What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-06 · 79 added, 51 removed, 306 unchanged (30% of the section changed)

3 unchanged sentences

in thousands, except share and per share amounts)

September 30,

Current assets:

16 unchanged sentences

Preferred stock, par value $ 0.0001 per share authorized:

5,000,000 shares at June 30, 2020 and December 31, 2019;

1,969,797 shares issued and outstanding at June 30, 2020 and December 31, 2019

5,000,000 shares at September 30, 2020 and December 31, 2019;

1,969,797 shares issued and outstanding at September 30, 2020 and December 31, 2019

Common stock, par value $ 0.0001 per share authorized:

200,000,000 at June 30, 2020 and December 31, 2019;

15,438,124 and 15,429,154 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

200,000,000 at September 30, 2020 and December 31, 2019;

15,466,451 and 15,429,154 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

Additional paid-in-capital

7 unchanged sentences

in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Total revenues

12 unchanged sentences

in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss):

Unrealized gain on available-for-sale

Unrealized gain (loss) on available-for-sale

Comprehensive loss

3 unchanged sentences

in thousands, except share and per share amounts)

Preferred stock

comprehensive

1 unchanged sentence

stockholders’

Preferred stock

Balance at December 31, 2019

6 unchanged sentences

Balance at June 30, 2020

Exercise of common stock options

Compensation expense related to stock options for services

Unrealized loss on marketable securities

Balance at September 30, 2020

Balance at December 31, 2018

7 unchanged sentences

Balance at June 30, 2019

Exercise of common stock options

Compensation expense related to stock options for services

Unrealized loss on marketable securities

Balance at September 30, 2019

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

5 unchanged sentences

Accounts payable

Accrued expense

Accrued expenses

Accrued interest, net of interest received on maturity of investments

6 unchanged sentences

Cash flows from financing activities:

Proceeds from the sale of related party stock and exercise of common stock options, net of transaction costs

Proceeds from the exercise of common stock options

Net cash provided by financing activities

27 unchanged sentences

Principle of Consolidation

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries.

The consolidated financial statements include the financial statements of the Compan y

and its wholly owned subsidiaries.

All significant intercompany balances have been eliminated in consolidation.

5 unchanged sentences

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of six months or less at the date of purchase to be cash equivalents.

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

The Company maintains its cash in bank accounts, the balance of which, at times, exceeds Federal Deposit Insurance Corporation insured limits.

12 unchanged sentences

To determine whether an other-than-temporary impairment exists, the Company considers whether it intends to sell the debt security and, if the Company does not intend to sell the debt security, it considers available evidence to assess whether it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis.

During the six months ended June 30, 2020 and 2019, the Company determined it did not have any securities that were other-than-temporarily impaired.

During the nine months ended September 30, 2020 and 2019, the Company determined it did not have any securities that were other-than-temporarily impaired.

Marketable securities are stated at fair value, including accrued interest, with their unrealized gains and losses included as a component of accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity.

1 unchanged sentence

Realized gains and losses are determined on the specific identification method.

During the six months ended June 30, 2020 and 2019, the Company did not have any realized gains or losses on marketable securities.

During the nine months ended September 30, 2020 and 2019, the Company did not have any realized gains or losses on marketable securities.

Fair Value of Financial Instruments

10 unchanged sentences

These inputs include reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

As of June 30, 2020, the Company’s financial assets valued based on Level 1 inputs consisted of cash and cash equivalents in a money market fund, its financial assets valued based on Level 2 inputs consisted of high-grade corporate and government agency bonds and commercial paper, and it had no financial assets valued based on Level 3 inputs.

During the six months ended June 30, 2020 and 2019, the Company did not have any transfers of financial assets between Levels 1 and 2.

As of June 30, 2020 and December 31, 2019, the Company did not have any financial liabilities that were recorded at fair value on a recurring basis on the balance sheet.

As of September 30, 2020, the Company’s financial assets valued based on Level 1 inputs consisted of cash and cash equivalents in a money market fund, its financial assets valued based on Level 2 inputs consisted of high-grade corporate and government agency bonds and commercial paper, and it had no financial assets valued based on Level 3 inputs.

During the nine months ended September 30, 2020 and 2019, the Company did not have any transfers of financial assets between Levels 1 and 2.

As of September 30, 2020 and December 31, 2019, the Company did not have any financial liabilities that were recorded at fair value on a recurring basis on the balance sheet.

Research and Development Costs

4 unchanged sentences

Management uses significant judgment in estimating the amount of research and development costs recognized in each reporting period.

Management analyzes and estimates the progress of its preclinical studies and clinical trials, completion of milestones events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period.

Management analyzes and estimates the progress of its preclinical studies and clinical trials, completion of milestone events per underlying agreements, invoices received and contracted costs when estimating the research and development costs to accrue in each reporting period.

Actual results could differ from the Company’s estimates.

3 unchanged sentences

The Company uses the Black-Scholes option pricing model to determine the grant date fair value as management believes it is the most appropriate valuation method for its option grants.

The Black-Scholes model requires inputs for

risk-free interest rate, dividend yield, volatility and expected lives of the options.

The Black-Scholes model requires inputs

for risk-free interest rate, dividend yield, volatility and expected lives of the options.

The expected lives for options granted represent the period of time that options granted are expected to be outstanding.

21 unchanged sentences

Diluted net loss per common share is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method.

However, for the six months ended June 30, 2020 and 2019, diluted net loss per share is the same as basic net loss per share because the inclusion of weighted average shares of unvested restricted common stock, common stock issuable upon the exercise of stock options, and common stock issuable upon the conversion of preferred stock would be anti-dilutive.

However, for the nine months ended September 30, 2020 and 2019, diluted net loss per share is the same as basic net loss per share because the inclusion of weighted average shares of unvested restricted common stock, common stock issuable upon the exercise of stock options, and common stock issuable upon the conversion of preferred stock would be anti-dilutive.

The following table summarizes outstanding securities not included in the computation of diluted net loss per common share, as their inclusion would be anti-dilutive:

Six Months Ended June 30,

Nine Months Ended September 30,

Common stock options

Unvested restricted common stock

Preferred stock

11 unchanged sentences

Food and Drug Administration and other government regulations.

The Company has incurred losses since inception, including approximately $ 85.2 million for the six months ended June 30, 2020, resulting in an accumulated deficit of approximately $ 308.4 million as of June 30, 2020.

The Company has incurred losses since inception, including approximately $ 143.1 million for the nine months ended September 30, 2020, resulting in an accumulated deficit of approximately $ 366.3 million as of September 30, 2020.

Management expects to incur losses for the foreseeable future.

To date, the Company has funded its operations primarily through proceeds from sales of the Company’s common and Series A Convertible Preferred Stock.

The Company believes that its cash, cash equivalents and marketable securities at June 30, 2020 will be sufficient to fund operations past one year from the issuance of these financial statements.

The Company believes that its cash, cash equivalents and marketable securities at September 30, 2020 will be sufficient to fund operations past one year from the issuance of these financial statements.

To meet its future capital needs, the Company intends to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions.

4 unchanged sentences

A summary of cash, cash equivalents and available-for-sale

marketable securities held by the Company as of June 30, 2020 and December 31, 2019 is as follows (in thousands):

June 30, 2020

marketable securities held by the Company as of September 30, 2020 and December 31, 2019 is as follows (in thousands):

September 30, 2020

Cash and cash equivalents:

16 unchanged sentences

Corporate debt securities due within 1 year of date of purchase (Level 2)

Corporate debt securities due within 1 to 2 years of date of purchase (Level 2)

Corporate debt securities due within 1 to 2 years of date of purchase

Total cash, cash equivalents and marketable securities

Accrued Liabilities

Accrued liabilities as of June 30, 2020 and December 31, 2019 consisted of the following (in thousands):

Accrued contract research costs

Accrued liabilities as of September 30, 2020 and December 31, 2019 consisted of the following (in thousands):

September 30,

Contract research organization costs

Other clinical study related costs

Compensation and benefits

Professional fees

Total accrued liabilities

Stockholders’ Equity

17 unchanged sentences

The administration of the 2015 Stock Plan is under the general supervision of the Compensation Committee of the Board of Directors.

The terms of stock options awarded under the 2015 Stock Plan, in general, are determined by the Compensation Committee, provided the exercise price per share generally shall not be set at less than the fair market value of a share of the common stock on the date of grant and the term shall not be greater than ten years from the date the option is granted.

As of June 30, 2020, the Company had options outstanding to purchase 1,820,142 shares of its common stock, which includes options outstanding under its 2006 Stock Plan.

As of June 30, 2020, 984,220 shares were available for future issuance.

The following table summarizes stock option activity during the six months ended June 30, 2020:

from the date the option is granted.

As of September 30, 2020, the Company had options outstanding to purchase 1,810,753 shares of its common stock, which includes options outstanding under its 2006 Stock Plan.

As of September 30, 2020, 965,282 shares were available for future issuance.

The following table summarizes stock option activity during the nine months ended September 30, 2020:

average exercise

3 unchanged sentences

Options cancelled

Outstanding at June 30, 2020

Exercisable at June 30, 2020

The total cash received by the Company as a result of stock option exercises was $ 0.1 million and $ 0.2 million, respectively, for the six months ended June 30, 2020 and 2019.

The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the six months ended June 30, 2020 and 2019 were $ 64.74 and $ 92.97 , respectively.

Outstanding at September 30, 2020

Exercisable at September 30, 2020

The total cash received by the Company as a result of stock option exercises was $ 0.5 million and $ 0.2 million, respectively, for the nine months ended September 30, 2020 and 2019.

The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the nine months ended September 30, 2020 and 2019 were $ 65.65 and $ 91.65 , respectively.

Stock-Based Compensation Expense

Stock-based compensation expense during the six months ended June 30, 2020 and 2019 was as follows (in thousands):

Three Months Ended June 30,

Six MonthsEndedJune 30,

Stock-based compensation expense during the nine months ended September 30, 2020 and 2019 was as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Stock-based compensation expense by type of award:

6 unchanged sentences

Total stock-based compensation expense included in net loss

Unrecognized stock-based compensation expense on stock options as of June 30, 2020 was $ 44.6 million with a weighted average remaining period of 2.8 years.

Unrecognized stock-based compensation expense on stock options as of September 30, 2020 was $ 41.1 million with a weighted average remaining period of 2.7 years.

Commitments and Contingencies

4 unchanged sentences

A single-digit royalty payment range is based on net sales of products developed from resmetirom, subject to certain reductions.

Except as described above, the Company has not achieved any additional product development or regulatory milestones and had no Licensed Product sales for the six months ended June 30, 2020 and 2019.

Except as described above, the Company has not achieved any additional product development or regulatory milestones and had no Licensed Product sales for the nine months ended September 30, 2020 and 2019.

The Company has entered into customary contractual arrangements and letters of intent in support of its Phase 3 clinical trials.

Subsequent Event

In November 2020, the Company is entering

into an at-the-market

sales agreement (the “2020 Sales Agreement”), with Cowen and Company, LLC (“Cowen”), pursuant to which the Company may, from time to time, issue and sell shares of its common stock.

The Company is not obligated to make any sales of its common stock under the 2020 Sales Agreement.

Any shares sold will be sold pursuant to an effective shelf registration statement on Form S-3,

(the “Registration Statement”), and a prospectus supplement that will be

filed pursuant to the Registration Statemen t.

The Sales Agreement will authorize

an aggregate offering price of up to $ 200 million in shares of our common stock, from time to time, at the Company’s option, through Cowen as its sales agent.

Sales of common stock through Cowen may be made by any method that is deemed an “at-the-market”

offering as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, including by means of ordinary brokers’ transactions at market prices, in block transactions or as otherwise agreed by the Company and Cowen.

Subject to the terms and conditions of the 2020 Sales Agreement, Cowen will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the common stock based upon the Company’s instructions (including any price, time or size limits or other customary parameters or conditions the Company may impose).

The 2020 Sales Agreement may be terminated by the Company at any time upon 10 days ’ notice.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

9 unchanged sentences

projections regarding potential future NASH resolution, safety, fibrosis treatment, cardiovascular effects, lipid treatment or biomarker effects with resmetirom;

the predictive power of liver fat reduction on NASH resolution with fibrosis reduction;

the predictive power of liver fat reduction on NASH resolution with fibrosis reduction or improvement;

the achievement of enrollment objectives concerning patient number, safety database and/or timing for our studies;

4 unchanged sentences

include all statements that are not historical facts;

and can be identified by terms such as “anticipates,” “be,” “believes,” “continue,” “could,” “demonstrates,” ”design,” “estimates,” “expects,” “forecasts,” “future,” “hopeful,” “goal,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” ”predictive,” “projects,” “seeks,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

and can be identified by terms such as “allow,” “anticipates,” “be,” “believes,” “continue,” “could,” “demonstrates,” ”design,” “estimates,” “expects,” “forecasts,” “future,” “hopeful,” “goal,” “intends,” “may,” “might,” “plans,” “potential,” “predicts,” ”predictive,” “projects,” “seeks,” “should,” “will,” “will achieve,” “would” or similar expressions and the negatives of those terms.

Although management presently believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct and you should be aware that actual results could differ materially from those contained in the forward-looking statements.

5 unchanged sentences

outcomes or trends from competitive studies;

future topline data timing or results;

the risks of achieving potential benefits in studies that includes substantially more patients than our prior studies;

5 unchanged sentences

Securities and Exchange Commission for more detailed information regarding these risks and uncertainties and other factors that may cause actual results to differ materially from those expressed or implied.

We specifically discuss these risks and uncertainties in greater detail in the “Risk Factors” appearing in Part I, Item 1A of our Annual Report on Form 10-K

for the year ended December 31, 2019 and Part II, Item 1A of this Quarterly Report on Form 10-Q

for the period ended June 30, 2020, as well as in our other filings with the SEC.

We specifically discuss these risks and uncertainties in greater detail in the “Risk Factors” sections appearing in Part I, Item 1A of our Annual Report on Form 10-K

for the year ended December 31, 2019, filed with the SEC on February 26, 2020, and Part II, Item 1A of the Quarterly Report on Form 10-Q

for the period ended June 30, 2020, filed with the SEC on August 6, 2020, as well as in our other filings with the SEC.

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