UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 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: 001-38554
FORTY SEVEN, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware |
|
47-4065674 |
( State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
|
|
1490 O’Brien Drive, Suite A Menlo Park, California 94025 |
|
94025 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrant’s telephone number, including area code: (650) 352-4150
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Ticker Symbol |
|
Name of each exchange on which registered |
Common Stock, $0.0001 par value |
|
FTSV |
|
The Nasdaq Global Select Market |
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 |
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☐ |
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|||
Non-accelerated filer |
|
☒ |
|
Smaller reporting company |
|
☒ |
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|
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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 ☐ No ☒
As of November 5, 2019, the registrant had 42,276,130 shares of common stock, $0.0001 par value per share, outstanding.
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Page no. |
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Item 1. |
1 |
|
|
1 |
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|
2 |
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|
Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity |
3 |
|
4 |
|
|
5 |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 |
Item 3. |
30 |
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Item 4. |
31 |
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||
Item 1. |
32 |
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Item 1A. |
32 |
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Item 2. |
65 |
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Item 3. |
65 |
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Item 4. |
65 |
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Item 5. |
65 |
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Item 6. |
66 |
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67 |
Where You Can Find More Information
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (ir.fortyseveninc.com/investor-relations), SEC filings, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with our stockholders and the public about our company, our products, and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.
i
Forty Seven Inc.
(In thousands)
|
|
September 30, 2019 |
|
|
December 31, 2018 |
|
||
|
|
(Unaudited) |
|
|
(1) |
|
||
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
31,783 |
|
|
$ |
10,837 |
|
Short-term investments |
|
|
134,959 |
|
|
|
128,186 |
|
Prepaid expenses and other current assets |
|
|
10,583 |
|
|
|
6,835 |
|
Total current assets |
|
|
177,325 |
|
|
|
145,858 |
|
Property and equipment, net |
|
|
1,315 |
|
|
|
1,360 |
|
Operating lease right-of-use assets |
|
|
2,282 |
|
|
|
— |
|
Other assets |
|
|
2,661 |
|
|
|
2,219 |
|
Total assets |
|
$ |
183,583 |
|
|
$ |
149,437 |
|
Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,164 |
|
|
$ |
4,621 |
|
Accrued liabilities |
|
|
16,519 |
|
|
|
9,044 |
|
Lease liabilities, current |
|
|
1,434 |
|
|
|
— |
|
Deferred grant funding, current |
|
|
2,585 |
|
|
|
1,744 |
|
Total current liabilities |
|
|
23,702 |
|
|
|
15,409 |
|
Lease liabilities, noncurrent |
|
|
1,228 |
|
|
|
— |
|
Deferred rent, noncurrent |
|
|
— |
|
|
|
331 |
|
Other long-term liabilities |
|
|
323 |
|
|
|
476 |
|
Total liabilities |
|
|
25,253 |
|
|
|
16,216 |
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock |
|
|
4 |
|
|
|
3 |
|
Additional paid-in capital |
|
|
359,390 |
|
|
|
273,069 |
|
Accumulated other comprehensive income (loss) |
|
|
90 |
|
|
|
(82 |
) |
Accumulated deficit |
|
|
(201,154 |
) |
|
|
(139,769 |
) |
Total stockholders’ equity |
|
|
158,330 |
|
|
|
133,221 |
|
Total liabilities and stockholders’ equity |
|
$ |
183,583 |
|
|
$ |
149,437 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
|
(1) |
The balance sheet as of December 31, 2018 is derived from the audited financial statements as of that date. |
1
Condensed Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share data)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
||||
License revenue |
|
$ |
15,678 |
|
|
$ |
— |
|
|
$ |
15,678 |
|
|
$ |
— |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
27,074 |
|
|
|
17,984 |
|
|
|
65,029 |
|
|
|
42,733 |
|
General and administrative |
|
|
4,977 |
|
|
|
4,383 |
|
|
|
14,618 |
|
|
|
11,588 |
|
Total operating expenses |
|
|
32,051 |
|
|
|
22,367 |
|
|
|
79,647 |
|
|
|
54,321 |
|
Loss from operations |
|
|
(16,373 |
) |
|
|
(22,367 |
) |
|
|
(63,969 |
) |
|
|
(54,321 |
) |
Interest and other income, net |
|
|
1,210 |
|
|
|
708 |
|
|
|
2,584 |
|
|
|
1,165 |
|
Net loss |
|
|
(15,163 |
) |
|
|
(21,659 |
) |
|
|
(61,385 |
) |
|
|
(53,156 |
) |
Unrealized gains (losses) on available-for-sale securities |
|
|
31 |
|
|
|
(4 |
) |
|
|
172 |
|
|
|
12 |
|
Comprehensive loss |
|
$ |
(15,132 |
) |
|
$ |
(21,663 |
) |
|
$ |
(61,213 |
) |
|
$ |
(53,144 |
) |
Net loss per share, basic and diluted |
|
$ |
(0.38 |
) |
|
$ |
(0.71 |
) |
|
$ |
(1.80 |
) |
|
$ |
(3.63 |
) |
Shares used in computing net loss per share, basic and diluted |
|
|
39,772,452 |
|
|
|
30,430,898 |
|
|
|
34,129,449 |
|
|
|
14,643,348 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity
For the Three and Nine Months Ended September 30, 2019 and 2018
(Unaudited)
(In thousands, except share data)
|
Convertible Preferred Stock |
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated Other Comprehensive |
|
|
Accumulated |
|
|
Total Stockholders' |
|
||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income (Loss) |
|
|
Deficit |
|
|
Equity |
|
||||||||
Balance at December 31, 2018 |
|
— |
|
|
$ |
— |
|
|
|
31,079,150 |
|
|
$ |
3 |
|
|
$ |
273,069 |
|
|
$ |
(82 |
) |
|
$ |
(139,769 |
) |
|
$ |
133,221 |
|
Issuance of common stock for exercise of stock options |
|
— |
|
|
|
— |
|
|
|
174,793 |
|
|
|
— |
|
|
|
789 |
|
|
|
— |
|
|
|
— |
|
|
|
789 |
|
Issuance of common stock pursuant to the ESPP |
|
— |
|
|
|
— |
|
|
|
44,656 |
|
|
|
— |
|
|
|
588 |
|
|
|
— |
|
|
|
— |
|
|
|
588 |
|
Vesting of early exercised stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
113 |
|
|
|
— |
|
|
|
— |
|
|
|
113 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,104 |
|
|
|
— |
|
|
|
— |
|
|
|
1,104 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,016 |
) |
|
|
(23,016 |
) |
Other comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
100 |
|
|
|
— |
|
|
|
100 |
|
Balance at March 31, 2019 |
|
— |
|
|
|
— |
|
|
|
31,298,599 |
|
|
|
3 |
|
|
|
275,663 |
|
|
|
18 |
|
|
|
(162,785 |
) |
|
|
112,899 |
|
Issuance of common stock for exercise of stock options |
|
— |
|
|
|
— |
|
|
|
133,723 |
|
|
|
— |
|
|
$ |
612 |
|
|
|
— |
|
|
|
— |
|
|
|
612 |
|
Vesting of early exercised stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,125 |
|
|
|
— |
|
|
|
— |
|
|
|
1,125 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,206 |
) |
|
|
(23,206 |
) |
Other comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
|
|
41 |
|
Balance at June 30, 2019 |
|
— |
|
|
|
— |
|
|
|
31,432,322 |
|
|
|
3 |
|
|
|
277,413 |
|
|
|
59 |
|
|
|
(185,991 |
) |
|
|
91,484 |
|
Issuance of common stock in public offering, net of issuance costs |
|
— |
|
|
|
— |
|
|
|
10,781,250 |
|
|
|
1 |
|
|
|
80,460 |
|
|
|
— |
|
|
|
— |
|
|
|
80,461 |
|
Issuance of common stock for exercise of stock options |
|
— |
|
|
|
— |
|
|
|
7,568 |
|
|
|
— |
|
|
|
24 |
|
|
|
— |
|
|
|
— |
|
|
|
24 |
|
Issuance of common stock pursuant to the ESPP |
|
— |
|
|
|
— |
|
|
|
49,912 |
|
|
|
— |
|
|
|
272 |
|
|
|
— |
|
|
|
— |
|
|
|
272 |
|
Vesting of early exercised stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,208 |
|
|
|
— |
|
|
|
— |
|
|
|
1,208 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(15,163 |
) |
|
|
(15,163 |
) |
Other comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
31 |
|
|
|
— |
|
|
|
31 |
|
Balance at September 30, 2019 |
|
— |
|
|
$ |
— |
|
|
|
42,271,052 |
|
|
$ |
4 |
|
|
$ |
359,390 |
|
|
$ |
90 |
|
|
$ |
(201,154 |
) |
|
$ |
158,330 |
|
|
Convertible Preferred Stock |
|
|
Common Stock |
|
|
Additional Paid-in |
|
|
Accumulated Other |
|
|
Accumulated |
|
|
Total Stockholders' |
|
||||||||||||||
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Comprehensive Loss |
|
|
Deficit |
|
|
Equity |
|
||||||||
Balance at December 31, 2017 |
|
16,215,896 |
|
|
$ |
149,397 |
|
|
|
6,751,157 |
|
|
$ |
1 |
|
|
$ |
3,507 |
|
|
$ |
(44 |
) |
|
$ |
(69,399 |
) |
|
$ |
83,462 |
|
Settlement of fractional shares from reverse stock split |
|
— |
|
|
|
— |
|
|
|
(15 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Vesting of early exercised stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
431 |
|
|
|
— |
|
|
|
— |
|
|
|
431 |
|
Repurchase of shares |
|
— |
|
|
|
— |
|
|
|
(41,935 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14,775 |
) |
|
|
(14,775 |
) |
Other comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(27 |
) |
|
|
— |
|
|
|
(27 |
) |
Balance at March 31, 2018 |
|
16,215,896 |
|
|
|
149,397 |
|
|
|
6,709,207 |
|
|
|
1 |
|
|
|
3,951 |
|
|
|
(71 |
) |
|
|
(84,174 |
) |
|
|
69,104 |
|
Issuance of common stock for exercise of stock options |
|
— |
|
|
|
— |
|
|
|
28,630 |
|
|
|
— |
|
|
|
55 |
|
|
|
— |
|
|
|
— |
|
|
|
55 |
|
Vesting of early exercised stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
171 |
|
|
|
— |
|
|
|
— |
|
|
|
171 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
616 |
|
|
|
— |
|
|
|
— |
|
|
|
616 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,722 |
) |
|
|
(16,722 |
) |
Other comprehensive income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
43 |
|
|
|
— |
|
|
|
43 |
|
Balance at June 30, 2018 |
|
16,215,896 |
|
|
|
149,397 |
|
|
|
6,737,837 |
|
|
|
1 |
|
|
|
4,793 |
|
|
|
(28 |
) |
|
|
(100,896 |
) |
|
|
53,267 |
|
Issuance of common stock upon initial public offering, net of issuance costs |
|
— |
|
|
|
- |
|
|
|
8,090,250 |
|
|
|
1 |
|
|
|
116,335 |
|
|
|
— |
|
|
|
— |
|
|
|
116,336 |
|
Preferred stock conversion to common stock |
|
(16,215,896 |
) |
|
|
(149,397 |
) |
|
|
16,215,896 |
|
|
|
1 |
|
|
|
149,396 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Issuance of common stock for exercise of options |
|
— |
|
|
|
— |
|
|
|
4,106 |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
Vesting of early exercised stock options |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
Stock-based compensation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,271 |
|
|
|
— |
|
|
|
— |
|
|
|
1,271 |
|
Net loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(21,659 |
) |
|
|
(21,659 |
) |
Other comprehensive loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
|
|
(4 |
) |
Balance at September 30, 2018 |
|
— |
|
|
$ |
— |
|
|
|
31,048,089 |
|
|
$ |
3 |
|
|
$ |
271,819 |
|
|
$ |
(32 |
) |
|
$ |
(122,555 |
) |
|
$ |
149,235 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(61,385 |
) |
|
$ |
(53,156 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
3,437 |
|
|
|
2,318 |
|
Depreciation and amortization |
|
|
386 |
|
|
|
289 |
|
Amortization of right-of-use assets |
|
|
759 |
|
|
|
— |
|
Accretion of discounts on marketable securities |
|
|
(977 |
) |
|
|
(293 |
) |
Realized gain on sale of available-for-sale securities |
|
|
(6 |
) |
|
|
— |
|
Change in fair value of embedded derivative |
|
|
(13 |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
(3,748 |
) |
|
|
(2,172 |
) |
Other assets |
|
|
(445 |
) |
|
|
69 |
|
Accounts payable |
|
|
(1,469 |
) |
|
|
185 |
|
Accrued liabilities |
|
|
7,631 |
|
|
|
554 |
|
Deferred grant funding |
|
|
841 |
|
|
|
1,375 |
|
Lease related liabilities |
|
|
(866 |
) |
|
|
(86 |
) |
Other long-term liabilities |
|
|
— |
|
|
|
(1 |
) |
Net cash used in operating activities |
|
|
(55,855 |
) |
|
|
(50,918 |
) |
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(328 |
) |
|
|
(106 |
) |
Purchases of available-for-sale securities |
|
|
(166,040 |
) |
|
|
(138,071 |
) |
Proceeds from sales of available-for-sale securities |
|
|
3,996 |
|
|
|
— |
|
Proceeds from maturities of available-for-sale securities |
|
|
156,427 |
|
|
|
71,478 |
|
Net cash used in investing activities |
|
|
(5,945 |
) |
|
|
(66,699 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock upon ESPP purchase |
|
|
859 |
|
|
|
— |
|
Proceeds from issuance of common stock upon exercise of stock options |
|
|
1,426 |
|
|
|
166 |
|
Proceeds from public offering of common stock, net of issuance costs |
|
|
80,461 |
|
|
|
116,460 |
|
Net cash provided by financing activities |
|
|
82,746 |
|
|
|
116,626 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
20,946 |
|
|
|
(991 |
) |
Cash and cash equivalents — beginning of period |
|
|
10,837 |
|
|
|
24,417 |
|
Cash and cash equivalents — end of period |
|
$ |
31,783 |
|
|
$ |
23,426 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Operating cash flows paid for operating leases |
|
$ |
1,015 |
|
|
$ |
— |
|
Noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Purchases of property and equipment included in accounts payable |
|
$ |
13 |
|
|
$ |
— |
|
Lease liability obtained in exchange for right-of-use asset |
|
$ |
712 |
|
|
$ |
— |
|
Conversion of convertible preferred stock to common stock at close of initial public offering |
|
$ |
— |
|
|
$ |
149,397 |
|
Deferred offering costs included in accounts payable and accrued liabilities |
|
$ |
— |
|
|
$ |
124 |
|
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
Notes to Condensed Financial Statements
1. |
Description of Business |
The Company is a clinical-stage immuno-oncology company focused on developing novel checkpoint therapies to activate macrophages in the fight against cancer. Forty Seven was founded based on the insight that blocking CD47, a key signaling molecule that is over-expressed on cancer cells, renders tumors susceptible to macrophages and the innate immune system. By harnessing macrophages, the Company believes that its lead product candidate, magrolimab (formerly known as 5F9), dosed as a monotherapy and in combination with marketed cancer therapies, can transform the treatment of cancer.
Liquidity
In the course of its development activities, the Company has sustained operating losses and expects to continue to generate operating losses for the foreseeable future. The Company’s ultimate success depends on the outcome of its research and development activities. The Company had cash, cash equivalents and short-term investments of $166.7 million as of September 30, 2019. Since inception through September 30, 2019, the Company has incurred cumulative net losses of $201.2 million. Management expects to incur additional losses in the future to conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.
The Company intends to raise such capital through the issuance of additional equity financing and/or third-party collaboration funding. However, if such financing is not available at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of its products. The Company expects that its cash, cash equivalents and short-term investments will be sufficient to fund operating expenses and capital expenditure requirements for a period of at least one year from the date these interim condensed financial statements are filed with the Securities and Exchange Commission (“SEC”).
In July 2019, the Company filed a Registration Statement on Form S-3, as amended (File No. 333-232498), declared effective by the SEC on July 12, 2019 (the “Shelf Registration Statement”), related to the offering of up to $250.0 million of common stock, preferred stock, debt securities and warrants. The Company may seek to use the Shelf Registration Statement at any time or from time to time to offer, in one or more offerings, common stock, preferred stock, debt securities and/or warrants. The Shelf Registration Statement also included a prospectus covering the offering, issuance and sale of up to $60.0 million of shares of the Company’s common stock, from time to time, in “at-the-market offerings” pursuant to a Controlled Equity OfferingSM Sales Agreement (the “Sales Agreement”) entered into with Cantor Fitzgerald & Co. (the “Sales Agent”) on July 1, 2019. As of September 30, 2019, the Company had not sold any securities pursuant to the Sales Agreement.
In July 2019, pursuant to the Shelf Registration Statement, the Company completed an underwritten public offering of 10,781,250 shares of the Company’s common stock, including 1,406,250 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares at a public offering price of $8.00 per share. The net proceeds from the offering to the Company were $80.5 million.
2. |
Summary of Significant Accounting Policies |
Basis of Presentation
The interim condensed financial statements are unaudited. The unaudited interim condensed financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other future annual or interim period. The condensed balance sheet as of December 31, 2018 included herein was derived from the audited financial statements as of that date. These condensed financial statements should be read in conjunction with the Company's audited financial statements and related notes as set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as filed with the SEC on March 28, 2019.
5
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates and assumptions made in the accompanying financial statements include but are not limited to revenue recognition, the fair value of stock options, the fair value of investments, income tax uncertainties, lease liability, and certain accruals. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ from those estimates.
Revenue Recognition
License and Collaboration Arrangements
The Company accounts for revenue recognition under Accounting Standards Codification (“ASC”), Revenue from Contracts with Customers (Topic 606) (“ASC 606”). Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.
The Company enters into collaborative arrangements with partners that fall under the scope of ASC, Collaborative Arrangements (Topic 808) (“ASC 808”). The Company analyzes it collaboration arrangements to assess whether they are within the scope of ASC 808 to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of