Kura Oncology, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS KURA ONCOLOGY, INC. Condensed Balance Sheets (In thousands, except par value data) June 30, 2020 December 31, 2019 (Unaudited) Assets Current assets: Cash and cash equivalents $ 134,758 $ 26,135 Short-term investments 204,111 210,756 Prepaid expenses and other current assets 3,317 2,712 Total current assets 342,186 239,603 Property and equipment, net 1,652 44 Restricted cash 210 — Operating lease right-of-use assets 7,108 234 Other long-term assets 1,844 2,091 Total assets $ 353,000 $ 241,972 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 16,801 $ 15,314 Current portion of long-term debt, net 1,750 250 Total current liabilities 18,551 15,564 Long-term debt, net 5,750 7,250 Operating lease liabilities, long-term 6,019 — Other long-term liabilities 306 377 Total liabilities 30,626 23,191 Stockholders' equity: Preferred stock, $ 0.0001 par value; 10,000 shares authorized; no shares issued and outstanding — — Common stock, $ 0.0001 par value; 200,000 shares authorized; 56,214 and 45,384 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively 6 5 Additional paid-in capital 574,385 431,322 Accumulated other comprehensive income 557 331 Accumulated deficit ( 252,574 ) ( 212,877 ) Total stockholders' equity 322,374 218,781 Total liabilities and stockholders' equity $ 353,000 $ 241,972 See accompanying notes to unaudited condensed financial statements. 1 KURA ONCOLOGY, INC. Condensed Statements of Operations and Comprehensive Loss (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating Expenses: Research and development (includes related party amounts of $ 63 and $ 98 for the three months ended June 30, 2020 and 2019, respectively, and $ 195 and $ 151 for the six months ended June 30, 2020 and 2019, respectively) $ 13,697 $ 11,440 $ 26,272 $ 21,822 General and administrative (includes related party amounts of $ 76 and $ 88 for the three months ended June 30, 2020 and 2019, respectively, and $ 187 and $ 175 for the six months ended June 30, 2020 and 2019, respectively) 7,476 4,451 15,101 9,020 Total operating expenses 21,173 15,891 41,373 30,842 Other Income (Expense): Management fee income, related party 12 74 27 200 Interest income 818 1,022 1,937 2,052 Interest expense ( 144 ) ( 148 ) ( 288 ) ( 293 ) Total other income 686 948 1,676 1,959 Net Loss $ ( 20,487 ) $ ( 14,943 ) $ ( 39,697 ) $ ( 28,883 ) Net loss per share, basic and diluted $ ( 0.40 ) $ ( 0.38 ) $ ( 0.82 ) $ ( 0.75 ) Weighted average number of shares used in computing net loss per share, basic and diluted 51,633 38,928 48,522 38,550 Comprehensive Loss: Net loss $ ( 20,487 ) $ ( 14,943 ) $ ( 39,697 ) $ ( 28,883 ) Other comprehensive income (loss): Unrealized gain (loss) on marketable securities and foreign currency ( 4 ) 143 226 292 Comprehensive Loss $ ( 20,491 ) $ ( 14,800 ) $ ( 39,471 ) $ ( 28,591 ) See accompanying notes to unaudited condensed financial statements. 2 KURA ONCOLOGY, INC. Condensed Statements of Stockholders’ Equity (In thousands) (Unaudited) Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders' Shares Par Value Capital Income (Loss) Deficit Equity Balance at December 31, 2019 45,384 $ 5 $ 431,322 $ 331 $ ( 212,877 ) $ 218,781 Issuance of common stock, net of offering costs 10,465 1 134,923 — — 134,924 Share-based compensation expense — — 5,705 — — 5,705 Issuance of common stock from exercise of options and employee stock purchase plan 365 — 2,435 — — 2,435 Other comprehensive income — — — 226 — 226 Net loss — — — — ( 39,697 ) ( 39,697 ) Balance at June 30, 2020 56,214 $ 6 $ 574,385 $ 557 $ ( 252,574 ) $ 322,374 Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders' Shares Par Value Capital Income (Loss) Deficit Equity Balance at March 31, 2020 45,430 $ 5 $ 434,722 $ 561 $ ( 232,087 ) $ 203,201 Issuance of common stock, net of offering costs 10,465 1 134,923 — — 134,924 Share-based compensation expense — — 2,552 — — 2,552 Issuance of common stock from exercise of options and employee stock purchase plan 319 — 2,188 — — 2,188 Other comprehensive loss — — — ( 4 ) — ( 4 ) Net loss — — — — ( 20,487 ) ( 20,487 ) Balance at June 30, 2020 56,214 $ 6 $ 574,385 $ 557 $ ( 252,574 ) $ 322,374 See accompanying notes to unaudited condensed financial statements. 3 KURA ONCOLOGY, INC. Condensed Statements of Stockholders’ Equity (In thousands) (Unaudited) Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders' Shares Par Value Capital Income (Loss) Deficit Equity Balance at December 31, 2018 38,148 $ 4 $ 310,849 $ ( 131 ) $ ( 149,737 ) $ 160,985 Issuance of common stock, net of offering costs 6,785 1 108,108 — — 108,109 Share-based compensation expense — — 4,518 — — 4,518 Issuance of common stock from exercise of options and employee stock purchase plan 256 — 1,560 — — 1,560 Other comprehensive income — — — 292 — 292 Net loss — — — — ( 28,883 ) ( 28,883 ) Balance at June 30, 2019 45,189 $ 5 $ 425,035 $ 161 $ ( 178,620 ) $ 246,581 Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders' Shares Par Value Capital Income (Loss) Deficit Equity Balance at March 31, 2019 38,169 $ 4 $ 313,220 $ 18 $ ( 163,677 ) $ 149,565 Issuance of common stock, net of offering costs 6,785 1 108,108 — — 108,109 Share-based compensation expense — — 2,249 — — 2,249 Issuance of common stock from exercise of options and employee stock purchase plan 235 — 1,458 — — 1,458 Other comprehensive income — — — 143 — 143 Net loss — — — — ( 14,943 ) ( 14,943 ) Balance at June 30, 2019 45,189 $ 5 $ 425,035 $ 161 $ ( 178,620 ) $ 246,581 See accompanying notes to unaudited condensed financial statements. 4 KURA ONCOLOGY, INC. Condensed Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended June 30, 2020 2019 Operating Activities Net loss $ ( 39,697 ) $ ( 28,883 ) Adjustments to reconcile net loss to net cash used in operating activities: Share-based compensation expense 5,705 4,518 Depreciation expense 12 — Amortization of premium and accretion of discount on marketable securities, net ( 134 ) ( 859 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 367 ) ( 13 ) Other long-term assets 533 ( 215 ) Accounts payable and accrued expenses ( 537 ) ( 3,300 ) Other long-term liabilities ( 71 ) 70 Net cash used in operating activities ( 34,556 ) ( 28,682 ) Investing Activities Maturities and sales of marketable securities 103,823 126,556 Purchases of marketable securities ( 96,818 ) ( 101,872 ) Purchases of property and equipment ( 1,231 ) — Net cash provided by investing activities 5,774 24,684 Financing Activities Proceeds from issuance of common stock, net 135,180 108,399 Proceeds from exercise of stock options and purchases under employee stock purchase plan 2,435 1,560 Net cash provided by financing activities 137,615 109,959 Net increase in cash, cash equivalents and restricted cash 108,833 105,961 Cash, cash equivalents and restricted cash at beginning of period 26,135 16,119 Cash, cash equivalents and restricted cash at end of period $ 134,968 $ 122,080 See accompanying notes to unaudited condensed financial statements. 5 KURA ONCOLOGY, INC. Notes to Unaudited Condensed Financial Statements 1. Organization and Basis of Presentation The Company Kura Oncology, Inc. is a clinical-stage biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline consists of small molecule product candidates that target cancer signaling pathways where there is a strong scientific and clinical rationale to improve outcomes, and we intend to pair them with molecular or cellular diagnostics to identify those patients most likely to respond to treatment. We plan to advance our product candidates through a combination of internal development and strategic partnerships while maintaining significant development and commercial rights. References in these Notes to Unaudited Condensed Financial Statements to the “Company,” “we,” “our” or “us,” refer to Kura Oncology, Inc. Basis of Presentation The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 25, 2020, from which we derived our balance sheet as of December 31, 2019. The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of the unaudited condensed financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the amounts reported on our unaudited condensed financial statements and accompanying notes. The amounts reported could differ under different estimates and assumptions. On an ongoing basis, we evaluate our estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to inform our critical accounting estimates. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates. The extent to which the COVID-19 pandemic may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with any confidence, such as the duration and severity of the COVID-19 pandemic, steps required or mandated by governments to mitigate the impact of COVID-19 or the effectiveness of actions to prevent, contain and treat COVID-19, particularly in the geographies where we, our third party manufacturers, contract research organizations or current and planned clinical trial sites operate. We cannot presently predict the scope and severity of any potential business disruptions, interruptions or shutdowns. If we or any of the third parties with whom we engage, however, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on our business and our results of operation and financial condition. 6 2. Summary of Significant Accounting Policies Reclassifications Certain prior period balances have been reclassified to conform to the current period presentation. Restricted Cash Under the terms of an office lease entered into in March 2020, we are required to maintain a standby letter of credit during the term of the lease. As of June 30, 2020, restricted cash of $ 0.2 million was pledged as collateral for the letter of credit. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the unaudited condensed balance sheets that sum to the total of the amounts shown in the unaudited condensed statements of cash flows, in thousands: June 30, 2020 December 31, 2019 June 30, 2019 December 31, 2018 Cash and cash equivalents $ 134,758 $ 26,135 $ 122,080 $ 16,119 Restricted cash 210 — — — Total $ 134,968 $ 26,135 $ 122,080 $ 16,119 Net Loss per Share Net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common shares and common stock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, outstanding stock options, an outstanding warrant and employee stock purchase plan rights are excluded from the calculation of diluted net loss per common share for the periods presented as their effect would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the antidilutive effect of the securities. More specifically, for the three and six months ended June 30, 2020 and 2019 , outstanding stock options, an outstanding warrant and employee stock purchase plan rights totaling approximately 5,141,000 shares and 4,140,000 shares, respectively, were excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, in order to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses, and establishes additional disclosures related to credit risks. We adopted ASU 2016-13 on January 1, 2020. The adoption of the new standard did not have a material impact on our unaudited condensed financial statements. We will continue to actively monitor the impact of the ongoing coronavirus (COVID-19) pandemic on expected credit losses. 7 3. Investments We invest in available-for-sale securities consisting of money market funds, U.S. Treasury securities, corporate debt securities and commercial paper. Available-for-sale securities are classified as part of either cash and cash equivalents or short-term investments on our unaudited condensed balance sheets. The following tables summarize, by major security type, our investments that are measured at fair value on a recurring basis, in thousands: June 30, 2020 Maturities (years) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds 1 or less $ 129,433 $ — $ — $ 129,433 Short-term investments: U.S. Treasury securities 1 or less 77,164 322 ( 1 ) 77,485 Corporate debt securities 1 or less 68,197 241 ( 4 ) 68,434 Commercial paper 1 or less 58,192 — — 58,192 Total short-term investments 203,553 563 ( 5 ) 204,111 Total $ 332,986 $ 563 $ ( 5 ) $ 333,544 December 31, 2019 Maturities (years) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents: Money market funds 1 or less $ 18,445 $ — $ — $ 18,445 Short-term investments: U.S. Treasury securities 2 or less 76,108 149 — 76,257 Corporate debt securities 2 or less 113,466 182 — 113,648 Commercial paper 1 or less 20,851 — — 20,851 Total short-term investments 210,425 331 — 210,756 Total $ 228,870 $ 331 $ — $ 229,201 The available-for-sale investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund our operations, as necessary. As of June 30, 2020, all of our short-term investments had maturities less than one year. Realized gains and losses were de minimus for the three and six months ended June 30, 2020. We evaluate our available-for-sale debt securities for credit losses when the amortized cost basis exceeds fair value. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive income (loss). When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. As of June 30, 2020, marketable securities with a fair market value of $ 40.7 million were in immaterial gross unrealized loss positions. Based on our review of these securities, we believe none of the unrealized loss is a result of a credit loss as of June 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 prior to recovery of their amortized cost basis. 8 4. Fair Value Measurements As of June 30, 2020 and December 31, 2019, we had cash equivalents and short-term investments measured at fair value on a recurring basis. Available-for-sale marketable securities consist of U.S. Treasury securities, which were measured at fair value using Level 1 inputs, and corporate debt securities and commercial paper, which were measured at fair value using Level 2 inputs. We determine the fair value of Level 2 related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools. These valuation models and analytical tools use market pricing or prices for similar instruments that are both objective and publicly available, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers. We validate the fair values of Level 2 financial instruments by comparing these fair values to a third-party pricing source. The following tables summarize, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy, in thousands: June 30, 2020 Balance Level 1 Level 2 Cash equivalents: Money market funds $ 129,433 $ 129,433 $ — Short-term investments: U.S. Treasury securities 77,485 77,485 — Corporate debt securities 68,434 — 68,434 Commercial paper 58,192 — 58,192 Total short-term investments 204,111 77,485 126,626 Total $ 333,544 $ 206,918 $ 126,626 December 31, 2019 Balance Level 1 Level 2 Cash equivalents: Money market funds $ 18,445 $ 18,445 $ — Short-term investments: U.S. Treasury securities 76,257 76,257 — Corporate debt securities 113,648 — 113,648 Commercial paper 20,851 — 20,851 Total short-term investments 210,756 76,257 134,499 Total $ 229,201 $ 94,702 $ 134,499 We believe that our term loan facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the term loan facility approximates fair value. The fair value of our term loan facility is determined using Level 2 inputs in the fair value hierarchy. 5. Balance Sheet Detail Property and equipment consisted of the following, in thousands: June 30, 2020 December 31, 2019 Computer software and equipment and laboratory equipment $ 180 $ 136 Furniture and fixtures 546 — Leasehold improvements 1,030 — Property and equipment, gross 1,756 136 Less: accumulated depreciation ( 104 ) ( 92 ) Property and equipment, net $ 1,652 $ 44 9 Accounts payable and accrued liabilities consisted of the following, in thousands: June 30, 2020 December 31, 2019 Accounts payable $ 786 $ 3,526 Accrued research and development expenses 9,455 6,970 Accrued compensation and benefits 3,041 3,694 Lease liability, current portion 1,745 252 Other accrued expenses 1,774 872 Total accounts payable and accrued expenses $ 16,801 $ 15,314 6. Long-Term Debt On April 3, 2020, we entered into the First Amendment to Loan and Security Agreement with Silicon Valley Bank to extend the additional draw period. Under the terms of the loan and security agreement, as amended, we may, at our sole discretion, borrow up to an additional $ 12.5 million at any time until November 30, 2020. There were no other changes to the terms of the loan and security agreement. 7. Leases We had a sublease with a related party for office space in San Diego, California, or Sublease, and a lease for office space in Cambridge, Massachusetts, that existed before January 1, 2019 and were classified as operating leases. In March 2019, the Sublease was amended to extend the expiration date from October 31, 2019 to April 30, 2020 with the monthly rent increased from approximately $ 16,000 to approximately $ 24,000 per month effective November 1, 2019 . In April 2020, the Sublease was amended to extend the expiration date from April 30, 2020 to June 30, 2020 with no change to the amount of monthly rent. The Sublease was terminated in June 2020 . See Note 10, Related Party Transactions, for further details of the Sublease. The lease for office space in Cambridge, Massachusetts expired on July 31, 2020 . In January 2020, we entered into an office lease agreement for our corporate offices in San Diego, California, which would have commenced on May 1, 2020 . In May 2020, we entered into an amendment to such office lease agreement that subsequently amended the commencement date to August 1, 2020 and extended the lease expiration to November 30, 2025 . We refer to such office lease agreement, as amended, as the San Diego Lease. The San Diego Lease provides for a one -time option to extend for a period of five additional years. The monthly base rent is approximately $ 58,000 for the first year, which amount will increase by 3.0 % per year over the initial term. In addition, the San Diego Lease is subject to charges for common area maintenance and other costs. The San Diego Lease provides a four-month rent abatement period during the first year of the San Diego Lease and approximately $ 1.0 million in reimbursement for allowable tenant improvements, which effectively reduce the total lease payments owed for the San Diego Lease. For accounting purposes, the lease commencement date was determined to be March 2020 when we had control of the office space. We recorded an operating lease right-of-use, or ROU, asset and operating lease liability of approximately $ 2.1 million on our unaudited condensed balance sheet. In March 2020, we entered into a lease agreement for office space in Boston, Massachusetts, or the Boston Lease, which commenced on April 1, 2020 and expires on July 31, 2024 . The Boston Lease provides for a one -time option to extend the Boston Lease for a period of five additional years after the expiration of the initial lease term . Under the terms of the Boston Lease, monthly base rent is approximately $ 105,500 for the first year, subject to an annual fixed percentage increase of 2.0 % on April 1 st of each year. In addition, we are obligated to pay for common area maintenance and other costs. Under the terms of the Boston Lease, we are required to maintain a standby letter of credit of approximately $ 0.2 million during the term of the lease. We recorded an operating lease ROU asset and operating lease liability of approximately $ 5.1 million on our unaudited condensed balance sheet. In May 2020, we entered into a two-year sublease for certain designated lab space in San Diego, California, which commenced on June 9, 2020 . Under the terms of the sublease, the monthly base rent is approximately $ 12,500 in the first year, subject to an annual fixed percentage increase of 5.0 % in June of the following year. We are not obligated to pay for common area maintenance and other costs. We recorded an operating lease ROU asset and operating lease liability of approximately $ 0.3 million on our unaudited condensed balance sheet. 10 Maturities of lease liabilities as of June 30, 2020 are as follows, in thousands: Year Ending December 31, 2020 (remaining)* $ 250 2021 2,141 2022 2,098 2023 2,080 2024 1,558 2025 722 Total lease payments 8,849 Less: imputed interest ( 1,086 ) Total operating lease liabilities $ 7,763 * Includes the remaining tenant incentives of $ 0.5 million to be received from the landlord in 2020. As of December 31, 2019, we had remaining lease liabilities of approximately $ 0.3 million which will mature in 2020. ROU assets are recorded in other long-term assets on our unaudited condensed balance sheets. Current and non-current lease liabilities are recorded in accounts payable and accrued expenses and other long-term liabilities, respectively, on our unaudited condensed balance sheets. As of June 30, 2020 and December 31, 2019, total operating lease ROU assets were $ 7.1 million and $ 0.2 million, respectively. As of June 30, 2020 and December 31, 2019, total operating lease liabilities were $ 7.8 million and $ 0.3 million, respectively, $ 6.0 million of which was recorded as noncurrent lease liability as of June 30, 2020. As of June 30, 2020 and December 31, 2019, the weighted-average discount rate was 5.5 % and 6.5 %, respectively. As of June 30, 2020 and December 31, 2019, the weighted-average remaining lease term was 4.5 years and 0.5 years, respectively. Total cash paid for amounts included in the measurement of lease liabilities, net of tenant improvement reimbursements, was $ 0.1 million and $ 0.2 million for the six months ended June 30, 2020 and 2019, respectively. ROU assets obtained in exchange for operating lease liabilities were $ 7.5 million and $ 0.7 million for the six months ended June 30, 2020 and 2019, respectively. Total operating lease expense was approximately $ 0.6 million and $ 0.1 million for the three months ended June 30, 2020 and 2019, respectively. Total operating lease expense was approximately $ 0.7 million and $ 0.2 million for the six months ended June 30, 2020 and 2019, respectively. We have entered into short-term operating leases that are not recorded on the unaudited condensed balance sheet. Total rent expense of all operating leases for the three months ended June 30, 2020 and 2019 was approximately $ 0.6 million and $ 0.1 million, respectively. Total rent expense of all operating leases for the six months ended June 30, 2020 and 2019 was approximately $ 0.9 million and $ 0.3 million, respectively. 8. Stockholders’ Equity In May 2020, we completed a public offering in which we sold an aggregate of 10,465,000 shares of common stock at a price of $ 13.75 per share. Net proceeds from the public offering, after deducting underwriting discounts, commissions and offering expenses, were approximately $ 134.9 million. In June 2019, we completed a public offering in which we sold an aggregate of 6,785,000 shares of common stock at a price of $ 17.00 per share. Net proceeds from the public offering, after deducting underwriting discounts, commissions and offering expenses, were approximately $ 108.1 million. 9. Share-Based Compensation The following table summarizes share-based compensation expense for all share-based compensation arrangements, in thousands: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Research and development $ 445 $ 884 $ 1,615 $ 1,681 General and administrative 2,107 1,365 4,090 2,837 Total share-based compensation expense $ 2,552 $ 2,249 $ 5,705 $ 4,518 11 As of June 30, 2020, unrecognized compensation costs related to employee stock options was approximately $ 28.6 million, which is expected to be recognized over a weighted average period of approximately 2.8 years. 10. Related Party Transactions Our president and chief executive officer is also the sole managing member of Araxes Pharma LLC, or Araxes, and is a significant stockholder of each of us and Araxes. The following is a summary of related party transactions for the three and six months ended June 30, 2020 and 2019: • Facility Sublease We subleased office space in San Diego, California from Araxes pursuant to the Sublease. The Sublease commenced in June 2017 and would have expired on October 31, 2019 . In March 2019, the Sublease was amended to extend until April 30, 2020 , and the monthly rent increased to approximately $ 24,000 per month effective November 1, 2019 , corresponding to the increase in Araxes’ monthly re nt. In April 2020, the Sublease was amended to extend the expiration date to June 30, 2020 with no change to the amount of monthly rent. The Sublease was terminated in June 2020 . For the three months ended June 30, 2020 and 2019, rent expense, including operating costs, related to our sublease was approximately $ 0.1 million in both periods. For the six months ended June 30, 2020 and 2019, rent expense, including operating costs, related to our Sublease was approximately $ 0.2 million in both periods. • Management Fees We have a management services agreement with Araxes pursuant to which Araxes pays us monthly fees for management services calculated based on costs incurred by us in the provision of services to Araxes, plus a reasonable mark-up. For the three months ended June 30, 2020 and 2019, we recorded approximately $ 0.1 million in management fee income in both periods. For the six months ended June 30, 2020 and 2019, we recorded approximately $ 0.1 million and $ 0.2 million in management fee income, respectively. In addition, the agreement allows for Araxes to reimburse us an amount equal to the number of full-time equivalents, or FTE, performing research and development services for Araxes, at an annual FTE rate of approximately $ 382,000 , plus actual expenses as reasonably incurred. The initial term of this agreement expired on December 31, 2015 but, pursuant to the terms of the agreement, renews automatically for additional consecutive one-year periods. The agreement may be terminated by either party with a notice of at least 30 days prior to the expiration of the then-renewal term. For the three and six months ended June 30, 2020 and 2019, we recorded reimbursements of nil and approximately $ 0.1 million, respectively, for research and development services provided to Araxes, which was recorded as a reduction to research and development expenses, on our unaudited condensed statements of operations and comprehensive loss. • Services Agreement We have a services agreement with Wellspring Biosciences, Inc., or Wellspring, a wholly owned subsidiary of Araxes, pursuant to which we pay Wellspring for research and development services provided to us in an amount equal to the number of FTE’s performing the services, at an annual FTE rate of $ 400,000 , plus actual expenses as reasonably incurred. The initial term of this services agreement expired on December 31, 2015 but, pursuant to the terms of the agreement, renews automatically for additional consecutive one-year periods. The agreement may be terminated by either party with a notice of at least 30 days prior to the expiration of the then-renewal term. For the three and six months ended June 30, 2020 and 2019, we recognized approximately $ 0.1 million in each period, from research and development services provided to us under this agreement as research and development expense on our unaudited condensed statements of operations and comprehensive loss. 12