10-Q
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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, 2022

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: 001-40656

 

TENAYA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

81-3789973

(State or other jurisdiction of

incorporation or organization)

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

171 Oyster Point Boulevard, 5th Floor

South San Francisco, CA

94080

(Address of principal executive offices)

(Zip Code)

 

(650) 825-6900

(Registrant’s telephone number, including area code)

 

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

 

TNYA

 

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

 

 

 

 

 

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, 2022, the registrant had 41,310,849 shares of common stock, $0.0001 par value per share, outstanding.

 


 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

5

 

 

Condensed Balance Sheets as of March 31, 2022 and December 31, 2021

5

 

 

Condensed Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021

6

 

 

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three months ended March 31, 2022 and 2021

7

 

 

Condensed Statements of Cash Flows for the three months ended March 31, 2022 and 2021

8

 

 

Notes to Unaudited Condensed Financial Statements

9

Item 2.

 

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

16

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

81

Item 3.

 

Defaults Upon Senior Securities

81

Item 4.

 

Mine Safety Disclosures

81

Item 5.

 

Other Information

81

Item 6.

 

Exhibits

82

SIGNATURES

83

 

 

 


SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, development plans, planned preclinical studies and clinical trials, future results of clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, investors can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements about:

the ability of our preclinical studies and planned clinical trials to demonstrate safety and efficacy of our product candidates, and other positive results;
the timing, progress and results of preclinical studies and planned clinical trials for our current product candidates and other product candidates we may develop;
the timing, scope and likelihood of regulatory filings and approvals, including timing of investigational new drugs (“INDs”), clinical trial applications (“CTAs”), Food and Drug Administration (“FDA”) approvals, and final regulatory approval of our current product candidates and any other future product candidates;
our ability to develop and advance our current product candidates and programs into, and successfully complete, clinical studies;
our manufacturing, commercialization, and marketing capabilities and strategy and the timing of our facilities becoming operational;
our plans relating to commercializing our product candidates, if approved;
the need to hire additional personnel and our ability to attract and retain such personnel;
our competitive position and the success of competing therapies that are or may become available;
our plans relating to the further development of our product candidates, including additional indications and targets we may pursue;
the impact of existing laws and regulations and regulatory developments in the United States, Europe and other jurisdictions;
our expectations regarding the effects of the ongoing COVID-19 pandemic on our business, including our preclinical studies and clinical trials;
our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering our current product candidates and other product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights;
our continued reliance on third parties to conduct additional preclinical studies and planned clinical trials of our product candidates, and for the development and manufacture of our product candidates for preclinical studies and clinical trials;
our ability to obtain, and negotiate favorable terms of, any collaboration, partnership, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates;
the pricing and reimbursement of our current product candidates and other product candidates we may develop, if approved, including any increase in demand as a result of the availability of reimbursement from the government and third-party payors;
the rate and degree of market acceptance and clinical utility of our current product candidates and other product candidates we may develop;
our estimates regarding expenses, operating losses, future revenue, capital requirements and needs for additional financing;
our financial performance;
the period over which we estimate our existing cash, cash equivalents and investments in marketable securities will be sufficient to fund our future operating expenses and capital expenditure requirements; and

3


our expectations regarding the period during which we will remain an emerging growth company under the JOBS Act.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, investors should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

4


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

TENAYA THERAPEUTICS, INC.

Condensed Balance Sheets

(In thousands)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

25,970

 

 

$

38,129

 

Investments in marketable securities

 

 

184,484

 

 

 

213,171

 

Prepaid expenses and other current assets

 

 

3,328

 

 

 

4,058

 

Total current assets

 

 

213,782

 

 

 

255,358

 

Property and equipment, net

 

 

49,384

 

 

 

43,020

 

Operating lease right-of-use assets

 

 

11,353

 

 

 

11,685

 

Restricted cash, noncurrent

 

 

399

 

 

 

547

 

Other noncurrent assets

 

 

6,579

 

 

 

3,579

 

Total assets

 

$

281,497

 

 

$

314,189

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

8,888

 

 

$

10,721

 

Accrued expenses and other current liabilities

 

 

8,132

 

 

 

9,059

 

Operating lease liabilities, current

 

 

2,075

 

 

 

1,994

 

Total current liabilities

 

 

19,095

 

 

 

21,774

 

Operating lease liabilities, noncurrent

 

 

13,093

 

 

 

13,707

 

Other noncurrent liabilities

 

 

212

 

 

 

182

 

Total liabilities

 

 

32,400

 

 

 

35,663

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

436,313

 

 

 

434,196

 

Accumulated other comprehensive loss

 

 

(631

)

 

 

(141

)

Accumulated deficit

 

 

(186,589

)

 

 

(155,533

)

Total stockholders’ equity

 

 

249,097

 

 

 

278,526

 

Total liabilities and stockholders’ equity

 

$

281,497

 

 

$

314,189

 

 

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

5


TENAYA THERAPEUTICS, INC.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

24,155

 

 

$

9,590

 

General and administrative

 

 

6,999

 

 

 

3,515

 

Total operating expenses

 

 

31,154

 

 

 

13,105

 

Loss from operations

 

 

(31,154

)

 

 

(13,105

)

Other income (expense), net:

 

 

 

 

 

 

Interest income

 

 

99

 

 

 

9

 

Other income (expense), net

 

 

(1

)

 

 

(2

)

Total other income (expense), net

 

 

98

 

 

 

7

 

Net loss before income tax expense

 

 

(31,056

)

 

 

(13,098

)

Income tax expense

 

 

 

 

 

 

Net loss

 

 

(31,056

)

 

 

(13,098

)

Other comprehensive loss:

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

(490

)

 

 

 

Comprehensive loss

 

$

(31,546

)

 

$

(13,098

)

Net loss per share, basic and diluted

 

$

(0.75

)

 

$

(11.93

)

Weighted-average shares used in computing net loss per share, basic and diluted

 

 

41,267,990

 

 

 

1,097,805

 

 

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

6


 

TENAYA THERAPEUTICS, INC.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share data)

(Unaudited)

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’ Equity

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

(Deficit)

 

Balance as of January 1, 2022

 

 

 

41,291,374

 

 

$

4

 

 

$

434,196

 

 

$

(141

)

 

$

(155,533

)

 

$

278,526

 

Issuance of common stock upon exercise
   of stock options

 

 

 

7,652

 

 

 

 

 

 

17

 

 

 

 

 

 

 

 

 

17

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

 

 

6

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

2,094

 

 

 

 

 

 

 

 

 

2,094

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

(490

)

 

 

 

 

 

(490

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,056

)

 

 

(31,056

)

Balance as of March 31, 2022

 

 

 

41,299,026

 

 

$

4

 

 

$

436,313

 

 

$

(631

)

 

$

(186,589

)

 

$

249,097

 

 

 

 

 

Convertible Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Notes
Receivable
from

 

 

Accumulated Other Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’ Equity

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stockholders

 

 

Loss

 

 

Deficit

 

 

(Deficit)

 

Balance as of January 1, 2021

 

 

24,493,528

 

 

$

220,754

 

 

 

 

1,210,306

 

 

$

 

 

$

1,584

 

 

$

(87

)

 

$

 

 

$

(82,812

)

 

$

(81,315

)

Issuance of Series C convertible preferred
   stock, net of issuance costs of $
20

 

 

1,608,750

 

 

 

19,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon exercise
   of stock options

 

 

 

 

 

 

 

 

 

12,508

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

 

 

 

29

 

Repurchase of common stock related to
   early exercise of options

 

 

 

 

 

 

 

 

 

(365

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

 

9

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

432

 

 

 

 

 

 

 

 

 

 

 

 

432

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,098

)

 

 

(13,098

)

Balance as of March 31, 2021

 

 

26,102,278

 

 

$

240,735

 

 

 

 

1,222,449

 

 

$

 

 

$

2,054

 

 

$

(87

)

 

$

 

 

$

(95,910

)

 

$

(93,943

)

 

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

7


 

TENAYA THERAPEUTICS, INC.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(31,056

)

 

$

(13,098

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

966

 

 

 

689

 

Amortization of premium on marketable securities

 

 

143

 

 

 

 

Stock-based compensation

 

 

2,094

 

 

 

432

 

Non-cash operating lease expense

 

 

332

 

 

 

171

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

732

 

 

 

118

 

Other noncurrent assets

 

 

25

 

 

 

(3,313

)

Accounts payable

 

 

(1,779

)

 

 

618

 

Accrued expenses and other current liabilities

 

 

318

 

 

 

(1,022

)

Operating lease liabilities

 

 

(533

)

 

 

(384

)

Other noncurrent liabilities

 

 

2

 

 

 

 

Net cash used in operating activities

 

 

(28,756

)

 

 

(15,789

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(8,595

)

 

 

(4,323

)

Purchases of marketable securities

 

 

(43,171

)

 

 

 

Proceeds from maturities of marketable securities

 

 

68,200

 

 

 

 

Net cash provided by (used in) investing activities

 

 

16,434

 

 

 

(4,323

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of Series C convertible preferred stock, net of issuance costs

 

 

 

 

 

19,986

 

Proceeds from exercise of stock options

 

 

15

 

 

 

29

 

Net cash provided by financing activities

 

 

15

 

 

 

20,015

 

Net change in cash, cash equivalents and restricted cash

 

 

(12,307

)

 

 

(97

)

Cash and cash equivalents and restricted cash at beginning of period

 

 

38,676

 

 

 

129,083

 

Cash and cash equivalents and restricted cash at end of period

 

$

26,369

 

 

$

128,986

 

Components of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

25,970

 

 

$

128,439

 

Restricted cash, noncurrent

 

 

399

 

 

 

547

 

Cash, cash equivalents and restricted cash

 

$

26,369

 

 

$

128,986

 

Supplemental disclosure of cash operating activities:

 

 

 

 

 

 

Cash paid for leases included in operating cash outflows

 

$

1,366

 

 

$

1,389

 

Supplemental disclosure of non-cash operating activities:

 

 

 

 

 

 

Lease liability obtained in exchange for right-of-use asset

 

$

 

 

$

213

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

Deferred offering costs related to initial public offering included in accounts payable

 

$

 

 

$

74

 

Property and equipment included in accounts payable and accrued expenses and other current liabilities

 

$

5,282

 

 

$

452

 

 

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

8


 

TENAYA THERAPEUTICS, INC.

Notes to Unaudited Condensed Financial Statements

1.
Organization and Description of the Business

Description of the Business

Tenaya Therapeutics, Inc. (the “Company”) was incorporated in the state of Delaware in August 2016 and is headquartered in South San Francisco, California. The Company is a preclinical stage biotechnology company focused on discovering, developing and delivering curative therapies that address the underlying drivers of heart disease. The Company is advancing product candidates from three distinct but interrelated product platforms: gene therapy, cellular regeneration and precision medicine.

Liquidity

The Company has incurred net losses since inception and expects such losses to continue in the future as it conducts research and development activities. As of March 31, 2022, the Company had an accumulated deficit of $186.6 million. The Company incurred a net loss of $31.1 million and $13.1 million during the three months ended March 31, 2022 and 2021, respectively. The Company had $213.5 million of cash, cash equivalents and investments in marketable securities as of March 31, 2022.

Management recognizes the need to raise additional capital to fully implement its business plan. The Company may seek to raise capital through equity financings, debt financings, license agreements, collaborative agreements or other sources of financing. Management believes that its existing cash, cash equivalents and investments in marketable securities as of March 31, 2022 will be sufficient to fund the Company’s operations for at least the next twelve months following the date these condensed financial statements are filed with the Securities and Exchange Commission (“SEC”).

2.
Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and follow the requirements of the SEC for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted.

The interim condensed balance sheet as of March 31, 2022, the interim condensed statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit) and cash flows for the three months ended March 31, 2022 and 2021 are unaudited. These unaudited interim condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s financial position, results of operations and cash flows for the interim periods presented. The condensed results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year or for any other future annual or interim period. The condensed balance sheet as of December 31, 2021 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 the related notes thereto for the year ended December 31, 2021, included in Company's Annual Report on Form 10-K, filed with the SEC on March 23, 2022.

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to clinical trials accrued liabilities, income tax valuation allowance and stock-based compensation. Management bases its estimates on historical experience, the current economic environment, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Concentration of Risk

The Company invests in a variety of financial instruments and, by its Board approved investment policy, limits the amount of credit exposure with any one issuer, industry or geographic area for investments other than instruments backed by the U.S. federal government.

9


 

Significant Accounting Policies

There have been no material revisions in our significant accounting policies described in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Recently Adopted Accounting Standards

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which is intended to simplify the accounting for income taxes. This standard eliminates certain exceptions to the approach for intra period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. As an emerging growth company, ASU 2019-12 became effective for the Company beginning January 1, 2022. The adoption of this standard did not have any impact on its financial statements.

In November 2021, the FASB issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance (ASU 2021-10), which requires business entities to make annual disclosures about transactions with a government they account for by analogizing to a grant or contribution accounting model. The required annual disclosures include the nature of the transaction, the entity’s related accounting policy, the financial statement line items affected and the amounts reflected in the current period financial statements, and any significant terms and conditions. ASU 2021-10 became effective for the Company beginning January 1, 2022. The adoption of this standard did not have a material impact on its financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the existing incurred loss impairment model with an expected credit loss model. This standard will require companies to recognize an allowance for credit losses on available-for-sale debt securities rather than the current approach of recording a reduction to the carrying value of the asset. As an emerging growth company, ASU 2016-13 will become effective for the Company beginning January 1, 2023. The Company is evaluating the impact of this standard on its financial statements.

 

3.
Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

 

Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2 - Inputs other than quoted market prices included in Level 1 are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

 

Level 3 - Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy:

 

 

 

 

 

March 31, 2022

 

 

 

Valuation
Hierarchy

 

Amortized
Cost

 

 

Unrealized
Gain

 

 

Unrealized
Loss

 

 

Fair Value

 

 

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

24,970

 

 

$

 

 

$

 

 

$

24,970

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

Level 1

 

 

106,319

 

 

 

 

 

 

(404

)

 

 

105,915

 

Commercial paper

 

Level 2

 

 

70,670

 

 

 

 

 

 

(196

)

 

 

70,474

 

Government agencies bonds

 

Level 2

 

 

11,151

 

 

 

 

 

 

(31

)

 

 

11,120

 

Total financial assets

 

 

 

$

213,110

 

 

$

 

 

$

(631

)

 

$

212,479

 

 

10


 

 

 

 

 

 

December 31, 2021

 

 

 

Valuation
Hierarchy

 

Amortized
Cost

 

 

Unrealized
Gain

 

 

Unrealized
Loss

 

 

Fair Value

 

 

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

37,129

 

 

$

 

 

$

 

 

$

37,129

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. treasuries

 

Level 1

 

$

78,097

 

 

$

 

 

$

(85

)

 

$

78,012

 

Commercial paper

 

Level 2

 

$

121,634

 

 

$

 

 

$

(50

)

 

$

121,584

 

Corporate bonds

 

Level 2

 

$

8,979

 

 

$

 

 

$

(3

)

 

$

8,976

 

Government agencies bonds

 

Level 2

 

$

4,602

 

 

$

 

 

$

(3

)

 

$

4,599

 

Total financial assets

 

 

 

$

250,441

 

 

$

 

 

$

(141

)

 

$

250,300

 

 

Money market funds are classified as Level 1 because they are valued using quoted market prices in active markets for identical assets. Financial instruments classified within Level 2 of the fair value hierarchy are valued based on observable inputs or can be derived from non-binding quotes from the Company’s investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, or historical pricing trends of a security relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company considers the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

The Company believes it is more likely than not that its marketable securities in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value. As of March 31, 2022, $184.5 million of available-for-sale marketable securities had remaining maturities of less than one year. The remainder of the marketable securities of $3.0 million had remaining maturities between one and two years and was included in other noncurrent assets in the accompanying condensed balance sheet as of March 31, 2022.

The carrying amount of our remaining financial assets and liabilities, which include cash, receivables and payables, approximate their fair values due to their short-term nature.

11


 

4.
Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consists of the following:

 

 

 

March 31,
2022

 

 

December 31,
2021

 

 

 

(In thousands)

 

Construction in progress

 

$

22,961

 

 

$

32,561

 

Laboratory equipment

 

 

12,172

 

 

 

11,891

 

Leasehold improvements

 

 

23,603

 

 

 

7,241

 

Furniture and fixtures

 

 

821

 

 

 

534

 

Computer equipment and software

 

 

218

 

 

 

218

 

Total property and equipment

 

$

59,775

 

 

$

52,445

 

Less: accumulated depreciation and amortization

 

 

(