
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Receivable from exercise of warrants |
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$ |
— |
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$ |
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Right-of-use asset obtained in exchange for lease obligation |
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$ |
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$ |
— |
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See accompanying notes to the unaudited consolidated financial statements.
5
Viking Therapeutics, Inc.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization, Liquidity and Management’s Plan, and Summary of Significant Accounting Policies
The Company
Viking Therapeutics, Inc., a Delaware corporation, together with its subsidiary (the “Company”), is a clinical-stage biopharmaceutical company focused on the development of novel therapies for metabolic and endocrine disorders. In June of 2021, the Company formed an Australian subsidiary, Viking Therapeutics, PTY LTD, so as to be able to take advantage of certain research and development reimbursements available to local Australian based research and development companies that choose to do research in Australia.
The Company was incorporated under the laws of the State of
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated balance sheet as of March 31, 2022, consolidated statements of operations for the three months ended March 31, 2022 and 2021, consolidated statements of stockholders’ equity for the three months ended March 31, 2022 and 2021 and consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 are unaudited. These unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2021 contained in the Annual Report on Form 10-K filed by the Company with the SEC on February 9, 2022. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of March 31, 2022, the results of operations for the three months ended March 31, 2022 and 2021, the unaudited consolidated statements of stockholders’ equity for the three months ended March 31, 2022 and 2021 and the unaudited consolidated statements of cash flows for the three months ended March 31, 2022 and 2021. The December 31, 2021 consolidated balance sheet included herein was derived from the audited consolidated financial statements, but it does not include all disclosures or notes required by GAAP for complete consolidated financial statements.
The financial data and other information disclosed in these notes to the consolidated financial statements related to the three months ended March 31, 2022 and 2021 are unaudited. Interim results are not necessarily indicative of results for an entire year.
Risks and Uncertainties
The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict, as the responses that the Company, other businesses and governments are taking continue to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that it could cause a local and/or global economic slowdown or recession. Policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.
In addition, the Company’s clinical trials have been affected by, and may continue to be affected by, the COVID-19 pandemic. Clinical site initiation and patient enrollment have been, and may continue to be, delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not been able to, and others may not be able to, comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, any inability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact the Company’s clinical trial operations.
The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s service providers, suppliers, contract research organizations (“CROs”) and the Company’s clinical trials, all of which are uncertain and cannot be predicted. As of the date of the issuance of the Company’s consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.
6
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements. Significant estimates made in preparing these consolidated financial statements relate to accounting for an operating lease and certain commitments. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents.
Investments Available-for-Sale
Available-for-sale securities are carried at fair value, with the unrealized gains and losses reported in accumulated other comprehensive income (loss). The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. The amortization of premiums and accretion of discounts is included in interest income. Realized gains and losses and declines in value judged to be other-than-temporary, if any, on available-for-sale securities are included in other income (expense). The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents and marketable securities. The Company maintains deposits in federally insured depository institutions in excess of federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. Additionally, the Company has established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity.
Prepaid Clinical Trial and Preclinical Study Costs
Prepaid clinical trial and preclinical study costs represent advance payments by the Company for future clinical trial and preclinical study services to be performed by the clinical research organization and other research organizations. Such amounts are recognized as research and development expense as the related clinical trial and preclinical study services are performed.
Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use (“ROU”) assets, and lease liability obligations are included in the Company’s consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liability obligations represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Please refer to Note 7 for additional information.
Deferred Financing Costs
Deferred financing costs represent legal, accounting and other direct costs related to the Company’s efforts to raise capital through a public or private sale of the Company’s common stock. Costs related to the public sale of the Company’s common stock are deferred until the completion of the applicable offering, at which time such costs are reclassified to additional paid-in-capital as a reduction of the proceeds. Costs related to the private sale of the Company’s common stock are deferred until the completion of the applicable offering, at which time such costs are amortized over the term of the applicable purchase agreement.
7
Revenue Recognition
The Company has not recorded any revenues since its inception. However, in the future, the Company may enter into collaborative research and licensing agreements, under which the Company could be eligible for payments made in the form of upfront license fees, research funding, cost reimbursement, contingent event-based payments and/or royalties.
On January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers and all related amendments (“ASC 606” or “the revenue standard”). ASC 606 is a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The revenue standard is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 provides that an entity should apply the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The revenue standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, and costs to obtain or fulfill contracts. The Company will apply ASC 606 prospectively to all contracts.
Research and Development Expenses
All costs of research and development are expensed in the period incurred. Research and development costs primarily consist of fees paid to CROs and clinical trial sites, employee and consultant related expenses, which include salaries, benefits and stock-based compensation for research and development personnel, external research and development expenses incurred pursuant to agreements with third-party manufacturing organizations, facilities costs, travel costs, dues and subscriptions, depreciation and materials used in preclinical studies, clinical trials and research and development.
The Company estimates its preclinical study and clinical trial expenses based on the services it received pursuant to contracts with research institutions and CROs that conduct and manage preclinical studies and clinical trials on the Company’s behalf. Clinical trial-related contracts vary significantly in length, and may be for a fixed amount based on milestones or deliverables, a variable amount based on actual costs incurred, capped at a certain limit, or a combination of these elements. The Company accrues service fees based on work performed, which relies on estimates of total costs incurred based on milestones achieved, patient enrollment and other events. The majority of the Company’s service providers invoice the Company in arrears, and to the extent that amounts invoiced differ from its estimates of expenses incurred, the Company accrues for additional costs. The financial terms of these agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include:
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fees paid to CROs, consultants and laboratories in connection with preclinical studies; |
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fees paid to CROs, clinical trial sites, investigators and consultants in connection with clinical trials; and |
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fees paid to contract manufacturers and service providers in connection with the production, testing and packaging of active pharmaceutical ingredients and drug materials for preclinical studies and clinical trials. |
Payments under some of these agreements depend on factors such as the milestones accomplished, including enrollment of certain numbers of patients, site initiation and the completion of clinical trial milestones. To date, the Company has not experienced any events requiring it to make material adjustments to its accruals for service fees. If the Company does not identify costs that it has begun to incur or if it underestimates or overestimates the level of services performed or the costs of these services, its actual expenses could differ from its estimates, which could materially affect its results of operations. Adjustments to the Company’s accruals are recorded as changes in estimates become evident. Furthermore, based on amounts invoiced to the Company by its service providers, the Company may also record payments made to those providers as prepaid expenses that will be recognized as expense in future periods as services are rendered.
Patent Costs
Costs related to filing and pursuing patent applications are expensed as incurred to general and administrative expense, as recoverability of such expenditures is uncertain.
Stock-Based Compensation
The Company generally uses the straight-line method to allocate compensation cost to reporting periods over each optionee’s requisite service period, which is generally the vesting period, and estimates the fair value of stock-based awards or restricted stock units to employees and directors using the Black-Scholes option-valuation model (the “Black-Scholes model”). The Black-Scholes model requires the input of subjective assumptions, including volatility, the expected term and the fair value of the underlying common stock
8
on the date of grant, among other inputs. For restricted stock and restricted stock unit awards, the Company generally uses the straight-line method to allocate compensation cost to reporting periods over the holder’s requisite service period, which is generally the vesting period, and uses the fair value at grant date to value the awards. For restricted stock that vests upon the satisfaction of certain performance conditions, the Company recognizes stock-based compensation expense when it becomes probable that the performance conditions will be met. At the grant date, the Company determines the grant date fair value, as a publicly traded company, using the intrinsic value, or the closing price of the Company’s common stock on the date of grant. At the point where the criteria are deemed probable of being met, the Company records stock-based compensation with a cumulative catch-up expense in the period first recognized and then on a straight-line basis over the remaining period for which the performance criteria are expected to be completed.
For the Company’s 2014 Employee Stock Purchase Plan (the “ESPP”), the Company generally recognizes compensation expense for the fair value of the purchase options, as measured on the grant date, and uses the graded vesting method to allocate this compensation cost to each purchase period within the related two-year offering period. As the ESPP also allows for up to one increase in contributions during each purchase period, as an employee elects to increase his or her contributions, the Company treats this as an accounting modification. The pre- and post-modification values are calculated on the date of the modification, and the incremental expense is then amortized over the remaining purchase periods.
Income Taxes
The Company accounts for its income taxes using the liability method whereby deferred tax assets and liabilities are determined based on temporary differences between the basis used for financial reporting and income tax reporting purposes. Deferred income taxes are provided based on the enacted tax rates in effect at the time such temporary differences are expected to reverse. A valuation allowance is provided for deferred tax assets if it is more likely than not that the Company will not realize those tax assets through future operations.
FASB Accounting Standards Codification Topic 740-10, Income Taxes, clarifies the accounting for uncertainty in income taxes recognized in the Company’s consolidated financial statements in accordance with GAAP. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized. Income tax positions that previously failed to meet the more-likely-than-not threshold are recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold are derecognized in the first subsequent financial reporting period in which that threshold is no longer met.
The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
Foreign Currency
The financial statements of the Company’s foreign subsidiary whose functional currency is the local currency is translated into U.S. dollars for consolidation as follows: assets and liabilities at the exchange rate as of the balance sheet date, stockholders’ equity at the historical rates of exchange, and income and expense amounts at the average exchange rate for the period. Translation adjustments resulting from the translation of the subsidiaries’ accounts are included in “Accumulated other comprehensive income” as equity in the consolidated balance sheet. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. At period end, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Gains and losses resulting from foreign currency transactions are included within “Other income (expense), net” in the consolidated statement of operations. For the three months ended March 31, 2022 and 2021, foreign currency transaction gain amounted to $
Comprehensive Loss
The Company’s comprehensive loss consists of net loss and foreign currency translation adjustments arising from the consolidation of the Company’s foreign subsidiary.
Net Loss per Common Share
Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common share equivalents
9
outstanding for the period determined using the treasury-stock method. For purposes of this calculation, the Company currently does not have any deemed common share equivalents; therefore, its basic and diluted net loss per share calculations are the same.
The following table presents the computation of basic and diluted net loss per common share (in thousands, except share and per share data):
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Three Months Ended March 31, |
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2022 |
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2021 |
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Numerator: |
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Net loss attributable to common stockholders |
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$ |
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$ |
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Denominator: |
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Weighted-average common shares outstanding |
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Less: Weighted-average shares subject to repurchase |
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( |
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( |
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Denominator for basic and diluted net loss per share |
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Net loss per share: |
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Basic and diluted |
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$ |
( |
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$ |
( |
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Potentially dilutive securities that are not included in the calculation of diluted net loss per share because their effect is anti-dilutive are as follows (in common equivalent shares):
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As of March 31, |
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2022 |
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2021 |
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Common stock warrants |
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Restricted stock units |
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Common stock subject to repurchase |
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Common stock options |
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Segments
The Company operates in only
2. Investments in Marketable Securities
The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. As of March 31, 2022 and December 31, 2021, the Company’s investments were in government money market funds, certificates of deposit, commercial paper and corporate debt securities. There were
Investments classified as available-for-sale as of March 31, 2022 consisted of the following (in thousands):
As of March 31, 2022 |
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Amortized Cost |
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Gross Unrealized Gains (1) |
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Gross Unrealized Losses (1) |
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Aggregate Estimated Fair Value |
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Certificates of deposit (2) |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Commercial paper (2) |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Corporate debt securities (2) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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10
(1) |
Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. At March 31, 2022, there was |
(2) |
At March 31, 2022, |
Investments classified as available-for-sale as of December 31, 2021 consisted of the following (in thousands):
As of December 31, 2021 |
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Amortized Cost |
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Gross Unrealized Gains (1) |
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Gross Unrealized Losses (1) |
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Aggregate Estimated Fair Value |
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Certificates of deposit (2) |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Commercial paper (2) |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Corporate debt securities (2) |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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(1) |
Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. At December 31, 2021, there were |
(2) |
At December 31, 2021, |
3. Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, investments and accounts payable. The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents and accounts payable approximate fair value because of the short-term maturity of those instruments. Fair value measurements are classified and disclosed in one of the following three categories:
Level 1 —Quoted prices in active markets for identical assets or liabilities.
Level 2 —Inputs other than Level 1 that are observable, either directly or indirectly, 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 assets or liabilities.
Level 3 —Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
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As of March 31, 2022 and December 31, 2021, all of the Company’s financial assets that were subject to fair value measurements were valued using observable inputs. The Company’s financial assets valued based on Level 1 inputs consist of money market funds. The Company’s financial assets valued based on Level 2 inputs consist of certificates of deposit, commercial paper and corporate debt securities, which consist of investments in highly rated investment-grade corporations.
The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. As of March 31, 2022, the Company’s investments were in government money market funds, certificates of deposit, commercial paper and corporate debt securities.
The fair values of the Company’s financial instruments are presented below (in thousands):
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Fair Value Measurements at March 31, 2022 |
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Total |
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Level 1 |
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Level 2 |
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Level 3 |
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Financial assets carried at fair value: |
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