What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-01 compared with 2021-08-02 · 96 added, 46 removed, 434 unchanged (25% of the section changed)

19 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

1 unchanged sentence

Marketable securities

Accounts receivable - related party

Prepaid and other current assets

15 unchanged sentences

$ 0.0001 par value;

10,000,000 shares authorized at June 30, 2021 and December 31, 2020;

0 shares issued and outstanding at June 30, 2021 and December 31, 2020

10,000,000 shares authorized at September 30, 2021 and December 31, 2020;

0 shares issued and outstanding at September 30, 2021 and December 31, 2020

Common stock:

$ 0.0001 par value;

290,000,000 shares authorized at June 30, 2021 and December 31, 2020;

42,421,159 and 28,372,634 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

290,000,000 shares authorized at September 30, 2021 and December 31, 2020;

46,546,915 and 28,372,634 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

4 unchanged sentences

Interest income and other expense, net

Sublease income - related party

Loss from equity method investment

9 unchanged sentences

(in thousands, except share data)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Comprehensive

11 unchanged sentences

Balance at June 30, 2021

Six Months Ended June 30, 2020

Issuance of common stock upon exercise of Exchange Warrants

Common stock issued on exercise of stock options

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Issuance of common stock in connection with at-the-market offering, net

Balance at September 30, 2021

Nine Months Ended September 30, 2020

Comprehensive

8 unchanged sentences

Balance at June 30, 2020

Common stock issued on exercise of stock options

Stock-based compensation expense

Unrealized loss on marketable securities

Balance at September 30, 2020

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

2 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities

5 unchanged sentences

Changes in operating assets and liabilities:

Accounts receivable - related party

Prepaid and other current assets

8 unchanged sentences

Maturities of marketable securities

Purchases of property and equipment

Net cash provided by investing activities

Cash flows from financing activities

Proceeds from issuance of common stock, net (includes $ 4,850 in aggregate gross proceeds from related parties for the six months ended June 30, 2021)

Proceeds from issuance of common stock, net (includes $ 4,850 in aggregate gross proceeds from related parties for the nine months ended September 30, 2021)

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

36 unchanged sentences

In addition, its operating plan may change as a result of many factors, including those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed on March 25, 2021.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 246.5 million as of June 30, 2021.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 257.1 million as of September 30, 2021.

The Company has historically financed its operations primarily through the sale of redeemable convertible preferred stock and common stock.

1 unchanged sentence

Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

As of June 30, 2021, the Company had cash, cash equivalents and short-term marketable securities of $ 66.5 million.

As of September 30, 2021, the Company had cash, cash equivalents and short-term marketable securities of $ 76.3 million.

Management believes that the Company’s current cash, cash equivalents and short-term marketable securities will be sufficient to fund its planned operations for at least 12 months from the date of the issuance of these financial statements.

11 unchanged sentences

The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants.

As of June 30, 2021, none of the Exchange Warrants have been exercised.

During the three months ended September 30, 2021, the Exchange Warrants were fully exercised, resulting in the issuance of 1,457,947 shares of common stock on a net exercise basis.

Summary of Significant Accounting Policies

5 unchanged sentences

Since its inception, the Company has incurred significant losses and negative cash flows from operations.

As of June 30, 2021, the Company had an accumulated deficit of $ 246.5 million and cash, cash equivalents and marketable securities of $ 66.5 million.

As of September 30, 2021, the Company had an accumulated deficit of $ 257.1 million and cash, cash equivalents and marketable securities of $ 76.3 million.

The Company has financed its operations primarily with the proceeds from the sale of stock.

4 unchanged sentences

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

The condensed consolidated results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The condensed consolidated results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 25, 2021.

4 unchanged sentences

Foreign Currency Translation

Angel Pharmaceutical’s functional currency is the Chinese renminbi (RMB).

Angel’s financial statements are reported in RMB.

Angel Pharmaceuticals Co., Ltd.’s (“Angel Pharmaceuticals”) functional currency is the Chinese renminbi (RMB).

Angel Pharmaceuticals’ financial statements are reported in RMB.

Financial information is translated from RMB to the U.S.

22 unchanged sentences

The Company’s significant accounting policies are described in Note 2 to its consolidated financial statements for the year ended December 31, 2020, included in its Annual Report on Form 10-K.

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2021.

There have been no material changes to the Company’s significant accounting policies during the nine months ended September 30, 2021.

Recent Accounting Pronouncements

9 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net loss - basic and diluted

1 unchanged sentence

Net loss per share, basic and diluted

Weighted average common shares outstanding for the three and six months ended June 30, 2021 and 2020 include 1,458,000 shares of common stock issuable on the conversion of pre-funded warrants described in Note 1.

Weighted average common shares outstanding for the three and nine months ended September 30, 2021 and 2020 include 1,458,000 shares of common stock issuable on the conversion of pre-funded warrants described in Note 1.

The amounts in the table below were excluded from the calculation of diluted net loss per share, due to their anti-dilutive effect:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Outstanding options

12 unchanged sentences

These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default projections based on historical data and other observable inputs.

The following tables present information as of June 30, 2021 and December 31, 2020 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):

June 30, 2021

The following tables present information as of September 30, 2021 and December 31, 2020 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):

September 30, 2021

Fair Value Measured Using

5 unchanged sentences

Marketable securities

As of June 30, 2021, marketable securities had a maximum remaining maturity of ten months .

As of June 30, 2021 and December 31, 2020, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

June 30, 2021

As of September 30, 2021, marketable securities had a maximum remaining maturity of six months .

As of September 30, 2021 and December 31, 2020, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

September 30, 2021

Treasury securities

4 unchanged sentences

Equity Method Investment

As of June 30, 2021 and December 31, 2020, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel ESOP.

The Company recognized its share of losses in Angel for the total amount of $ 0.5 million and $ 0.6 million as loss from equity method investment on the consolidated statement of operations for the three and six months ended June 30, 2021, respectively.

As of September 30, 2021 and December 31, 2020, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel ESOP.

The Company recognized its share of losses in Angel for the total amount of $ 1.7 million and $ 2.3 million as loss from equity method investment on the consolidated statement of operations for the three and nine months ended September 30, 2021, respectively.

Summary Financial Information

1 unchanged sentence

Balance Sheet Data (unaudited)

June 30, 2021

September 30, 2021

December 31, 2020

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Statement of Operations Data (unaudited)

62 unchanged sentences

Balance Sheet Components (in thousands)

September 30,

Prepaid and Other Current Assets

13 unchanged sentences

Accrued legal and accounting

As of June 30, 2021, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.

As of September 30, 2021, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.

Each share of common stock is entitled to one vote.

Common stockholders are entitled to dividends if and when declared by the board of directors.

As of June 30, 2021, no dividends on common stock had been declared.

As of September 30, 2021, no dividends on common stock had been declared.

In March 2020, the Company entered into an open market sales agreement (the “Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s common stock, from time to time, with aggregate gross sales proceeds of up to $ 50.0 million through an at-the-market equity offering program under which Jefferies will act as its sales agent.

1 unchanged sentence

Jefferies is entitled to compensation for its services equal to up to 3.0 % of the gross proceeds of any shares of common stock sold through Jefferies under the Sales Agreement.

During the six months ended June 30, 2021, the Company sold 4,264,865 shares under its at-the-market offering program resulting in net proceeds of $ 11.8 million.

As of June 30, 2021, $ 36.6 million remained available for sale under the Sales Agreement.

During the nine months ended September 30, 2021, the Company sold 6,609,605 shares under its at-the-market offering program resulting in net proceeds of $ 29.0 million.

As of September 30, 2021, $ 18.9 million remained available for sale under the Sales Agreement.

The Company has reserved shares of common stock for issuance as follows:

September 30,

Exchange warrants

19 unchanged sentences

Options granted

( 1,408,000 )

Options exercised

Options forfeited

Balance at June 30, 2021

Balance at September 30, 2021

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

General and administrative

During the three and six months ended June 30, 2021 and 2020, the Company recorded no income tax benefits for the net operating losses (NOLs) incurred due to the uncertainty of realizing a benefit from those items.

During the three and nine months ended September 30, 2021 and 2020, the Company recorded no income tax benefits for the net operating losses (NOLs) incurred due to the uncertainty of realizing a benefit from those items.

The Company continues to maintain a full valuation allowance against its net deferred tax assets.

1 unchanged sentence

In January 2015, the Company signed an initial operating lease, effective February 1, 2015 for 8,138 square feet of office and laboratory space with a one year term.

Between January 2015 and October 2018, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the lease to February 2023.

Between January 2015 and September 2021, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the lease to February 2025.

The lease agreement includes annual rent escalations.

1 unchanged sentence

The Company records rent expense on a straight-line basis over the effective term of the lease, including any free rent periods and incentives.

As the interest rate implicit in lease arrangements is typically not readily available, in calculating the present value of the lease payments, the Company has utilized its incremental borrowing rate, which is determined based on the prevailing market rates for collateralized debt with maturity dates commensurate with the term of its lease .

As the interest rate implicit in lease arrangements is typically not readily available, in calculating the present value of the lease payments, the Company has utilized its incremental borrowing rate, which was determined based on the prevailing market rates for collateralized debt with maturity dates commensurate with the term of its lease.

The Company’s facility lease is a net lease, as the non-lease components (i.e.

1 unchanged sentence

Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.

As of June 30, 2021 and December 31, 2020, the right-of-use asset under operating lease was $ 1.3 million and $ 1.6 million, respectively.

The elements of lease expense for the three and six months ended June 30, 2021 and 2020 were as follows (in thousands):

In September 2021, the Company entered into a lease amendment to extend the expiration of its operating lease by two years , from February 2023 to February 2025.

As a result of this lease extension, the Company recorded a $ 2.4 million increase in the operating lease right-of-use asset and a corresponding increase in the operating lease liability .

As of September 30, 2021 and December 31, 2020, the right-of-use asset under operating lease was $ 3.4 million and $ 1.6 million, respectively.

The elements of lease expense for the three and nine months ended September 30, 2021 and 2020 were as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

Statements of operations and

September 30,

comprehensive loss location

11 unchanged sentences

Discount rate

As of June 30, 2021, minimum rental commitments under this lease were as follows (in thousands):

As of September 30, 2021, minimum rental commitments under this lease were as follows (in thousands):

Year Ended December 31 (in thousands)

6 unchanged sentences

imputed interest

In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel Pharmaceuticals.

Pursuant to the sublease, rent is due monthly and is subject to scheduled annual increases and Angel Pharmaceuticals is responsible for certain operating expenses and taxes throughout the life of the sublease.

The sublease will expire in February 2023 and Angel Pharmaceuticals has no option to extend the sublease term.

Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.

For the three months ended September 30, 2021, the Company recognized $ 0.1 million of sublease income.

Commitments and Contingencies

13 unchanged sentences

The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law.

There have been no claims to date and the Company has a directors and officers insurance policy that may enable it to recover a portion of any amounts paid for future claims.

been no claims to date and the Company has a directors and officers insurance policy that may enable it to recover a portion of any amounts paid for future claims.

Legal Proceedings

8 unchanged sentences

(1) Peter Thompson, M.D., a member of our Board of Directors since November 2014, is a Private Equity Partner at OrbiMed Advisors, LLC.

As more fully described in Note 5 to the Company’s consolidated financial statements for the year ended December 31, 2020, included in our Annual Report on Form 10-K, the Company holds a 49.7 % ownership in Angel Pharmaceuticals and, in connection with intellectual property licensing agreements between the Company and Angel Pharmaceuticals, the Company provides clinical drug supplies to Angel Pharmaceuticals for use in its clinical trials.

Third-party and internal personnel costs incurred by the Company associated with the manufacturing of these clinical supplies are billed to Angel Pharmaceuticals in the period incurred.

During the three months ended June 30, 2021, associated costs were not material.

As more fully described in Note 5 to the Company’s consolidated financial statements for the year ended December 31, 2020, included in our Annual Report on Form 10-K, the Company holds a 49.7 % ownership in Angel Pharmaceuticals and, in connection with intellectual property licensing agreements between the Company and Angel Pharmaceuticals, the Company provides operational support and clinical drug supplies to Angel Pharmaceuticals.

Third-party and internal personnel costs incurred by the Company are billed to Angel Pharmaceuticals in the period incurred and recorded as an offset to expenses.

During the three and nine months ended September 30, 2021, the Company billed Angel for approximately $ 58,000 and $ 167,000 in internal personnel costs and $ 184,000 and $ 470,000 in third-party party costs, respectively.

The third-party costs were primarily associated with clinical drug supply and as passthrough costs, they did not have any impact on the Company’s condensed consolidated statements of operations.

In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel Pharmaceuticals.

The sublease will expire in February 2023 and Angel Pharmaceuticals has no option to extend the sublease term.

Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.

For the three months ended September 30, 2021, the Company recognized $ 0.1 million of sublease income.

In July 2021, Linda S.

Grais, M.D., J.D., a member of the Company’s Board of Directors, was appointed as a non-executive member of the Board of Directors of ICON plc (“ICON”), effective upon completion of ICON’s acquisition of PRA Health Sciences, Inc.

ICON is a clinical research organization and provides services to support the Company’s clinical trials.

During the nine months ended September 30, 2021, the Company recorded approximately $ 205,000 in clinical trial expenses under its agreements with ICON.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements