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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended March 31, 2021

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 001-36548

 

ATARA BIOTHERAPEUTICS, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

46-0920988

(State or other jurisdiction of incorporation or organization)

 

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

 

 

 

611 Gateway Blvd., Suite 900

South San Francisco, CA

 

94080

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (650) 278-8930

 

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, par value $0.0001 per share

 

ATRA

 

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  

The number of outstanding shares of the Registrant’s Common Stock as of April 26, 2021 was 84,076,737 shares.

 

 

 

 


 

 

ATARA BIOTHERAPEUTICS, INC.

INDEX

 

 

  

 

  

Page

PART I.

  

FINANCIAL INFORMATION

  

 

 

 

 

Item 1.

  

Financial Statements (Unaudited)

  

 

 

 

 

 

  

Condensed Consolidated Balance Sheets

  

5

 

 

 

 

  

Condensed Consolidated Statements of Operations and Comprehensive Loss

  

6

 

 

 

 

  

Condensed Consolidated Statements of Changes in Stockholders’ Equity

  

7

 

 

 

 

  

Condensed Consolidated Statements of Cash Flows

  

8

 

 

 

 

  

Notes to Condensed Consolidated Financial Statements

  

9

 

 

 

Item 2.

  

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

  

18

 

 

 

Item 3.

  

Quantitative and Qualitative Disclosures about Market Risk

  

27

 

 

 

Item 4.

  

Controls and Procedures

  

28

 

 

 

PART II.

  

OTHER INFORMATION

  

 

 

 

 

Item 1.

  

Legal Proceedings

  

29

 

 

 

Item 1A.

  

Risk Factors

  

29

 

 

 

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

66

 

Item 3.

  

Defaults Upon Senior Securities

  

66

 

Item 4.

  

Mine Safety Disclosures

  

66

 

Item 5.

  

Other Information

  

66

 

Item 6.

  

Exhibits

  

67

 

 

 

  

Signatures

  

68

 

 

 

 


2


 

 

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which represent our intent, belief or current expectations, involve risks and uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “predict,” “plan,” “expect” or the negative or plural of these words or similar expressions. The forward-looking statements include, but are not limited to, statements about:

 

our expectations regarding the timing of initiating clinical studies, opening client sites, enrolling clinical studies and reporting results of clinical studies for our programs, including in light of the COVID-19 pandemic;

 

the likelihood and timing of regulatory submissions or related approvals for our product candidates, including the initiation, completion and expectations about the timing of approvals for our BLA for tab-cel® for patients with EBV+ PTLD;

 

the potential indications for our product candidates, if approved for commercial use;

 

the potential market opportunities for commercializing our product candidates;

 

our Research, Development and License Agreement with Bayer, including potential milestone and royalty payments under the agreement;

 

our expectations regarding the potential market size and the size of the patient populations for our product candidates, if approved for commercial use;

 

estimates of our expenses, capital requirements and need for additional financing;

 

our expectation regarding the length of time that our existing capital resources will be sufficient to enable us to fund our planned operations;

 

our ability to commercialize our product candidates, if approved for commercial use;

 

our ability to develop, acquire and advance product candidates into, and successfully complete, clinical studies;

 

the initiation, timing, progress and results of future preclinical studies and clinical studies and our research and development programs;

 

the scope of protection we are able to obtain and maintain for the intellectual property rights covering our product candidates;

 

our financial performance;

 

developments and projections relating to our competitors and our industry;

 

our ability to manufacture our product candidates for our clinical studies, or if approved, for commercial sale;

 

the impact of COVID-19 to our business and operations, as well as the businesses and operations of third parties on which we rely;

 

our ability to sell or manufacture approved products at commercially reasonable values; and

 

timing and costs related to qualification of our manufacturing plant for commercial production.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, including, without limitation, risks and uncertainties associated with the costly and time-consuming pharmaceutical product development process and the uncertainty of clinical success; the COVID-19 pandemic, which may significantly impact (i) our business, research, clinical development plans and operations, including our operations in South San Francisco and Southern California and at our clinical trial sites, as well as the business or operations of our third-party manufacturer, contract research organizations or other third parties with whom we conduct business, (ii) our ability to access capital, and (iii) the value of our common stock; the sufficiency of our cash resources and need for additional capital, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this report in greater detail under the heading “1A. Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

3


 

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, “Atara,” “Atara Biotherapeutics,” “Company,” “we,” “our,” and “us” means Atara Biotherapeutics, Inc. and, where appropriate, its subsidiaries.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. These risks are more fully described below. These risks include, among others:

 

we have incurred substantial losses since our inception and anticipate that we will continue to incur substantial and increasing losses for the foreseeable future;

 

we currently have no approved products and thus have no revenues from commercialization of any products and may never generate product revenues or achieve profitability;

 

we are early in our development efforts, and we will need to successfully complete preclinical and clinical testing of our product candidates before we can seek regulatory approval and potentially generate commercial sales;

 

we will require substantial additional financing to achieve our goals, which may not be available to us on acceptable terms, or at all;

 

our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel;

 

the results of preclinical studies or earlier clinical studies are not necessarily predictive of future results, and product candidates we advance into clinical studies may not have favorable results in later clinical studies or receive regulatory approval;

 

clinical drug development, both in the U.S. and international jurisdictions, involves a lengthy and expensive process with an uncertain outcome and even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties;

 

our T-cell immunotherapy product candidates and our next-generation CAR T programs represent new therapeutic approaches that could result in heightened regulatory scrutiny and delays in or our inability to achieve regulatory approval, commercialization or payor coverage of our product candidates;

 

the market opportunities for our product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small;

 

we may not be able to obtain or maintain orphan drug exclusivity for our product candidates;

 

the COVID-19 pandemic continues to impact our business and operations and could materially and adversely affect our business and operations in the future, as well as the businesses and operations of third parties on which we rely;

 

our success depends upon our ability to obtain and maintain sufficient intellectual property protection for our product candidates, and we may not be able to protect our intellectual property rights throughout the world;

 

our principal stockholders own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval; and

 

we may not be able to obtain and maintain the relationships with third parties that are necessary to develop, commercialize and manufacture some or all of our product candidates.

 

 

4


 

 

Atara Biotherapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

151,097

 

 

$

200,404

 

Short-term investments

 

 

284,064

 

 

 

300,255

 

Restricted cash - short-term

 

 

194

 

 

 

194

 

Accounts receivable

 

 

9,610

 

 

 

1,250

 

Prepaid expenses and other current assets

 

 

19,342

 

 

 

21,170

 

Total current assets

 

 

464,307

 

 

 

523,273

 

Property and equipment, net

 

 

51,471

 

 

 

50,517

 

Operating lease assets

 

 

11,930

 

 

 

12,303

 

Restricted cash - long-term

 

 

1,200

 

 

 

1,200

 

Other assets

 

 

729

 

 

 

827

 

Total assets

 

$

529,637

 

 

$

588,120

 

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

17,355

 

 

$

7,118

 

Accrued compensation

 

 

12,786

 

 

 

20,458

 

Accrued research and development expenses

 

 

10,655

 

 

 

15,813

 

Deferred revenue

 

 

35,497

 

 

 

33,455

 

Other current liabilities

 

 

7,901

 

 

 

6,057

 

Total current liabilities

 

 

84,194

 

 

 

82,901

 

Deferred revenue - long-term

 

 

31,811

 

 

 

27,795

 

Operating lease liabilities - long-term

 

 

12,569

 

 

 

13,041

 

Other long-term liabilities

 

 

2,026

 

 

 

2,044

 

Total liabilities

 

 

130,600

 

 

 

125,781

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock—$0.0001 par value, 500,000 shares authorized as of March 31,

   2021 and December 31, 2020; 84,075 and 83,372 shares issued and outstanding

   as of March 31, 2021 and December 31, 2020, respectively

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

1,601,784

 

 

 

1,586,616

 

Accumulated other comprehensive income

 

 

161

 

 

 

296

 

Accumulated deficit

 

 

(1,202,916

)

 

 

(1,124,581

)

Total stockholders’ equity

 

 

399,037

 

 

 

462,339

 

Total liabilities and stockholders’ equity

 

$

529,637

 

 

$

588,120

 

 

 

See accompanying notes.

5


 

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share amounts)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

License and collaboration revenue

 

$

3,552

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

64,059

 

 

 

57,659

 

General and administrative

 

 

17,738

 

 

 

17,038

 

Total operating expenses

 

 

81,797

 

 

 

74,697

 

Loss from operations

 

 

(78,245

)

 

 

(74,697

)

Interest and other (expense) income, net

 

 

(90

)

 

 

1,188

 

Net loss

 

$

(78,335

)

 

$

(73,509

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

Unrealized loss on available-for-sale securities

 

 

(135

)

 

 

(16

)

Comprehensive loss

 

$

(78,470

)

 

$

(73,525

)

Net loss per common share:

 

 

 

 

 

 

 

 

Basic and diluted net loss per common share

 

$

(0.86

)

 

$

(1.20

)

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding used to calculate basic

   and diluted net loss per common share

 

 

91,456

 

 

 

61,208

 

 

See accompanying notes.

6


 

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

For the Three Months Ended March 31, 2021

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2020

 

 

83,372

 

 

$

8

 

 

$

1,586,616

 

 

$

296

 

 

$

(1,124,581

)

 

$

462,339

 

Issuance of common stock through ATM facilities, net of commissions

   and offering costs of $139

 

 

146

 

 

 

 

 

 

2,382

 

 

 

 

 

 

 

 

 

2,382

 

RSU settlements, net of shares withheld

 

 

449

 

 

 

 

 

 

(1,231

)

 

 

 

 

 

 

 

 

(1,231

)

Issuance of common stock pursuant to employee stock awards

 

 

108

 

 

 

 

 

 

1,749

 

 

 

 

 

 

 

 

 

1,749

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

12,268

 

 

 

 

 

 

 

 

 

12,268

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(78,335

)

 

 

(78,335

)

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(135

)

 

 

 

 

 

(135

)

Balance as of March 31, 2021

 

 

84,075

 

 

$

8

 

 

$

1,601,784

 

 

$

161

 

 

$

(1,202,916

)

 

$

399,037

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Common

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

For the Three Months Ended March 31, 2020

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2019

 

 

56,806

 

 

$

6

 

 

$

1,108,516

 

 

$

220

 

 

$

(817,961

)

 

$

290,781

 

Issuance of common stock through ATM facilities, net of commissions

   and offering costs of $704

 

 

1,528

 

 

 

 

 

 

22,987

 

 

 

 

 

 

 

 

 

22,987

 

Exercise of pre-funded warrants

 

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RSU settlements, net of shares withheld

 

 

455

 

 

 

 

 

 

(1,395

)

 

 

 

 

 

 

 

 

(1,395

)

Issuance of common stock pursuant to employee stock awards

 

 

94

 

 

 

 

 

 

1,330

 

 

 

 

 

 

 

 

 

1,330

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

12,644

 

 

 

 

 

 

 

 

 

12,644

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(73,509

)

 

 

(73,509

)

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

(16

)

Balance as of March 31, 2020

 

 

58,940

 

 

$

6

 

 

$

1,144,082

 

 

$

204

 

 

$

(891,470

)

 

$

252,822

 

 

See accompanying notes.

7


 

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(78,335

)

 

$

(73,509

)

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

12,268

 

 

 

12,644

 

Depreciation and amortization expense

 

 

2,222

 

 

 

1,949

 

Amortization of investment premiums

 

 

360

 

 

 

42

 

Non-cash operating lease expense

 

 

373

 

 

 

364

 

Asset retirement obligation accretion expense

 

 

21

 

 

 

19

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(8,360

)

 

 

 

Prepaid expenses and other current assets

 

 

1,828

 

 

 

(1,888

)

Other assets

 

 

38

 

 

 

(209

)

Accounts payable

 

 

9,555

 

 

 

(590

)

Accrued compensation

 

 

(7,672

)

 

 

(5,030

)

Accrued research and development expenses

 

 

(5,158

)

 

 

(514

)

Other current liabilities

 

 

1,510

 

 

 

(169

)

Deferred revenue

 

 

6,058

 

 

 

 

Operating lease liabilities

 

 

(406

)

 

 

(153

)

Net cash used in operating activities

 

 

(65,698

)

 

 

(67,044

)

Investing activities

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(94,055

)

 

 

(56,851

)

Proceeds from maturities and sales of short-term investments

 

 

109,751

 

 

 

97,157

 

Purchases of property and equipment

 

 

(2,197

)

 

 

(1,333

)

Net cash provided by investing activities

 

 

13,499

 

 

 

38,973

 

Financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock through ATM facilities, net

 

 

2,457

 

 

 

24,277

 

Proceeds from employee stock awards

 

 

1,749

 

 

 

1,330

 

Taxes paid related to net share settlement of restricted stock units

 

 

(1,231

)

 

 

(1,395

)

Principal payments on finance lease obligations

 

 

(66

)

 

 

(90

)

Other financing activities, net

 

 

(17

)

 

 

(165

)

Net cash provided by financing activities

 

 

2,892

 

 

 

23,957

 

Decrease in cash, cash equivalents and restricted cash

 

 

(49,307

)

 

 

(4,114

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

201,798

 

 

 

75,711

 

Cash, cash equivalents and restricted cash at end of period

 

$

152,491

 

 

$

71,597

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

Property and equipment purchases included in accounts payable and other accrued liabilities

 

$

1,245

 

 

$

1,098

 

Accrued costs related to underwritten public offering

 

$

176

 

 

$

 

Accrued costs related to ATM facilities

 

$

75

 

 

$

112

 

Finance lease assets obtained in exchange for lease obligations

 

$

 

 

$

281

 

Supplemental cash flow disclosure

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

10

 

 

$

17

 

Cash paid for income taxes

 

$

8

 

 

$

 

 

See accompanying notes.

8


 

Atara Biotherapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1.

Description of Business

Atara Biotherapeutics, Inc. (“Atara”, “we”, “our” or “the Company”) was incorporated in August 2012 in Delaware. Atara is a pioneer in T-cell immunotherapy, leveraging its novel allogeneic EBV T-cell platform to develop transformative therapies for patients with serious diseases, including solid tumors, hematologic cancers and autoimmune disease.

We have several T-cell immunotherapies in clinical development and are progressing multiple next-generation allogeneic chimeric antigen receptor T-cell (“CAR T”) programs. We have entered into a research, development and license agreement (“Bayer License Agreement”) with Bayer AG (“Bayer”) pursuant to which we granted to Bayer an exclusive, field-limited license under the applicable patents and know-how owned or controlled by us and our affiliates covering or related to ATA2271 and ATA3271. See Note 6 for further information.

We have licensed rights to T-cell product candidates from Memorial Sloan Kettering Cancer Center (“MSK”), rights related to our next-generation CAR T programs from MSK and from H. Lee Moffitt Cancer Center (“Moffitt”), and rights to know-how and technology from the Council of the Queensland Institute of Medical Research (“QIMR Berghofer”). See Note 7 for further information.

 

2.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Atara and its wholly owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the Company’s consolidated financial statements. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or any other future period. The condensed consolidated balance sheet as of December 31, 2020 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete consolidated financial statements.

Liquidity

We have incurred significant operating losses since inception and have relied primarily on public and private equity financings and receipts from license and collaboration agreements to fund our operations. As we continue to incur losses, our transition to profitability will depend on the successful development, approval and commercialization of product candidates and on the achievement of sufficient revenues to support our cost structure. We may never achieve profitability, and unless and until we do, we will need to continue to raise additional capital. We expect that existing cash, cash equivalents and short-term investments as of March 31, 2021 will be sufficient to fund our planned operations for at least the next twelve months from the date of issuance of these financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. Significant estimates relied upon in preparing these financial statements include estimates related to revenue recognition, clinical study and other accruals, stock-based compensation expense and income taxes. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

We consider the applicability and impact of any Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). Based on our assessment, the ASUs were determined to be either not applicable or are expected to have minimal impact on our condensed consolidated financial statements.

9


 

 

3.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing net loss by the weighted-average number of shares of common stock and pre-funded warrants outstanding during the period, without consideration of common share equivalents. Diluted net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock, pre-funded warrants and common share equivalents outstanding for the period. The pre-funded warrants are included in the computation of basic and diluted net loss per common share as the exercise price is negligible and the pre-funded warrants are fully vested and exercisable. Common share equivalents are only included in the calculation of diluted net loss per common share when their effect is dilutive.

Potential dilutive securities have been excluded from the computation of diluted net loss per share, as the effect is antidilutive, and consist of unvested restricted stock units (“RSUs”), including unvested performance-based RSUs for which established performance criteria have been achieved as of the end of the respective periods; vested and unvested options to purchase common stock; and shares to be issued under our employee stock purchase plan (“ESPP”). Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in all periods presented.

The following table represents the potential common shares issuable pursuant to outstanding securities as of the related period end dates that were excluded from the computation of diluted net loss per common share, as their inclusion would have an antidilutive effect:

 

 

As of March 31,

 

 

2021

 

 

2020

 

Unvested RSUs

 

4,900,248

 

 

 

3,630,713

 

Vested and unvested options

 

9,030,928

 

 

 

8,096,471

 

ESPP share purchase rights

 

164,954

 

 

 

178,397

 

Total

 

14,096,130

 

 

 

11,905,581

 

 

 

4.

Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable U.S. GAAP:

 

Level 1:

Quoted prices in active markets for identical assets or liabilities that we have the ability to access

 

Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves

 

Level 3:

Inputs that are unobservable data points that are not corroborated by market data

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2 and Level 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

10


 

The following tables summarize the estimated fair value and related valuation input hierarchy of our available-for-sale securities as of each period end:

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of March 31, 2021:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

138,100

 

 

$

 

 

$

 

 

$

138,100

 

U.S. Treasury obligations

 

Level 2

 

 

176,010

 

 

 

72

 

 

 

 

 

 

176,082

 

Government agency obligations

 

Level 2

 

 

25,218

 

 

 

15

 

 

 

(6

)

 

 

25,227

 

Corporate debt obligations

 

Level 2

 

 

61,259

 

 

 

100

 

 

 

(20

)

 

 

61,339

 

Commercial paper

 

Level 2

 

 

22,242

 

 

 

 

 

 

 

 

 

22,242

 

Asset-backed securities

 

Level 2

 

 

10,847

 

 

 

8

 

 

 

(8

)

 

 

10,847

 

Total available-for-sale securities

 

 

 

 

433,676

 

 

 

195

 

 

 

(34

)

 

 

433,837

 

Less: amounts classified as cash equivalents

 

 

 

 

(149,773

)

 

 

 

 

 

 

 

 

(149,773

)

Amounts classified as short-term investments

 

 

 

$

283,903

 

 

$

195

 

 

$

(34

)

 

$

284,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

Total

 

 

Total

 

 

Total

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

As of December 31, 2020:

 

Input Level

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

 

 

 

 

(in thousands)

 

Money market funds

 

Level 1

 

$

168,343

 

 

$

 

 

$

 

 

$

168,343

 

U.S. Treasury obligations

 

Level 2

 

 

230,239

 

 

 

113

 

 

 

(6

)

 

 

230,346

 

Government agency obligations

 

Level 2

 

 

22,537

 

 

 

22

 

 

 

(3

)

 

 

22,556

 

Corporate debt obligations

 

Level 2