What changed in this filing

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Item 1. Financial Statements

2020-08-10 compared with 2020-05-11 · 86 added, 48 removed, 266 unchanged (34% of the section changed)

25 unchanged sentences

Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized;

0 shares issued and outstanding at March 31, 2020 and

0 shares issued and outstanding at June 30, 2020 and

December 31, 2019

Common stock, $ 0.0001 par value, 490,000,000 shares authorized at

March 31, 2020 and December 31, 2019;

June 30, 2020 and December 31, 2019;

44,667,016 and 44,413,404

shares issued and outstanding at March 31, 2020 and

shares issued and outstanding at June 30, 2020 and

December 31, 2019, respectively

9 unchanged sentences

Three Months Ended

Six Months Ended

Operating expenses

26 unchanged sentences

Balances at March 31, 2020

Issuance of common stock upon

exercise of stock options

Issuance of common stock upon

vesting of restricted stock units,

net of taxes withheld

Stock-based compensation

Other comprehensive income

Balances at June 30, 2020

Comprehensive

6 unchanged sentences

Balances at March 31, 2019

Issuance of common stock upon

exercise of stock options

Stock-based compensation

Other comprehensive income

Balances at June 30, 2019

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

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

17 unchanged sentences

Proceeds from issuance of common stock upon options exercise

Payments for restricted stock units, net of taxes withheld

Proceeds from sale of future royalties, net of issuance costs

17 unchanged sentences

Kodiak Sciences Inc.

(the “Company”) is a clinical stage biopharmaceutical company specializing in novel therapeutics to treat chronic, high-prevalence retinal diseases.

The Company devotes substantially all of its time and efforts to performing research and development, raising capital and recruiting personnel.

As of March 31, 2020, the Company had cash, cash equivalents and marketable securities of $430.4 million.

(the “Company”) is a biopharmaceutical company committed to researching, developing and commercializing transformative therapeutics to treat high prevalence retinal diseases in the United States and additional international markets.

The Company devotes substantially all of its resources to the research and development of its product candidates including activities to conduct clinical studies of its product candidates, manufacture product candidates and provide general and administrative support for these operations.

As of June 30, 2020, the Company had cash, cash equivalents and marketable securities of $ 417.1 million.

Although the Company has incurred significant operating losses since inception and expects to continue to incur operating losses and negative operating cash flows for the foreseeable future, the Company believes that the cash, cash equivalents and marketable securities will be sufficient to meet the anticipated operating and capital expenditure requirements for the 12 months following the date of this Form 10-Q.

13 unchanged sentences

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and expenses during the reporting period.

The impact of COVID-19 continues to evolve.

As a result, certain estimates and assumptions required increased judgment and carried a higher degree of variability and volatility, including but not limited to, the fair value of marketable securities, performance-based equity awards, and research and development accruals for the quarter ended March 31, 2020.

The impact of the ongoing COVID-19 pandemic continues to evolve.

As events continue to unfold and additional information becomes available, these estimates may change materially in future periods.

Actual results could differ from those estimates.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Risks and Uncertainties

In March 2020, the World Health Organization declared a pandemic due to the global COVID-19 outbreak.

The significant uncertainties caused by COVID-19 may negatively impact the Company’s operations, liquidity, and capital resources, and will depend on certain developments, including the duration and spread of the outbreak, regulatory and private sector responses and the impact on employees and vendors including supply chain and clinical partners, all of which are uncertain and cannot be predicted.

The significant uncertainties caused by the ongoing COVID-19 pandemic may negatively impact the Company’s operations, liquidity, and capital resources, and will depend on certain evolving developments, including the duration and spread of the outbreak, regulatory and private sector responses and the impact on employees and vendors including supply chain and clinical partners, all of which are uncertain and cannot be predicted.

During this pandemic, the Company continues to work closely with clinical sites towards maximal patient safety and the lowest number of missed visits and study discontinuations.

The Company has taken and continues to take proactive measures to maintain the integrity of its ongoing clinical studies.

Despite these efforts, the COVID-19 pandemic could significantly impact clinical trial enrollment and completion of its clinical studies.

Despite these efforts, the ongoing COVID-19 pandemic could significantly impact clinical trial enrollment and completion of its clinical studies.

The Company will continue to monitor the COVID-19 situation and its impact on the ability to continue the development of, and seek regulatory approvals for, the Company’s product candidates, and begin to commercialize any approved products.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Summary of Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2020 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except as noted below with respect to the Company’s liability related to sale of future royalties and as noted within the “Recent Accounting Pronouncements – Recently Adopted Accounting Pronouncements” section.

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2020 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, except as noted below with respect to the Company’s liability related to sale of future royalties and as noted within the “Recent Accounting Pronouncements – Recently Adopted Accounting Pronouncements” section.

Liability related to Sale of Future Royalties

17 unchanged sentences

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) , under its ASC or other standard setting bodies, and adopted by the Company as of the specified effective date, unless otherwise discussed below.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Recently Adopted Accounting Pronouncements

6 unchanged sentences

The Company adopted this new guidance as of January 1, 2020, which did not impact its consolidated financial statements and related disclosures.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs I ncurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation, set-up, and other upfront costs incurred in cloud computing arrangements.

The Company adopted this new guidance as of January 1, 2020, w hich did not impact its consolidated financial statements and related disclosures.

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which clarifies the accounting for implementation, set-up, and other upfront costs incurred in cloud computing arrangements.

The Company adopted this new guidance as of January 1, 2020, which did not impact its consolidated financial statements and related disclosures.

New Accounting Pronouncements Not Yet Adopted

12 unchanged sentences

Total accrued and other current liabilities

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Fair Value Measurements

The following tables present the Company’s fair value hierarchy for assets measured at fair value on a recurring basis (in thousands):

Fair Value Measurements at March 31, 2020

Fair Value Measurements at June 30, 2020

Cash equivalents:

13 unchanged sentences

Corporate notes

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Marketable Securities

The marketable securities are classified as available-for-sale and consist of U.S.

treasury securities, corporate notes and commercial paper.

treasury securities, commercial paper and corporate notes.

The fair value measurement data for marketable securities is obtained from independent pricing services.

The Company validates the prices provided by the third-party pricing services by understanding the valuation methods and data sources used and analyzing the pricing data in certain instances.

The following table summarizes the marketable securities held at March 31, 2020 and December 31, 2019 (in thousands):

As of March 31, 2020

The following table summarizes the marketable securities held at June 30, 2020 and December 31, 2019 (in thousands):

As of June 30, 2020

treasury securities

2 unchanged sentences

Total marketable securities, current

Corporate notes

Total marketable securities, noncurrent

As of December 31, 2019

5 unchanged sentences

Total marketable securities, noncurrent

All marketable securities held at March 31, 2020 and December 31, 2019 had contractual maturities of less than 18 months.

There were no realized gains or losses recognized on the sale or maturity of available-for-sale debt securities during the three months ended March 31, 2020 and 2019, respectively, and as a result, the Company did not reclassify any amounts out of accumulated comprehensive loss.

As of March 31, 2020 and December 31, 2019, the Company had no allowance for credit losses for available-for-sale debt securities.

There were no impairment charges or recoveries recorded during each of the three months ended March 31, 2020 and 2019.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

All marketable securities held at June 30, 2020 and December 31, 2019 had contractual maturities of less than 18 months .

There were no realized gains or losses recognized on the sale or maturity of available-for-sale debt securities during the three and six months ended June 30, 2020 and 2019, respectively, and as a result, the Company did not reclassify any amounts out of accumulated comprehensive loss.

As of June 30, 2020 and December 31, 2019, the Company had no allowance for credit losses for available-for-sale debt securities.

There were no impairment charges or recoveries recorded during each of the three and six months ended June 30, 2020 and 2019.

Commitments and Contingencies

As of June 30, 2020, the Company has a lease agreement for office and laboratory space at 2631 Hanover Street in Palo Alto, California through October 2023.

In April 2020, the Company entered into a lease agreement for office and laboratory space at Rottenstrasse 5 in Visp, Switzerland.

The space is approximately 1,000 square meters.

The monthly rent during the initial 5-year term will be approximately 0.03 million Swiss Francs.

In June 2020, the Company entered into lease agreements for two buildings at 1200 and 1250 Page Mill Road in Palo Alto, California, which are expected to serve as its corporate headquarters.

The facilities are approximately 82,662 square feet and 72,812 square feet, respectively, and includes office and laboratory space.

For 1200 Page Mill Road, the monthly rent during the initial 6.5-year term will be approximately $ 0.6 million, with annual year-over-year increases of 3 % and total rent abatement of approximately $ 7.2 million.

For 1250 Page Mill Road, the monthly rent during the initial 13-year term will be approximately $ 0.5 million, with annual year-over-year increases of 3 % and total rent abatement of approximately $ 6.3 million.

As of June 30, 2020, the Company did not have control of these spaces at Rottenstrasse 5 and 1200 and 1250 Page Mill Road and therefore, did no t record right-of-use assets and corresponding lease liabilities.

These commitments are not included in the below table.

The maturities of the operating lease liabilities as of June 30, 2020 were as follows (in thousands):

Year ending December 31,

June 30, 2020

Total undiscounted lease payments

imputed interest

Total operating lease liabilities

Other Commitments and Contingencies

The Company has entered into service agreements with a variety of service providers, pursuant to which such service providers agreed to perform activities in connection with the manufacturing of certain materials.

2 unchanged sentences

The level of cancellation fees may be dependent on the timing of the written notice in relation to the commencement date of the work, with the maximum cancellation amount dependent on the agreement or the work order.

As of March 31, 2020 and December 31, 2019, the total amount of cancelable and/or non-cancelable purchase obligations, including accrued amounts, under these agreements were $29.8 million and $4.7 million, respectively.

Expense recognized under these agreements during the period, including amounts paid and accrued, for the three months ended March 31, 2020 and 2019 were $4.1 million and $1.0 million, respectively.

As of March 31, 2020, the Company had not incurred any cancellation fees.

As of June 30, 2020 and December 31, 2019, the total amount of cancelable and/or non-cancelable purchase obligations, including accrued amounts, under these agreements were $ 38.6 million and $ 4.7 million, respectively.

Expense recognized under these agreements during the period, including amounts paid and accrued, for the three and six months ended June 30, 2020 were $ 3.5 million and $ 7.6 million, respectively, and for the three and six months ended June 30, 2019 were $ 2.4 million and $ 3.4 million, respectively.

As of June 30, 2020, the Company had no t incurred any cancellation fees.

The Company has also entered into various cancellable license agreements for certain technology.

1 unchanged sentence

Such payments are dependent on future product sales and are not estimable.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Legal Proceedings

3 unchanged sentences

Significant judgment by the Company is required to determine both probability and the estimated amount.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Indemnification

13 unchanged sentences

The remaining $ 125.0 million shall be payable to the Company upon enrollment of 50 % of the patients in the planned RVO clinical program.

The Company recorded the initial $100.0 million payment as a liability on the consolidated balance sheet net of issuance costs as of March 31, 2020 , in accordance with ASC 730, Research and Development .

The Company recorded the initial $ 100.0 million payment as a liability on the consolidated balance sheet net of issuance costs , in accordance with ASC 730, Research and Development .

Under ASC 730, the significant related party relationship between the Company and BBA creates an implicit obligation to repay the funding amount paid to the Company.

3 unchanged sentences

In January 2020 and 2019, the number of shares of common stock available for issuance under the 2018 Equity Incentive Plan was increased by approximately by 1.8 million and 1.5 million shares, respectively, as a result of the automatic increase provision in the 2018 Plan.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Stock Options

Stock option activity under the 2018 Plan and 2015 Equity Incentive Plan is summarized as follows (in thousands, except share and per share data).

Stock option activity under the 2018 Plan and 2015 Equity Incentive Plan is summarized as follows:

(in thousands)

Outstanding at December 31, 2019

Forfeited or canceled

Outstanding at March 31, 2020

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Restricted S hares

Restricted share activity, including restricted stock awards, restricted stock units, and performance-based restricted stock units, under the 2018 Plan and 2015 Plan is summarized as follows (in thousands, except shares and per share data):

Outstanding at June 30, 2020

Restricted Shares

Restricted share activity, including restricted stock awards, restricted stock units, and performance-based restricted stock units, under the 2018 Plan and 2015 Plan is summarized as follows:

Unvested at December 31, 2019

Unvested at March 31, 2020

Shares withheld related to net share settlement of RSUs

Unvested at June 30, 2020

Performance-Based Stock Options and Restricted Stock Units

4 unchanged sentences

None of these performance-based equity awards vested during 2019.

The Company believes that the achievement of the requisite performance condition continues to be probable and stock-based compensation expense recognized was $1.8 million and none during the three months ended March 31, 2020 and 2019, respectively.

The Company believes that the achievement of the requisite performance condition continues to be probable.

Stock-based compensation expense recognized was $ 1.8 million and $ 3.6 million during the three and six months ended June 30, 2020, respectively, and none during the three and six months ended June 30, 2019, respectively.

Stock-Based Compensation Expense

Stock-based compensation is classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended March 31,

Stock-based compensation for options and restricted shares is classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended

Six Months Ended

Research and development

1 unchanged sentence

Total stock-based compensation

As of March 31, 2020, the unrecognized stock-based compensation of unvested stock options, restricted stock units, and performance-based options and restricted stock units was $70.7 million and it is expected to be recognized over a weighted-average period of 2.96 years.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

As of June 30, 2020, the unrecognized stock-based compensation of unvested stock options, restricted stock units, and performance-based options and restricted stock units was $ 103.0 million and it is expected to be recognized over a weighted-average period of 3.48 years.

Net Loss per Common Share

The following common share equivalents were excluded from the computation of diluted net loss per common share for the periods presented because their inclusion would have been antidilutive:

As of March 31,

As of June 30,

Outstanding stock options

1 unchanged sentence

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