What changed in this filing

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Item 1. Financial Statements

2020-11-02 compared with 2020-08-10 · 117 added, 87 removed, 634 unchanged (24% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

September 30,

Current assets:

1 unchanged sentence

Marketable securities, available-for-sale

Accounts receivable, net

Accounts receivable, net and other contract assets

Prepaid expenses and other assets

20 unchanged sentences

300,000 shares authorized;

136,671 and 136,713 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

135,369 and 136,713 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Product sales, net

20 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss):

Unrealized gain on marketable securities

Unrealized (loss) gain on marketable securities

Foreign currency translation adjustment

Unrealized gain (loss) on foreign currency

Unrealized (loss) gain on foreign currency

Total comprehensive income (loss)

3 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

Net income (loss)

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

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Share-based compensation

5 unchanged sentences

Lease payments deferred

Loss on impairment of right-of-use asset

Changes in operating assets and liabilities:

2 unchanged sentences

Accounts payable and accrued expenses

Net cash used in operating activities

Net cash provided by (used in) operating activities

Investing activities:

15 unchanged sentences

Right-of-use assets obtained in exchange for lease obligation

Pending settlement of common stock repurchase

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(Unaudited) (in thousands)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Comprehensive Loss

Stockholders’

BALANCE AS OF MARCH 31, 2020

BALANCE AS OF JUNE 30, 2020

Share-based compensation expense

Issuance of common stock pursuant to exercise of stock options and vesting of restricted stock units, net

Issuance of restricted stock awards, net

Repurchase of common stock

Other comprehensive loss

BALANCE AS OF JUNE 30, 2020

Six Months Ended June 30, 2020

BALANCE AS OF SEPTEMBER 30, 2020

Nine Months Ended September 30, 2020

Comprehensive Loss

7 unchanged sentences

Other comprehensive income

BALANCE AS OF JUNE 30, 2020

Three Months Ended June 30, 2019

BALANCE AS OF SEPTEMBER 30, 2020

Three Months Ended September 30, 2019

Comprehensive Loss

Stockholders’

BALANCE AS OF MARCH 31, 2019

BALANCE AS OF JUNE 30, 2019

Share-based compensation expense

2 unchanged sentences

Other comprehensive income

BALANCE AS OF JUNE 30, 2019

Six Months Ended June 30, 2019

BALANCE AS OF SPETEMBER 30, 2019

Nine Months Ended September 30, 2019

Comprehensive Loss

5 unchanged sentences

Other comprehensive income

BALANCE AS OF JUNE 30, 2019

BALANCE AS OF SPETEMBER 30, 2019

See accompanying notes to condensed consolidated financial statements.

48 unchanged sentences

Cash equivalents consist of highly liquid investments, readily convertible to cash, that mature within ninety days or less from the date of purchase.

As of June 30, 2020 , our cash equivalents consisted of money market funds.

As of September 30, 2020 , our cash equivalents consisted of money market funds.

Marketable securities are investments with original maturities of more than ninety days from the date of purchase that are specifically identified to fund current operations.

7 unchanged sentences

Under the terms of the leases of our facilities, we are required to maintain letters of credit as security deposits during the terms of such leases.

At June 30, 2020 and December 31, 2019 , restricted cash of $ 0.5 million was pledged as collateral for the letters of credit.

At September 30, 2020 and December 31, 2019 , restricted cash of $ 0.5 million was pledged as collateral for the letters of credit.

Fair Value of Financial Instruments

18 unchanged sentences

We evaluate the carrying value of inventories on a regular basis, taking into account such factors as historical and anticipated future sales compared to quantities on hand, the price we expect to obtain for products in their respective markets compared with historical cost and the remaining shelf life of goods on hand.

As of June 30, 2020 , and December 31, 2019 , inventories consisted of $ 1.7 million and $ 1.4 million , respectively, of Hylenex inventory, net and $ 46.6 million and $ 28.0 million , respectively, of bulk rHuPH20.

As of September 30, 2020 , and December 31, 2019 , inventories consisted of $ 1.6 million and $ 1.4 million , respectively, of Hylenex inventory, net and $ 56.1 million and $ 28.0 million , respectively, of bulk rHuPH20, consistent with our plan to build inventory to meet future customer demand.

The Company has entered into operating leases primarily for real estate and automobiles.

27 unchanged sentences

While these collaboration agreements are similar in that they originate from the same framework, each one is the result of an arms-length negotiation and thus may vary from one to the other.

We collect an upfront license payment from the collaboration partner and are also entitled to receive event-based payments subject to the collaboration partner’s achievement of specified development, regulatory and sales-based milestones.

We collect an upfront license payment from collaboration partners and are also entitled to receive event-based payments subject to collaboration partners’ achievement of specified development, regulatory and sales-based milestones.

In several agreements, collaboration partners pay us annual fees to maintain their exclusive license rights if they are unable to advance product development to specified stages.

We earn separate fees for bulk rHuPH20 supplies and research and development services.

In addition, the collaboration partner will pay us royalties at an on average mid-single digit percent rate of their sales if products under the collaboration are commercialized.

In addition, collaboration partners will pay us royalties at an on average mid-single digit percent rate of their sales if products under the collaboration are commercialized.

All amounts owed to us are noncancelable after the underlying triggering event occurs, and nonrefundable once paid.

Unless terminated earlier in accordance with its terms, the collaboration generally continues in effect until the later of:

(i) expiration of the last to expire of the valid claims of our patents covering rHuPH20 or other specified patents developed under the collaboration which valid claim covers a product developed under the collaboration, and (ii) expiration of the last to expire royalty term for a product developed under the collaboration, which is determined separately for each country.

In the event such valid claims expire prior to the end of the applicable royalty term, the royalty rate is reduced for the remainder of such royalty term.

The collaboration partner may terminate the agreement prior to expiration for any reason in its entirety or on a target-by-target basis generally upon 90 days prior written notice to us.

Upon any such termination, the license granted to the collaboration partner (in total or with respect to the terminated target, as applicable) will terminate provided, however, that in the event of expiration of the agreement (as opposed to a termination), the on-going licenses granted will become perpetual, non-exclusive and fully paid.

Although these agreements are in form structured as collaborative agreements, we concluded for accounting purposes they represent contracts with customers and are not subject to accounting literature on collaborative arrangements.

Unless terminated earlier in accordance with its terms, collaborations generally continue in effect until the last to expire royalty payment term, as determined on a product by product and on a country by country basis, with each royalty term starting on the first commercial sale of that product and ending the later of:

(i) a specified period or term set forth in the agreement or (ii) expiration of the last to expire of the valid claims of our patents covering rHuPH20 or other specified patents developed under the collaboration which valid claim covers a product developed under the collaboration.

When there are no valid claims during the applicable royalty term in a given country, the royalty rate is reduced for those sales.

Collaboration partners may terminate the agreement prior to expiration for any reason in its entirety or on a target-by-target basis generally upon 90 days prior written notice to us.

Upon any such termination, the license granted to collaboration partners (in total or with respect to the terminated target, as applicable) will terminate provided, however, that in the event of expiration of the agreement (as opposed to a termination), the on-going licenses granted will become perpetual, non-exclusive and fully paid.

Although these agreements are in form identified as collaborative agreements, we concluded for accounting purposes they represent contracts with customers and are not subject to accounting literature on collaborative arrangements.

This is because we grant to collaboration partners licenses to our intellectual property and provide supply of bulk rHuPH20 and research and development services which are all outputs of our ongoing activities, in exchange for consideration.

We do not develop assets jointly with collaboration partners, and do not share in significant risks of their development or commercialization activities.

Accordingly, we concluded our collaborative agreements must be accounted for pursuant to ASC Topic 606, Revenue from Contracts with Customers.

Under these collaborative agreements, we do not develop assets jointly with collaboration partners, and do not share in significant risks of their development or commercialization activities.

Accordingly, we concluded our collaborative agreements are appropriately accounted for pursuant to ASC Topic 606, Revenue from Contracts with Customers.

Under all of our collaborative agreements, we have identified licenses to use functional intellectual property as the only performance obligation.

The intellectual property underlying the license is our proprietary ENHANZE technology which represents application of rHuPH20 to facilitate delivery of drugs or fluids.

The license grants the collaboration partners right to use our intellectual property as it exists on the effective date of the license, because there is no ongoing development of the ENHANZE technology required.

Each of the licenses grants the collaboration partners rights to use our intellectual property as it exists and is identified on the effective date of the license, because there is no ongoing development of the ENHANZE technology required.

Therefore, we recognize revenue from licenses at the point when the license becomes effective and the collaboration partner has received access to our intellectual property, usually at the inception of the agreement.

4 unchanged sentences

When these amounts in aggregate are not offered at a discount that exceeds discounts available to other customers, we conclude the option does not contain a material right, and we consider grants of additional licensing rights upon option exercises to be separate contracts (target selection contracts).

We provide standard indemnification and protection of licensed intellectual property for our customers.

We provide customary indemnification and protection of licensed intellectual property for our customers.

These provisions are part of assurance that the licenses meet the agreements’ representations and are not obligations to provide goods or services.

10 unchanged sentences

dosing of a first patient in a clinical trial, achievement could be considered probable prior to its actual occurrence, based on the progress towards commencement of the trial.

In order to evaluate progress towards commencement of a trial, we assess the status of activities leading up to our collaboration partner’s initiation of a trial such as feedback received from the FDA (if applicable), completion of IND filings, readiness and availability of drug, readiness of study sites and our collaboration partner’s commitment of resources to the program.

We do not include any amounts subject to uncertainties into the transaction price until it is probable that the amount will not result in a significant reversal of revenue in the future.

17 unchanged sentences

We do not receive final royalty reports from our collaboration partners until after we complete our financial statements for a prior quarter.

Therefore, we recognize revenue based on estimates of the royalty earned, which are based on preliminary reports provided by our collaboration partners.

Therefore, we recognize revenue based on estimates of the royalty earned, which are based on internal estimates and available preliminary reports provided by our collaboration partners.

We will record a true-up in the following quarter if necessary, when final royalty reports are received.

100 unchanged sentences

Outstanding stock options, unvested RSAs, unvested RSUs, unvested PSUs and the Convertible Notes are considered common stock equivalents and are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive.

For the three and six months ended June 30, 2020 and 2019 , approximately 6.7 million and 15.7 million shares, respectively, of outstanding stock options, unvested RSAs, unvested RSUs, unvested PSUs and the Convertible Notes were excluded from the calculation of diluted net (loss) income per common share because their effect was anti-dilutive.

For the three and nine months ended September 30, 2020 and 2019 , approximately 3.6 million and 15.0 million shares, respectively, of outstanding stock options, unvested RSAs, unvested RSUs, unvested PSUs and the Convertible Notes were excluded from the calculation of diluted net (loss) income per common share because their effect was anti-dilutive.

The 19.3 million shares underlying the conversion option of the Convertible Notes does not have an impact on our diluted earnings per share when net income is reported when the average market price of our common stock is less than the conversion price of $ 23.85 per share, as we intend and have the ability to settle the principal amount of the Convertible Notes in cash upon conversion.

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Net income (loss)

Weighted average common shares outstanding for basic

net (loss) income per share

Weighted average common shares outstanding for basic net income (loss) per share

Net effect of dilutive common stock equivalents

Weighted average common shares outstanding for diluted

net (loss) income per share

Weighted average common shares outstanding for diluted net income (loss) per share

Net income (loss) per share:

8 unchanged sentences

Statements or Other Significant Matters

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40)

The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

January 1, 2022

(Early adoption permitted effective January 1, 2021)

We are currently evaluating the effect the updated standard will have on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820).

17 unchanged sentences

Available-for-sale marketable securities consisted of the following (in thousands):

June 30, 2020

September 30, 2020

Amortized Cost

15 unchanged sentences

Commercial paper

As of June 30, 2020 , none of our available-for-sale marketable securities were in a gross unrealized loss position.

As of September 30, 2020 , 3 available-for-sale marketable securities with a fair market value of $ 27.4 million were in a gross unrealized loss position of $ 5 thousand .

Based on our review of these marketable securities, we believe none of the unrealized loss is as a result of a credit loss as of September 30, 2020 , because we do not intend to sell these securities and it is not more-likely-than-not that we will be required to sell these securities before the recovery of their amortized cost basis.

Contractual maturities of available-for-sale debt securities are as follows (in thousands):

June 30, 2020

September 30, 2020

December 31, 2019

3 unchanged sentences

The following table summarizes, by major security type, our cash equivalents and available-for-sale marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in thousands):

June 30, 2020

September 30, 2020

December 31, 2019

8 unchanged sentences

Commercial paper

We had no instruments that were classified within Level 3 as of June 30, 2020 and December 31, 2019 .

We had no instruments that were classified within Level 3 as of September 30, 2020 and December 31, 2019 .

Our disaggregated revenues were as follows (in thousands):

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Product sales, net

9 unchanged sentences

Total revenue

During the three months ended June 30, 2020 we recognized revenue related to licenses granted to collaboration partners in prior periods in the amount of $ 40.8 million .

During the three months ended September 30, 2020 we recognized revenue related to licenses granted to collaboration partners in prior periods in the amount of $ 55.9 million .

This amount represents royalties earned in the current period in addition to $ 32.0 million of variable consideration in the contracts where uncertainties have been resolved and the development milestones were expected to be achieved or were achieved.

We recognized revenue of $ 3.3 million during the three months ended June 30, 2020 that had been included in deferred revenues at December 31, 2019 .

During the six months ended June 30, 2020 we recognized revenue related to licenses granted to collaboration partners in prior periods in the amount of $ 57.7 million .

There was no revenue recognized during the three months ended September 30, 2020 that had been included in deferred revenues at December 31, 2019 .

During the nine months ended September 30, 2020 we recognized revenue related to licenses granted to collaboration partners in prior periods in the amount of $ 114.1 million .

This amount represents royalties earned in the current period in addition to $ 57.5 million of variable consideration in the contracts where uncertainties have been resolved and the development milestones were expected to be achieved or were achieved.

We recognized revenue of $ 3.9 million during the six months ended June 30, 2020 that had been included in deferred revenues at December 31, 2019 .

We recognized revenue of $ 3.9 million during the nine months ended September 30, 2020 that had been included in deferred revenues at December 31, 2019 .

We did not recognize any adjustments to reduce sales reserves and allowances liability related to Hylenex recombinant sales in prior periods.

Accounts receivable, net, and deferred revenues (contract liabilities) from contracts with customers, including collaboration partners, consisted of the following (in thousands):

June 30, 2020

September 30, 2020

December 31, 2019

Accounts receivable, net

Other contract assets

Deferred revenues

As of June 30, 2020 , the amounts included in the transaction price of our contracts with customers, including collaboration partners, and allocated to goods and services not yet provided were $ 8.0 million , of which $ 6.6 million relates to unfulfilled product purchase orders and $ 1.4 million has been collected and is reported as deferred revenues.

As of September 30, 2020 , the amounts included in the transaction price of our contracts with customers, including collaboration partners, and allocated to goods and services not yet provided were $ 15.1 million , of which $ 13.7 million relates to unfulfilled product purchase orders and $ 1.4 million has been collected and is reported as deferred revenues.

The unfulfilled product purchase orders are estimated to be delivered during the remainder of 2020.

Of the total deferred revenues of $ 1.4 million , $ 0.7 million is expected to be used by our customers within the next 12 months.

There were no contract assets related to collaborative agreements at June 30, 2020 .

While we may become entitled to receive additional event-based development and regulatory milestones and other fees under our collaborative agreements, which relate to intellectual property licenses granted to collaboration partners in prior periods, no amounts were probable.

We recognized contract assets of $ 32.0 million at September 30, 2020 , which relate to development milestones deemed probable of receipt for intellectual property licenses granted to collaboration partners in prior periods.

The following table presents amounts under our collaborative agreements included in the transaction price (i.e.

cumulative amounts triggered or probable) as of June 30, 2020 (in thousands):

cumulative amounts triggered or probable) as of September 30, 2020 (in thousands):

Collaboration partner and agreement date:

12 unchanged sentences

Sales-based milestone amounts

Through June 30, 2020 , our collaboration partners have completed development, obtained marketing authorization approvals for certain indications and commenced commercialization of the following products:

Roche, for Herceptin SC (trastuzumab) in the European Union (“EU”) in August 2013;

and MabThera SC (rituximab)

in the EU in March 2014 and its equivalent RITUXAN HYCELA (rituximab/hyaluronidase human) i n the US in June 2017;

Herceptin SC in Canada in September 2018;

Herceptin Hylecta (trastuzumab and hyaluronidase-oysk) in the US in February 2019;

Through September 30, 2020 , our collaboration partners have completed development, obtained marketing authorization approvals for certain indications and commenced commercialization of the following products:

Janssen, for DARZALEX FASPRO™ (daratumumab hyaluronidase human-fihj) in US in May 2020 and subsequently in other regions.

Roche, for Herceptin SC (trastuzumab) in the EU in August 2013 and subsequently in other regions;

MabThera SC (rituximab) in the EU in March 2014 and subsequently in other regions;

and Phesgo™ (pertuzumab/trastuzumab/hyaluronidase-zzxf) in the US in June 2020.

Baxalta, for HYQVIA (Immune Globulin Infusion 10% (Human) with Recombinant Human Hyaluronidase) in the EU and in the US in May 2013.

Janssen, for DARZALEX FASPRO™ (daratumumab hyaluronidase human-fihj) in US in May 2020 and Darzalex in the EU in June 2020.

The remaining targets and products are currently in the process of development by the collaboration partners.

1 unchanged sentence

Accounts receivable, net consisted of the following (in thousands):

September 30,

Accounts receivable from product sales to collaborators

2 unchanged sentences

Accounts receivable from other product sales

Other contract assets

Allowance for distribution fees and discounts

1 unchanged sentence

Inventories consisted of the following (in thousands):

September 30,

Raw materials

3 unchanged sentences

Prepaid expenses and other assets consisted of the following (in thousands):

September 30,

Prepaid manufacturing expenses

7 unchanged sentences

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

September 30,

Research equipment

5 unchanged sentences

Property and equipment, net

Depreciation and amortization expense was approximately $ 0.8 million and $ 1.0 million , inclusive of ROU asset amortization of $ 0.4 million and $ 0.4 million for the three months ended June 30, 2020 and 2019 respectively.

Depreciation and amortization expense was approximately $ 1.7 million and $ 2.0 million , inclusive of ROU asset amortization of $ 0.9 million and $ 0.8 million for the six months ended June 30, 2020 and 2019 respectively.

Depreciation and amortization expense was approximately $ 0.8 million and $ 1.0 million , inclusive of ROU asset amortization of $ 0.4 million and $ 0.5 million for the three months ended September 30, 2020 and 2019 respectively.

Depreciation and amortization expense was approximately $ 2.5 million and $ 3.0 million , inclusive of ROU asset amortization of $ 1.3 million and $ 1.3 million for the nine months ended September 30, 2020 and 2019 respectively.

Accrued expenses consisted of the following (in thousands):

September 30,

Accrued outsourced research and development expenses

6 unchanged sentences

Total accrued expenses, current

Expense associated with the accretion of the lease liabilities was approximately $ 0.2 million and $ 0.2 million for the three months ended June 30, 2020 and 2019 respectively.

Total lease expense for the three months ended June 30, 2020 and 2019 was $ 0.6 million and $ 0.7 million respectively.

Expense associated with the accretion of the lease liabilities was approximately $ 0.3 million and $ 0.4 million for the six months ended June 30, 2020 and 2019 , respectively.

Total lease expense for the six months ended June 30, 2020 and 2019 , $ 1.2 million and $ 1.3 million respectively.

Cash paid for amounts related to leases for the three months ended June 30, 2020 and 2019 was $ 0.9 million and $ 0.8 million , and $ 1.7 million and $ 1.5 million for the six months ended June 30, 2020 and 2019 respectively.

Expense associated with the accretion of the lease liabilities was approximately $ 0.1 million and $ 0.2 million for the three months ended September 30, 2020 and 2019 respectively.

Total lease expense for the three months ended September 30, 2020 and 2019 was $ 0.5 million and $ 0.7 million respectively.

Expense associated with the accretion of the lease liabilities was approximately $ 0.4 million and $ 0.6 million for the nine months ended September 30, 2020 and 2019 , respectively.

Total lease expense for the nine months ended September 30, 2020 and 2019 , $ 1.7 million and $ 2.0 million respectively.

Cash paid for amounts related to leases for the three months ended September 30, 2020 and 2019 was $ 0.8 million and $ 0.8 million , and $ 2.5 million and $ 2.3 million for the nine months ended September 30, 2020 and 2019 respectively.

Deferred revenue consisted of the following (in thousands):

September 30,

Collaborative agreements

28 unchanged sentences

In connection with the Convertible Notes, we paid the initial purchasers of the Convertible Notes a fee of $ 12.7 million and incurred additional debt issuance costs totaling $ 0.3 million , which includes expenses that we paid on behalf of the initial purchasers and expenses incurred directly by us.

Debt issuance costs, the initial purchasers’ fee and the equity component is presented as a debt discount as of June 30, 2020 in the amount of $ 69.9 million , and will be amortized over the remaining estimated term of 4.3 years using the effective interest method, utilizing an effective interest rate of 5.10 % .

The net carrying amount of the debt as of June 30, 2020 is $ 390.1 million .

The fair value of the Convertible Notes, which was estimated using trading levels obtained from third-party service provider (Level 2), was $ 585.8 million at June 30, 2020 and $ 461.1 million at December 31, 2019 .

For the three months ended June 30, 2020 , we recognized interest expense of $ 4.9 million , including contractual coupon interest of $ 1.4 million and amortization of the debt discount of $ 3.5 million .

For the six months ended June 30, 2020 , we recognized interest expense of $ 9.9 million , including contractual coupon interest of $ 2.9 million and amortization of the debt discount of $ 7.0 million .

As of June 30, 2020 , we were in compliance with all covenants under the Indenture and there was no material adverse change in our business, operations or financial condition.

Debt issuance costs, the initial purchasers’ fee and the equity component is presented as a debt discount as of September 30, 2020 in the amount of $ 66.4 million , and will be amortized over the remaining estimated term of 4.1 years using the effective interest method, utilizing an effective interest rate of 5.10 % .

The net carrying amount of the debt as of September 30, 2020 is $ 393.6 million .

The fair value of the Convertible Notes, which was estimated using trading levels

obtained from third-party service provider (Level 2), was $ 591.0 million at September 30, 2020 and $ 461.1 million at December 31, 2019 .

For the three months ended September 30, 2020 , we recognized interest expense of $ 4.9 million , including contractual coupon interest of $ 1.4 million and amortization of the debt discount of $ 3.5 million .

For the nine months ended September 30, 2020 , we recognized interest expense of $ 14.8 million , including contractual coupon interest of $ 4.3 million and amortization of the debt discount of $ 10.5 million .

As of September 30, 2020 , we were in compliance with all covenants under the Indenture and there was no material adverse change in our business, operations or financial condition.

Royalty-backed Loan

17 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

3 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Stock options

RSAs, RSUs and PSUs

We granted stock options to purchase approximately 0.1 million and 0.7 million shares of common stock during the three months ended June 30, 2020 and 2019 , respectively, and $ 1.4 million and $ 2.9 million shares of common stock during the six months ended June 30, 2020 and 2019 , respectively.

We granted stock options to purchase approximately 34.7 thousand and 0.1 million shares of common stock during the three months ended September 30, 2020 and 2019 , respectively, and $ 1.5 million and $ 3.0 million shares of common stock during the six months ended September 30, 2020 and 2019 , respectively.

The exercise price of stock options granted is equal to the closing price of the common stock on the date of grant.

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Expected volatility

3 unchanged sentences

Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized (in thousands, unless otherwise noted):

June 30, 2020

September 30, 2020

Weighted-Average

2 unchanged sentences

Stockholders’ Equity

During the six months ended June 30, 2020 and 2019 , we issued an aggregate of 3,124,650 and 556,323 shares of common stock, respectively, in connection with the exercises of stock options at a weighted average exercise price of $ 13.08 and $ 11.10 per share, respectively, for net proceeds of approximately $ 40.9 million and $ 6.2 million , respectively.

For the six months ended June 30, 2020 and 2019 , we issued 564,841 and 496,850 shares of common stock, respectively, upon vesting of certain RSUs for which 140,525 and 131,315 RSUs were withheld from the RSU holders, respectively, to pay for minimum withholding taxes totaling approximately $ 5.4 million and $ 2.1 million , respectively.

Stock options and unvested restricted units totaling approximately 8.3 million shares and 13.6 million shares of our common stock were outstanding as of June 30, 2020 and December 31, 2019 , respectively.

During the nine months ended September 30, 2020 and 2019 , we issued an aggregate of 3,952,311 and 757,275 shares of common stock, respectively, in connection with the exercises of stock options at a weighted average exercise price of $ 13.54 and $ 10.94 per share, respectively, for net proceeds of approximately $ 53.5 million and $ 8.3 million , respectively.

For the nine months ended September 30, 2020 and 2019 , we issued 569,701 and 899,737 shares of common stock, respectively, upon vesting of certain RSUs for which 142,905 and 133,476 RSUs were withheld from the RSU holders, respectively, to pay for minimum withholding taxes totaling approximately $ 5.4 million and $ 2.2 million , respectively.

Stock options and unvested restricted units totaling approximately 7.4 million shares and 13.6 million shares of our common stock were outstanding as of September 30, 2020 and December 31, 2019 , respectively.

Share Repurchases

14 unchanged sentences

Second quarter

Third quarter

(1) This is in addition to 0.5 million shares delivered in February upon completion of the ASR.

7 unchanged sentences

Our commitments include payments related to our commenced operating leases.

Approximate annual future minimum operating lease payments as of June 30, 2020 are as follows (in thousands;

excluding the six months ended June 30, 2020 ):

Approximate annual future minimum operating lease payments as of September 30, 2020 are as follows (in thousands;

excluding the nine months ended September 30, 2020 ):

Total minimum lease payments

2 unchanged sentences

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