10-Q 1 vktx-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 2024

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 001-37355

 

VIKING THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

46-1073877

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

 

 

9920 Pacific Heights Blvd, Suite 350

San Diego, California

 

92121

(Address of Principal Executive Offices)

 

(Zip Code)

 

(858) 704-4660

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act

 

 

Title of Each Class

 

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.00001 per share

 

VKTX

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class

 

Number of Shares Outstanding

as of April 15, 2024

Common stock, $0.00001 par value

 

110,268,210

 


VIKING THERAPEUTICS, INC.

FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 2024

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

Part I.

 

FINANCIAL INFORMATION

 

1

 

 

 

 

 

Item 1.

 

Consolidated Financial Statements

 

1

 

 

 

 

 

 

 

Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023

 

1

 

 

 

 

 

 

 

Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2024 and 2023 (unaudited)

 

2

 

 

 

 

 

 

 

Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)

 

3

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)

 

4

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

5

 

 

 

 

 

Item 2.

 

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

 

18

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

24

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

24

 

 

 

 

 

Part II.

 

OTHER INFORMATION

 

26

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

26

 

 

 

 

 

Item 1A.

 

Risk Factors

 

26

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

61

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

61

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

61

 

 

 

 

 

Item 5.

 

Other Information

 

62

 

 

 

 

 

Item 6.

 

Exhibits

 

63

 

 

 

 

 

SIGNATURES

 

64

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Viking Therapeutics, Inc.

Consolidated Balance Sheets

 

(In thousands, except share and per share amounts)

 

 

March 31,
2024

 

 

December 31,
2023

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

195,579

 

 

$

55,516

 

Short-term investments – available-for-sale

 

 

767,397

 

 

 

306,563

 

Prepaid clinical trial and preclinical study costs

 

 

2,716

 

 

 

2,624

 

Prepaid expenses and other current assets

 

 

643

 

 

 

2,522

 

Total current assets

 

 

966,335

 

 

 

367,225

 

Right-of-use assets

 

 

1,052

 

 

 

1,126

 

Deferred financing costs

 

 

98

 

 

 

106

 

Deposits

 

 

33

 

 

 

33

 

Total assets

 

$

967,518

 

 

$

368,490

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

5,225

 

 

$

7,512

 

Other accrued liabilities

 

 

27,220

 

 

 

11,299

 

Lease liability, current

 

 

329

 

 

 

324

 

Total current liabilities

 

 

32,774

 

 

 

19,135

 

Lease liability, net of current portion

 

 

852

 

 

 

936

 

Total long-term liabilities

 

 

852

 

 

 

936

 

Total liabilities

 

 

33,626

 

 

 

20,071

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.00001 par value: 10,000,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued and outstanding at March 31, 2024 and December 31, 2023

 

 

 

 

 

 

Common stock, $0.00001 par value: 300,000,000 shares authorized at March 31, 2024 and December 31, 2023; 110,228,869 shares issued and outstanding at March 31, 2024 and 100,113,770 shares issued and outstanding at December 31, 2023

 

 

1

 

 

 

1

 

Treasury stock at cost, no shares at March 31, 2024 and 2,193,251 shares at December 31, 2023

 

 

 

 

 

(6,795

)

Additional paid-in capital

 

 

1,340,789

 

 

 

733,546

 

Accumulated deficit

 

 

(405,299

)

 

 

(377,944

)

Accumulated other comprehensive loss

 

 

(1,599

)

 

 

(389

)

Total stockholders’ equity

 

 

933,892

 

 

 

348,419

 

Total liabilities and stockholders’ equity

 

$

967,518

 

 

$

368,490

 

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)

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Revenues

 

$

 

 

$

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

 

24,103

 

 

 

11,008

 

General and administrative

 

 

9,970

 

 

 

9,529

 

Total operating expenses

 

 

34,073

 

 

 

20,537

 

Loss from operations

 

 

(34,073

)

 

 

(20,537

)

Other income (expense):

 

 

 

 

 

 

Amortization of financing costs

 

 

(28

)

 

 

(28

)

Interest income, net

 

 

6,745

 

 

 

1,034

 

Total other income, net

 

 

6,717

 

 

 

1,006

 

Net loss

 

 

(27,356

)

 

 

(19,531

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

Unrealized gain (loss) on securities

 

 

(1,125

)

 

 

501

 

Foreign currency translation loss

 

 

(85

)

 

 

(17

)

Comprehensive loss

 

$

(28,566

)

 

$

(19,047

)

Basic and diluted net loss per share

 

$

(0.26

)

 

$

(0.25

)

Weighted-average shares used to compute basic
   and diluted net loss per share

 

 

103,457

 

 

 

78,352

 

See accompanying notes to the unaudited consolidated financial statements.

2


 

Viking Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity

 

(In thousands, except share amounts)

(Unaudited)

 

 

 

Three-Month Period Ended March 31, 2024

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated Other
Comprehensive

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Amount

 

 

Total

 

Balance at December 31, 2023

 

 

100,113,770

 

 

$

1

 

 

$

733,546

 

 

$

(377,944

)

 

$

(389

)

 

$

(6,795

)

 

$

348,419

 

Employee stock-based compensation, net

 

 

 

 

 

 

 

 

7,981

 

 

 

 

 

 

 

 

 

 

 

 

7,981

 

Shares withheld related to employee tax withholding

 

 

(833,711

)

 

 

 

 

 

(42,101

)

 

 

 

 

 

 

 

 

 

 

 

(42,101

)

Issuance of common stock under employee stock plans

 

 

2,080,857

 

 

 

 

 

 

4,361

 

 

 

 

 

 

 

 

 

 

 

 

4,361

 

Sale of common stock, net of issuance costs

 

 

8,867,953

 

 

 

 

 

 

637,002

 

 

 

 

 

 

 

 

 

6,795

 

 

 

643,797

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,125

)

 

 

 

 

 

(1,125

)

Unrealized currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(85

)

 

 

 

 

 

(85

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(27,356

)

 

 

 

 

 

 

 

 

(27,356

)

Balance at March 31, 2024

 

 

110,228,869

 

 

$

1

 

 

$

1,340,789

 

 

$

(405,300

)

 

$

(1,599

)

 

$

 

 

$

933,891

 

 

 

 

Three-Month Period Ended March 31, 2023

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated Other
Comprehensive

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Amount

 

 

Total

 

Balance at December 31, 2022

 

 

78,257,258

 

 

$

1

 

 

$

445,267

 

 

$

(292,049

)

 

$

(1,102

)

 

$

(6,795

)

 

$

145,322

 

Employee stock-based compensation, net

 

 

 

 

 

 

 

3,569

 

 

 

 

 

 

 

 

 

 

 

 

3,569

 

Shares withheld related to employee tax withholding

 

 

(201,905

)

 

 

 

 

 

(1,714

)

 

 

 

 

 

 

 

 

 

 

 

(1,714

)

Issuance of common stock under employee stock plans

 

 

1,085,524

 

 

 

 

 

 

3,966

 

 

 

 

 

 

 

 

 

 

 

 

3,966

 

Sale of common stock, net of issuance costs

 

 

178,204

 

 

 

 

 

 

1,969

 

 

 

 

 

 

 

 

 

 

 

 

1,969

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

501

 

 

 

 

 

 

501

 

Unrealized currency translation loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

 

 

 

(17

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(19,531

)

 

 

 

 

 

 

 

 

(19,531

)

Balance at March 31, 2023

 

 

79,319,081

 

 

$

1

 

 

$

453,057

 

 

$

(311,580

)

 

$

(618

)

 

$

(6,795

)

 

$

134,065

 

See accompanying notes to the unaudited consolidated financial statements.

3


 

Viking Therapeutics, Inc.

Consolidated Statements of Cash Flows

 

(In thousands)

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2024

 

 

2023

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

 

$

(27,356

)

 

$

(19,531

)

 

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

 

 

 

 

 

 

 

Amortization of investment premiums

 

 

(2,821

)

 

 

(389

)

 

Amortization of financing costs

 

 

28

 

 

 

28

 

 

Stock-based compensation

 

 

7,981

 

 

 

3,569

 

 

Amortization of right-of-use assets

 

 

74

 

 

 

72

 

 

Interest expense related to operating lease liability

 

 

9

 

 

 

12

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

1,748

 

 

 

(2,258

)

 

Accrued interest, net of interest receivable on maturity of investments

 

 

655

 

 

 

243

 

 

Accounts payable

 

 

(2,287

)

 

 

(4,732

)

 

Accrued expenses

 

 

15,923

 

 

 

(1,572

)

 

Lease liability

 

 

(88

)

 

 

(85

)

 

Net cash used in operating activities

 

 

(6,134

)

 

 

(24,643

)

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchases of investments

 

 

(596,601

)

 

 

(57,395

)

 

Proceeds from maturities of investments

 

 

136,809

 

 

 

59,593

 

 

Net cash (used in) provided by investing activities

 

 

(459,792

)

 

 

2,198

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Public offering, net of offering costs

 

 

597,119

 

 

 

(37

)

 

Value of shares withheld related to employee tax withholding

 

 

(42,101

)

 

 

(1,714

)

 

Proceeds from option exercises

 

 

4,361

 

 

 

3,966

 

 

ATM offering, net of fees

 

 

46,658

 

 

 

1,969

 

 

Net cash provided by financing activities

 

 

606,037

 

 

 

4,184

 

 

Net increase (decrease) in cash and cash equivalents

 

 

140,111

 

 

 

(18,261

)

 

Cash and cash equivalents beginning of period

 

 

55,516

 

 

 

36,632

 

 

Effect of exchange rate changes on cash

 

 

(48

)

 

 

(9

)

 

Cash and cash equivalents end of period

 

$

195,579

 

 

$

18,362

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing
   transactions

 

 

 

 

 

 

 

Unpaid deferred public offering and other financing costs

 

$

69

 

 

$

52

 

 

See accompanying notes to the unaudited consolidated financial statements.

4


 

Viking Therapeutics, Inc.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization 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 Delaware on September 24, 2012 and its principal executive offices are located in San Diego, California, with a subsidiary located in Adelaide, Australia.

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, 2024, consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023, and consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 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, 2023 contained in the Annual Report on Form 10-K filed by the Company with the SEC on February 7, 2024. 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, 2024, the results of operations for the three months ended March 31, 2024 and 2023, the unaudited consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023 and the unaudited consolidated statements of cash flows for the three months ended March 31, 2024 and 2023. The December 31, 2023 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, 2024 and 2023 are unaudited. Interim results are not necessarily indicative of results for an entire year.

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 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.

5


 

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 4 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.

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 contract research organizations (“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.

6


 

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:

fees paid to CROs, consultants and laboratories in connection with preclinical studies;
fees paid to CROs, clinical trial sites, investigators and consultants in connection with clinical trials; and
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.

Related to the Company’s Australian subsidiary, Viking Therapeutics, PTY LTD, the Company is eligible, and has received, under the AusIndustry Research and Tax Development Tax Incentive Program, an amount of cash from the Australian Taxation Office (ATO). The tax incentive is available to the Company on the basis of specific criteria with which the Company must comply related to research and development expenditures in Australia. As there is no specific GAAP guidance related to how to record this research and development tax incentive, the Company looked to International Accounting Standard (IAS) 20 and determined that it will recognize these research and development tax incentives as contra research and development expense once received. The amounts are determined based on a cost-reimbursement basis, and the incentive is related to the Company’s research and development expenditures and is due regardless of whether any Australian tax is owed.

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 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.

7


 

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 are 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 loss” 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 “Total other income, net” in the consolidated statement of operations and comprehensive loss. For the three months ended March 31, 2024 and 2023, foreign currency transaction loss amounted to $85,000 and $17,000, respectively.

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 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):

 

 

 

Three Months Ended March 31,

 

 

 

 

2024

 

 

2023

 

 

Numerator:

 

 

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(27,356

)

 

$

(19,531

)

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

Weighted-average common shares outstanding

 

 

103,640,400

 

 

 

78,534,921

 

 

Less: Weighted-average shares subject to repurchase

 

 

(183,095

)

 

 

(183,095

)

 

Denominator for basic and diluted net loss per share

 

 

103,457,305

 

 

 

78,351,826

 

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.26

)

 

$

(0.25

)

 

 

8


 

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):

 

 

 

As of March 31,

 

 

 

2024

 

 

2023

 

Restricted stock units

 

 

2,829,187

 

 

 

2,701,987

 

Common stock subject to repurchase

 

 

183,095

 

 

 

183,095

 

Common stock options

 

 

5,516,193

 

 

 

5,761,977

 

 

 

 

8,528,475

 

 

 

8,647,059

 

 

Segments

The Company operates in only one segment. Management uses cash flows as the primary measure to manage its business and does not segment its business for internal reporting or decision-making purposes.

 

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 each of March 31, 2024 and December 31, 2023, the Company’s investments were in government money market funds, certificates of deposit, commercial paper, corporate debt securities and government debt securities. There were no sales of available-for-sale securities during the three months ended March 31, 2024 or during the year ended December 31, 2023.

Investments classified as available-for-sale as of March 31, 2024 consisted of the following (in thousands):

 

As of March 31, 2024

 

Amortized
Cost

 

 

Gross
Unrealized
Gains
(1)

 

 

Gross
Unrealized
Losses
(1)

 

 

Aggregate
Estimated
Fair Value

 

Commercial paper (2)

 

$

16,042

 

 

$

 

 

$

 

 

$

16,042

 

Corporate debt securities (2)

 

 

510,004

 

 

 

46

 

 

 

(914

)

 

 

509,136

 

Government debt securities (2)

 

 

242,564

 

 

 

 

 

 

(345

)

 

 

242,219

 

 

 

$

768,610

 

 

$

46

 

 

$

(1,259

)

 

$

767,397

 

 

(1)
Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. At March 31, 2024, there were 18 securities in an unrealized gain position and there were 248 securities in an unrealized loss position. The unrealized gains were less than $21,000 individually and $47,000 in the aggregate. The unrealized losses were less than $38,000 individually and $1,274,000 in the aggregate. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. The Company reviews its investments to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.
(2)
At March 31, 2024, none of these securities were classified as cash and cash equivalents on the Company’s consolidated balance sheet, and $190.9 million of the corporate debt securities were scheduled to mature outside of one year at the time of purchase.

9


 

Investments classified as available-for-sale as of December 31, 2023 consisted of the following (in thousands):

 

As of December 31, 2023

 

Amortized
Cost

 

 

Gross
Unrealized
Gains
(1)

 

 

Gross
Unrealized
Losses
(1)

 

 

Aggregate
Estimated
Fair Value

 

Commercial paper (2)

 

$

24,226

 

 

$

 

 

$

 

 

$

24,226

 

Corporate debt securities (2)

 

 

168,564

 

 

 

148

 

 

 

(128

)

 

 

168,584

 

Government debt securities (2)

 

 

113,871

 

 

 

8

 

 

 

(126

)

 

 

113,753

 

 

 

$

306,661

 

 

$

156

 

 

$

(254

)

 

$

306,563

 

 

(1)
Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. At December 31, 2023, there were 49 securities in an unrealized gain position and 115 securities in an unrealized loss position. The unrealized gains were less than $37,000 individually and $158,000 in the aggregate. The unrealized losses were less than $23,000 individually and $258,000 in the aggregate. None of these securities have been in a continuous unrealized loss or unrealized gain position for more than 12 months. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. The Company reviews its investments to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.
(2)
At December 31, 2023, none of these securities were classified as cash and cash equivalents on the Company’s consolidated balance sheet and none of the corporate debt securities were scheduled to mature outside of one year at the time of purchase.

 

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.

As of March 31, 2024 and December 31, 2023, 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, corporate debt securities and government 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, 2024, the Company’s investments were in government money market funds, commercial paper, corporate debt securities and government debt securities.

10


 

The fair values of the Company’s financial instruments are presented below (in thousands):

 

 

 

 

 

 

Fair Value Measurements at March 31, 2024

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets carried at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

$

183,873

 

 

$

151,151

 

 

$

32,722

 

 

$

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper, available-for-sale

 

 

16,042

 

 

 

 

 

 

16,042

 

 

 

 

Corporate debt securities, available-for-sale

 

 

509,136

 

 

 

 

 

 

509,136

 

 

 

 

Government debt securities, available-for-sale

 

 

242,219

 

 

 

 

 

 

242,219

 

 

 

 

Total financial assets

 

$

951,270

 

$

151,151

 

 

$

800,119

 

 

$

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2023

 

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Financial assets carried at fair value:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

$

40,479

 

 

$

16,411

 

 

$

24,068

 

 

$

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper, available-for-sale

 

 

24,226

 

 

 

 

 

 

24,226

 

 

 

 

Corporate debt securities, available-for-sale

 

 

168,584

 

 

 

 

 

 

168,584

 

 

 

 

Government debt securities, available-for-sale

 

 

113,753

 

 

 

 

 

 

113,753

 

 

 

 

Total financial assets

 

$

347,042

 

$

16,411

 

 

$

330,631

 

 

$

 

 

4. Operating Leases – ROU Assets and Lease Liability Obligations

The Company has only one operating lease (the “Office Lease”), which is for office space under a lease that commenced on March 1, 2022 and expires on July 31, 2027 (the “Term”). Below is a summary of the Company’s ROU assets and lease liabilities as of March 31, 2024 and December 31, 2023 (in thousands, except for years and %):

 

 

March 31, 2024

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

Right-of-use assets

 

$

1,052

 

 

 

$

1,126

 

 

 

 

 

 

 

 

 

 

 

Lease liability obligations, current

 

$

329

 

 

 

$

324

 

 

Lease liability obligations, less current portion

 

 

852

 

 

 

 

936

 

 

Total lease liability obligations

 

$

1,181

 

 

 

$

1,260

 

 

 

 

 

 

 

 

 

 

 

Weighted-average remaining lease term

 

3.33 years

 

 

 

3.58  years

 

 

 

 

 

 

 

 

 

 

 

Weighted-average discount rate

 

 

3.00

 

%

 

 

3.00

 

%

During each of the three months ended March 31, 2024 and 2023, the Company recognized $86,000 in operating lease expenses, which are included in operating expenses in the Company’s consolidated statement of operations.

Approximate future minimum lease payments for the Company’s ROU assets over the remaining lease period as of March 31, 2024 are as follows (in thousands):

 

 

 

 

 

Remainder of 2024

 

$

269

 

 

2025

 

 

368

 

 

2026

 

 

379

 

 

2027

 

 

227

 

 

Total minimum lease payments

 

$

1,243

 

 

Less: amount representing interest

 

$

(62

)

 

Total lease liability obligations

 

$

1,181

 

 

 

11


 

The Office Lease provides the Company with an option to extend the term of the Office Lease for a period of five years beyond the Term. If the option is exercised, the renewal term will be upon the same terms and conditions as the original Term, except that the base rent will be equal to the prevailing market rate as determined pursuant to the terms of the Office Lease. The option to extend the Term was not recognized as part of the Company’s lease liability and right-of-use assets.

5. Stockholders’ Equity

Preferred Stock

The Company is authorized to issue up to 10,000,000 shares of preferred stock, $0.00001 par value per share, with no shares of preferred stock outstanding as of March 31, 2024 and December 31, 2023. The Company’s Board of Directors is authorized to designate the terms and conditions of any preferred stock the Company may issue without further action by the stockholders of the Company.

Common Stock

The Company is authorized to issue up to 300,000,000 shares of common stock, $0.00001 par value per share.

In February 2014, the Company entered into a stock purchase agreement with one of its founders. The agreement provided for the purchase of 1,000,000 shares of the Company’s common stock at a price per share of $0.01 in exchange for future services to be rendered to the Company as measured by certain performance criteria. The shares were subject to a repurchase option and were to vest in two tranches of 500,000 shares each, upon achievement of the performance target or upon a triggering event as defined.

The Company determined that the fair value of the unrecognized expense was $168,000 at February 20, 2014, the grant date. In May 2015, the Company repurchased 633,810 of these shares at a purchase price of $0.00001 per share. In connection with the repurchase, the Company entered into an amendment to the stock purchase agreement to provide that the remaining 366,190 shares would continue to vest in two tranches of 183,095 shares each, upon achievement of the performance target or upon a triggering event as defined. The pro rata grant date fair value of the unrecognized expense is $62,000. In October 2015, a triggering event became probable of occurrence and was deemed achieved in October 2016 and 183,095 shares vested at that time; therefore, the Company recorded $31,000 of stock-based compensation expense through December 31, 2016. No similar expense was recognized during the three months ended March 31, 2024 or 2023. The Company will continue to reassess at each reporting period whether it is probable that the performance target will be achieved, and if and when it is deemed probable, the Company will begin to record compensation expense using the fair value to determine stock-based compensation expense in its financial statements over the period the Company estimates the performance target will actually be achieved.

On July 28, 2021, the Company entered into an At-The-Market Equity Offering Sales Agreement (the “ATM Agreement”), with Stifel, Nicolaus & Company, Incorporated, Truist Securities, Inc. and H.C. Wainwright & Co. LLC (collectively, the “Agents”), pursuant to which the Company could offer and sell, from time to time, through or to the Agents, as sales agent or principal (the “ATM Offering”), shares of the Company’s common stock (the “ATM Shares”). Any ATM Shares offered and sold in the ATM Offering were to be issued pursuant to a universal Shelf Registration Statement on Form S-3 (File No. 333-258231) (the “2021 Shelf Registration Statement”) and the 424(b) prospectus supplement relating to the ATM Offering dated August 11, 2021. From its inception through the expiration of the 2021 Shelf Registration Statement in July 2023, 1,587,404 shares of the Company’s common stock were sold pursuant to the ATM Offering for aggregate net proceeds to the Company of approximately $13.6 million.

On March 10, 2022, the Company’s Board of Directors authorized a stock repurchase program effective March 18, 2022, whereby the Company could purchase up to $50.0 million in shares of its common stock over a period of up to two years (the “Repurchase Program”). The Repurchase Program was to be carried out at the discretion of a committee of the Company’s Board of Directors through open market purchases, one or more Rule 10b5-1 trading plans, block trades and in privately negotiated transactions. Through March 18, 2024, the termination date of the Repurchase Program, an aggregate of 729,034 shares of the Company’s common stock were repurchased by the Company under the Repurchase Program. Shares repurchased by the Company under the Repurchase Program were held in treasury and reissued by the Company as part of the March 2024 Offering.

On April 3, 2023, the Company completed an underwritten public offering of its common stock (the “April 2023 Offering”) pursuant to the 2021 Shelf Registration Statement. In the April 2023 Offering, the Company sold an aggregate of 19,828,300 shares of its common stock at a public offering price of $14.50 per share, which included the exercise in full by the underwriters of their option to purchase 2,586,300 additional shares of common stock. Upon the closing of the April 2023 Offering, the Company received net proceeds of $270.0 million, after deducting underwriting discounts, commissions and other offering expenses.

On July 26, 2023, the Company filed an automatic universal shelf registration statement on Form S-3 (File No. 333-273460) as a well-known seasoned issuer as defined in Rule 405 under the Securities Act of 1933, as amended, which became effective upon filing (the “2023 Shelf Registration Statement”). The 2023 Shelf Registration Statement allows the Company to offer an indeterminate amount of securities, including equity securities, debt securities, warrants, rights, units and depositary shares, from time to time as described in

12


 

the 2023 Shelf Registration Statement. The specific terms of any offering under the 2023 Shelf Registration Statement will be established at the time of such offering. The 2023 Shelf Registration Statement will expire on July 26, 2026.

On July 26, 2023, the Company entered into an Amendment No. 1 to At-The-Market Equity Offering Sales Agreement (the “ATM Agreement Amendment”) with Stifel, Nicolaus & Company, Incorporated, Truist Securities, Inc., H.C. Wainwright & Co. LLC and BTIG, LLC. Pursuant to the ATM Agreement Amendment, BTIG, LLC was added as a sales agent for the ATM Offering and the ATM Agreement was amended to provide that the ATM Offering could be conducted off of registration statements on Form S-3 subsequently filed by the Company. Any ATM Shares offered and sold in the ATM Offering will now be issued pursuant to the 2023 Shelf Registration Statement and the prospectus relating to the ATM Offering, dated July 26, 2023, that was included in the 2023 Shelf Registration Statement (the “ATM Prospectus”). The 2023 Shelf Registration Statement will expire on July 26, 2026. From the date of the ATM Prospectus through March 31, 2024, 1,426,303 shares of the Company’s common stock were sold pursuant to the ATM Offering and, as of March 31, 2024, the Company may sell shares of its common stock for remaining gross proceeds of up to $151.9 million from time to time pursuant to the ATM Prospectus.

On March 4, 2024, the Company completed an underwritten public offering of its common stock (the “March 2024 Offering”) pursuant to the 2023 Shelf Registration Statement. In the March 2024 Offering, the Company sold an aggregate of 7,441,650 shares of its common stock at a public offering price of $85.00 per share, which included the exercise in full by the underwriters of their option to purchase 970,650 additional shares of common stock. Of the shares sold, 2,193,251 were issued out of the Company’s treasury shares. Upon the closing of the March 2024 Offering, the Company received net proceeds of $597.1 million, after deducting underwriting discounts, commissions and other offering expenses.

During each of the three months ended March 31, 2024 and 2023, the Company issued no shares of its common stock pursuant to the ESPP.

6. 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 requires the input of subjective assumptions, including volatility, the expected term and the fair value of the underlying common stock 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 its 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 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, then as an employee elects to increase their 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.

2014 Plan. The Company’s 2014 Equity Incentive Plan (the “2014 Plan”) provides that the compensation committee of the Company’s Board of Directors (the “Compensation Committee”) may grant or issue stock options, stock appreciation rights, restricted shares, restricted stock units and unrestricted shares, deferred share units, performance and cash-settled awards and dividend equivalent rights to participants under the 2014 Plan. Initially, a total of 1,527,770 shares of the Company’s common stock were reserved for issuance pursuant to the 2014 Plan. The 2014 Plan provides that the number of shares available for issuance under the 2014 Plan would, unless otherwise determined by the Company’s Board of Directors or the Compensation Committee, be automatically increased on January 1 of each year commencing on January 1, 2016 and ended on (and including) January 1, 2024, in an amount equal to 3.5% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year. The shares of common stock deliverable pursuant to awards under the 2014 Plan are authorized but unissued shares of the Company’s common stock, or shares of the Company’s common stock that the Company otherwise holds in treasury or in trust. Any shares of the Company’s common stock underlying awards that are settled in cash or otherwise expire, or are forfeited, terminated or cancelled (including pursuant to an exchange program established by the Compensation Committee) prior to the issuance of stock will again be available for issuance under the 2014 Plan. In addition, shares of the Company’s common stock that are withheld (or not issued) in payment of the exercise price or taxes relating to an award, and shares of the Company’s common stock equal to the number surrendered in payment of any exercise price or withholding taxes relating to an award, will again be available for issuance under the 2014 Plan. As of December 31, 2023, there were 5,939,750 shares of the Company’s common stock available for

13


 

issuance and, effective January 1, 2024, an additional 3,503,981 shares of the Company’s common stock were added to the number of shares reserved for issuance under the 2014 Plan in accordance with the terms of the 2014 Plan. As of March 31, 2024, there were 7,955,542 shares of the Company’s common stock available for issuance under the 2014 Plan.

ESPP. Initially, a total of 458,331 shares of the Company’s common stock were reserved for issuance pursuant to the ESPP. The ESPP provides that the number of shares available for issuance under the ESPP would, unless otherwise determined by the Company’s Board of Directors or the Compensation Committee, be automatically increased on January 1 of each year commencing on January 1, 2016 and ended on (and including) January 1, 2024, in an amount equal to 1% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year. The shares of common stock available for purchase pursuant to the ESPP are authorized but unissued shares of the Company’s common stock, shares of the Company’s common stock that the Company otherwise holds in treasury or shares of the Company’s common stock that were purchased on the open market in arms’ length transactions in accordance with applicable securities laws. Shares of the Company’s common stock will be offered for purchase under the ESPP as determined by the Compensation Committee through a series of successive offerings that each have a term of 24 months and consist of four consecutive purchase periods of six months each. Prior to the commencement of any future offering under the ESPP, the Compensation Committee may determine that the current offering shall end, may commence a new offering on the first day after the end of such terminal purchase period (or any desired later date), and may decide that future offerings will consist of one or more consecutive purchase periods, each to be of such duration as determined by the Compensation Committee; however, no offering will exceed 27 months and no purchase period will exceed one year. Each employee of the Company who (1) is an employee on the first date of any offering under the ESPP, (2) is customarily scheduled to work for more than 20 hours per week and more than five months per calendar year, and (3) meets such other criteria as may be determined by the Compensation Committee (consistent with Section 423 of the Internal Revenue Code of 1986, as amended), is eligible to participate in the ESPP for each purchase period within such offering. The purchase price per share of the Company’s common stock under the ESPP may not be less than, and will initially be equal to, the lesser of: (1) 85% of the fair market value per share of the Company’s common stock on the first day of the offering, or (2) 85% of the fair market value per share of the Company’s common stock on the date the purchase right is exercised, which will be the last day of the applicable purchase period. As of December 31, 2023, there were 4,251,444 shares of the Company’s common stock available for issuance and, effective January 1, 2024, an additional 1,001,137 shares of the Company’s common stock were added to the number of shares reserved for issuance under the ESPP in accordance with the terms of the ESPP. As of March 31, 2024, there were 5,252,581 shares of the Company’s common stock available for issuance under the ESPP.

During the three months ended March 31, 2024 and 2023, the Company recognized the following stock-based compensation expense (in thousands):

 

 

 

For the Three Months Ended March 31,

 

 

 

 

2024

 

 

2023

 

 

Stock-based compensation expense by type of award:

 

 

 

 

 

 

 

Stock options

 

$

2,429

 

 

$

1,367

 

 

Restricted stock and restricted stock units

 

 

5,056

 

 

 

2,080

 

 

Employee stock purchase plan

 

 

496

 

 

 

122

 

 

Total stock-based compensation expense included
   in expenses

 

$

7,981

 

 

$

3,569

 

 

Stock-based compensation expense by line item:

 

 

 

 

 

 

 

Research and development expenses

 

$

2,153

 

 

$

928

 

 

General and administrative expenses

 

 

5,828

 

 

 

2,641

 

 

Total stock-based compensation expense included
   in expenses

 

$

7,981

 

 

$

3,569

 

 

 

The following table sets forth the Company’s unrecognized stock-based compensation expense by type of award and the weighted-average period over which that expense is expected to be recognized (in thousands, except for years):

14


 

 

 

 

As of March 31, 2024

 

 

 

Unrecognized
Expense,
Net of
Estimated
Forfeitures

 

 

Weighted-
average
Recognition
Period
(in years)

 

 

 

 

 

 

 

 

Type of award:

 

 

 

 

 

 

Stock options

 

$

21,429

 

 

 

3.00

 

Restricted stock and restricted stock units

 

$

26,018

 

 

 

1.89

 

 

The following table is a summary of restricted stock activity during the three months ended March 31, 2024:

 

 

 

Shares of Restricted Stock

 

 

Weighted-
Average
Grant Date
Fair Value

 

Unvested at December 31, 2023

 

 

183,095

 

 

$

0.17

 

Granted

 

 

 

 

$

 

Vested

 

 

 

 

$

 

Forfeited

 

 

 

 

$

 

Repurchased

 

 

 

 

$

 

Unvested at March 31, 2024