What changed in this filing

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Item 1. Financial Statements

2020-11-09 compared with 2020-08-10 · 83 added, 45 removed, 307 unchanged (29% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

20 unchanged sentences

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

0 shares issued and outstanding at June 30, 2020 and

0 shares issued and outstanding at September 30, 2020 and

December 31, 2019

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

June 30, 2020 and December 31, 2019;

September 30, 2020 and December 31, 2019;

44,760,513 and

shares issued and outstanding at June 30, 2020 and

December 31, 2019, respectively

44,413,404 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,

Operating expenses

9 unchanged sentences

computing net loss per common share, basic and diluted

Other comprehensive income

Other comprehensive income (loss)

Change in unrealized gains related to available-for-sale

debt securities, net of tax

Total other comprehensive income

Total other comprehensive income (loss)

Comprehensive loss

5 unchanged sentences

Stockholders’

Income (Loss)

Balances at December 31, 2019

12 unchanged sentences

Balances at June 30, 2020

Issuance of common stock upon

exercise of stock options

Stock-based compensation

Other comprehensive loss

Balances at September 30, 2020

Comprehensive

Stockholders’

Income (Loss)

Balances at December 31, 2018

9 unchanged sentences

Balances at June 30, 2019

Issuance of common stock upon

exercise of stock options

Issuance of common stock upon

exercise of common stock warrant

Stock-based compensation

Other comprehensive income

Balances at September 30, 2019

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

14 unchanged sentences

Maturities of marketable securities

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities

22 unchanged sentences

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.

As of September 30, 2020, the Company had cash, cash equivalents and marketable securities of $ 380.5 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.

14 unchanged sentences

The impact of the ongoing COVID-19 pandemic 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 three and six months ended June 30, 2020.

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

10 unchanged sentences

Summary of Significant Accounting Policies

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.

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and nine months ended September 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

38 unchanged sentences

Accrued and other current liabilities consist of the following (in thousands):

September 30,

Accrued research and development

Accrued salaries and benefits

Accrued legal fees

Accrued professional fees

Accrued legal fees

Accrued other liabilities

4 unchanged sentences

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 June 30, 2020

Fair Value Measurements at September 30, 2020

Cash equivalents:

18 unchanged sentences

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 June 30, 2020 and December 31, 2019 (in thousands):

As of June 30, 2020

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

As of September 30, 2020

treasury securities

11 unchanged sentences

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.

All marketable securities held at September 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 nine months ended September 30, 2020 and 2019, respectively, and as a result, the Company did not reclassify any amounts out of accumulated comprehensive loss.

As of September 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 nine months ended September 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.

Palo Alto, California Leases

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 now the Company’s U.S.

headquarters.

The facilities are approximately 82,662 square feet and 72,812 square feet, respectively and include 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 % plus certain operating expenses and taxes 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 % plus certain operating expenses and taxes and total rent abatement of approximately $ 6.3 million.

The Landlord will provide a tenant improvement allowance of approximately $ 1.2 million and $ 10.6 million for each building, respectively.

The Company executed a $ 10.9 million cash-collateralized letter of credit, which may be reduced in the future subject to the terms of the leases and certain reduction requirements specified therein.

The cash collateralizing the letter of credit is classified as restricted cash on the Company’s condensed consolidated balance sheets.

Under ASC 842, the Company classified these leases as operating leases and recorded right-of-use assets and lease liabilities on the lease commencement date.

The Company continues to lease office and laboratory space at 2631 Hanover Street in Palo Alto, California.

The Company entered into a lease agreement in January 2013 which was amended in March 2016 and extended the lease term until October 2023.

The Company classified this lease as an operating lease and recorded a right-of-use asset and lease liability on January 1, 2019 and recognized rent expense on a straight-line basis throughout the remaining lease term.

Switzerland Lease

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):

The monthly rent during the initial 5-year term will be approximately 0.03 million Swiss Francs plus certain operating expenses and taxes.

Under ASC 842, the Company classified these leases as operating leases and recorded right-of-use assets and lease liabilities on the lease commencement date.

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

Year ending December 31,

June 30, 2020

September 30, 2020

Total undiscounted lease payments

1 unchanged sentence

Total operating lease liabilities

Manufacturing Agreement

In August 2020, the Company and its subsidiary Kodiak Sciences GmbH entered into a manufacturing agreement with a contract manufacturing organization for the clinical and commercial supply of drug substance for KSI-301, the Company’s proprietary therapeutic candidate for the treatment and prevention of retinal vascular diseases.

A custom-built manufacturing suite is planned to be completed and dedicated to the manufacture of the Company’s drug substance with an estimated capital contribution of 40 million Swiss Francs from the Company.

Construction of the manufacturing suite is targeted for completion in 2021.

The Company will be required to pay annual suite fees of 12 million Swiss Francs for 2021 and 16 million Swiss Francs for each year thereafter, which covers the manufacturing fees for a specified number of batches, and the Company may pay for additional batches to be manufactured.

The manufacturing agreement has an initial term of eight years , and the Company has the right to extend the term up to a total of 16 years.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

The Company concluded that this agreement contains an embedded lease as the custom-built manufacturing suite will be dedicated for the Company’s use.

As of September 30, 2020, the Company did not have control of this manufacturing space and therefore, did no t record a right-of-use asset and corresponding lease liability.

These commitments are not included in the above table.

Other Commitments and Contingencies

3 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 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.

As of September 30, 2020 and December 31, 2019, the total amount of cancelable and/or non-cancelable purchase obligations, including accrued amounts, under these agreements were $ 221.1 million and $ 4.7 million, respectively.

Expense recognized under these agreements during the period, including amounts paid and accrued, for the three and nine months ended September 30, 2020 were $ 4.4 million and $ 12.0 million, respectively, and for the three and nine months ended September 30, 2019 were $ 2.7 million and $ 6.1 million, respectively.

As of September 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

22 unchanged sentences

If and when the Company makes royalty payments under the funding agreement, it would reduce the liability balance at such time.

Stock-Based Compensation

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-Based Compensation

Stock Options

3 unchanged sentences

Forfeited or canceled

Outstanding at June 30, 2020

Outstanding at September 30, 2020

Restricted Shares

2 unchanged sentences

Shares withheld related to net share settlement of RSUs

Unvested at June 30, 2020

Unvested at September 30, 2020

Performance-Based Stock Options and Restricted Stock Units

5 unchanged sentences

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 recognized was $ 1.8 million and $ 5.5 million during the three and nine months ended September 30, 2020, respectively, and none during the three and nine months ended September 30, 2019, respectively.

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

Stock-Based Compensation Expense

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Total stock-based compensation

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.

As of September 30, 2020, the unrecognized stock-based compensation of unvested stock options, restricted stock units, and performance-based options and restricted stock units was $ 90.4 million and it is expected to be recognized over a weighted-average period of 3.04 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 June 30,

As of September 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