Company Quick10K Filing
Quick10K
Verrica Pharmaceuticals
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$9.37 26 $241
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
8-K 2019-06-13 Officers
8-K 2019-06-12 Shareholder Vote
8-K 2019-05-07 Earnings, Exhibits
8-K 2019-04-12 Officers
8-K 2019-01-03 Regulation FD, Exhibits
8-K 2018-11-07 Earnings, Exhibits
8-K 2018-09-12 Regulation FD, Exhibits
8-K 2018-08-07 Earnings, Exhibits
8-K 2018-07-16 Enter Agreement
8-K 2018-06-19 Amend Bylaw, Exhibits
IR Ingersoll-Rand 29,310
WAFD Washington Federal 2,620
OXM Oxford Industries 1,340
TPC Tutor Perini 856
CZWI Citizens Community Bancorp 126
EAST Eastside Distilling 53
VRIAC Voya Retirement Insurance & Annuity 0
LTN Union Acquisition 0
TLP Transmontaigne Partners 0
WNDW Solarwindow Technologies 0
VRCA 2019-03-31
Part I. Financial Information
Item 1. Unaudited Condensed Financial Statements
Note 1-Nature of Business
Note 2-Significant Accounting Policies
Note 3-Investments in Marketable Securities
Note 4-Property and Equipment
Note 5-Related Party Transactions
Note 6-Accrued Expenses
Note 7-Stock-Based Compensation
Note 8-Leases
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Recent Sales of Unregistered Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 vrca-ex311_7.htm
EX-31.2 vrca-ex312_9.htm
EX-32.1 vrca-ex321_8.htm

Verrica Pharmaceuticals Earnings 2019-03-31

VRCA 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 vrca-10q_20190331.htm 10-Q vrca-10q_20190331.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2019

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: 001-38529

 

Verrica Pharmaceuticals Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

46-3137900

( State or other jurisdiction of

incorporation or organization)

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

10 North High Street, Suite 200

West Chester, PA

19380

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (484) 453-3300

 

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, 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  

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

VRCA

 

The Nasdaq Stock Market LLC

As of May 3, 2019, the registrant had 25,708,485 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

VERRICA PHARMACEUTICALS INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

1

 

 

 

 

 

Item 2.

 

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

 

12

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

 

18

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

18

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

19

 

 

 

 

 

Item 1A

 

Risk Factors

 

19

 

 

 

 

 

Item 2.

 

Recent Sales of Unregistered Securities and Use of Proceeds

 

19

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

19

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

19

 

 

 

 

 

Item 5.

 

Other Information

 

19

 

 

 

 

 

Item 6.

 

Exhibits

 

19

 

 

 

 

 

Signatures

 

21

 

 

 


PART I. FINANCIAL INFORMATION

 

Item 1.

Unaudited Condensed Financial Statements

VERRICA PHARMACEUTICALS INC.

CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,427

 

 

$

10,271

 

Marketable securities

 

 

58,855

 

 

 

79,538

 

Prepaid expenses and other assets

 

 

1,389

 

 

 

1,343

 

Other receivable - related party

 

 

6

 

 

 

 

Total current assets

 

 

84,677

 

 

 

91,152

 

Property, plant and equipment, net

 

 

1,013

 

 

 

255

 

Operating lease right-of-use asset

 

 

275

 

 

 

 

Deposits

 

 

14

 

 

 

499

 

Total assets

 

$

85,979

 

 

$

91,906

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,136

 

 

$

922

 

Accrued expenses

 

 

1,804

 

 

 

1,517

 

Accounts payable and accrued expenses - related party

 

 

 

 

 

38

 

Operating lease liability

 

 

122

 

 

 

 

Total current liabilities

 

 

3,062

 

 

 

2,477

 

Operating lease liability

 

 

156

 

 

 

 

Total liabilities

 

 

3,218

 

 

 

2,477

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares

   issued and outstanding as of March 31, 2019 and December 31, 2018

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 authorized

   as of March 31, 2019 and December 31, 2018; 25,813,629 shares

   issued and 25,708,485 shares outstanding as of March 31, 2019 and 25,809,900

   shares issued and 25,704,756 shares outstanding as of December 31, 2018,

   respectively

 

 

3

 

 

 

3

 

Treasury stock, at cost, 105,144 shares as of March 31, 2019 and

   December 31, 2018

 

 

 

 

 

 

Additional paid-in capital

 

 

123,211

 

 

 

122,526

 

Accumulated deficit

 

 

(40,464

)

 

 

(33,083

)

Accumulated other comprehensive gain (loss)

 

 

11

 

 

 

(17

)

Total stockholders’ equity

 

 

82,761

 

 

 

89,429

 

Total liabilities and stockholders’ equity

 

$

85,979

 

 

$

91,906

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

1


VERRICA PHARMACEUTICALS INC.

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

$

4,487

 

 

$

927

 

General and administrative

 

 

3,539

 

 

 

961

 

Total operating expenses

 

 

8,026

 

 

 

1,888

 

Loss from operations

 

 

(8,026

)

 

 

(1,888

)

Other income:

 

 

 

 

 

 

 

 

Interest income

 

 

547

 

 

 

41

 

Total other income

 

 

547

 

 

 

41

 

Net loss

 

$

(7,479

)

 

$

(1,847

)

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.30

)

 

$

(0.65

)

Weighted average common shares outstanding, basic and diluted

 

 

24,857,771

 

 

 

2,850,640

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(7,479

)

 

$

(1,847

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities

 

 

28

 

 

 

 

Comprehensive loss

 

$

(7,451

)

 

$

(1,847

)

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

2


VERRICA PHARMACEUTICALS INC.

CONDENSED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Total

 

 

 

Series A Convertible

 

 

Series B Convertible

 

 

Series C Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

Stockholders’

 

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Preferred Stock

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Treasury Stock

 

 

Comprehensive

 

 

Equity

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

Shares Issued

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Shares

 

 

Cost

 

 

Gain (Loss)

 

 

(Deficit)

 

Balance as of January 1, 2019

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

25,809,900

 

 

$

3

 

 

$

122,526

 

 

$

(33,083

)

 

 

105,144

 

 

$

 

 

$

(17

)

 

$

89,429

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

780

 

Exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,729

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,479

)

 

 

 

 

 

 

 

 

 

 

 

(7,479

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28

 

 

 

28

 

Adoption of ASU 2018-07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(98

)

 

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of March 31, 2019

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

25,813,629

 

 

$

3

 

 

$

123,211

 

 

$

(40,464

)

 

 

105,144

 

 

$

 

 

$

11

 

 

$

82,761

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2018

 

 

21,302,972

 

 

$

10,508

 

 

 

1,937,984

 

 

$

5,000

 

 

 

 

 

$

 

 

 

 

3,804,643

 

 

$

 

 

$

5,394

 

 

$

(12,435

)

 

 

105,144

 

 

$

 

 

$

 

 

$

(7,041

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

135

 

Series C convertible preferred stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,606,267

 

 

 

21,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance costs for Series C preferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,847

)

 

 

 

 

 

 

 

 

 

 

 

(1,847

)

Balance as of March 31, 2018

 

 

21,302,972

 

 

$

10,508

 

 

 

1,937,984

 

 

$

5,000

 

 

 

4,606,267

 

 

$

20,993

 

 

 

 

3,804,643

 

 

$

 

 

$

5,529

 

 

$

(14,282

)

 

 

105,144

 

 

$

 

 

$

 

 

$

(8,753

)

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

3


VERRICA PHARMACEUTICALS INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

For the Three Months Ended March 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(7,479

)

 

$

(1,847

)

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

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

780

 

 

 

135

 

Accretion of discounts on marketable securities

 

 

(359

)

 

 

 

Depreciation expense

 

 

11

 

 

 

 

Amortization on operating lease right-of-use asset

 

29

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

(46

)

 

 

(1,000

)

Other receivable - related party

 

 

(6

)

 

 

 

Accounts payable

 

 

215

 

 

 

457

 

Accrued expenses

 

 

4

 

 

 

108

 

Accounts payable and accrued expenses - related party

 

 

(38

)

 

 

(7

)

Operating lease liability

 

 

(28

)

 

 

 

Net cash used in operating activities

 

 

(6,917

)

 

 

(2,154

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Sales and maturities of marketable securities

 

 

42,365

 

 

 

 

Purchases of marketable securities

 

 

(21,295

)

 

 

 

Purchases of property, plant and equipment

 

 

 

 

 

(17

)

Net cash provided by (used in) investing activities

 

 

21,070

 

 

 

(17

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

3

 

 

 

 

Proceeds received from issuance of Series C preferred stock

 

 

 

 

 

21,000

 

Stock issuance costs related to Series C preferred stock

 

 

 

 

 

(7

)

Net cash provided by financing activities

 

 

3

 

 

 

20,993

 

Net increase in cash and cash equivalents

 

 

14,156

 

 

 

18,822

 

Cash and cash equivalents at the beginning of the period

 

 

10,271

 

 

 

8,663

 

Cash and cash equivalents at the end of the period

 

$

24,427

 

 

$

27,485

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities:

 

 

 

 

 

 

 

 

Fixed asset and construction in process purchases accrued at period end

 

$

285

 

 

$

2

 

Deferred offering costs included in accounts payable and accrued expenses

 

 

 

 

472

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

4


 

VERRICA PHARMACEUTICALS INC.

Notes to Condensed Financial Statements

(Unaudited)

Note 1—Nature of Business

Verrica Pharmaceuticals Inc. (the “Company”) was formed on July 3, 2013 and is incorporated in the State of Delaware. The Company is a medical dermatology company committed to the development and commercialization of novel treatments that provide meaningful benefit for people living with skin diseases.

Liquidity and Capital Resources

The Company has incurred substantial operating losses since inception and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As of March 31, 2019, the Company had an accumulated deficit of $40.5 million.

Since inception, the Company has financed its operations through sales of convertible preferred stock and the sale of common stock in the Company’s initial public offering, with aggregate gross proceeds of $123.2 million and net proceeds of $114.9 million. As of March 31, 2019, the Company had cash, cash equivalents and marketable securities of $83.3 million.

Note 2—Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2018 filed with the Securities and Exchange Commission (the “SEC”) on March 7, 2019. The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period.

In the fourth quarter of 2018, the Company changed its policy for recognizing stock-based compensation expense for awards with service conditions only from the graded attribution method to the straight-line attribution method. The following tables present the effect of the change in accounting policy and its impact on the Company’s results of operations as previously reported for the quarter ended March 31, 2018, as compared to the results of operations after the retrospective application of the change in accounting policy (in thousands, except share and per share amounts):

 

 

 

For the Quarter Ended

 

 

 

March 31, 2018

 

 

 

As Computed

Under

Straight-line

Attribution

Method:

 

 

As Previously

Reported

Under Graded

Attribution

Method:

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

$

927

 

 

$

929

 

General and administrative

 

 

961

 

 

 

986

 

Total operating expenses

 

 

1,888

 

 

 

1,915

 

Loss from operations

 

 

(1,888

)

 

 

(1,915

)

Total other income

 

 

41

 

 

 

41

 

Net loss

 

$

(1,847

)

 

$

(1,874

)

Net loss per share, basic and diluted

 

$

(0.65

)

 

$

(0.66

)

Weighted average common shares outstanding, basic

   and diluted

 

 

2,850,640

 

 

 

2,850,640

 

5


 

 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

 

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 other than the adoption of the FASB Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), and ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. Based on the analysis, on January 1, 2019, the Company recorded an operating lease right-of-use asset of $304,000 and an operating lease liability of $306,000 and eliminated deferred rent of $2,000. See Note 8 for additional information.

In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The changes take effect for public companies for fiscal years starting after December 15, 2018, including interim periods within that fiscal year. The Company adopted this ASU as of January 1, 2019 and recorded an adjustment to accumulated deficit and additional paid-in capital of $98,000.

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement, which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted upon issuance of the update. The Company does not expect the adoption of this guidance to have a material impact on its financial statements.

Net Loss Per Share

Net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share excludes the potential impact of Series A, Series B and Series C Preferred Stock, common stock options and unvested shares of restricted stock because their effect would be anti-dilutive due to the Company’s net loss. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same.

6


 

The table below provides potential shares outstanding that were not included in the computation of diluted net loss per common share, as the inclusion of these securities would have been anti-dilutive:

 

 

 

As of March 31,

 

 

 

2019

 

 

2018

 

Shares issuable upon conversion of Series A Preferred

 

 

 

 

 

12,428,773

 

Shares issuable upon conversion of Series B Preferred

 

 

 

 

 

1,130,679

 

Shares issuable upon conversion of Series C Preferred

 

 

 

 

 

2,687,420

 

Shares issuable upon exercise of stock options

 

 

2,051,725

 

 

 

969,352

 

Non-vested shares under restricted stock grants

 

 

848,859

 

 

 

848,859

 

 

Note 3—Investments in Marketable Securities

 

Investments in marketable securities consisted of the following as of March 31, 2019 and December 31, 2018 (in thousands):

 

 

 

March 31, 2019

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Gross Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Commercial paper

 

$

35,947

 

 

$

8

 

 

$

-

 

 

$

35,955

 

U.S. treasury securities

 

 

8,558

 

 

$

1

 

 

 

-

 

 

 

8,559

 

Asset-backed securities

 

 

14,339

 

 

$

3

 

 

 

(1

)

 

 

14,341

 

Total marketable securities

 

$

58,844

 

 

$

12

 

 

$

(1

)

 

$

58,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

 

Amortized

 

 

Gross Unrealized

 

 

Gross Unrealized

 

 

Fair

 

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Commercial paper

 

$

48,623

 

 

$

5

 

 

$

(4

)

 

$

48,624

 

U.S. treasury securities

 

 

17,028

 

 

 

 

 

 

(2

)

 

 

17,026

 

Asset-backed securities

 

 

13,904

 

 

 

 

 

 

(16

)

 

 

13,888

 

Total marketable securities

 

$

79,555

 

 

$

5

 

 

$

(22

)

 

$

79,538

 

 

There were no marketable securities with a maturity of greater than one year for either period presented. Unrealized gains and losses on marketable debt securities are recorded as a separate component of accumulated other comprehensive gain (loss) included in stockholders’ equity.  

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

 

Level 1 — Quoted market prices in active markets for identical assets or liabilities.

 

Level 2 — Observable inputs other than Level 1 prices, 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.

7


 

The following tables presents fair value of the Company’s marketable securities (in thousands):

 

 

 

Fair Value Measurement as of March 31, 2019

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

 

 

$

35,955

 

 

$

 

 

$

35,955

 

U.S. treasury securities

 

 

8,559

 

 

 

 

 

 

 

 

 

8,559

 

Asset-backed securities

 

 

 

 

 

14,341

 

 

 

 

 

 

14,341

 

Total assets

 

$

8,559

 

 

$

50,296

 

 

$

 

 

$

58,855

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurement as of December 31, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

 

 

$

48,624

 

 

$

 

 

$

48,624

 

U.S. treasury securities

 

 

17,026