What changed in this filing

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Item 1. Financial Statements

2020-08-05 compared with 2020-05-08 · 170 added, 234 removed, 549 unchanged (42% of the section changed)

3 unchanged sentences

(in thousands, except share and per share data)

2020 December 31,

Current assets:

6 unchanged sentences

Operating lease right-of-use asset, net 584 —

Other assets 1 —

Total assets $ 33,485 $ 30,262

Liabilities and Stockholders’ Equity

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Accrued liabilities 3,020 5,108

Current portion of note payable

Current portion of notes payable 3,417 3,976

Total current liabilities 6,723 10,180

Note payable, net of current portion

Notes payable, net of current portion 5,380 4,328

Other liabilities 211 —

Total liabilities 12,314 14,508

3 unchanged sentences

100,000,000 shares authorized;

53,077,348 and 34,861,876 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

53,077,348 and 34,861,876 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital 203,291 183,574

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Collaboration revenue $ — $ 2,498 $ 681 $ 2,846

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Interest and other expense ( 94 ) ( 229 ) ( 235 ) ( 461 )

Net loss ( 6,435 ) ( 8,896 ) ( 14,479 ) ( 20,525 )

Change in unrealized gain on investments — 9 — 14

Comprehensive loss $ ( 6,435 ) $ ( 8,887 ) $ ( 14,479 ) $ ( 20,511 )

Net loss $ ( 6,435 ) $ ( 8,896 ) $ ( 14,479 ) $ ( 20,525 )

Net loss per share, basic and diluted $ ( 0.12 ) $ ( 0.29 ) $ ( 0.29 ) $ ( 0.66 )

4 unchanged sentences

(in thousands, except share data)

Accumulated Other Comprehensive Loss

Common Stock Additional

Capital Accumulated Other Comprehensive Gain (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount

Balance at December 31, 2019 34,861,876 $ 349 $ 183,574 $ — $ ( 168,169 ) $ 15,754

Prior period adjustment from adoption of ASC 842

Adjustment from adoption of ASC 842 — — — — ( 3 ) ( 3 )

Issuance of common stock and warrants in a public offering, net of issuance costs 15,000,000 150 13,731 — — 13,881

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Share-based compensation expense — — 664 — — 664

Net loss — — — — ( 8,044 ) ( 8,044 )

Balance at March 31, 2020 53,077,348 531 202,685 — ( 176,216 ) 27,000

Accumulated Other Comprehensive Loss

Issuance costs related to public offering — — ( 17 ) — — ( 17 )

Share-based compensation expense — — 623 — — 623

Net loss — — — — ( 6,435 ) ( 6,435 )

Balance at June 30, 2020 53,077,348 $ 531 $ 203,291 $ — $ ( 182,651 ) $ 21,171

Common Stock Additional

Capital Accumulated Other Comprehensive Gain (Loss) Accumulated

Deficit Total

Stockholders’

Shares Amount

Balance at December 31, 2018 30,839,463 $ 308 $ 177,335 $ ( 3 ) $ ( 126,296 ) $ 51,344

3 unchanged sentences

Change in unrealized gain on investments — — — 5 — 5

Net loss — — — — ( 11,629 ) ( 11,629 )

Balance at March 31, 2019 30,921,219 309 178,570 2 ( 137,925 ) 40,956

Issuance of common stock under the 2017 ATM, net of issuance costs 96,652 1 277 — — 278

Shares issued for cash upon the exercise of stock options under an equity incentive plan 19,492 — 15 — — 15

Share-based compensation expense — — 1,075 — — 1,075

Change in unrealized gain on investments — — — 9 — 9

Net loss — — — — ( 8,896 ) ( 8,896 )

Balance as of June 30, 2019 31,037,363 $ 310 $ 179,937 $ 11 $ ( 146,821 ) $ 33,437

See accompanying notes to these condensed consolidated financial statements.

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(unaudited, in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net loss $ ( 14,479 ) $ ( 20,525 )

Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation expense 1,287 2,093

Implementation of ASC 842 and other non-cash lease expenses

Non-cash interest expense

Amortization of financing issuance costs 281 —

Depreciation and amortization 132 144

Loss on sale of equipment

Amortization of premiums and discounts on available-for-sale securities

Other 131 ( 139 )

Changes in operating assets and liabilities:

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Cash flows from investing activities:

Purchases of short-term investments

Maturities of short-term investments 2,000 39,000

Proceeds from sale of property and equipment 1 —

Purchases of short-term investments — ( 28,726 )

Purchases of property and equipment — ( 69 )

Net cash provided by (used in) investing activities

Net cash provided by investing activities 2,001 10,205

Cash flows from financing activities:

1 unchanged sentence

Payment of issuance costs associated with the sale of common stock ( 1,193 ) ( 13 )

Payments of principal on note payable

Proceeds from issuance of notes payable 1,726 —

Payments of principal on notes payable ( 1,333 ) ( 333 )

Proceeds from stock purchases under employee stock purchase plan 16 84

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Amortization of public offering costs $ 30 $ 1

Unpaid common stock issuance costs included in current liabilities $ 19 $ —

Change in unrealized gain on investments

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Cobomarsen is an inhibitor of microRNA-155, which is found at abnormally high levels in malignant cells of several blood cancers.

The Company is also developing remlarsen and MRG-229, which are product candidates being developed for the treatment of patients with pathological fibrosis.

These product candidates are replacements for microRNA‑29 (“miR‑29”), which is found at abnormally low levels in a number of pathological fibrotic conditions, including cutaneous, cardiac, renal, hepatic, pulmonary and ocular fibrosis, as well as in systemic sclerosis.

MRG-110, an inhibitor of microRNA‑92, is the Company’s product candidate for the treatment of heart failure, wound healing, and other ischemic disease.

The Company is also developing remlarsen and MRG-229 for the treatment of patients with pathological fibrosis.

Both remlarsen and MRG-229 are replacements for microRNA-29 (“miR-29”), which is found at abnormally low levels in a number of pathological fibrotic conditions, including cutaneous, cardiac, renal, hepatic, pulmonary and ocular fibrosis, as well as in systemic sclerosis.

Remlarsen is a product candidate for local administration in cutaneous fibrosis and ocular fibrosis, while MRG-229 is the Company’s lead preclinical state compound for the potential systemic treatment of pulmonary, renal, and hepatic fibrosis.

Finally, MRG-110, an inhibitor of microRNA-92, is the Company’s product candidate for the treatment of heart failure, wound healing, and other ischemic disease.

The Company believes its experience in microRNA biology and chemistry, drug discovery, bioinformatics, translational medicine, and drug development allows it to identify and develop microRNA-targeted drugs that are designed to regulate gene pathways to return diseased tissues to a healthy state.

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The Company has funded its operations to date principally through proceeds received from the sale of the Company’s common stock (“Common Stock”) and other equity securities, debt financings, up-front milestones, and reimbursements received under a prior license and collaboration agreement.

Since its inception and through March 31, 2020 , the Company has generated an accumulated deficit of $176.2 million .

As of March 31, 2020 , the Company had approximately $36.1 million in cash and cash equivalents.

Based on its current operating plans, management believes that the Company’s cash and cash equivalents, combined with the effect of the six-month deferral of interest-only payments and the maturity date related to the Company’s loan and security agreement with Silicon Valley Bank (the “2017 SVB Loan Agreement”) in April 2020 (see Note 7.

Notes Payable ), will be sufficient to fund the Company’s operations into the third quarter of 2021 .

Since its inception and through June 30, 2020, the Company has generated an accumulated deficit of $ 182.7 million.

As of June 30, 2020, the Company had approximately $ 30.6 million in cash and cash equivalents.

Based on its current operating plans, management believes that the Company’s cash and cash equivalents will be sufficient to fund the Company’s operations into the third quarter of 2021.

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of Coronavirus, a global pandemic.

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If the pandemic continues to be a severe worldwide crisis, it could have a material adverse effect on the Company’s business, results of operations, financial condition, and cash flows.

The financial statements do not reflect any adjustments as a result of the COVID-19 pandemic.

The Company has no products approved for commercial sale, has not generated any revenue from product sales, and cannot guarantee when or if it will generate any revenue from product sales.

Since its inception and through March 31, 2020, the Company has generated an accumulated deficit of $176.2 million .

Since its inception and through June 30, 2020, the Company has generated an accumulated deficit of $ 182.7 million.

Substantially all of the Company’s operating losses resulted from expenses incurred in connection with its research and development programs and from general and administrative costs associated with its operations.

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The Company will continue to require additional capital beyond its current cash runway guidance of into the third quarter of 2021 to continue its operations.

The amount and timing of future funding requirements will depend on many factors, including the pace

and results of the Company’s clinical development efforts, equity financings, entering into license and collaboration agreements, and issuing debt or other financing vehicles.

The amount and timing of future funding requirements will depend on many factors, including the pace and results of the Company’s clinical development efforts, equity financings, entering into license and collaboration agreements, and issuing debt or other financing vehicles.

The Company’s ability to secure additional capital is dependent upon a number of factors, some of which are outside of the Company’s control, including success in developing its technology and drug product candidates, operational performance, and market conditions, including resulting from the ongoing COVID-19 pandemic.

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The Company accounts for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

The Company enters into collaboration agreements and certain other agreements that are within the scope of ASC 606, under which the Company licenses, may license, or grants an option to license rights to certain of the Company’s product candidates

and performs research and development services in connection with such agreements.

The terms of these agreements typically include payment of one or more of the following:

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The Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract.

The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction, and the estimated costs.

The Company utilizes key assumptions to determine the stand-alone selling price, which may include other

comparable transactions, pricing considered in negotiating the transaction, and the estimated costs.

Variable consideration is allocated specifically to one or more performance obligations in a contract when the terms of the variable consideration relate to the satisfaction of the performance obligation and the resulting amounts allocated are consistent with the amounts the Company would expect to receive for the satisfaction of each performance obligation.

The consideration allocated to each performance obligation is recognized as revenue when control is transferred for the related goods or services.

For performance obligations which consist of licenses and other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied

over time or at a point in time and, if over time, the appropriate method of measuring progress.

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

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(i) management commits to a plan of termination, (ii) the plan identifies the number of employees to be terminated and their job classifications or functions, locations and the expected completion date, (iii) the plan establishes the terms of the benefit arrangement, and (iv) it is unlikely that significant changes to the plan will be made or the plan will be withdrawn.

For one-time termination benefits for which future service is required, a liability is measured at the communication date based on its value as of the termination date and recognized ratably over the future service period.

For one-time termination benefits for

which future service is required, a liability is measured at the communication date based on its value as of the termination date and recognized ratably over the future service period.

The Company recognizes and measures a liability for other related costs in the period in which the liability is incurred.

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An impairment charge would occur when a decline in the fair value of the investments below the cost basis is judged to be other-than-temporary.

As of March 31, 2020 , the Company did not have any balances associated with available-for-sale securities.

As of June 30, 2020, the Company did not have any balances associated with available-for-sale securities.

As of December 31, 2019, the Company’s short-term available-for-sale securities had an amortized cost of $ 2.0 million, fair value of $ 2.0 million, and no associated unrealized gain or loss.

The Company had no long-term investments as of March 31, 2020 or December 31, 2019 .

The Company had no long-term investments as of June 30, 2020 or December 31, 2019.

Fair Value Measurements

3 unchanged sentences

Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability .

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Level 1 Level 3 Level 1 Level 3

(in thousands)

1 unchanged sentence

treasury securities (included in short-term investments) — — 1,999 —

Total assets $ 30,918 $ — $ 27,262 $ —

Common Stock warrants (included in accrued and other liabilities) $ — $ 100 $ — $ 100

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The lease payments used to determine the Company’s operating lease assets may include lease incentives, stated rent increases, and escalation clauses and are recognized in the Company’s operating lease assets in the Company’s condensed consolidated balance sheets.

The Company’s operating leases are reflected in operating lease right-of-use asset and operating lease liability within accrued liabilities in the Company’s consolidated balance sheets.

The Company’s operating leases are reflected in operating lease right-of-use asset and operating lease liability within accrued and other liabilities in the Company’s condensed consolidated balance sheets.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

4 unchanged sentences

The Company assesses the carrying amount of its property and equipment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

No impairment charges were recorded during the three months ended March 31, 2020 and 2019 .

No impairment charges were recorded during the three and six months ended June 30, 2020 and 2019.

Net Loss per Share

3 unchanged sentences

Comprehensive loss is comprised of net loss and adjustments for the change in unrealized gains and losses on investments.

Unrealized accumulated comprehensive gains or losses are reflected as a separate component in the statement of stockholders’ equity.

The Company had no realized or unrealized gains or losses during the three months ended March 31, 2020 .

The Company had an unrealized gain of $5 thousand and no realized gains or losses during the three months ended March 31, 2019.

Unrealized accumulated comprehensive gains or losses are reflected as a separate component in the condensed consolidated statements of stockholders’ equity.

The Company had no realized or unrealized gains or losses during the three and six months ended June 30, 2020.

The Company had unrealized gains of $ 9 thousand and $ 14 thousand during the three and six months ended June 30, 2019, respectively, and no realized gains or losses during the same corresponding periods.

The Company accounts for income taxes by using an asset and liability method of accounting for deferred income taxes.

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The Company classifies interest and penalties arising from the underpayment of income taxes in the condensed consolidated statements of operations and comprehensive loss as general and administrative expenses.

No such expenses have been recognized during the three months ended March 31, 2020 and 2019 .

No such expenses have been recognized during the three and six months ended June 30, 2020 and 2019.

The legislation informally titled the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was signed into law on December 22, 2017.

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international taxation from a worldwide tax system to a territorial tax system.

The Tax Act did not have a material impact on the Company’s condensed consolidated financial statements primarily due to the valuation allowance recorded against its net deferred tax assets.

Under the Tax Act as modified by the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), federal NOLs incurred in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five tax years preceding such loss, and NOLs arising in tax years beginning after December 31, 2020 may not be carried back.

Because we have had no taxable income in prior years, we do not anticipate carrying back any of our net operating losses.

Moreover, federal net operating losses generated in tax years ending after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of current year taxable income for tax years beginning after January 1, 2021.

Neither the Tax Act nor the CARES Act have had a material impact on the Company’s condensed consolidated financial statements primarily due to the valuation allowance recorded against its net deferred tax assets.

Segment Information

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The Company adopted ASC 842 on January 1, 2020, using the optional transition method permitted by ASU No.

2018-11 in which an immaterial prior-period cumulative adjustment was recorded at January 1, 2020.

The Company’s building operating lease commitments are subject to the new standard, which resulted in an operating lease liability of $ 0.4 million and a right-of-use asset of $ 0.4 million, with no material effect on the Company’s condensed consolidated statements of operations and comprehensive loss.

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The eliminated positions were primarily related to research and development and corresponding project, general, and administrative support.

Through March 31, 2020 , the Company had recorded

cumulative restructuring expense of $2.2 million and expects to incur approximately $0.2 million in additional restructuring expense, primarily related to retention, during the remainder of 2020.

The Company recorded $0.1 million in restructuring charges during the three months ended March 31, 2020 , which was primarily related to retention transactions and recorded in research and development expenses on the condensed consolidated statements of operations and comprehensive loss.

From the inception of the restructuring plan in August 2019 and through June 30, 2020, the Company had recorded cumulative restructuring expense of $ 2.3 million and expects to incur approximately $ 0.1 million in additional restructuring expense, primarily related to retention, during the remainder of 2020.

The Company recorded $ 0.1 million and $ 0.2 million in restructuring charges during the three and six months ended June 30, 2020, respectively, which was primarily related to retention transactions and recorded in research and development expenses on the condensed consolidated statements of operations and comprehensive loss.

No restructuring charges were recorded during the three and six months ended June 30, 2019.

The following table summarizes the Company’s accrued restructuring liability balance and associated activity (in thousands):

December 31, 2019

Cash Payments

March 31, 2020

December 31, 2019 Additions Adjustments Cash Payments June 30, 2020

Retention $ 935 $ 192 $ 37 $ ( 972 ) $ 192

Severance and severance-related expenses 580 16 2 ( 413 ) 185

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STRATEGIC ALLIANCE AND COLLABORATION WITH SERVIER

In October 2011, the Company entered into a license and collaboration agreement (the “Servier Collaboration Agreement”) with Les Laboratoires Servier and Institut de Recherches Servier (collectively, “Servier”) for the research, development, and commercialization of RNA-targeting therapeutics in cardiovascular disease.

In 2011, the Company entered into a license and collaboration agreement (the “Servier Collaboration Agreement”) with Les Laboratoires Servier and Institut de Recherches Servier (collectively, “Servier”) for the research, development, and commercialization of RNA-targeting therapeutics in cardiovascular disease.

Under the Servier Collaboration Agreement, the Company granted Servier an exclusive license to research, develop, manufacture, and commercialize RNA-targeting therapeutics for certain microRNA targets in the cardiovascular field.

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The Company combined the amendments with the original agreement due to the modifications not resulting in increased promised goods or services that were distinct, and the price of the contract did not increase by an amount of consideration that reflects the Company’s standalone selling prices.

The Company identified the following performance obligations under the Servier Collaboration Agreement:

(i) up-front license fee for a multiple-year research collaboration, under which it jointly performed agreed upon research activities directed to the identification and characterization of named targets and oligonucleotides in the cardiovascular field (the “Research Collaboration”);

(ii) research and development activities;

(iii) transfer of materials;

(iv) developmental, clinical, regulatory, and commercial sales milestone payments;

and (v) royalties on net sales of licensed products.

The Company acts as a principal as it controls the goods or services prior to transfer to the customer.

The Company performed the research and development activities specified in the contracts and controlled the laboratories and resources that performed the research and development activities.

The Company concluded that the up-front license fees were not distinct from the Research Collaboration as Servier cannot obtain the benefit of the license without the Research Collaboration.

This performance obligation represented the licensing of Company‑owned intellectual property related to the Company’s knowledge of microRNA therapeutics for certain specific diseases, together with research activities that were interdependent with licensed intellectual property to determine feasibility of commercialization.

As of January 1, 2019, the date of the initial application of ASC 606 by the Company, the remaining total transaction price associated with the Servier Collaboration Agreement was determined to be approximately $3.1 million consisting of maximum reimbursements of development costs under the development plan.

During February 2019, the Joint Steering Committee approved an additional $1.0 million of development plan activities.

As of January 1, 2019, the Company identified up to $60.4 million in development and regulatory milestones under the Servier Collaboration Agreement, and the Company had recognized $7.5 million in milestone revenue through the initial application date.

The Company utilizes the most likely amount method to estimate any development

and regulatory milestone payments to be received.

The Company considered the stage of development and the risks associated with the remaining development required to achieve these milestones, as well as whether the achievement of the milestones is outside the control of the Company.

The Company determined that the remaining milestone payments were fully constrained, as a result of the uncertainty whether the milestones would be achieved by March 31, 2020 .

The Company also determined that any commercial milestones and sales-based royalties will be recognized when the related sales occur and, therefore, these payments have also been excluded from the transaction price.

The Company re-evaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur.

As of March 31, 2020 , no adjustments to the transaction price were noted.

The transaction price was allocated to the performance obligations based on the relative estimated standalone selling prices of each performance obligation or, in the case of certain variable consideration, to one or more performance obligations.

The Company identified several performance obligations under the Servier Collaboration Agreement and allocated the transaction price to these performance obligations based on the relative estimated standalone selling prices of each performance obligation or, in the case of certain variable consideration, to one or more performance obligations.

Research and development activities are priced generally at the standard labor rates for the respective activity and transfer of materials are generally priced at cost.

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therefore, the negotiated amounts of the milestones in the agreement are the standalone selling price.

Amounts incurred and billable, but not billed to Servier, for research and related intellectual property activities totaled $1 thousand and $0.3 million as of March 31, 2020 and December 31, 2019 , respectively.

These amounts are included in prepaid expenses and other current assets in the Company’s condensed consolidated balance sheets.

As of March 31, 2020 and December 31, 2019 , the Company had no accounts receivable balances outstanding for Servier research and related intellectual property activities.

The amounts recognized in 2019 under ASC 606 did not materially differ from what the Company would have recognized under ASC 605.

During the three months ended March 31, 2020 and 2019 , the Company recorded collaboration revenue related to reimbursable research and development costs under the Servier Collaboration Agreement of $0.7 million and $0.3 million , respectively.

Amounts incurred and billable, but not billed to Servier, for research and related intellectual property activities totaled $ 0.3 million as of December 31, 2019, which are included in prepaid expenses and other current assets in the Company’s condensed consolidated balance sheets.

No amounts were incurred and billable, but not billed to Servier, for research and related intellectual property activities as of June 30, 2020.

As of June 30, 2020 and December 31, 2019, the Company had no accounts receivable balances outstanding for Servier research and related intellectual property activities.

Collaboration revenue under the Servier Collaboration Agreement consisted of the following:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

(in thousands)

Research and development reimbursable costs $ — $ 2,498 $ 681 $ 2,846

PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:

2020 December 31,

(in thousands)

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Property and equipment, net $ 379 $ 523

During the three months ended March 31, 2020 and 2019 , depreciation and amortization expense was $0.1 million .

During the three and six months ended June 30, 2020 and 2019, depreciation and amortization expense was $ 0.1 million.

Depreciation and amortization expense is recorded primarily in research and development expense on the condensed consolidated statements of operations and comprehensive loss.

1 unchanged sentence

Accrued liabilities consisted of the following:

2020 December 31,

(in thousands)

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Accrued employee compensation and related taxes 686 508

Operating lease liability 397 —

Restructuring liability 377 1,515

Accrued legal fees and expenses 311 284

Operating lease liability

Accrued other professional service fees 105 254

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Deferred and accrued facility lease obligations — 66

Accrued equipment and lab materials

Other accrued liabilities 85 122

Total accrued liabilities $ 3,020 $ 5,108

NOTES PAYABLE

2017 Silicon Valley Bank Loan Agreement

In November 2017, the Company entered into the 2017 SVB Loan Agreement.

In November 2017, the Company entered into a loan and security agreement with Silicon Valley Bank (the “2017 SVB Loan Agreement”).

Upon entry into the 2017 SVB Loan Agreement, the Company borrowed $ 10.0 million with a 30 -month payment period following an 18 -month interest-only payment period ending in November 2021.

In April 2020, the 2017 Loan Agreement was amended to extend the interest-only payment period and extended maturity date by an additional six months.

Amounts outstanding bear interest at the prime rate ( 3.25% and 4.75% at March 31, 2020 and December 31, 2019 , respectively), with a final payment fee equal to $0.9 million due upon maturity.

As of March 31, 2020 , no additional amounts are available under the 2017 SVB Loan Agreement.

Amounts outstanding bear interest at the prime rate ( 3.25 % and 4.75 % at June 30, 2020 and December 31, 2019, respectively), with a final payment fee equal to $ 0.9 million due upon maturity.

As of June 30, 2020, no additional amounts are available under the 2017 SVB Loan Agreement.

The Company may elect to prepay prior to maturity all or any portion of the outstanding principal amounts under the 2017 SVB Loan Agreement, subject to a prepayment charge, depending on the date of prepayment or upon the occurrence of an event of default in which the Company’s obligations to repay the outstanding principal is accelerated.

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Upon the occurrence of an event of default, at the Silicon Valley Bank’s discretion, interest on the 2017 SVB Loan Agreement will accrue at 5.0 % above the rate that is otherwise applicable thereto until the earlier of the repayment of the Company’s obligations under the 2017 SVB Loan Agreement or the cure of such event of default.

Amounts outstanding under the 2017 SVB Loan Agreement were as follows:

(in thousands)

Amounts outstanding under the 2017 SVB Loan Agreement were as follows (in thousands):

2020 December 31,

Principal amount outstanding $ 6,333 $ 7,667

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Note payable, net of current portion $ 4,421 $ 4,328

Future annual minimum principal payments under the 2017 SVB Loan Agreement as of March 31, 2020 for the respective calendar years are as follows (in thousands):

Future annual minimum principal payments under the 2017 SVB Loan Agreement as of March 31, 2020 (after giving effect to the amendment of the 2017 SVB Loan Agreement in April 2020), for the respective calendar years would have been as follows (in thousands):

Future annual minimum principal payments under the 2017 SVB Loan Agreement as of June 30, 2020 for the respective calendar years are as follows (in thousands):

Total $ 6,333

Paycheck Protection Program Loan

In April 2020, the Company received approximately $ 1.7 million in loan funding under the Paycheck Protection Program (the “PPP”), established pursuant to the CARES Act and administered by the U.S.

Small Business Administration (the “SBA”).

The unsecured loan (the “PPP Loan”) is evidenced by a promissory note of the Company (the “Note”) in the principal amount of approximately $ 1.7 million, to Silicon Valley Bank (the “Bank”), the lender.

Under the terms of the Note and the PPP Loan, interest accrues on the outstanding principal at the rate of 1.0 % per annum.

The term of the Note is two years , though it may be payable sooner in connection with an event of default under the Note.

To the extent the loan amount is not forgiven under the PPP, the Company is obligated to make equal monthly payments of principal and interest.

Payments of principal and interest on the PPP Loan will be deferred for the first six months of the PPP Loan term.

The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed.

Under the PPP, the Company may apply for and be granted forgiveness for all or part of the PPP Loan.

The amount of loan proceeds eligible for forgiveness is based on a formula that takes into account a number of factors, including the amount of loan proceeds used by the Company during the eight-week period after the loan origination for certain purposes, including payroll costs, interest on certain mortgage obligations, rent payments on certain leases, and certain qualified utility payments, provided that at least 75% of the loan amount is used for eligible payroll costs.

Subject to the other requirements and limitations on loan forgiveness, only loan proceeds spent on payroll and other eligible costs during the covered eight-week period will qualify for forgiveness.

The Company intends to use the PPP Loan for qualifying and other related expenses.

The Company can provide no assurance that it will obtain forgiveness of the PPP Loan in whole or in part.

The Note may be prepaid in part or in full, at any time, without penalty.

The Note provides for certain customary events of default, including (i) the Company’s failure to make a payment when due under the Note, (ii) the Company’s failure to do anything required by the Note or any other loan document, (iii) if the Company defaults on any other loan with the Bank, (iv) the Company’s failure to preserve, or account to the Bank’s satisfaction for, any of the collateral or its proceeds, (v) the Company’s failure, or anyone acting on behalf of the Company’s failure, to disclose any material fact to the Bank or the SBA, (vi) if the Company makes, or anyone acting on behalf of the Company makes, a materially false or misleading representation to the Bank or the SBA, (vii) the Company’s default on any loan or agreement with another creditor, if the Bank believes the default may materially affect the Company’s ability to pay the Note, (viii) the Company’s failure to pay any taxes when due, (ix) if the Company becomes the subject of a proceeding under any bankruptcy or insolvency law, (x) if the Company has a receiver or liquidator appointed for any part of the Company’s business or property, (xi) if the Company makes an assignment for the benefit of creditors, (xii) if the Company has any adverse change in financial condition or business operation that the Bank believes may materially affect the Company’s ability to pay the Note, (xiii) if the Company reorganizes, merges, consolidates, or otherwise changes ownership or business structure without the Bank’s prior written consent, or (xiv) if the Company becomes the subject of a civil or criminal action that the Bank believes may materially affect the Company’s ability to pay the Note.

Upon the occurrence of an event of default, the Bank has customary remedies and may, among other things,

require immediate payment of all amounts owed under the Note, collect all amounts owing from the Company, and file suit and obtain judgment against the Company.

Amounts outstanding under the PPP Loan were as follows (in thousands):

Principal amount outstanding $ 1,726

current maturities ( 767 )

Note payable, net of current portion $ 959

Future annual minimum principal payments under the PPP Loan as of June 30, 2020 for the respective calendar years are as follows (in thousands):

Total $ 1,726

COMMITMENTS AND CONTINGENCIES

Indemnification Agreements

The Company has entered into indemnification agreements with each of its directors and officers whereby it has agreed to indemnify such persons for certain events or occurrences while the individual is, or was, serving as a director, officer, employee, or other agent of the Company.

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited.

Employment Agreements

The Company has entered into agreements with its executives and its employees that provide for base salary, severance, eligibility for bonuses, and other generally available benefits.

The agreements provide that the Company may terminate the employment of its employees, including executives, at any time, with or without cause.

If an employee under an employment agreement is terminated without cause, as defined in the employment agreements, or an employee under an employment agreement resigns for good reason, as defined in the employment agreements, then the employee under the employment agreement is entitled to receive, upon the execution of a release agreement, a severance package consisting of one or more of the following provisions:

(i) the equivalent of up to 3 months of the employee’s base salary in effect immediately prior to date of termination;

(ii) acceleration of vesting of the equivalent of up to 3 months of vesting of the executive’s outstanding unvested stock options or other equity awards that were outstanding as of the effective date of the executive’s employment agreement;

and (iii) up to 3 months of continued health coverage.

If an executive is terminated without cause or resigns for good reason within one month prior to or 12 months following a change of control, as defined in the employment agreements, the executive is entitled to receive, upon the execution of a release agreement, a severance package consisting of:

(i) the equivalent of 12 months of the executive’s base salary in effect immediately prior to date of termination;

(ii) the vesting in full of the executive’s then-outstanding stock options or other equity awards subject to time-

based vesting;

and (iii) 12 months of continued health coverage.

Solely in the case of the Company’s Chief Executive Officer, if such termination occurs one month before or 12 months following a change of control, then, upon the execution of a release agreement, the executive is entitled to:

(i) the equivalent of 24 months of the executive’s base salary in effect immediately prior to the date of termination;

(ii) the vesting in full of the executive’s outstanding stock options or other equity awards subject to time-based vesting;

and (iii) 12 months of continued health coverage.

License Agreement with the University of Texas

As of March 31, 2020 , the Company had one exclusive patent license agreement (the “UT License Agreement”) with the Board of Regents of The University of Texas System (the “University of Texas”).

Under the UT License Agreement, the University of Texas granted the Company exclusive and nonexclusive licenses to certain patent and technology rights.

At the time the UT License Agreement was entered into, the University of Texas was a minority stockholder of the Company.

In consideration of rights granted by the University of Texas, the Company is required to:

(i) pay a nonrefundable up-front license documentation fee in the amount of $10 thousand ;

(ii) pay an annual license maintenance fee in the amount of $10 thousand starting one year from the date of the agreement;

(iii) reimburse the University of Texas for actual costs incurred in conjunction with the filing, prosecution, enforcement, and maintenance of patent rights prior to the effective date;

and (iv) bear all future costs of and manage the filing, prosecution, enforcement, and maintenance of patent rights.

During the three months ended March 31, 2020 and 2019 , the Company incurred immaterial up-front and maintenance fees, which were recorded as research and development expense.

All costs related to the filing, prosecution, and maintenance of patent and technology rights are recorded as general and administrative expense when incurred.

Under the terms of the UT License Agreement, the Company may be obligated to make the following future milestone payments for each licensed product candidate:

(i) up to approximately $0.6 million upon the initiation of defined clinical trials;

(ii) $2.0 million upon regulatory approval in the United States;

and (iii) $0.5 million per region upon regulatory approval in other specified regions.

Additionally, if the Company or any of its sublicensees successfully commercializes any product candidate subject to the UT License Agreement, it is responsible for royalty payments in the low-single digits based upon net sales of such licensed products and payments at a percentage in the mid-teens of any sublicense income, subject to specified exceptions.

The University of Texas’s right to these royalty payments will expire upon the expiration of the last patent claim subject to the UT License Agreement.

During the three months ended March 31, 2020 and 2019, the Company did not incur any milestone payments.

The license term extends on a product-by-product and country-by-country basis until the expiration of the last to expire of the licensed patents that covers such product in such country.

Upon expiration of the royalty payment obligation, the Company will have a fully-paid license in such country.

The Company may also terminate each UT License Agreement for convenience upon a specified number of days’ prior notice to the University of Texas.

The University of Texas also has the right to earlier terminate the UT License Agreement after a defined date under specified circumstances where the Company has effectively abandoned its research and development efforts or has no sales.

The UT License Agreement will terminate under customary termination provisions including automatic termination upon the Company’s bankruptcy or insolvency, upon notice of an uncured material breach, and upon mutual written consent.

All charges incurred under the UT License Agreement have been expensed to date due to the uncertainty as to future economic benefit from the acquired rights.

License Agreement with Roche Innovation Center Copenhagen A/S (formerly Santaris Pharma A/S)

The Company is party to a license agreement with Santaris Pharma A/S, which subsequently changed its name to Roche Innovation Center Copenhagen A/S (“RICC”), which was acquired by F.

Hoffmann-La Roche Ltd (“Roche”), in 2014.

The agreement was entered into in June 2010, was amended in October 2011, amended and restated in December 2012, and further amended in August 2019 (the “RICC License Agreement”).

At the time the RICC License Agreement was entered into, Roche was a minority stockholder of the Company.

Under the RICC License Agreement, the Company has received exclusive and nonexclusive licenses from RICC to use specified technology of RICC (the “RICC Technology”) for specified uses, including research, development, and commercialization of pharmaceutical products using this technology worldwide.

Under the RICC License Agreement, the Company has the right to develop and commercialize the RICC Technology directed to four specified targets and the option to obtain exclusive product licenses for up to six additional targets.

The acquisition of Santaris Pharma A/S by Roche was considered a change of control under the RICC License Agreement, and as such, certain terms and conditions of the RICC License Agreement changed, as contemplated and in accordance with the RICC License Agreement.

These changes primarily relate to milestone payments reflected in the disclosures below.

If the Company exercises its option to obtain additional product licenses or to replace the target families, it will be required to make additional payments to RICC.

Under the terms of the RICC License Agreement, milestone payments were previously decreased by a specified percentage as a result of the change of control by RICC referenced above.

The Company is obligated to make milestone payments for each licensed product of up to $5.2 million , which is inclusive of a potential product license option fee.

Certain of these milestones will be increased by a specified percentage if the Company undergoes a change of control as defined under the RICC License Agreement.

If the Company grants a third party a sublicense to the RICC Technology, it is required to remit to Roche up to a specified percentage of the up-front, milestone, and other specified payments it receives under its sublicense, and if such sublicense covers use of the RICC Technology in the United States or the entire European Union, the Company will not have any further obligation to pay the fixed milestone payments noted above.

During the three months ended March 31, 2020 and 2019 , the Company did not incur expense related to any milestones reached under the RICC License Agreement.

If the Company or its sublicensee successfully commercializes any product candidate subject to the RICC License Agreements, then RICC is entitled to royalty payments in the mid-single digits on the net sales of such product, provided that if such net sales are made by a sublicensee under the RICC License Agreement, RICC is entitled to royalty payments equal to the lesser of a percentage in the mid-single digits on the net sales of such product or a specified percentage of the royalties paid to the Company by such sublicensee, subject to specified restrictions.

The Company is obligated to make any such royalty payments until the later of:

(i) a specified anniversary of the first commercial sale of the applicable product or (ii) the expiration of the last valid patent claim licensed by RICC under the RICC License Agreement underlying such product.

Upon the occurrence of specified events, the royalty owed to RICC will be decreased by a specified percentage.

The RICC License Agreement will terminate upon the latest of the expiration of all of RICC’s royalty rights, the termination of the last miRagen target, or the expiration of its right to obtain a product license for a new target under the RICC License Agreement.

The Company may also terminate the RICC License Agreement for convenience upon a specified number of days’ prior notice to RICC, subject to specified terms and conditions.

Either party may terminate the RICC License Agreement upon an uncured material breach by the other party and RICC may terminate the RICC License Agreement upon the occurrence of other specified events immediately or after such event is not cured within a specified number of days, as applicable.

All charges incurred under the RICC License Agreement have been expensed to date due to the uncertainty as to future economic benefit from the acquired rights.

During the three months ended March 31, 2020 and 2019, the Company did not make any payments to RICC for raw materials to be used in its drug manufacturing process.

Subcontract Agreement with Yale University

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Yale is responsible for filing, prosecuting, and maintaining foreign and domestic patent applications and patents on all inventions jointly developed by the parties under the Yale Agreements.

Through March 31, 2020 , the Company has received $1.0 million under the Yale Agreements.

Through June 30, 2020, the Company has received $ 1.0 million under the Yale Agreements.

The Yale Agreements terminate automatically on the date that Yale delivers its final research report to the NIH under the terms of the grant underlying the Yale Agreements.

Each party may also terminate the Yale Agreements upon a specified number of days’ notice in the event that the NIH’s grant funding is reduced or terminated or upon material breach by the other party.

License Agreements with the t2cure GmbH

The Company is party to a license and collaboration agreement (the “t2cure Agreement”) that began in October 2010 with t2cure GmbH (“t2cure”), which was subsequently amended.

Under the t2cure Agreement, the Company received a worldwide, royalty-bearing, and exclusive license to specified patent and technology rights relating to microRNA-92.

In consideration of rights granted by t2cure, the Company paid an up-front fee of $46 thousand and the Company is obligated to:

(i) pay an annual license maintenance fee in the amount of €3 thousand ( $3 thousand as of March 31, 2020 );

and (ii) reimburse t2cure for costs incurred in conjunction with the filing, prosecution, enforcement, and maintenance of patent rights.

Under the terms of the t2cure Agreement, the Company is obligated to make the following future milestone payments for each licensed product, as defined in the t2cure Agreement:

(i) up to approximately $0.7 million upon the initiation of certain defined clinical trials;

(ii) $2.5 million upon regulatory approval in the United States;

and (iii) up to $1.5 million per region upon regulatory approval in the European Union or Japan.

Additionally, if the Company or any of its sublicensees successfully commercialize any product candidate subject to the t2cure Agreement, it is responsible for royalty payments equal to percentages in the low-single digits upon net sales of licensed products, and under specified circumstances, sublicense fees equal to a percentage in the low twenties of sublicense income received by it.

The Company is obligated to make any such royalty payment until the later of:

(i) the tenth anniversary of the first commercial sale of the applicable product or (ii) the expiration of the last valid claim to a patent licensed by t2cure under the t2cure Agreement covering such product.

If such patent claims expire prior to the end of the ten -year term, then the royalty owed to t2cure will be decreased by a specified percentage.

The Company also has the right to decrease its royalty payments by a specified percentage for royalties paid to third parties for licenses to certain third-party intellectual property.

The license term extends on a country-by-country basis until the later of:

(i) the tenth anniversary of the first commercial sale of a licensed product in a country and (ii) the expiration of the last to expire valid claim that claims such licensed product in such country.

Upon expiration of the royalty payment obligation, the Company will have a fully-paid license in such country.

The Company has the right to terminate the t2cure Agreement at will, on a country-by-country basis, after 60 days’ written notice.

The t2cure Agreement will also automatically terminate upon the Company’s bankruptcy or insolvency or upon notice of an uncured material breach.

All charges incurred under the t2cure Agreement have been expensed to date, due to the uncertainty as to future economic benefit from the acquired rights.

Lease Obligation Payable

Effective January 1, 2019, the Company adopted ASC 842 using the optional transition method provided by ASU No.

2018-11, which requires recognition of a right-of-use asset and a lease liability for all leases at the transition date, based on the present value of the lease payment over the lease term.

The Company is party to a multi-year, noncancelable lease agreement that began in December 2010 for its current office and lab space.

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Minimum base lease payments under the lease agreement, including the impact of tenant improvement allowances, are recognized on a straight-line basis over the full term of the lease.

As of March 31, 2020 , the lease was scheduled to mature on December 31, 2020, but was subsequently amended in April 2020 to extend the maturity to December 31, 2021.

The Company recognized a right-of-use asset and corresponding lease liability for the lease agreement of $0.4 million as of January 1, 2020, by calculating the present value of lease payments, discounted at 6% , the Company’s estimated incremental borrowing rate, over the 12 months expected remaining term.

The lease term was amended in April 2020, which extended the lease term.

As of June 30, 2020, the lease was scheduled to mature on December 31, 2021.

Upon adoption, the Company recognized a right-of-use asset and corresponding lease liability for the lease agreement of $ 0.4 million as of January 1, 2020, by calculating the present value of lease payments, discounted at 6 %, the Company’s estimated incremental borrowing rate, over the 12 months expected remaining term.

As a result of the transition to ASC 842, the Company recorded an immaterial prior-period adjustment, as a cumulative-effect adjustment, at January 1, 2020.

In April 2020,

when the lease was amended, the Company accounted for the amendment as a lease modification in accordance with ASC 842, which resulted in an immaterial adjustment to the right-of-use asset and corresponding lease liability.

The interest rate implicit in the lease contract is not readily determinable and as such, the Company’s uses an incremental borrowing rate, based on prior borrowing rates, at the implementation date.

This is an internally developed rate that would be incurred to borrow, with similar collateral, over the term of the lease.

Amortization of the operating lease right-of-use asset, and corresponding reduction of operating lease obligation, amounted to $0.1 million for the three months ended March 31, 2020 , and was included in operating expense.

As of March 31, 2020, the remaining lease term was nine months .

In April 2020, the lease was amended to extend the term to December 31, 2021.

During the three months ended March 31, 2020 and 2019 , lease rental expense, and the corresponding cash outflow, was approximately $0.1 million .

Future minimum payments as of March 31, 2020 were approximately $0.3 million , through December 31, 2020.

After giving effect to the April 2020 lease amendment, future minimum payments were approximately $0.7 million through December 31, 2021.

The Company is also required to pay for operating expenses related to the leased space, which were $0.1 million for the three months ended March 31, 2020 and 2019 .

Amortization of the operating lease right-of-use asset, and corresponding reduction of operating lease obligation, amounted to $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2020, respectively, and was included in operating expense in the condensed consolidated statement of operations and comprehensive loss.

During the three and six months ended June 30, 2019, lease rental expense, and the corresponding cash outflow, was approximately $ 0.1 million and $ 0.2 million, respectively.

As of June 30, 2020, the remaining lease term was 1.5 years.

Future minimum payments as of June 30, 2020 were approximately $ 0.6 million through December 31, 2021.

As of June 30, 2020, the Company’s operating lease obligations were reflected as operating lease liabilities of $ 0.4 million as accrued liabilities and $ 0.2 million as other liabilities in the Company’s condensed consolidated balance sheets.

The Company is also required to pay for operating expenses related to the leased space, which were $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2020 and 2019, respectively.

The operating expenses are incurred separately and were not included in the present value of lease payments.

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As consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement and the Initial Purchase Shares, the Company issued to 959,079 shares of Common Stock to Aspire Capital as a non-refundable commitment fee, for a total issuance of 2,557,544 shares.

In January 2020, the Company sold to Aspire Capital 2,200,000 shares Common Stock at a weighted-average price of $1.84 per share for proceeds of $4.1 million .

As of May 8, 2020 , the Company may sell an additional $14.9 million of shares of Common Stock to Aspire Capital.

In January 2020, the Company sold to Aspire Capital 2,200,000 shares of Common Stock at a weighted-average price of $ 1.84 per share for proceeds of $ 4.1 million.

In July 2020, the Company sold to Aspire Capital an additional 3,532,806 shares of Common Stock at a weighted-average price of $ 1.25 for proceeds of $ 4.4 million.

As of August 5, 2020, the Company may sell an additional $ 10.5 million of shares of Common Stock to Aspire Capital.

Under the Aspire Stock Purchase Agreement, the Company has the right, in its sole discretion, on any trading day selected by it, and within certain specified limitations, to present Aspire Capital with a purchase notice, directing Aspire Capital (as principal) to purchase up to 200,000 shares of Common Stock per business day at a per share price equal to the lesser of (i) the lowest sale price of Common Stock on the purchase date or (ii) the average of the three lowest closing sale prices for the Common Stock during the 10 consecutive business days ending on the business day immediately preceding the purchase date.

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At the initial closing, the Company issued 150,987 shares of Common Stock at a price per share equal to $ 6.62 .

On October 31, 2019, the Company issued an additional 606,364 shares of Common Stock to LLS TAP at a price per share of

approximately $0.82 .

On October 31, 2019, the Company issued an additional 606,364 shares of Common Stock to LLS TAP at a price per share of approximately $ 0.82 .

The Company has received aggregate net proceeds of approximately $ 1.4 million after expenses incurred in connection with the Offering.

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(i) the sale of all Common Stock subject to the ATM Agreement or (ii) termination of the ATM Agreement in accordance with its terms.

During the three months ended March 31, 2020 , the Company sold, pursuant to the terms of the ATM Agreement, 975,063 shares of Common Stock, at a weighted average price of $0.72 per share, for aggregate net proceeds of approximately $0.7 million , including commissions to Cowen as sales agent.

Since March 2017 and through March 31, 2020 , the Company sold, pursuant to the terms of the ATM Agreement, an aggregate of 2,846,449 shares of Common Stock, at a weighted average price of $4.25 per share, for aggregate net proceeds of approximately $11.6 million , including initial expenses for executing the “at the market offering” and commissions to Cowen as sales agent.

During the six months ended June 30, 2020, the Company sold, pursuant to the terms of the ATM Agreement, 975,063 shares of Common Stock, at a weighted average price of $ 0.72 per share, for aggregate net proceeds of approximately $ 0.7 million, including commissions to Cowen as sales agent.

Since March 2017 and through June 30, 2020, the Company sold, pursuant to the terms of the ATM Agreement, an aggregate of 2,846,449 shares of Common Stock, at a weighted average price of $ 4.25 per share, for aggregate net proceeds of approximately $ 11.6 million, including initial expenses for executing the “at the market offering” and commissions to Cowen as sales agent.

Common Stock Public Offering

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Each whole warrant has an exercise price of $ 1.10 per share and expires on the fifth anniversary of the date of issuance.

The shares of common stock and warrants were sold together as a fixed combination, each consisting of one share of Common Stock and one-half warrant, with each whole warrant exercisable to purchase one whole share of Common Stock but were issued separately and were immediately separable upon issuance.

The shares of common stock and warrants were sold together as a fixed combination, each consisting of one share of Common Stock and one-half warrant, with each whole warrant

exercisable to purchase one whole share of Common Stock but were issued separately and were immediately separable upon issuance.

The combined price to the public in the offering for each share of Common Stock and accompanying half warrant was $ 1.00 , which resulted in approximately $ 13.9 million of net proceeds to the Company after deducting underwriting commissions and discounts and other estimated offering expenses payable by the Company and excluding the proceeds, if any, from the exercise of the warrants.

Series Preferred

As of March 31, 2020 , the Company had no shares of preferred stock outstanding and had not designated any class or series of preferred stock.

As of June 30, 2020, the Company had no shares of preferred stock outstanding and had not designated any class or series of preferred stock.

Under the Company’s amended and restated certificate of incorporation, the Company’s board of directors has the authority to designate and issue up to 5,000,000 shares of preferred stock, at its discretion, in one or more classes or series and to fix the powers, preferences and rights, and the qualifications, limitations, or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, and liquidation preferences, without further vote or action by the Company’s stockholders.

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Warrants are classified as liabilities when the Company may be required to settle a warrant exercise in cash and classified as equity when the Company settles a warrant exercise in shares of its common stock.

Liability-classified warrants are valued at fair value at the date of issue and at each reporting date pursuant to FASB ASC 820, Fair Value Measurement , and are reflected as a warrant liability on the Company’s consolidated balance sheets with the change in the warrant liability during each reporting period reflected as a gain (loss) from change in fair value of warrant liability in the consolidated statement of operations.

Number of Underlying Shares (1)

Weighted Average Exercise Price at March 31, 2020

Remaining Contractual Life at March 31, 2020

March 31, 2020

December 31, 2019

Liability-classified warrants are valued at fair value at the date of issue and at each reporting date pursuant to FASB ASC 820, Fair Value Measurement , and are reflected as a warrant liability on the Company’s condensed consolidated balance sheets with the change in the warrant liability during each reporting period reflected as a gain (loss) from change in fair value of warrant liability in the condensed consolidated statement of operations and comprehensive loss.

Number of Underlying Shares (1) Weighted Average Exercise Price at June 30, 2020 Remaining Contractual Life at June 30, 2020

June 30, 2020 December 31, 2019

Liability-classified warrants

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Acquired February 2017 — 10,707 $ — —

Subtotal 7,524,097 34,804 $ 1.12

Total warrants 7,535,815 46,522 $ 1.13

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(2) Subject to specified conditions, the Company may voluntarily reduce the warrant exercise price of the warrants issued in February 2020.

A summary of the Company’s warrant activity during the three months ended March 31, 2020 is as follows:

A summary of the Company’s warrant activity during the six months ended June 30, 2020 is as follows:

Common Stock Warrants

Weighted Average Exercise Price

Number Weighted Average Exercise Price

Outstanding at December 31, 2019 46,522 $ 17.93

Outstanding at March 31, 2020

Granted 7,500,000 $ 1.10

Expired ( 10,707 ) $ 52.50

Outstanding at June 30, 2020 7,535,815 $ 1.13

Liability-Classified Warrants

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Equity Incentive Plans

As of March 31, 2020 , there were 1,072,787 options outstanding and no remaining equity awards available for future issuances under the 2008 Plan.

As of June 30, 2020, there were 1,063,002 options outstanding and no remaining equity awards available for future issuances under the 2008 Plan.

All awards granted under the 2008 Plan that, after February 13, 2017, expire or terminate for any reason prior to exercise or settlement, are forfeited, or are reacquired, withheld, or not issued to satisfy a tax withholding obligation or to satisfy the exercise price of a stock award, will become available for grant under the 2016 Plan in accordance with its terms.

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Cumulative increases to the share reserve through January 1, 2020 consisted of 3,530,773 shares.

As of March 31, 2020 , there were outstanding stock options to purchase 3,732,288 shares of Common Stock and 1,895,040 shares of Common Stock available for issuance pursuant to the terms under the 2016 Plan.

As of June 30, 2020, there were outstanding stock options to purchase 4,095,970 shares of Common Stock and 1,541,083 shares of Common Stock available for issuance pursuant to the terms under the 2016 Plan.

Options granted under the 2008 Plan and the 2016 Plan have an exercise price equal to the market value of the Common Stock at the date of grant and expire ten years from the date of grant.

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Number of Options

(in thousands)

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

Aggregate Intrinsic Value

(in thousands) Weighted Average Exercise Price Weighted Average Remaining Contractual Term

(years) Aggregate Intrinsic Value

(in thousands)

Outstanding at December 31, 2019 3,497 $ 5.19 5.91 $ —

Granted 2,505 $ 0.89

Exercised ( 17 ) $ 0.76

Forfeited or expired ( 826 ) $ 4.84

Outstanding at March 31, 2020

Vested or expected to vest at March 31, 2020

Exercisable as of March 31, 2020

Vested as of March 31, 2020

Outstanding at June 30, 2020 5,159 $ 3.17 6.86 $ 633,352

Vested or expected to vest at June 30, 2020 5,159 $ 3.17 6.86 $ 633,352

Exercisable as of June 30, 2020 2,328 $ 4.70 5.28 $ 34,819

Vested as of June 30, 2020 2,328 $ 4.70 5.28 $ 34,819

Fair Value Assumptions

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Stock Options Granted

The weighted-average grant-date fair value of options granted to the Company’s employees and members of its board of directors during the three months ended March 31, 2020 and 2019 was $0.61 and $2.37 , respectively.

The weighted-average grant-date fair value of options granted to the Company’s employees and members of its board of directors during the six months ended June 30, 2020 and 2019 was $ 0.65 and $ 2.33 , respectively.

The fair value was determined by the Black-Scholes option pricing model using the following weighted-average assumptions:

Three Months Ended

Six Months Ended

Expected term, in years 4.82 6.36

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The Company expects that a new 6 -month offering period will begin each August 22 and February 22.

As of March 31, 2020 , the Company had 947,793 shares available for issuance and 145,061 cumulative shares had been issued under the ESPP.

As of June 30, 2020, the Company had 947,793 shares available for issuance and 145,061 cumulative shares had been issued under the ESPP.

Share-Based Compensation Expense

Share-based compensation related to all equity awards issued pursuant to the 2008 Plan and 2016 Plan and for estimated shares to be issued under the ESPP for the purchase periods active during each respective period is included in the condensed consolidated statements of operations and comprehensive loss as follows:

Three Months Ended

Six Months Ended

(in thousands)

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Total share-based compensation expense $ 1,287 $ 2,093

As of March 31, 2020 , the Company had $4.6 million of total unrecognized employee and non-employee share-based compensation costs, which the Company expects to recognize over a weighted-average remaining period of 2.16 years.

As of June 30, 2020, the Company had $ 3.9 million of total unrecognized employee and non-employee share-based compensation costs, which the Company expects to recognize over a weighted-average remaining period of 2.36 years.

NET LOSS PER SHARE

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Warrants to purchase Common Stock 7,536 47

SUBSEQUENT EVENTS

In April 2020, the Company received approximately $1.7 million in loan funding under the Paycheck Protection Program (the “PPP”), established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S.

Small Business Administration (the “SBA”).

The unsecured loan (the “PPP Loan”) is evidenced by a promissory note of the Company (the “Note”) in the principal amount of approximately $1.7 million , to Silicon Valley Bank (the “Bank”), the lender.

Under the terms of the Note and the PPP Loan, interest accrues on the outstanding principal at the rate of 1.0% per annum.