1 unchanged sentence
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Report of Independent Registered Public Accounting Firm
+Added: Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2021 and 2020
Consolidated Statements of Operations for the Years ended December 31, 2021, 2020, and 2019
−Removed: Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit
−Removed: for the Years ended December 31, 2020 and 2019
+Added: Consolidated Statements of Comprehensive Loss for the Years ended December 31, 2021, 2020, and 2019
+Added: Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the Years ended December 31, 2021, 2020, and 2019
5 unchanged sentences
We have audited the accompanying consolidated balance sheets of Schrödinger, Inc.
−Removed: and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with U.S.
+Added: and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.
generally accepted accounting principles.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
1 unchanged sentence
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
1 unchanged sentence
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
−Removed: As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
−Removed: Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
2 unchanged sentences
We believe that our audits provide a reasonable basis for our opinion.
+Added: Critical Audit Matters
+Added: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:
+Added: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
+Added: Estimation of total costs to perform for Bristol-Myers Squibb Company collaboration and license agreement
+Added: As discussed in Note 3(c) to the consolidated financial statements, the Company recorded revenue of $13.7 million during the year ended December 31, 2021 related to the Bristol-Myers Squibb Company (“BMS”) collaboration and license agreement on a proportional performance basis.
+Added: The Company measures progress towards completion at the end of each reporting period based on measuring proportional performance.
+Added: The proportional performance is determined using input-based measurements of total costs of research activities incurred for the agreement relative to the total estimate of costs of research activities for the agreement.
+Added: We identified the estimation of total costs to perform research activities for the BMS collaboration and license agreement as a critical audit matter.
+Added: There was subjective auditor judgment in evaluating the Company’s estimate of total costs to perform research activities.
+Added: The following are the primary procedures we performed to address this critical audit matter.
+Added: We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to account for the BMS collaboration and license agreement, including controls related to the determination of total costs to perform research activities.
+Added: We evaluated the Company’s estimate of costs to be incurred by:
+Added: — Comparing the estimated length of time required to complete the research plan to both industry publications and actual time incurred to complete the various phases for a selection of the Company’s other research programs
+Added: — Comparing the estimated internal employee hours and external contract research organizations costs to be incurred by phase to other research programs completed by the Company
+Added: —Attending the quarterly forecast review meetings to evaluate factors impacting total costs to perform research activities
+Added: — Inspecting minutes of Joint Steering Committee meetings between the Company and BMS to evaluate factors impacting total costs to perform research activities and compared it with the outcome of the inquiries stated above
+Added: Identification of performance obligations in complex or unusual software revenue arrangements
+Added: As discussed in Note 3(a) to the consolidated financial statements, the Company reported on-premise software revenue of $74.6 million and hosted software revenue of $11.1 million for the year ended December 31, 2021.
+Added: As discussed in Note 3(d), the Company’s contracts with customers often include promises to transfer multiple software products and services, including training, professional services, technical support services, and rights to unspecified updates.
+Added: At contract inception, the Company assesses the products and services promised within each contract to identify distinct performance obligations that should be accounted for separately.
+Added: We identified the determination of distinct performance obligations in complex or unusual software revenue arrangements as a critical audit matter.
+Added: There was subjective auditor judgment in evaluating whether promised products and services in complex or unusual software revenue arrangements are separate performance obligations or inputs into a combined performance obligation.
+Added: The following are the primary procedures we performed to address this critical audit matter.
+Added: We evaluated the design and tested the operating effectiveness of certain internal controls related to the software revenue process, including controls related to the determination of distinct performance obligations.
+Added: For a selection of complex or unusual software revenue arrangements, we evaluated whether the performance obligations identified by the Company were capable of being distinct in the context of the contract by obtaining an understanding of the Company’s product and service offerings, obtaining and inspecting contracts, and evaluating the application of the revenue recognition accounting guidance for the selected contract .
We have served as the Company’s auditor since 2010.
Portland, Oregon
−Removed: March 4, 2021
−Removed: SCH RÖDINGER, INC.
+Added: February 24, 2022
+Added: Report of Independent Registered Public Accounting Firm
+Added: To the Stockholders and Board of Directors
+Added: Schrödinger, Inc.:
+Added: Opinion on Internal Control Over Financial Reporting
+Added: We have audited Schrödinger, Inc.
+Added: and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated February 24, 2022 expressed an unqualified opinion on those consolidated financial statements.
+Added: Basis for Opinion
+Added: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.
+Added: Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
+Added: We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
+Added: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
+Added: We conducted our audit in accordance with the standards of the PCAOB.
+Added: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
+Added: Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
+Added: Our audit also included performing such other procedures as we considered necessary in the circumstances.
+Added: We believe that our audit provides a reasonable basis for our opinion.
+Added: Definition and Limitations of Internal Control Over Financial Reporting
+Added: A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
+Added: A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
+Added: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
+Added: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
+Added: Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
+Added: Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
+Added: We have served as the Company’s auditor since 2010.
+Added: Portland, Oregon
+Added: February 24, 2022
+Added: SCHRÖDINGER, INC.
AND SUBSIDIARIES
8 unchanged sentences
Accounts receivable, net of allowance for doubtful accounts of $ 108 and $ 60
−Removed: Unbilled and other receivables
+Added: Unbilled and other receivables, net for allowance for unbilled receivables of $ 30 and $ 0
Prepaid expenses
3 unchanged sentences
Right of use assets
−Removed: Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)
+Added: Liabilities and Stockholders’ Equity
Current liabilities:
10 unchanged sentences
Commitments and contingencies (Note 6)
−Removed: Convertible preferred stock:
−Removed: Series E convertible preferred stock, $0.01 par value.
−Removed: Authorized zero and 77,150,132
−Removed: zero and 73,795,777 shares issued and outstanding at December 31, 2020 and
−Removed: December 31, 2019, respectively
−Removed: Series D convertible preferred stock, $0.01 par value.
−Removed: Authorized zero and 39,540,611
−Removed: zero and 39,540,611 shares issued and outstanding at December 31, 2020 and
−Removed: December 31, 2019, respectively
−Removed: Series C convertible preferred stock, $0.01 par value.
−Removed: Authorized zero and 47,242,235
−Removed: zero and 47,242,235 shares issued and outstanding at December 31, 2020 and
−Removed: December 31, 2019, respectively
−Removed: Series B convertible preferred stock, $0.01 par value.
−Removed: Authorized zero and 29,468,101
−Removed: zero and 29,468,101 shares issued and outstanding at December 31, 2020 and
−Removed: December 31, 2019, respectively
−Removed: Series A convertible preferred stock, $0.01 par value.
−Removed: Authorized zero and 134,704,785
−Removed: zero and 134,704,785 shares issued and outstanding at December 31, 2020 and
−Removed: December 31, 2019, respectively
−Removed: Total convertible preferred stock
−Removed: Stockholders’ equity (deficit):
+Added: Stockholders’ equity:
+Added: Preferred stock, $ 0.01 par value.
+Added: Authorized 10,000,000 shares;
+Added: zero shares issued and
+Added: outstanding at December 31, 2021 and December 31, 2020, respectively
Common stock, $ 0.01 par value.
−Removed: Authorized 500,000,000 and 425,000,000 shares;
+Added: Authorized 500,000,000 shares;
61,834,515 and 60,713,534 shares issued and outstanding at December 31, 2021
1 unchanged sentence
Limited common stock, $ 0.01 par value.
−Removed: Authorized 100,000,000 and 146,199,885 shares;
−Removed: 9,164,193 and zero shares issued and outstanding at December 31, 2020 and
+Added: Authorized 100,000,000 shares;
+Added: 9,164,193 shares issued and outstanding at December 31, 2021 and
December 31, 2020, respectively
1 unchanged sentence
Accumulated deficit
−Removed: Accumulated other comprehensive income
−Removed: Total stockholders’ equity (deficit) of Schrödinger stockholders
+Added: Accumulated other comprehensive (loss) income
+Added: Total stockholders’ equity of Schrödinger stockholders
Noncontrolling interest
−Removed: Total stockholders’ equity (deficit)
−Removed: Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)
+Added: Total stockholders’ equity
+Added: Total liabilities and stockholders’ equity
See accompanying notes to consolidated financial statements.
18 unchanged sentences
Other income:
−Removed: Gain on equity investments
+Added: (Loss) gain on equity investments
Change in fair value
12 unchanged sentences
See accompanying notes to consolidated financial statements.
−Removed: SCH RÖDINGER, INC.
+Added: SCHRÖDINGER, INC.
AND SUBSIDIARIES
−Removed: Consolidated State ments of Comprehensive Loss
+Added: Consolidated Statements of Comprehensive Loss
(in thousands)
3 unchanged sentences
Changes in market value of investments, net of tax:
−Removed: Unrealized gain on marketable securities
+Added: Unrealized (loss) gain on marketable securities
Comprehensive loss
43 unchanged sentences
preferred stock into
+Added: ( 134,704,785
preferred stock into
5 unchanged sentences
Balance at December 31, 2020
+Added: Change in unrealized
+Added: loss on marketable
+Added: Issuances of common
+Added: stock upon stock
+Added: option exercise
+Added: Stock-based compensation
+Added: Contributions by
+Added: non-controlling interest
+Added: Balance at December 31, 2021
See accompanying notes to consolidated financial statements.
5 unchanged sentences
Cash flows from operating activities:
−Removed: Adjustments to reconcile net loss to net cash provided by (used in)
+Added: Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
−Removed: Gain on equity investments
+Added: Loss (gain) on equity investments
Noncash revenue from equity investments
3 unchanged sentences
Noncash investment accretion
+Added: Loss on disposal of property and equipment
Decrease (increase) in assets:
3 unchanged sentences
Prepaid expenses and other assets
−Removed: Increase (decrease) in liabilities:
+Added: (Decrease) increase in liabilities:
Accounts payable
3 unchanged sentences
Other accrued liabilities
−Removed: Net cash provided by (used in) operating activities
+Added: Net cash (used in) provided by operating activities
Cash flows from investing activities:
2 unchanged sentences
Distribution from equity investment
+Added: Proceeds from sale of equity investments
Purchases of marketable securities
9 unchanged sentences
Net cash provided by financing activities
−Removed: Net increase (decrease) in cash and cash equivalents and restricted cash
+Added: Net (decrease) increase in cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash, beginning of year
4 unchanged sentences
Accrued deferred offering costs
−Removed: Purchases of property and equipment
+Added: Purchases of property and equipment in accounts payable
Acquisitions of right of use assets in exchange for lease obligations
2 unchanged sentences
See accompanying notes to consolidated financial statements.
−Removed: SCH RÖDINGER, INC.
+Added: SCHRÖDINGER, INC.
AND SUBSIDIARIES
6 unchanged sentences
The Company sells its software to biopharmaceutical and industrial companies, academic institutions, and government laboratories.
−Removed: The Company also applies its computational platform to a broad pipeline of drug discovery and development programs in collaboration with biopharmaceutical companies, some of which the Company co-founded.
+Added: The Company also applies its computational platform to a broad pipeline of drug discovery and development programs in collaboration with biopharmaceutical companies.
In addition, the Company uses its platform to advance a pipeline of internal drug discovery programs.
8 unchanged sentences
In addition, a stockholder of the Company sold 500,000 shares of common stock.
−Removed: The Company did not receive any proceeds from the sale of shares of common stock by the selling stockholder.
+Added: The Company did no t receive any proceeds from the sale of shares of common stock by the selling stockholder.
Significant Accounting Policies
Recently Issued Accounting Pronouncements
−Removed: In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.
−Removed: 2018-13 , Changes to Disclosure Requirements for Fair Value Measurements (Topic 820), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements.
−Removed: The standard removes, modifies, and adds certain disclosure requirements.
+Added: In January 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No.
+Added: 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) —Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 , which clarifies the accounting related to equity investments and derivatives.
+Added: This guidance was effective for the Company in the first quarter of 2021 on a prospective basis, and early adoption was permitted.
The Company adopted this new standard effective January 1, 2021 with no material impact on its consolidated financial statements.
−Removed: In November 2018, the FASB issued ASU No.
−Removed: 2018-18, Collaborative Arrangements (Topic 808) – Clarifying the Interaction between Topic 808 and Topic 606 .
−Removed: The amendments in this ASU clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606, Revenue from Contracts with Customers , when the collaborative arrangement participant is a customer in the context of a unit of account and precluded recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer.
−Removed: The new guidance is effective for fiscal years beginning after December 15, 2019.
−Removed: The Company adopted the amendment on January 1, 2020, with no material impact on its consolidated financial statements.
−Removed: Accounting Pronouncements Not Yet Adopted
−Removed: In June 2016, the FASB issued ASU No.
−Removed: 2016-13, Financial Instruments-Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.
−Removed: ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates.
−Removed: It also eliminates the concept of other-than-temporary impairment and requires credit losses related to certain available-for-sale debt securities to be recorded through an allowance for credit
−Removed: losses rather than as a reduction in the amortized cost basis of the securities.
−Removed: These changes result in earlier recognition of credit losses.
−Removed: The Company will adopt ASU 2016-13 as of January 1, 2021 and does not expect this adoption to have a significant impact on its consolidated financial statements.
−Removed: In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Topic 350):
−Removed: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.
+Added: In August 2018, the FASB issued ASU No.
+Added: 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Topic 350) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract .
This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.
The standard is effective for annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021, with early adoption permitted.
−Removed: The Company has not yet adopted ASU 2018-15 and does not expect the adoption to have a significant impact on its consolidated financial statements.
−Removed: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes.
−Removed: This guidance will be effective for the Company in the first quarter of 2021 on a prospective basis, and early adoption is permitted.
−Removed: The Company has not yet adopted ASU 2019-12, and does not expect this adoption to have a significant impact on its consolidated financial statements.
+Added: The Company adopted this new standard effective January 1, 2021 with no material impact on its consolidated financial statements.
+Added: In June 2016, the FASB issued ASU No.
+Added: 2016-13, Financial Instruments-Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments , which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost.
+Added: 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates.
+Added: It also eliminates the concept of other-than-temporary impairment and requires credit losses related to certain available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.
+Added: These changes generally result in earlier recognition of credit losses.
+Added: The Company adopted this new standard effective January 1, 2021 with no material impact on its consolidated financial statements.
+Added: In October 2021, the FASB issues ASU No.
+Added: 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires the measurement and recognition of contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers (Topic 606).
+Added: This update replaces the existing guidance requiring contract assets and contract liabilities to be measured and recognized at fair value.
+Added: The standard is effective on a prospective basis for annual periods beginning after December 15, 2022, including interim periods within the fiscal year, with early adoption permitted.
+Added: The Company plans to early adopt this new standard effective January 1, 2022 and does not expect a material impact on its consolidated financial statements.
Basis of Presentation and Use of Estimates
2 unchanged sentences
GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period.
−Removed: Significant estimates include the assumptions used in the allocation of revenue, estimates towards the progress of completion of collaboration agreements, and the valuation of stock-based compensation.
+Added: Significant estimates include the assumptions used in the allocation of revenue, estimates regarding the progress of completing performance obligations under collaboration agreements, and the valuation of stock-based compensation.
Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements.
Principles of Consolidation
−Removed: The Company’s consolidated financial statements include the accounts of Schrödinger, Inc.
−Removed: and its wholly owned subsidiaries.
+Added: The Company’s consolidated financial statements include the accounts of Schrödinger, Inc., its wholly owned subsidiaries, and its variable interest entity.
All intercompany balances and transactions have been eliminated in consolidation.
3 unchanged sentences
Included in cash and cash equivalents were cash equivalents of $ 90,477 and $ 185,614 as of December 31, 2021 and 2020, respectively, which consisted of money market funds and certificates of deposit, and are stated at cost, which approximates market value.
−Removed: The Company classifies all highly liquid investments with an original maturity of three months or less to be cash equivalents.
+Added: The Company classifies all highly liquid investments with an original maturity of 90 days or less to be cash equivalents.
The Company classifies all marketable securities, which consist of fixed income securities, as available for sale securities.
At times, cash balances held at financial institutions were in excess of the Federal Deposit Insurance Corporation’s insured limits;
−Removed: however, the Company primarily places its temporary cash with high-credit quality financial institutions.
−Removed: Restricted cash consists of a letter of credit held with the Company’s financial institution related to facility leases, and is classified as current in the Company’s balance sheets based on the maturity of the underlying letter of credit.
+Added: however, the Company primarily places its cash with high-credit quality financial institutions.
+Added: Restricted cash consists of letters of credit held with the Company’s financial institution related to facility leases and is classified as current in the Company’s balance sheets based on the maturity of the underlying letters of credit.
Accounts Receivable
10 unchanged sentences
Property and equipment are stated at cost.
+Added: The Company did not capitalize any interest during 2021 and 2020.
Maintenance and repairs are expensed as incurred.
2 unchanged sentences
Property and equipment are reviewed for impairment as discussed below under Accounting for the Impairment of Long‑Lived Assets.
−Removed: The Company did not capitalize any interest during 2020 and 2019.
Accounting for the Impairment of Long‑Lived Assets
11 unchanged sentences
If deemed necessary, credit reviews of significant new customers may be performed prior to extending credit.
−Removed: The determination of a customer’s ability to pay requires judgment, and failure to collect from a customer can adversely affect revenue, cash, and net income.
−Removed: The Company maintains an allowance for doubtful accounts.
+Added: The determination of a customer’s ability to pay requires judgment, and failure to collect from a customer can adversely affect revenue, cash flows, and results of operations.
+Added: As of December 31, 2021, three customers accounted for 17 %, 15 %, and 11 % of total accounts receivable, respectively.
As of December 31, 2020, two customers accounted for 17 % and 14 % of total accounts receivable, respectively.
−Removed: As of December 31, 2019, one customer accounted for 10% of total accounts receivable.
+Added: For the year ended December 31, 2021, one customer accounted for 14 % of total revenues.
For the year ended December 31, 2020, no customer accounted for more than 10 % of total revenues.
23 unchanged sentences
Equity Investments
−Removed: The Company has entered into collaboration agreements with Nimbus Therapeutics, LLC (“Nimbus”), Morphic Therapeutic, Inc., a wholly owned subsidiary of Morphic Holding, Inc.
−Removed: (“Morphic”), Petra Pharma Corporation (“Petra”), and Relay Therapeutics, Inc.
−Removed: (“Relay”) to perform drug design services in exchange for minority ownership, which are included within equity investments in the Company’s consolidated balance sheets.
−Removed: The Company has concluded that the carrying value of its equity investment in Nimbus should reflect its contractual rights to substantive profits.
−Removed: The Company further determined that the hypothetical liquidation at book value method (“HLBV method”) for valuing contractual rights to substantive profits provides the best representation of its financial position in Nimbus.
−Removed: During 2020, the Company continued to value Nimbus using the HLBV method.
−Removed: The HLBV method is a balance sheet-oriented approach to equity method accounting.
−Removed: Under the HLBV method, the Company determines its share of earnings or losses by comparing its claim on the book value at the beginning and end of each reporting period.
−Removed: This claim is calculated as the amount that the Company would receive (or be obligated to pay) if the investee were to liquidate all of its assets at recorded amounts, determined as of the balance sheet date in accordance with U.S.
−Removed: GAAP, and distribute the resulting cash to creditors and investors in accordance with their respective priorities.
−Removed: Upon the completion of Morphic’s initial public offering in June 2019 , the Company changed the valuation methodology used to value the Morphic investment.
−Removed: As there is a readily available public market for Morphic’s common stock , the Company values its investment based on the closing price of Morphic’s common sto ck as of the reporting date.
−Removed: Upon the completion of Relay’s initial public offering in July 2020, the Company changed the valuation methodology used to value the Relay investment.
−Removed: As there is a readily available public market for Relay’s common stock, the Company values its investment based on the closing price of Relay’s common stock as of the reporting date.
−Removed: Prior to May 2020, the Company had concluded that its equity investment in Petra should be valued using the historical cost method, as the Company does not exercise significant influence over Petra.
−Removed: During May 2020, Petra merged with a third party.
−Removed: For further information regarding the Company’s equity investments, see Note 5, Fair Value Measurements and Note 12, Equity Investments.
−Removed: Net Loss per Share Attributable to Common and Limited Common Stockholders
−Removed: Following the completion of the Company’s IPO in February 2020, the outstanding equity of the Company consists of common stock and limited common stock.
+Added: In the normal course of business, the Company has entered, and may continue to enter, into collaboration agreements with private companies to perform drug design services for such companies in exchange for equity ownership stakes in such companies.
+Added: If it is determined that the Company has control over the investee, the investee is consolidated in the financial statements.
+Added: If the investee is consolidated with the Company and less than 100 % of the equity is owned by the Company, the Company will present non-controlling interest to represent the portion of the investee owned by other investors.
+Added: If it is determined that the Company does not have control over the investee, the Company evaluates the investment for the ability to exercise significant influence.
+Added: Equity investments over which the Company has significant influence may be accounted for under equity method accounting in accordance with ASC Topic 323, Equity Method and Joint Ventures.
+Added: If it is determined that the Company does not have significant influence over the investee, and there is no readily determinable fair value for the investment, the equity investment may be accounted for at cost minus impairment in accordance with ASC Topic 321, Equity Securities.
+Added: For further information regarding the Company’s equity investments, see Note 5, Fair Value Measurements, Note 10, Noncontrolling Interest, and Note 12, Equity Investments.
+Added: Net (Loss) Income per Share Attributable to Common and Limited Common Stockholders
+Added: The outstanding equity of the Company consists of common stock and limited common stock.
Under the Company’s certificate of incorporation, the rights of the holders of common stock and limited common stock are identical, except with respect to voting and conversion.
1 unchanged sentence
Limited common stock may be converted into common stock at any time at the option of the stockholder.
−Removed: Undistributed earnings allocated to the participating securities are subtracted from net income in determining net loss attributable to common and limited common stockholders.
−Removed: Basic net loss per share is computed by dividing net loss attributable to common and limited common stockholders by the weighted-average number of shares of common and limited common stock outstanding during the period.
−Removed: For the calculation of diluted net loss, net income attributable to common and limited common stockholders for basic net loss is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans.
−Removed: Diluted net loss per share attributable to common and limited common stockholders is computed by dividing the resulting net income attributable to common and limited common stockholders by the weighted-average number of fully diluted shares of common and limited common stock outstanding.
−Removed: For purposes of this calculation, stock options are considered common stock equivalents but have been excluded from the calculation of net loss per share attributable to common and limited stockholders as their effect is anti-dilutive.
−Removed: For years ended December 31, 2020 and 2019, the computation of basic and diluted net loss per share is presented on a combined basis for common and limited common stock because the results are identical.
+Added: Undistributed earnings allocated to the participating securities are subtracted from net income in determining net (loss) income attributable to common and limited common stockholders.
+Added: Basic net (loss) income per share is computed by dividing net (loss) income attributable to common and limited common stockholders by the weighted-average number of shares of common and limited common stock outstanding during the period.
+Added: For the calculation of diluted net income, net income attributable to common and limited common stockholders for basic net income is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans.
+Added: Diluted net income per share attributable to common and limited common stockholders is computed by dividing the resulting net income attributable to common and limited common stockholders by the weighted-average number of fully diluted shares of common and limited common stock outstanding.
Revenue Recognition
7 unchanged sentences
Drug Discovery – over time
−Removed: Software Products and Services
The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations.
−Removed: For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis.
+Added: For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price (“SSP”) basis.
Revenue is recognized net of any sale and value-added taxes collected from customers and subsequently remitted to governmental authorities.
15 unchanged sentences
Professional services .
−Removed: Professional services, such as training, technical support and installation or assisting customers with modeling, generally are not related to the functionality of the Company’s software and may be recognized as resources are consumed or over the term of the arrangement, depending on the terms of the underlying agreement.
+Added: Professional services, such as training, technical support, installation, or assisting customers with modeling, generally are not related to the core functionality of the Company’s software and are recognized as revenue when resources are consumed.
The Company has historically estimated project status with relative accuracy, although a number of internal and external factors can affect such estimates, including labor rates, utilization and efficiency variances.
Payments for services are due in advance or upon consumption of resources.
−Removed: Contribution .
−Removed: Contribution revenue consists of funds received under a non-reciprocal agreement with Gates Ventures, LLC.
+Added: Software c ontribution revenue .
+Added: Software c ontribution revenue consists of funds received under a non-reciprocal agreement with Gates Ventures, LLC.
The agreement is an unconditional non-exchange contribution without restrictions and the initial contribution was invoiced upon execution of the agreement.
−Removed: Revenue was recognized upon execution of the agreement when invoiced in accordance with Accounting Standards Codification (“ASC”) Topic 958, Not-for-Profit Entities, as the agreement is not an exchange transaction.
−Removed: The following table presents the revenue recognized from the five sources of the software products and services revenue:
+Added: Revenue was recognized upon execution of the agreement and on the first anniversary of the agreement when invoiced in accordance with ASC Topic 958, Not-for-Profit Entities as the agreement is not an exchange transaction.
+Added: The agreement with Gates Ventures, LLC covers the period from June 23, 2020 through June 22, 2023 for total consideration of up to $ 3,000 .
+Added: The Company received $ 1,000 in connection with its entry into the agreement in the second quarter of 2020, and $ 1,000 in the second quarter of 2021 on the first anniversary of its entry into the agreement.
+Added: The Company is also entitled to receive an additional $ 1,000 payment on or around the second anniversary of the agreement, subject to the Company providing certain progress reports to the Trustees of Columbia University in the City of New York.
+Added: As of December 31, 2021, the Company had no deferred revenue balance related to this agreement.
+Added: The following table presents the revenue recognized from the sources of software products and services revenue:
Year Ended December 31,
4 unchanged sentences
Revenue from contracts with customers
+Added: Software contribution
Total software revenue
−Removed: Contribution Revenue
−Removed: During the year ended December 31, 2020, the Company recognized contribution revenue related to an agreement with Gates Ventures, LLC, which covers the period from June 23, 2020 through June 22, 2023 for total consideration of up to $3,000.
−Removed: The Company received $1,000 in connection with its entry into the agreement, and the Company is entitled to receive additional $1,000 payments on or around the first and second anniversary of its entry into the agreement, subject to the Company providing certain progress reports to the Trustees of Columbia University in the City of New York.
−Removed: As of December 31, 2020, the Company had no deferred revenue balance related to this agreement.
−Removed: During the year ended December 31, 2020, the Company recognized $1,000 of contribution revenue.
Drug Discovery
+Added: Drug discovery services.
Revenue from drug discovery and collaboration services contracts is recognized either over time, typically by using costs incurred or hours expended to measure progress, or at a point in time based on the achievement of milestones.
5 unchanged sentences
As of December 31, 2021, 2020, and 2019, milestones not yet achieved that were determined to be probable of achievement totaled $ 2,250 , $ 250 , and $ 1,500 , respectively, and $ 2,250 , $ 85 , and $ 1,500 of those milestones were recognized as revenue for the years ended December 31, 2021, 2020, and 2019.
+Added: Drug discovery contribution revenue .
+Added: Drug discovery contribution revenue consists of funds received under an agreement with Bill and Melinda Gates Foundation on a cost reimbursement basis, to perform services aimed at accelerating drug discovery in women’s health, which began in November 2021.
+Added: Revenue is recognized as conditions are met in accordance with ASC Topic 958, Not-for-Profit Entities.
+Added: As of December 31, 2021, there was a $ 1,129 deferred revenue balance related to this agreement.
+Added: Year Ended December 31,
+Added: Drug discovery services revenue from contracts with customers
+Added: Drug discovery contribution
+Added: Total drug discovery revenue
Collaboration and License Agreement
1 unchanged sentence
The Company will be responsible, at its own cost and expense, for the discovery of small molecule compounds directed to five specified biological targets pursuant to a mutually agreed research plan for each such target.
−Removed: The targets include HIF-2 alpha and SOS1/KRAS, which are two of the Company’s internal programs.
+Added: The initial targets included HIF-2 alpha and SOS1/KRAS, which were two of the Company’s internal programs.
+Added: In November 2021, the Company and BMS mutually agreed to replace the HIF-2 alpha target with another precision oncology target.
+Added: Following the replacement election, all rights to the HIF-2 alpha target program reverted to us.
Once a development candidate meeting specified criteria for a target under the agreement has been identified by the Company, BMS will be solely responsible for the further development, manufacturing and commercialization of such development candidate at its own cost and expense.
Under the terms of the agreement, BMS paid the Company an initial upfront fee payment of $ 55,000 .
−Removed: The Company also is entitled to receive up to $2.7 billion in total milestone payments across all potential targets, consisting of:
+Added: The Company also is entitled to receive up to $ 2,700,000 in total milestone payments across all potential targets, consisting of:
a) up to $ 585,000 in milestone payments per oncology target, including $ 360,000 in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225,000 in the aggregate for the achievement of certain specified commercial milestones;
−Removed: and b) up to $482,000 million in milestone payments per neurology and immunology target, including $257,000 in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $225,000 in the aggregate for the achievement of certain specified commercial milestones.
+Added: and b) up to $ 482,000 in milestone payments per neurology and immunology target, including $ 257,000 in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $ 225,000 in the aggregate for the achievement of certain specified commercial milestones.
The Company is also entitled to a tiered percentage royalty on annual net sales ranging from mid-single digits to low-double digits, subject to certain specified reductions.
Royalties are payable by BMS on a licensed product-by-licensed product and country-by-country basis until the later of the expiration of the last valid claim covering the licensed product in such country, expiration of all applicable regulatory exclusivities in such country for such licensed product and the tenth anniversary of the first commercial sale of such licensed product in such country.
−Removed: The Company assessed the collaboration and license agreement in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606), and concluded that BMS is a customer based on the agreement structure.
+Added: The Company assessed the collaboration and license agreement in accordance with ASC 606 and concluded that BMS is a customer based on the agreement structure.
At inception, the Company identified one performance obligation for each of the five programs under the agreement, which includes research activities for each program and a license grant for the underlying intellectual property.
2 unchanged sentences
Additional consideration to be paid to the Company upon the achievement of future milestone payments were excluded from the transaction price as they represent milestone payments that are not considered probable as of the inception date such that there is not a significant risk of revenue reversal.
−Removed: The Company has allocated the transaction price of $55,000 to each performance obligation based on the relative stand-alone selling price of each performance obligation at inception, which was determined based on each performance obligation’s estimated stand-alone selling price.
−Removed: The Company determined the estimated stand-alone selling price at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin.
+Added: The Company has allocated the transaction price of $ 55,000 to each performance obligation based on the SSP of each performance obligation at inception, which was determined based on each performance obligation’s estimated standalone selling price.
+Added: The Company determined the estimated standalone selling price at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin.
Significant inputs used to determine the total costs to perform the research activities included the length of time required, the internal hours expected to be incurred on the services and the number and costs of various studies that will be performed to complete the research plan.
Revenue associated with the research activities is recognized on a proportional performance basis over the period of service for research activities, using input-based measurements of total costs of research incurred to estimate the proportion performed.
−Removed: Progress towards completion is remeasured at th e end of each reporting period.
−Removed: During the year ended December 31, 2020, the Company recognized $988 associated with the agreement based on the research activities performed subsequent to the contract start date.
−Removed: As of December 31, 2020, there was $54,012 of deferred revenue related to the agreement, which was classified as either current or non-current in the consolidated balance sheet based on the period the services are expected to be performed.
+Added: Progress towards completion is remeasured at the end of each reporting period.
+Added: During the years ended December 31, 2021 and 2020, the Company recognized $ 13,749 and $ 988 , respectively, associated with the agreement based on the research activities performed.
+Added: As of December 31, 2021 and 2020, there was $ 40,263 and $ 54,012 of deferred revenue related to the agreement, which was classified as either current or non-current in the consolidated balance sheet based on the period the services are expected to be performed.
There was no outstanding receivable for this collaboration as of December 31, 2021.
10 unchanged sentences
Once the estimated transaction price is established, amounts are allocated to the performance obligations that have been identified.
−Removed: The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price (“SSP”) basis.
+Added: The transaction price is allocated to each separate performance obligation on a SSP basis.
Judgment is required to determine the SSP for each distinct performance obligation.
7 unchanged sentences
The Company’s judgments about whether a group of contracts comprises a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.
−Removed: Judgment is required to determine the total costs to perform research activities, which include the length of time required, the internal hours expected to be incurred on the services, and the number and costs of various studies that may be performed to complete the research plan.
+Added: Judgment is required to determine the total costs to perform research activities, which include the length of time required, the internal hours expected to be incurred on the services, and the number and costs of various studies that may be performed by third-parties to complete the research plan.
Generally, the Company has not experienced significant returns or refunds to customers.
−Removed: The Company’s estimates related to revenue recognition require significant judgment and the change in these estimates could have an effect on the Company’s results of operations during the periods involved.
+Added: The Company’s estimates related to revenue recognition require significant judgment and a change in these estimates could have an effect on the Company’s results of operations during the periods involved.
Contract Balances
3 unchanged sentences
For the Company’s time-based software agreements, customers are generally invoiced at the beginning of the arrangement for the entire term, though when the term spans multiple years the customers may be invoiced on an annual basis.
−Removed: For certain drug discovery agreements where the milestones are deemed probable, the Company records a contract asset for the full value of the milestone.
+Added: For certain drug discovery agreements where the milestones are deemed probable in a period prior to when the milestone is achieved, the Company records a contract asset for the full value of the milestone.
Contract assets are included in unbilled and other receivables within the consolidated balance sheets and are transferred to receivables when the Company invoices the customer.
2 unchanged sentences
Deferred revenue, short-term:
+Added: Software products and services
Drug discovery
Deferred revenue, long-term:
+Added: Software products and services
Drug discovery
7 unchanged sentences
Deferred Sales Commissions
−Removed: The Company has applied the practical expedient for sales commission expense, as any compensation paid to sales representatives to obtain a contract relates to a period of one year or less.
+Added: The Company has applied the practical expedient for sales commission expense, as any material compensation paid to sales representatives to obtain a contract relates to a period of one year or less.
Therefore, the Company has not capitalized any costs related to sales commissions.
22 unchanged sentences
Equity investments
−Removed: Fair value of the Company’s investments in Morphic and Relay, classified as Level 1 in the fair value hierarchy, were determined using the respective market prices of Morphic’s and Relay’s common stock as of the close of trading on December 31, 2020.
−Removed: Fair value of the Company’s investment in Nimbus, classified as Level 3 in the fair value hierarchy, was determined under the HLBV method, as further described in Note 2, Significant Accounting Policies.
−Removed: Significant unobservable inputs used under the HLBV method include Nimbus’ annual financial statements and the Company’s respective liquidation priority.
+Added: Fair value of the Company’s investments in Nimbus Therapeutics, LLC (“Nimbus”) and ShouTi Inc.
+Added: (“ShouTi”), classified as Level 3 in the fair value hierarchy, was determined under the hypothetical liquidated book value method (“HLBV method”), as further described in Note 12, Equity Investments.
+Added: Significant unobservable inputs used under the HLBV method include Nimbus’ and ShouTi’s annual financial statements and the Company’s respective liquidation priorities.
The following table sets forth changes in fair value of the Company’s Level 3 investments:
As of December 31, 2019
+Added: Cash contributions
Unrealized loss
8 unchanged sentences
The Company leases office space under operating leases that expire at various dates through 2037 .
−Removed: The Company adopted Topic 842, Leases as of January 1, 2019 and elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to January 1, 2019.
−Removed: In addition, the Company elected the short-term lease exception as a practical expedient and to combine lease and non-lease components.
−Removed: The Company recognizes rent expense on a straight-line basis over the life of the related lease, including any periods of free rent.
+Added: The Company has elected the package of practical expedients under the transition guidance of ASC Topic 842, Leases , to exclude short-term leases from the balance sheet and to combine lease and non-lease components.
Upon inception of a lease, the Company determines if an arrangement is a lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that the Company will exercise the options.
1 unchanged sentence
In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable.
−Removed: The Company determined lease liability amounts using a discount rate of 5.01%, which represents the Company’s incremental borrowing rate.
−Removed: The Company determines its incremental borrowing rate for lease liability using its current borrowing rate, adjusted for various factors including level of collateralization and lease term.
+Added: Upon execution of a new lease, the Company performs an analysis to determine its incremental borrowing rate using its current borrowing rate, adjusted for various factors including level of collateralization and lease term.
As of December 31, 2021, the remaining weighted average lease term was 15 years.
−Removed: During the year ended December 31, 2020, the Company entered into two new leases, which increased right-of-use (“ROU”) assets and lease liabilities by $2,709.
+Added: During the year ended December 31, 2021, the accounting commencement began for two new leases, which increased the right-of-use (“ROU”) assets and lease liabilities by $ 71,054 .
ROU assets and lease liabilities were equal as no lease costs or incentives were associated with acquiring the leases.
+Added: On November 1, 2021, the Company entered into an office lease agreement for 16,727 square feet of office space located at One Main Street, Cambridge, Massachusetts.
+Added: Under the terms of the agreement, the Company will pay base rent of approximately $ 135 per month with a 3 % annual rental escalation.
+Added: The Company estimates that the lease commencement date will occur during the three months ending June 30, 2022 and continue to the end of the lease, which is 10 years after commencement.
+Added: On November 30, 2021, the Company entered into an office lease agreement for 19,753 square feet of office space located at Salarpuria Sattva, Knowledge City, Hyderabad, India.
+Added: Under the terms of the agreement, the Company will pay base rent of approximately $ 20 per month from commencement to handover date and $ 29 per month from handover date to termination of the lease.
+Added: The Company estimates that the lease handover and commencement dates will occur during the three months ending March 31, 2022 and continue to the end of the lease in June 2023 .
Variable and short-term lease costs were immaterial for the year ended December 31, 2021.
17 unchanged sentences
Deferred income tax expense (benefit)
−Removed: Components of income (loss) before income taxes by tax jurisdiction were as follows:
+Added: Components of loss before income taxes by tax jurisdiction were as follows:
Year ended December 31,
1 unchanged sentence
Loss before income taxes
−Removed: Reconciliation of income tax expense at the applicable statutory income tax rates to the effective rate is as follows:
+Added: Reconciliation of income tax expense at the applicable statutory income tax rates to the effective income tax rate is as follows:
Year ended December 31,
9 unchanged sentences
Effective income tax rate
−Removed: The income tax expense for the year ended December 31, 2020 primarily related to state taxes and taxes in foreign jurisdictions.
+Added: The income tax expense for the years ended December 31, 2021 and December 31, 2020 primarily related to state taxes and taxes in foreign jurisdictions.
Income tax benefit for the year ended December 31, 2019 primarily related to alternative minimum tax credits previously utilized that are refundable under the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”).
5 unchanged sentences
Accrued expenses
+Added: Deferred Revenue
+Added: Lease Liabilities
Gross deferred tax assets
11 unchanged sentences
These carryforwards will expire between 2022 and 2041 if not used by the Company to reduce income taxes payable in future periods.
+Added: Pursuant to Internal Revenue Code Sections 382 and 383, the utilization of NOLs and other tax attributes may be substantially limited due to cumulative changes in ownership greater than 50% that may have occurred or could occur during applicable testing periods.
+Added: The Company has performed an analysis through March 31, 2021 and
+Added: determined that such an ownership change has occurred.
+Added: There was no material impact to the financial statements due to this ownership change.
The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign operations as the Company considers these earnings to be indefinitely reinvested.
1 unchanged sentence
The CARES Act lifts certain deduction limitations originally imposed by the 2017 Tax Act.
−Removed: Corporate taxpayers may carryback NOLs originating during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act.
−Removed: The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020.
−Removed: Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020.
−Removed: The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act.
−Removed: The CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation.
−Removed: In addition, the CARES Act allows companies to defer making certain payroll tax payments until future years.
−Removed: With the enactment of the CARES Act, the Company has not recognized a quantitative or qualitative impact for the year ended December 31, 2020.
+Added: With the enactment of the CARES Act, the Company has not recognized a quantitative or qualitative impact for the years ended December 31, 2021, 2020, and 2019.
The Company classifies interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statement of operations.
7 unchanged sentences
The Company does not anticipate any significant increases or decreases in its uncertain tax positions within the next 12 months.
−Removed: As of December 31, 2020, statutes of limitations were open for all of the Company’s federal and state tax returns filed after the year ended December 31, 2015 and 2014, respectively.
−Removed: Net operating loss and credit carryforwards for all years are subject to
−Removed: examination and adjustments for the three years following the year in which the carryforwards are utilized.
−Removed: The Company is not currently undergoing any federal or state income tax examinations .
+Added: The Company and its subsidiaries file U.S.
+Added: federal income tax returns and various state, local and foreign income tax returns.
+Added: As of December 31, 2021, the Company’s statutes of limitations are open for all federal and state years tax returns filed after the years ended December 31, 2016 and 2015, respectively.
+Added: Net operating loss and credit carryforwards for all years are subject to examination and adjustments for the three years following the year in which the carryforwards are utilized.
+Added: The Company is not currently under Internal Revenue Service or state examination.
Stockholders’ Equity (Deficit)
−Removed: Upon the closing of the IPO, 226,344,686 shares of preferred stock automatically converted into an aggregate of 30,278,832 shares of common stock.
As of December 31, 2021, the Company had authorized 500,000,000 shares of common stock with a par value of $ 0.01 per share.
−Removed: Holders of common stock are entitled to one vote per share, to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock.
+Added: Holders of common stock are entitled to one vote per share, to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock, if any.
Common stockholders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.
−Removed: Common stock is subordinate to preferred stock with respect to dividend rights and rights upon liquidation, winding up, and dissolution of the Company.
+Added: The rights, preferences and privileges of holders of the common stock are subject to and may be adversely affected by the right of the holders of shares of any series of preferred stock that the Company may designate and issue in the future.
Limited Common Stock
−Removed: I mmediately prior to the closing of the IPO, preferred stockholders voluntarily exchanged 98,406,823 shares of preferred stock for an aggregate of 13,164,193 shares of limited common stock.
−Removed: During the year ended December 31, 2020, limited common stockholders voluntarily converted 4,000,000 shares of limited common stock into 4,000,000 shares of common stock.
As of December 31, 2021, the Company had authorized 100,000,000 shares of limited common stock with a par value of $ 0.01 per share.
−Removed: Holders of limited common stock are entitled to one vote per share, however, the holders of limited common stock are not entitled to vote such shares in any election of directors or on the removal of directors.
−Removed: Holders of limited common stock are entitled to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock.
−Removed: Holders of the Company’s limited common stock have the right to exchange each share of limited common stock for one share of the Company’s common stock.
+Added: Holders of limited common stock are entitled to one vote per share, however, the holders of limited common stock shall not be entitled to vote such shares in any election of directors or on the removal of directors.
+Added: Holders of limited common stock are entitled to receive dividends, if and when declared by the board of directors, and upon liquidation or dissolution, to receive a portion of the assets available for distributions to stockholders, subject to preferential amounts owed to holders of the Company’s preferred stock , if any .
+Added: Holders of the Company’s limited common stock have the right to convert each share of limited common stock into one share of the Company’s common stock.
Limited common stockholders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.
1 unchanged sentence
Preferred Stock
−Removed: As of December 31, 2020, the Company had authorized 10,000,000 shares of preferred stock with a par value of $0.01 per share.
+Added: As of December 31, 2021, the Company had authorized 10,000,000 shares of undesignated preferred stock with a par value of $ 0.01 per share.
The Company’s board of directors has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each series of preferred stock.
1 unchanged sentence
Stock Incentive Plans
−Removed: As of December 31, 2020, the Company’s stock incentive plans included the 2010 Stock Plan (the “2010 Plan”) and the 2020 Equity Incentive Plan (the “2020 Plan”) (together, the “Plans”).
−Removed: The 2020 Plan provides for the award of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards.
−Removed: The 2010 Plan provided for the granting of incentive stock options and non-qualified stock options.
+Added: As of December 31, 2021, the Company’s stock incentive plans included the 2010 Stock Plan (the “2010 Plan”), the 2020 Equity Incentive Plan (the “2020 Plan”), and the 2021 Inducement Equity Incentive Plan (the "2021 Plan”) (together, the “Plans”).
+Added: The 2020 Plan provides for the award of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards to employees, directors, consultants or advisors.
+Added: The 2021 Plan provides for the award of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards to persons who were not previously an employee or director of the Company or who are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to such person’s entry into employment with the Company and in accordance with the requirements of the Nasdaq Stock Market Rule 5635(c)(4).
+Added: Neither consultants nor advisors are eligible to participate in the 2021 Plan.
+Added: The 2010 Plan provided for the granting of incentive stock options and nonstatutory stock options to employees, directors, consultants, or advisors.
As of the effective date of the 2020 Plan, no further awards will be made under the 2010 Plan.
1 unchanged sentence
Shares of common stock subject to outstanding awards granted under the 2010 Plan that expire, terminate, or are otherwise surrendered, cancelled, forfeited, or repurchased by the Company are available for issuance under the 2020 Plan.
+Added: Stock Options
Stock options must be granted at an exercise price not less than 100 % of the fair market value per share at the grant date.
+Added: The board of directors or compensation committee determines the exercise price of the Company’s stock options based on the closing price of the common stock as reported on the Nasdaq Global Select Market on the day of the grant.
The maximum contractual term of options granted under the Plans is typically 10 years, options generally vest over four years with 25 % of the shares underlying the option vesting at the end of the first year and the remaining vesting monthly over the following three years.
−Removed: During 2020 and 2019 , 1,398,177 and 214,845 options under the Plans were exercised at a total exercise price of $ 4,183 and $ 549 , respectively.
+Added: During 2021, 2020, and 2019, 1,120,981 , 1,398,177 , and 214,845 options under the Plans were exercised for total proceeds of $ 7,927 , $ 4,183 , and $ 549 , respectively.
The fair value of each option award is determined on the date of grant using the Black Scholes Merton option-pricing model.
1 unchanged sentence
The expected terms of options granted to employees during 2021, 2020, and 2019 were calculated using an average of historical exercises.
−Removed: Estimated volatility for 2020 and 2019 incorporates a calculated volatility derived from the historical closing prices of shares of common stock of similar entities whose share prices were publicly available for the expected term of the option.
+Added: Estimated volatility for 2021, 2020, and 2019 incorporates a calculated volatility derived from the historical closing prices of shares of common stock of similar entities whose share prices were publicly available
+Added: for the expected term of the option.
The risk-free interest rate is based on the U.S.
1 unchanged sentence
The Company accounts for forfeitures as they occur, as such, the Company does not estimate forfeitures at the time of grant.
−Removed: The board of directors or compensation committee determines the exercise price of the Company’s stock options based on the closing price of the common stock as reported on the Nasdaq Global Select Market on the day of grant.
−Removed: As of December 31, 2020, there were 2,168,706 shares available for grant under the 2020 Plan.
−Removed: As of December 31, 2019, there were 236,005 shares available for grant under the 2010 Plan.
+Added: As of December 31, 2021, there were 2,283,037 shares available for grant under the Plans.
Following are the weighted average valuation assumptions used for options:
21 unchanged sentences
Noncontrolling Interest
−Removed: The Company reviews each legal entity formed by parties related to the Company to determine whether or not the Company has a variable interest in the entity and whether or not the entity would meet the definition of a variable interest entity (“VIE”) in accordance with ASC Topic 810, Consolidation (“ASC 810”).
−Removed: If the entity is a VIE, the Company assesses whether or not the Company is the primary beneficiary of that VIE based on a number of factors, including (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to any contractual agreements and (iii) which party has the obligation to absorb losses or the right to receive benefits from the VIE.
+Added: The Company reviews each legal entity formed by parties related to the Company to determine whether or not the Company has a variable interest in the entity and whether or not the entity would meet the definition of a variable interest entity (“VIE”) in accordance with ASC Topic 810, Consolidation .
+Added: If the entity is a VIE, the
+Added: Company assesses whether or not the Company is the primary beneficiary of that VIE based on a number of factors, including (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to any contractual agreements and (iii) which party has the obligation to absorb losses or the right to receive benefits from the VIE.
If the Company determines it is the primary beneficiary of a VIE, the Company consolidates the financial statements of the VIE into the Company’s consolidated financial statements at the time that determination is made.
1 unchanged sentence
If the Company were to determine that it is no longer the primary beneficiary of a consolidated VIE, or no longer has a variable interest in the VIE, it would deconsolidate the VIE in the period that the determination is made.
−Removed: If the Company determines it is the primary beneficiary of a VIE that meets the definition of a business, the Company measures the assets, liabilities and noncontrolling interests of the newly consolidated entity at fair value in accordance with ASC Topic 805, Business Combinations (“ASC 805”) at the date the reporting entity first becomes the primary beneficiary.
−Removed: In October 2018, Faxian was formed in the United States.
+Added: If the Company determines it is the primary beneficiary of a VIE that meets the definition of a business, the Company measures the assets, liabilities and noncontrolling interests of the newly consolidated entity at fair value in accordance with ASC Topic 805, Business Combinations at the date the reporting entity first becomes the primary beneficiary.
+Added: In October 2018, Faxian Therapeutics, LLC (“Faxian”) was formed in the United States.
In April 2019, upon consummation of the joint venture, the Company and WuXi AppTech ("WuXi"), each received a 50 % equity interest in the entity in exchange for their contributions to the entity.
The Company determined that Faxian was a VIE and concluded that it is the primary beneficiary of the VIE.
−Removed: As such, the Company has historically consolidated Faxian's results into the consolidated financial statements, and eliminated WuXi's ownership as a non-controlling interest.
+Added: As such, the Company has consolidated Faxian's results into the consolidated financial statements, and eliminated WuXi's ownership as a non-controlling interest.
Net Loss per Share Attributable to Common and Limited Common Stockholders
−Removed: The following table presents the calculation of basic and diluted net loss per share attributable to common and limited common stockholders for the years presented (in thousands, except per share data):
+Added: The following table presents the calculation of basic and diluted net loss per share attributable to common and limited common stockholders for the years presented (in thousands, except for share and per share data):
Year Ended December 31,
12 unchanged sentences
Equity Investments
−Removed: The Company classifies the Nimbus investment as an equity investment within the consolidated balance sheets.
−Removed: The initial Nimbus investment was received as compensation for collaboration services provided under a separate service agreement.
−Removed: During the year ended December 31, 2020, the Company made a $2,869 cash investment in Nimbus.
−Removed: The Company held 6.9% and 6.7% of Nimbus units on a fully diluted basis as of December 31, 2020 and December 31, 2019, respectively.
−Removed: As Nimbus is a limited liability company and the Company is not a passive investor due to its collaboration with Nimbus on a number of drug discovery targets, the Company's management determined that it has significant influence over the entity and therefore accounts for the entity as an equity method investment.
The Company provides collaboration services for Nimbus under the terms of a master services agreement executed on May 18, 2010, as amended.
Collaboration agreements are separate from the transaction that resulted in equity ownership and related fees are paid in cash to the Company.
−Removed: Under the HLBV method, the Company reported losses of $2,977 and $4,180 on the Nimbus investment during 2020 and 2019, respectively.
−Removed: The carrying value of the Nimbus investment was zero and $108 as of December 31, 2020 and December 31, 2019, respectively.
+Added: As Nimbus is a limited liability company and the Company is not a passive investor due to its collaboration with Nimbus on a number of drug discovery targets, the Company's management determined that it has significant influence over the entity and therefore accounts for the investment as an equity method investment.
+Added: The Company has concluded that the carrying value of its equity investment in Nimbus should reflect its contractual rights to substantive profits.
+Added: The Company further determined that the HLBV method for valuing contractual rights to substantive profits provides the best representation of its financial position in Nimbus.
+Added: The HLBV method is a balance sheet-oriented approach to equity method accounting.
+Added: Under the HLBV method, the Company determines its share of earnings or losses by comparing its claim on the book value at the beginning and end of each reporting period.
+Added: This claim is calculated as the amount that the Company would receive (or be obligated to pay) if the investee were to liquidate all of its assets at recorded amounts, determined as of the balance sheet date in accordance with U.S.
+Added: GAAP, and distribute the resulting cash to creditors and investors in accordance with their respective priorities.
+Added: The carrying value of the Nimbus investment was zero as of December 31, 2021 and December 31, 2020.
The Company has no obligation to fund Nimbus losses in excess of its initial investment.
−Removed: In June 2019, Morphic successfully completed an initial public offering.
−Removed: The Company accounts for its investment in Morphic at fair value based on the share price of Morphic’s common stock at the measurement date.
−Removed: During 2020 and 2019, the Company reported a gain of $13,685 and $14,102, respectively, on the Morphic investment.
+Added: The Company reported losses of zero , $ 2,977 , and $ 4,180 on the Nimbus investment during 2021, 2020, and 2019, respectively.
+Added: The Company accounts for its investment in Morphic Holding, Inc.
+Added: (“Morphic”) at fair value based on the share price of Morphic’s common stock at the measurement date.
+Added: During 2021, 2020, and 2019 the Company reported gains of $ 11,548 , $ 13,685 , and $ 14,102 on the Morphic investment, respectively.
As of December 31, 2021 and December 31, 2020, the carrying value of the Company’s investment in Morphic was $ 39,561 and $ 28,013 , respectively.
−Removed: The Company has no obligation to fund Morphic losses in excess of its initial investment.
+Added: Prior to May 2020, the Company had concluded that its equity investment in Petra Pharma Corporation (“Petra”) should be valued as a non-marketable equity security as the Company did not exercise significant influence over Petra.
During May 2020, Petra entered into a merger agreement with a third party.
1 unchanged sentence
The Company is also eligible to receive $ 361 in escrow payments.
−Removed: As the escrow payments are expected to be received within 12 months from the closing of the merger, they have been recorded as other receivables within the consolidated balance sheets.
−Removed: The Company recorded a gain on the Petra investment of $4,156 for the year ended December 31, 2020.
−Removed: The Company reported no gain or loss on the Petra investment for the year ended December 31, 2019.
−Removed: In connection with the merger, the Company also received 2,676,191 shares of common stock of Ravenna Pharmaceuticals, Inc.
−Removed: The Company does not exercise significant influence over Ravenna and, as such, the Company has recorded its investment in Ravenna as a non-marketable equity security.
−Removed: As of December 31, 2020 and December 31, 2019, the carrying value of non-marketable equity securities was $94 and $930, respectively.
+Added: During 2021, the Company received escrow payments of $ 335 .
+Added: In connection with the Petra merger, the Company received 2,676,191 shares of common stock of Ravenna Pharmaceuticals, Inc.
+Added: The Company concluded that its equity investment in Ravenna should be valued as a non-marketable equity security as the Company does not exercise significant influence over Ravenna.
+Added: As of each of December 31, 2021 and December 31, 2020, the carrying value of the Company’s investment in Ravenna was $ 19 and $ 94 , respectively.
+Added: The Company reported losses of $ 75 , zero , and zero on the Ravenna investment during 2021, 2020, and 2019, respectively.
In July 2020, Relay successfully completed an initial public offering.
The Company accounts for its investment in Relay at fair value based on the share price of Relay’s common stock at the measurement date.
−Removed: The Company reported a gain of $17,556 on the Relay investment for the year ended December 31, 2020, which is included within change in fair value in the consolidated statements of operations.
−Removed: The Company reported no gain or loss on the Relay investment for the year ended December 31, 2019.
−Removed: As of December 31, 2020 and December 31, 2019, the carrying value of the Company’s investment in Relay was $17,556 and zero, respectively.
−Removed: The Company has no obligation to fund Relay losses in excess of its initial investment.
+Added: In January 2021, the Company disposed of its equity stake in Relay for aggregate consideration of $ 15,735 , resulting in a loss of $ 1,821 for 2021.
+Added: The Company reported a gain of $ 17,556 on the Relay investment for the year ended December 31, 2020.
+Added: There was no gain or loss on the Relay investment for 2019, as Relay was not a public company during this period.
+Added: In May 2021, the Company purchased 631,377 shares of Series B preferred stock of Ajax Therapeutics, Inc.
+Added: (“Ajax”) for $ 1,700 in cash.
+Added: The Company has concluded that its equity investment in Ajax should be valued as a non-marketable equity security as the Company does not exercise significant influence over Ajax.
+Added: As of December 31, 2021 and December 31, 2020, the carrying value of the Company’s investment in Ajax was $ 1,700 and zero , respectively.
+Added: In July 2021, the Company purchased 494,035 shares of Series B preferred stock of ShouTi for $ 2,000 in cash.
+Added: As ShouTi is structured as a company limited by shares, incorporated under the laws of the Cayman Islands and the Company is not a passive investor due to its collaboration with ShouTi on a number of drug discovery targets, the Company’s management determined that it has significant influence over the entity and therefore accounts for the investment as an equity method investment.
+Added: The Company has determined that the HLBV method for valuing contractual rights to substantive profits provides the best representation of its financial position in ShouTi.
+Added: The carrying value of ShouTi was $ 1,887 and zero as of December 31, 2021 and December 31, 2020, respectively.
+Added: The Company has no obligation to fund ShouTi losses in excess of its initial investment.
+Added: The Company recorded a loss of $ 113 on the ShouTi investment during the year ended December 31, 2021.
Employee Benefit Plan
9 unchanged sentences
Shaw entities purchased certain products and services from, and provided cost reimbursements to, the Company totaling $ 318 , $ 226 , and $ 195 for the years ended December 31, 2021, 2020, and 2019, respectively.
−Removed: As of December 31, 2020 and December 31, 2019, the Company had net payables of $3,464 and $1,760, respectively, to D.E.
+Added: As of December 31, 2021 and 2020, the Company had net payables of $ 2,637 and $ 3,464 , respectively, to D.E.
Shaw entities.
1 unchanged sentence
Bill and Melinda Gates Foundation
−Removed: For the years ended December 31, 2020 and 2019, the Bill & Melinda Gates Foundation, an entity under common control with Bill and Melinda Gates Foundation Trust (“BMGFT”), a stockholder of the Company, issued a grant under which it agreed to pay the Company directly for certain licenses and services provided to a specified group of third-party organizations.
+Added: For the years ended December 31, 2021, 2020, and 2019, the Bill & Melinda Gates Foundation, an entity under common control with Bill and Melinda Gates Foundation Trust, a stockholder of the Company, issued a grant under which it agreed to pay the Company directly for certain licenses and services provided to a specified group of third-party organizations.
Revenue recognized for services provided by the Company under this grant were $ 1,160 , $ 2,094 , and $ 1,065 for the years ended December 31, 2021, 2020, and 2019, respectively.
−Removed: As of December 31, 2020 and December 31, 2019, the Company had net receivables of $543 and $294, respectively, due from the Bill & Melinda Gates Foundation.
−Removed: During the year ended December 31, 2020, the Company also recognized contribution revenue of $1,000 related to an agreement with Gates Ventures, LLC, an entity under control of William H.
+Added: As of December 31, 2021 and 2020, the Company had net receivables of $ 165 and $ 543 , respectively, due from the Bill & Melinda Gates Foundation.
+Added: In the fourth quarter of 2021, the Company recognized $ 111 in drug discovery contribution revenue related to funds received under an agreement with the Bill & Melinda Gates Foundation, aimed at accelerating drug discovery in women’s health.
+Added: As of December 31, 2021, the Company had no receivables due under this agreement from the Bill & Melinda Gates Foundation.
+Added: The Company received $ 1,000 in contribution revenue in connection with its entry into an agreement with Gates Ventures, LLC in the second quarter of 2020, and $ 1,000 in contribution revenue in the second quarter of 2021 on the first anniversary of its entry into the agreement.
+Added: Gates Ventures, LLC is an entity under control of William H.
Gates III, who may be deemed to be the beneficial owner of more than 5 % of the Company’s voting securities.
−Removed: There was no revenue recognized under this agreement for year ended December 31, 2019.
−Removed: As of December 31, 2020 and December 31, 2019, the Company did not record a receivables balance due from Gates Ventures, LLC.
+Added: As of December 31, 2021 and 2020, the Company had no net receivables due from Gates Ventures, LLC.
+Added: During the year ended December 31, 2021, the Company entered into multiple software agreements with ShouTi and its subsidiary for approximately $ 650 .
+Added: The Company recognized revenue of approximately $ 129 in the aggregate related to these agreements during the year ended December 31, 2021.
Segment Reporting
26 unchanged sentences
General and administrative
−Removed: Gain on equity investments
+Added: (Loss) gain on equity investments
Change in fair value
7 unchanged sentences
Subsequent Events
−Removed: On January 14, 2021, the Company sold 422,425 shares of Relay common stock for $15,735.
+Added: On January 14, 2022, we acquired 117,840 shares of XTAL BioStructures, Inc.
+Added: for $ 6.5 million, a company that provides structural biology services, including biophysical methods, protein production and purification, and X-ray crystallography, which includes $ 6.0 million in upfront purchase price, plus an adjustment for working capital, less cash acquired.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
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.