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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, 2021

 

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 001-37566

 

SYNLOGIC, INC.

(Exact name of Registrant as specified in its Charter)

 

Delaware

(State or other jurisdiction of

incorporation or organization)

 

26-1824804

(I.R.S. Employer

Identification No.)

 

 

 

301 Binney St., Suite 402

Cambridge, MA

(Address of principal executive offices)

 

02142

(Zip Code)

(617) 401-9975

(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 exchange on which registered

Common Stock, par value $0.001 per share

SYBX

The Nasdaq Capital 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, 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  

 

As of May 6, 2021, there were 52,368,221 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

 

 


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained herein are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 

 

the success of our research and development efforts;

 

the initiation, progress, timing, costs and results of clinical trials for our product candidates;

 

the time and costs involved in obtaining regulatory approvals for our product candidates;

 

the success of our collaborations with third parties;

 

the progress, timing and costs involved in developing manufacturing processes and in manufacturing products, as well as agreements with third-party manufacturers;

 

the rate of progress and cost of our commercialization activities;

 

the expenses we incur in marketing and selling our product candidates;

 

the revenue generated by sales of our product candidates;

 

the emergence of competing or complementary technological developments;

 

the terms and timing of any additional collaborative, licensing or other arrangements that we may establish;

 

the acquisition of businesses, products and technologies;

 

our need to implement additional infrastructure and internal systems;

 

our need to add personnel and financial and management information systems to support our product development and potential future commercialization efforts, and to enable us to operate as a public company;

 

the development of major public health concerns, including the novel coronavirus outbreak or other pandemics arising globally, and the current and future impact of it and COVID-19 on our clinical trials, business operations and funding requirements; and

 

other risks and uncertainties, including those listed under Part II, Item 1A. “Risk Factors”.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

 

 


 

SYNLOGIC, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

Unaudited Consolidated Balance Sheets

 

1

 

 

 

Unaudited Consolidated Statements of Operations and Comprehensive Loss

 

2

 

 

 

Unaudited Consolidated Statements of Stockholders’ Equity

 

3

 

 

 

Unaudited Consolidated Statements of Cash Flows

 

4

 

 

 

Notes to Unaudited Consolidated Financial Statements

 

5

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

13

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

22

 

 

 

Item 4. Controls and Procedures

 

22

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

 

23

 

 

 

Item 1A. Risk Factors

 

23

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

53

 

 

 

Item 3. Defaults Upon Senior Securities

 

53

 

 

 

Item 4. Mine Safety Disclosures

 

53

 

 

 

Item 5. Other Information

 

53

 

 

 

Item 6. Exhibits

 

54

 

 

 

Signatures

 

55

 

 

 

 


 

SYNlogic, Inc. and SUBSIDIARIES

Unaudited Consolidated Balance Sheets

(In thousands, except share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,704

 

 

$

32,507

 

Short-term marketable securities

 

 

67,648

 

 

 

67,937

 

Prepaid expenses and other current assets

 

 

6,845

 

 

 

6,402

 

Total current assets

 

 

101,197

 

 

 

106,846

 

Property and equipment, net

 

 

10,174

 

 

 

10,776

 

Right of use asset - operating lease

 

 

15,065

 

 

 

15,527

 

Restricted cash

 

 

1,097

 

 

 

1,097

 

Prepaid research and development, net of current portion

 

 

8,208

 

 

 

9,590

 

Other assets

 

 

4

 

 

 

4

 

Total assets

 

$

135,745

 

 

$

143,840

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,563

 

 

$

1,995

 

Accrued expenses

 

 

2,802

 

 

 

3,773

 

Lease liability - operating lease

 

 

2,620

 

 

 

2,531

 

Finance lease obligations

 

 

1

 

 

 

2

 

Total current liabilities

 

 

6,986

 

 

 

8,301

 

Long-term liabilities:

 

 

 

 

 

 

 

 

Lease liability - operating lease, net of current portion

 

 

19,578

 

 

 

20,273

 

Other long-term liabilities

 

 

131

 

 

 

131

 

Total long-term liabilities

 

 

19,709

 

 

 

20,404

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

Common stock, $0.001 par value

 

 

 

 

 

 

 

 

250,000,000 shares authorized as of March 31, 2021 and December 31, 2020.

   40,873,526 shares issued and outstanding as of March 31, 2021 and

   38,183,273 shares issued and outstanding as of December 31, 2020.

 

 

41

 

 

 

38

 

Additional paid-in capital

 

 

354,286

 

 

 

345,394

 

Accumulated other comprehensive income

 

 

5

 

 

 

14

 

Accumulated deficit

 

 

(245,282

)

 

 

(230,311

)

Total stockholders' equity

 

 

109,050

 

 

 

115,135

 

Total liabilities and stockholders' equity

 

$

135,745

 

 

$

143,840

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

1


 

Synlogic, INC. aND SUBSIDIARIES

Unaudited Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

 

 

 

For the Three Months Ended

 

 

 

March 31, 2021

 

 

March 31, 2020

 

Revenue

 

$

 

 

$

100

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

11,180

 

 

 

12,677

 

General and administrative

 

 

3,851

 

 

 

3,821

 

Total operating expenses

 

 

15,031

 

 

 

16,498

 

Loss from operations

 

 

(15,031

)

 

 

(16,398

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest and investment income

 

 

60

 

 

 

574

 

Interest expense

 

 

 

 

 

(3

)

Other expense

 

 

 

 

 

(1

)

Other income (expense), net

 

 

60

 

 

 

570

 

Net loss

 

$

(14,971

)

 

$

(15,828

)

 

 

 

 

 

 

 

 

 

Net loss per share - basic and diluted

 

$

(0.36

)

 

$

(0.46

)

Weighted-average common stock outstanding - basic and diluted

 

 

41,545,050

 

 

 

34,233,688

 

Comprehensive loss:

 

 

 

 

 

 

 

 

Net loss

 

$

(14,971

)

 

$

(15,828

)

Net unrealized (loss) gain on marketable securities

 

 

(9

)

 

 

(55

)

Comprehensive loss

 

$

(14,980

)

 

$

(15,883

)

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

2


 

Synlogic, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

 

 

 

Common stock

 

 

Additional

 

 

Accumulated

other

 

 

 

 

 

 

 

 

 

 

 

$0.001 par value

 

 

paid-in

 

 

comprehensive

 

 

Accumulated

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

income (loss)

 

 

deficit

 

 

equity

 

Balance at December 31, 2020

 

 

38,183,273

 

 

$

38

 

 

$

345,394

 

 

$

14

 

 

$

(230,311

)

 

$

115,135

 

Proceeds from issuance of common stock in connection with at-the-

   market offering, net of issuance costs

 

 

2,447,211

 

 

 

3

 

 

 

8,047

 

 

 

 

 

 

 

 

 

8,050

 

Exercise of options

 

 

216

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of restricted stock

 

 

242,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock under employee stock purchase plan

 

 

19,061

 

 

 

 

 

 

33

 

 

 

 

 

 

 

 

 

33

 

Restricted stock awards withheld for payment of employees'

   withholding tax liability

 

 

(15,970

)

 

 

 

 

 

(65

)

 

 

 

 

 

 

 

 

(65

)

Cancellation of restricted stock

 

 

(2,719

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

877

 

 

 

 

 

 

 

 

 

877

 

Unrealized gain (loss) on securities

 

 

 

 

 

 

 

 

 

 

 

(9

)

 

 

 

 

 

(9

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,971

)

 

 

(14,971

)

Balance at March 31, 2021

 

 

40,873,526

 

 

$

41

 

 

$

354,286

 

 

$

5

 

 

$

(245,282

)

 

$

109,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

32,266,814

 

 

$

33

 

 

$

327,900

 

 

$

110

 

 

$

(171,138

)

 

$

156,905

 

Issuance of restricted stock

 

 

226,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of restricted stock

 

 

(33,755

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity-based compensation expense

 

 

 

 

 

 

 

 

1,095

 

 

 

 

 

 

 

 

 

1,095

 

Unrealized gain (loss) on securities

 

 

 

 

 

 

 

 

 

 

 

(55

)

 

 

 

 

 

(55

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,828

)

 

 

(15,828

)

Balance at March 31, 2020

 

 

32,459,394

 

 

$

33

 

 

$

328,995

 

 

$

55

 

 

$

(186,966

)

 

$

142,117

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

3


 

Synlogic, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(14,971

)

 

$

(15,828

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

626

 

 

 

667

 

Equity-based compensation expense

 

 

877

 

 

 

1,095

 

Accretion/amortization of investment securities

 

 

105

 

 

 

(45

)

Reduction in carrying amount of operating lease right of use asset

 

 

462

 

 

 

420

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(443

)

 

 

509

 

Prepaid research and development, net of current portion

 

 

1,382

 

 

 

3,327

 

Accounts payable and accrued expenses

 

 

(1,408

)

 

 

(2,129

)

Deferred revenue

 

 

 

 

 

(100

)

Operating lease liabilities

 

 

(606

)

 

 

(395

)

Net cash used in operating activities

 

 

(13,976

)

 

 

(12,479

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(27,091

)

 

 

(14,269

)

Proceeds from maturity of marketable securities

 

 

25,996

 

 

 

18,852

 

Proceeds from redemption of marketable securities

 

 

1,270

 

 

 

1,500

 

Purchases of property and equipment

 

 

(21

)

 

 

(266

)

Net cash provided by investing activities

 

 

154

 

 

 

5,817

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Payments on finance lease obligations

 

 

(1

)

 

 

(69

)

Proceeds from issuance of common stock in connection with at-the-market offering, net of issuance costs

 

 

8,052

 

 

 

 

Proceeds from employee stock purchases and exercise of stock options

 

 

33

 

 

 

 

Payment of employee withholding taxes relating to restricted stock awards

 

 

(65

)

 

 

 

Net cash provided by (used in) financing activities

 

 

8,019

 

 

 

(69

)

Net decrease in cash, cash equivalents and restricted cash

 

 

(5,803

)

 

 

(6,731

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

33,604

 

 

 

27,281

 

Cash, cash equivalents and restricted cash at end of period

 

$

27,801

 

 

$

20,550

 

Supplemental disclosure of non-cash investing activities:

 

 

 

 

 

 

 

 

Property and equipment purchases included in accounts payable and accrued expenses

 

$

3

 

 

$

41

 

Supplemental disclosure of non-cash financing activities:

 

 

 

 

 

 

 

 

Issuance costs included in accounts payable and accrued expenses

 

$

2

 

 

$

 

Cash paid for interest

 

$

 

 

$

3

 

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

4


 

 

SYNLOGIC, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(1)

Nature of Business

Organization

Synlogic, Inc., together with its wholly owned and consolidated subsidiaries (“Synlogic” or the “Company”), is a clinical-stage biopharmaceutical company focused on the drug discovery and development of Synthetic Biotic™ medicines. Synthetic Biotic medicines are generated from Synlogic’s proprietary drug discovery and development platform, leveraging a reproducible, modular approach to synthetic biology to develop beneficial microbes, which perform or deliver critical therapeutic functions. Synthetic Biotic medicines are designed to metabolize a toxic substance or compensate for missing or damaged metabolic pathways. Synlogic’s goal is to discover, develop and ultimately commercialize Synthetic Biotic medicines. Since incorporation, the Company has devoted substantially all of its efforts to the research and development of its product candidates.

On August 28, 2017, Synlogic, Inc., formerly known as Mirna Therapeutics, Inc. (NASDAQ: MIRN) (“Mirna”), completed a business combination with Synlogic, a private company, pursuant to the Agreement and Plan of Merger and Reorganization, dated as of May 15, 2017 (the “Merger Agreement”), pursuant to which the private Synlogic entity survived as a wholly owned subsidiary of Mirna (the “Merger”). Immediately after completion of the Merger, Mirna changed its name to “Synlogic, Inc.” (NASDAQ: SYBX).

Risks and Uncertainties

At March 31, 2021, the Company had approximately $94.4 million in cash, cash equivalents, and short-term marketable securities, $1.1 million of restricted cash and an accumulated deficit of approximately $245.3 million. Since its inception through March 31, 2021, the Company has primarily financed its operations through the issuance of preferred stock, units and warrants, the sale of its common stock, the AbbVie collaboration, and cash received in the Merger. In the absence of positive cash flows from operations, the Company is highly dependent on its ability to find additional sources of funding in the form of debt or equity financing. Management believes that the Company has sufficient cash to fund its operations through at least twelve months from the issuance of these financial statements.

As an early-stage company, the Company is subject to a number of risks common to other life science companies, including, but not limited to, raising additional capital, development by its competitors of new technological innovations, risk of failure in preclinical and clinical studies, safety and efficacy of its product candidates in clinical trials, the risk of relying on external parties such as contract research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), the regulatory approval process, market acceptance of the Company’s products once approved, lack of marketing and sales history, dependence on key personnel and protection of proprietary technology. The Company’s therapeutic programs are currently pre-commercial, spanning discovery through early development and will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization of any product candidates.  These efforts require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance-reporting capabilities.  There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary regulatory approval or that any approved products will be commercially viable.  Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales.  The Company may never achieve profitability, and unless and until it does, it will continue to need to raise additional capital or obtain financing from other sources, such as strategic collaborations or partnerships.

(2)

Summary of Significant Accounting Policies

The significant accounting policies described in the Company’s audited financial statements as of and for the year ended December 31, 2020, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (“SEC”) on March 25, 2021 (the “2020 Annual Report”), have had no material changes during the three months ended March 31, 2021. The updated accounting policy and the impact of adoption are discussed in the “Recently Adopted Accounting Pronouncements” section in this note.

 

 

Basis of Presentation

The accompanying consolidated financial statements and the related disclosures as of March 31, 2021 and for the three months ended March 31, 2021 and 2020 are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the SEC for interim financial statements.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  These interim consolidated financial statements should be read in conjunction with the Company’s 2020 and 2019 audited consolidated financial statements and notes included in the Company’s 2020 Annual Report. The December 31, 2020 consolidated balance sheet included herein was derived from

5


 

the audited financial statements as of that date but does not include all disclosures including notes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company’s financial position and results of operations for the three months ended March 31, 2021 and 2020.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or any other interim period or future year or period.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Synlogic and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Recently Adopted Accounting Pronouncements

In October 2020, the FASB issued an amendment, ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs, to the guidance in ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The amendment requires companies to reevaluate whether a callable debt security that has multiple call dates is within the scope of paragraph 310-20-65-2. The amendment shall be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted the new guidance effective on January 1, 2021 which had an immaterial impact on its consolidated financial statements.

Recently Issued Pronouncements

In June 2016, the FASB issued ASU 2016-13 - Measurement of Credit Losses on Financial Statements. The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. In November 2019, the FASB issued ASU 2019-10 – Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date for certain companies. The standard is effective for public companies eligible to be smaller reporting companies for annual and interim periods beginning after December 15, 2022. Early adoption is available. The Company is currently evaluating the potential impact ASU 2016-13, and related updates, will have on its consolidated financial statements and disclosures.

The Company has evaluated other recently issued accounting pronouncements and has concluded that that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

 

(3)

Fair Value of Financial Instruments

The tables below present information about the Company’s assets that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value, as described under Note 2, Summary of Significant Accounting Policies, in the audited financial statements included in the Company’s 2020 Annual Report.  

The Company’s investment portfolio includes many fixed income securities that do not always trade on a daily basis.  As a result, the pricing services used by the Company applied other available information as applicable through processes such as benchmark yields, benchmarking of like securities, sector groupings and matrix pricing to prepare evaluations.  In addition, model processes were used to assess interest rate impact and develop prepayment scenarios.  These models take into consideration relevant credit information, perceived market movements, sector news and economic events.  The inputs into these models may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads and other relevant data.

6


 

At March 31, 2021 and December 31, 2020, the Company has classified assets measured at fair value on a recurring basis as follows (in thousands):

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

March 31,

 

 

Quoted Prices in Active

Markets for Identical

Assets

 

 

Significant Other

Observable Inputs

 

 

Significant

Unobservable Inputs

 

Description

 

2021

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Money market funds

 

$

26,703

 

 

$

26,703

 

 

$

 

 

$

 

Commercial paper

 

 

42,469

 

 

 

 

 

 

42,469

 

 

 

 

Corporate debt securities

 

 

16,376

 

 

 

 

 

 

16,376

 

 

 

 

U.S. government agency securities and treasuries

 

 

8,803

 

 

 

8,803

 

 

 

 

 

 

 

Total

 

$

94,351

 

 

$

35,506

 

 

$

58,845

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at Reporting Date Using

 

 

 

December 31,

 

 

Quoted Prices in Active

Markets for Identical

Assets

 

 

Significant Other

Observable Inputs

 

 

Significant

Unobservable Inputs

 

Description

 

2020

 

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

Money market funds

 

$

32,506

 

 

$

32,506

 

 

$

 

 

$

 

Commercial paper

 

 

40,477

 

 

 

 

 

 

40,477

 

 

 

 

Corporate debt securities

 

 

18,637

 

 

 

 

 

 

18,637

 

 

 

 

U.S. government agency securities and

   treasuries

 

 

8,823

 

 

 

8,823

 

 

 

 

 

 

 

Total

 

$

100,443

 

 

$

41,329

 

 

$

59,114

 

 

$

 

 

Cash equivalents, prepaid expenses and other current assets, accounts payable and accrued expenses at March 31, 2021 and December 31, 2020 are carried at amounts that approximate fair value due to their short-term maturities. Finance lease obligations at March 31, 2021 and December 31, 2020 approximate fair value as they bear interest at a rate approximating a market interest rate.

(4)

Available-for-Sale Investments

 

The following tables summarize the available-for-sale securities held at March 31, 2021 and December 31, 2020 (in thousands):

 

March 31, 2021

 

Amortized cost

 

 

Gross unrealized

gains

 

 

Gross unrealized

losses

 

 

Fair Value

 

Commercial paper

 

$

42,466

 

 

$

4

 

 

$

(1

)

 

$

42,469

 

Corporate debt securities

 

 

16,378

 

 

 

3

 

 

 

(5

)

 

 

16,376

 

U.S. government agency securities

 

 

8,799

 

 

 

4

 

 

 

 

 

 

8,803

 

Total

 

$

67,643

 

 

$

11

 

 

$

(6

)

 

$

67,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

Amortized cost

 

 

Gross unrealized

gains

 

 

Gross unrealized

losses

 

 

Fair Value

 

Commercial paper

 

$

40,467

 

 

$

11

 

 

$

(1

)

 

$

40,477

 

Corporate debt securities

 

 

18,634

 

 

 

4

 

 

 

(1

)

 

 

18,637

 

U.S. government agency securities

 

 

8,822

 

 

 

1

 

 

 

 

 

 

8,823

 

Total

 

$

67,923

 

 

$

16

 

 

$

(2

)

 

$

67,937

 

 

The contractual maturity of all securities held at March 31, 2021 was nine months or less.  There were nine and eight investments in an unrealized loss position at March 31, 2021 and December 31, 2020, respectively, none of which had been in an unrealized loss position for more than twelve months. The aggregate fair value of the securities in an unrealized loss position at March 31, 2021 and December 31, 2020 was $28.8 million and $20.1 million, respectively. The Company reviews its investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying amount is not recoverable within a reasonable period of time. To determine whether an impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary.  The Company did not hold any securities with an other-than-temporary impairment at March 31, 2021.

7


 

Gross realized gains and losses on the sales of investments have not been material to the Company’s consolidated statement of operations.

 

(5)

Property and Equipment, net

Property and equipment, net consists of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Laboratory equipment

 

$

7,829

 

 

$

7,793

 

Computer and office equipment

 

 

769

 

 

 

769

 

Furniture and fixtures

 

 

421

 

 

 

421

 

Leasehold improvements

 

 

9,514

 

 

 

9,514

 

Construction in progress

 

 

516

 

 

 

528

 

 

 

 

19,049

 

 

 

19,025

 

Less accumulated depreciation

 

 

(8,875

)

 

 

(8,249

)

 

 

$

10,174

 

 

$

10,776

 

 

(6)

Accrued Expenses

Accrued expenses consist of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Payroll related

 

$