UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
(Address of principal executive offices)
(Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: |
| Trading Symbol |
| Name of each exchange on which registered: |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
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Non-accelerated filer ☐ | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our business strategy, future operations and results thereof, future financial position, future revenue, projected costs, prospects, current and prospective products, product approvals, research and development costs, current and prospective collaborations, timing and likelihood of success, plans and objectives of management, expected market growth and future results of current and anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “contemplate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
These forward-looking statements include, among other things, statements about:
● | the implementation of our business model and our plans to develop and commercialize our lead product candidates and other product candidates, including the potential clinical efficacy and other benefits thereof; |
● | the rate and degree of market acceptance and clinical utility any current or future product candidate for which we may receive marketing approval; |
● | our ability and plans in continuing to build out our commercial infrastructure and successfully launching, marketing, and selling naxitamab, omburtamab and any current or future product candidate for which we may receive marketing approval, including our plans with respect to the focus and activities of our sales force, the nature of our marketing, market access and patient support activities and related assumptions; |
● | the pricing and reimbursement of, and the extent to which patient assistance programs are utilized for naxitamab, omburtamab or any current or future product candidate for which we may receive marketing approval; |
● | our ongoing and future clinical trials for our lead product candidates naxitamab and omburtamab, whether conducted by us or by any of our collaborators, including the timing of initiation of these trials, the pace of enrollment, the completion of enrollment, the availability of data from these trials, the expected dates of Biological License Application, or BLA, submission and approval by the United States Food and Drug Administration, or FDA, and equivalent foreign regulatory authorities and of the anticipated results; |
● | our pre-clinical studies and future clinical trials for our other product candidates and our research and development programs, whether conducted by us or by any of our collaborators, including the timing of initiation of these trials, the pace of enrollment, the expected date of completion and of the anticipated results; |
● | the timing of and our ability to obtain and maintain regulatory, marketing and reimbursement approvals for our product candidates; |
● | our ability to retain the continued service of our key employees and to identify, hire and retain additional qualified employees, including a direct sales force; |
● | our plans for remediation of material weaknesses in our internal control over financial reporting; |
● | our commercialization, marketing and manufacturing capabilities and strategy; |
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● | our intellectual property position and strategy and the scope of protection we are able to establish and maintain for the intellectual property rights covering our product candidates and technology; |
● | our ability to identify and develop additional product candidates and technologies with significant commercial potential; |
● | our plans and ability to enter into collaborations or strategic partnerships for the development and commercialization of our product candidates and future operations; |
● | the potential benefits of any future collaboration or strategic partnerships; |
● | our expectations related to the use of our cash and cash equivalents, how long that cash is expected to last; |
● | the need for, timing and amount of any future financing transaction; |
● | our financial performance, including our estimates regarding revenues, expenses, capital expenditure requirements; |
● | developments relating to our competitors and our industry; |
● | adverse effects on our business, financial condition and results of operations from the global COVID-19 pandemic, including the pace of global economic recovery from the pandemic; |
● | the impact of government laws and regulations; |
● | our ability to comply with healthcare laws and regulations in the United States and any foreign countries, including, without limitation, those applying to the marketing and sale of pharmaceutical products; and |
● | our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. |
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, licensing arrangements, collaborations, joint ventures or investments that we may make.
The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
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TABLE OF CONTENTS
You should read this Quarterly Report and the documents we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from the plans, intentions, and expectations disclosed in the forward-looking statements we may make.
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PART I – FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Y-MABS THERAPEUTICS, INC.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share data)
| September 30, |
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2020 | 2019 | |||||
ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents | $ | | $ | | ||
Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets | | | ||||
Other assets |
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TOTAL ASSETS | $ | | $ | | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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LIABILITIES |
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Accounts payable | $ | | $ | | ||
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Operating lease liabilities, current portion | | | ||||
Total current liabilities |
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Accrued milestone and royalty payments |
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Operating lease liabilities, long-term portion | | | ||||
Other liabilities | | | ||||
TOTAL LIABILITIES |
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Commitments and contingencies (Note 6) |
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STOCKHOLDERS’ EQUITY |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid in capital |
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Accumulated other comprehensive income / (loss) |
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Accumulated deficit |
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TOTAL STOCKHOLDERS’ EQUITY |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | | $ | |
The accompanying notes are an integral part of the consolidated financial statements
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Y-MABS THERAPEUTICS, INC.
Consolidated Statements of Net Loss and Comprehensive Loss
(unaudited)
(In thousands, except share and per share data)
Three months ended September 30, |
| Nine months ended September 30, | ||||||||||
2020 | 2019 |
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OPERATING EXPENSES |
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Research and development | $ | | $ | | $ | | $ | | ||||
General and administrative |
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Total operating expenses |
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Loss from operations |
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OTHER INCOME, NET |
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Interest and other income / (expenses), net |
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NET LOSS | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income / (loss) |
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Foreign currency translation |
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COMPREHENSIVE LOSS | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Net loss per share attributable to common stockholders, basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted average common shares outstanding, basic and diluted |
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The accompanying notes are an integral part of the consolidated financial statements
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Y-MABS THERAPEUTICS, INC.
Consolidated Statements of Changes in Stockholders’ Equity
(unaudited)
(In thousands, except share data)
Accumulated | |||||||||||||||||
Other | |||||||||||||||||
Common Stock | Additional | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
| Shares |
| Amount |
| Paid-in Capital |
| Income / (Loss) |
| Deficit |
| Equity | ||||||
Balance December 31, 2018 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Foreign currency translation | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance March 31, 2019 | | | | | ( | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Foreign currency translation | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | ( | ( | ||||||||||||
Balance June 30, 2019 | | | | ( | ( | | |||||||||||
Issuance of common stock to non-employees | | — | — | — | — | — | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Foreign currency translation | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance September 30, 2019 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Accumulated | |||||||||||||||||
Other | |||||||||||||||||
Common Stock | Additional | Comprehensive | Accumulated | Stockholders’ | |||||||||||||
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Balance December 31, 2019 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Exercise of stock options | | — | | — | — | | |||||||||||
Stock-based compensation expense | | — | | — | — | | |||||||||||
Foreign currency translation | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance March 31, 2020 | | | | | ( | | |||||||||||
Issuance of common stock to non-employees | | — | | — | — | | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Foreign currency translation | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance June 30, 2020 | | | | ( | ( | | |||||||||||
Exercise of stock options | | — | | — | — | | |||||||||||
Issuance of common stock to non-employee | | — | — | — | — | — | |||||||||||
Stock-based compensation expense | — | — | | — | — | | |||||||||||
Foreign currency translation | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Balance September 30, 2020 |
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The accompanying notes are an integral part of the consolidated financial statements
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Y-MABS THERAPEUTICS, INC.
Consolidated Statements of Cash Flows
(unaudited)
(In thousands)
Nine months ended September 30, | |||||||
2020 | 2019 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Non-cash expense in connection with equity issuance to MSK/MIT | | — | |||||
Non-cash expense in connection with equity issuance to inventors | | — | |||||
Foreign currency transactions |
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Changes in assets and liabilities: |
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Other current assets |
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Other assets |
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Accounts payable |
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Accrued liabilities and other |
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NET CASH USED IN OPERATING ACTIVITIES |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of property and equipment |
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Loans to inventors | ( | — | |||||
NET CASH USED IN INVESTING ACTIVITIES |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from exercised stock options | | — | |||||
NET CASH PROVIDED BY FINANCING ACTIVITIES |
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Effect of exchange rates on cash and cash equivalents |
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NET DECREASE IN CASH AND CASH EQUIVALENTS |
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Cash and cash equivalents at the beginning of period |
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Cash and cash equivalents at the end of period | $ | | $ | | |||
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES |
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Property and equipment purchases in accounts payable | — | | |||||
Right-of-use assets obtained in exchange for lease obligations | | |
The accompanying notes are an integral part of the consolidated financial statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1—ORGANIZATION AND DESCRIPTION OF BUSINESS
Y-mAbs Therapeutics, Inc. (“we,” “us,” “our,” the “Company,” or “Y-mAbs”) is a late-stage clinical biopharmaceutical company focused on the development and commercialization of novel antibody-based therapeutic products for the treatment of cancer.
The Company is headquartered in New York, New York and was incorporated on April 30, 2015 under the laws of the State of Delaware.
NOTE 2—BASIS OF PRESENTATION
The Company has not generated any revenue and has incurred losses since inception. Operations of the Company are subject to certain risks and uncertainties, including, among others, uncertainty of drug candidate development; technological uncertainty; uncertainty regarding patents and proprietary rights; uncertainty in obtaining FDA approval in the United States and regulatory approval in other jurisdictions; marketing or sales capability or experience; uncertainty in getting adequate payer coverage and reimbursement; dependence on key personnel; compliance with government regulations and the need to obtain additional financing. The Company’s drug candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities.
The Company’s drug candidates are in various stages of development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.
The Company’s financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has experienced negative cash flows from operations since inception and had an accumulated deficit of $
As of September 30, 2020, the Company had cash and cash equivalents of $
The Company may raise additional capital to fund future operations through the sale of its equity securities, incurring debt, entering into licensing or collaboration agreements with partners, grants or other sources of financing. Sufficient funds may not be available to the Company on attractive terms or at all when needed from equity or debt financing. If FDA approvals for naxitamab or omburtamab do not occur or are significantly delayed, and the Company is
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unable to obtain additional financing from these or other sources when needed, it will likely be necessary to take other actions to enhance its liquidity position which may include significantly reducing the current rate of spending through delaying, scaling back current operations, or suspending certain research and development programs and other operational programs.
The accompanying unaudited consolidated financial statements reflect the accounts of the Company and its wholly-owned subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, Accounting Standards Codification (“ASC”) Topic 270-10 and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. The unaudited interim financial statements include all adjustments (consisting only of normal recurring nature) necessary in the judgment of management for a fair statement of the results for the periods presented. All intercompany balances and transactions have been eliminated. The Company has evaluated subsequent events through the date of this filing. Operating results for the three and nine-month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020, any other interim periods, or any future year or period. The December 31, 2019 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. You should read these unaudited interim condensed consolidated financial statements in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019. Effective January 1, 2020, the Company adopted Accounting Standards Update No. 2018-15 (“ASU 2018-15”), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service. The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements.
Operating Leases
As described below, the Company adopted Topic 842 as of January 1, 2019. The Company determines if an arrangement includes a lease at inception. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its estimated incremental borrowing rate based on information available at the lease commencement date. Because most of the Company’s leases do not provide an implicit rate of return, an incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The Company’s incremental borrowing rate for a lease is the estimated rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.
The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that it will exercise any such options.
Topic 842 also provides practical expedients and certain exemptions for an entity’s ongoing accounting post implementation. The Company currently elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize right-of-use assets or liabilities, and this includes not recognizing right-of-use assets or liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all of our leases. The Company has made an accounting policy election to account for each separate lease component of a contract and its associated non-lease components as a single lease component. See the Lease Agreements section in Note 6 for the related disclosures.
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Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less from date of purchase to be cash equivalents. All cash and cash equivalents are held in highly rated securities including a Treasury money market fund which is unrestricted as to withdrawal or use. To date, the Company has not experienced any losses on its cash and cash equivalents. The carrying amount of cash and cash equivalents approximates its fair value due to its short-term and liquid nature. We maintain cash balances in excess of insured limits. We do not anticipate any losses with respect to such cash balances.
Fair Value Measurements
Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:
• Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets;
• Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and
• Level 3 — Unobservable inputs for the asset or liability, which include management's own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.
Cash equivalents held in money market funds are valued using other significant observable inputs, which represent a Level 2 measurement within the fair value hierarchy. The Company has no other cash equivalents.
The following tables present the Company’s fair value hierarchy for its financial instruments, which are measured at fair value on a recurring basis (in thousands):
Fair Value Measurements at September 30, 2020 Using: | ||||||||||||
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Cash equivalents: | ||||||||||||
Money market funds | $ | — | $ | 120,297 | $ | — | $ | 120,297 | ||||
$ | — | $ | 120,297 | $ | — | $ | 120,297 |
Fair Value Measurements at December 31, 2019 Using: | ||||||||||||
| Level 1 |
| Level 2 |
| Level 3 |
| Total | |||||
Cash equivalents: | ||||||||||||
Money market funds | $ | — | $ | | $ | — | $ | | ||||
$ | — | $ | | $ | — | $ | |
For the quarter ended September 30, 2020, there were
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the accrual for research and development expenses, the accrual of milestone and royalty payments, and the valuation of stock options. Estimates
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are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.
The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets. We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.
Segment Information
The Company is engaged solely in the discovery and development of novel antibody-based therapeutic products for the treatment of cancer. Accordingly, the Company has determined that it operates in
Recently Issued Accounting Pronouncements – Adopted
In August 2018, the FASB issued Accounting Standards Update No. 2018 -13 (“ASU2018-13”), Fair Value Measurement (Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 allows to remove the reasons for transfer between Level 1 and Level 2 assets, and adds the changes in unrealized gains and losses for recurring level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements and related disclosures.
In August 2018, the FASB issued Accounting Standards Update No. 2018-15 (“ASU 2018-15”), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 clarifies certain aspects of ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which was issued in April 2015. Specifically, ASU 2018-15 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 (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements and related disclosures.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. Under ASU 2016-02, lessees will be required to recognize for all leases, at the commencement date of the lease, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. Topic 842 was subsequently amended by ASU 2017-13, Revenue and Leases: Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments; ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; ASU No. 2018-11, Targeted Improvements and ASU No. 2018-20, Narrow Scope Improvements for Lessors.
The Company
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expedients in transition. The Company elected the
Upon adoption of the new leasing standards, the Company recognized a lease liability of $
NOTE 4—NET LOSS PER SHARE
Basic net loss per share (“EPS”) is calculated by dividing net income or loss attributable to common stockholders by the weighted average common stock outstanding. Diluted EPS is calculated by adjusting weighted average common shares outstanding for the dilutive effect of common stock options and restricted stock units. In periods in which a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be antidilutive. Securities that could potentially dilute basic EPS in the future were not included in the computation of diluted EPS because to do so would have been antidilutive. The calculations of basic and diluted net loss per share are as follows:
Three months ended September 30, | Nine months ended September 30, | ||||||||||||
| 2020 | 2019 |
| 2020 | 2019 | ||||||||
(in thousands, except per share amounts) | |||||||||||||
Net loss (numerator) | $ | ( | $ | ( | $ | ( | $ | ( | |||||
Weighted-average shares (denominator) |
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Basic and diluted net loss per share | $ | ( | $ | ( | $ | ( | $ | ( |
Potentially dilutive securities excluded from the computation of diluted earnings per share relate to stock options outstanding and unvested restricted shares and RSUs and totaled
NOTE 5—ACCRUED LIABILITIES
Accrued short-term liabilities at September 30, 2020 and December 31, 2019 are as follows:
September 30, |
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Accrued licensing, milestone and royalty payments | $ | | $ | | ||
Accrued clinical costs |
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Other |
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Total | $ | | $ | |
NOTE 6—LICENSE AGREEMENTS AND COMMITMENTS
As of September 30, 2020, the Company has entered into
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grant the Company certain patent rights and intellectual property rights, and in consideration thereof, the Company agreed to make certain payments and issue shares of the Company’s common stock to MSK and MIT. Certain of the payments are contingent milestone and royalty payments, as disclosed in the table below. Amounts disclosed in Note 5 for accrued milestone and royalty payments are inclusive of obligations under the MSK License, CD33 License Agreement and SADA License Agreement, collectively.
We have the following significant license agreements and related commitments which include all obligations that have been paid or accrued as of and for the period ending September 30, 2020:
| Cash paid |
| Expense |
| Expense |
| Expense |
| Expense |
| Accrued liabilities |
| Accrued liabilities |
| Accrued liabilities |
| Accrued liabilities | ||||||||||
Agreements | Nine months ended September 2020 | Nine months ended September 2020 | Nine months ended September 2019 | Three months ended September 2020 | Three months ended September 2019 | Current as of September 2020 | Non-current as of September 2020 | Current as of December 2019 | Non-current as of December 2019 | ||||||||||||||||||
MSK | $ | $ - | $ - | $ - | $ - | $ | $ | $ | $ | ||||||||||||||||||
CD33 | — | — | — | — | — | | | | | ||||||||||||||||||
MabVax | — | — | — | — | — | — | — | — | — |
The below table represents the maximum clinical, regulatory or sales-based miletones as reflected within the agreements, certain of which have been paid in prior periods or are accrued as presented in the table above:
| Maximum |
| Maximum |
| Maximum |
| ||||
Agreements | Clinical Milestones | Regulatory Milestones | Sales-based milestones | |||||||
MSK | $ | $ | $ | |||||||
CD33 | | | | |||||||
MabVax | | | — |
Minimum royalties and certain clinical milestones that become due based upon the passage of time under the CD33 License Agreement and the MabVax Agreement are not recorded as a liability as the Company does not consider such obligations to be probable as of September 30, 2020.
SADA License Agreement
On April 15, 2020, we entered into a license agreement (the “SADA License Agreement”) with MSK and Massachusetts Institute of Technology (“MIT”) that grants us an exclusive worldwide, sublicensable license to MSK’s and MIT’s rights to certain patent and intellectual property to develop, make, and commercialize licensed products and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics and cancer treatments using the SADA BiDE Pre-targeted Radioimmunotherapy Platform (“SADA technology”). We have assessed the licensing and other rights acquired and given the lack of outputs upon acquisition and that
The patents and patent applications covered by this agreement are directed, in part, to the SADA technology, as well as a number of SADA constructs developed by MSK. Upon entering into the SADA License Agreement and in exchange for the licenses granted thereunder, we concluded that the technology acquired under the licensing arrangement had no alternative future use. This conclusion was based on consideration of the rights conveyed under the agreement, extent of further development necessary and presence of uncertainty prior to obtaining regulatory approval for any product. Accordingly, we expensed and paid MSK and MIT an upfront payment of $
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The SADA License Agreement requires us to pay to MSK and MIT mid to high single-digit royalties based on annual net sales of licensed products or the performance of licensed services by us and our affiliates and sublicensees. We are obligated to pay annual minimum royalties of $
The Company is also obligated to pay MSK and MIT certain clinical, regulatory and sales-based milestone payments under the SADA License Agreement. Certain of the clinical and regulatory milestone payments become due at the earlier of completion of the related milestone activity or the date indicated in the SADA License Agreement. Total clinical and regulatory milestones potentially due under the SADA License Agreement are $
In addition, to the extent we enter into sublicense arrangements, we are obligated to pay to MSK and MIT a percentage of certain payments received from sublicensees of the rights licensed to us by MSK and MIT, which percentage will be based upon the achievement of certain clinical milestones. The Company has not entered into any sublicenses related to the SADA License Agreement. For each of the constructs previously generated by MSK using the SADA technology and sold for the Company by a sublicensee, the Company may pay sales milestones up to $
Failure by the Company to meet certain conditions under the arrangement could cause the related license to such licensed products to be canceled and could result in termination of the entire arrangement with MSK and MIT. In addition, the Company may terminate the SADA License Agreement with prior written notice.
Research and development is inherently uncertain and as described above, should such research and development fail, the SADA License Agreement is cancelable at the Company’s option. The Company will also consider the development risk and each party’s termination rights under the agreement when considering whether any clinical or regulatory based milestone payments, certain of which also contain time-based payment requirements, are probable. The Company records milestones in the period in which the contingent liability is probable and the amount is reasonably estimable. During the three and nine month period ended September 30, 2020, we expensed $
We have the following SADA related balances and commitments which include all obligations that have been paid or accrued as of and for the priod ending September 30, 2020:
| Cash paid |
| Expense |
| Expense |
| Expense |
| Expense |
| Accrued liabilities |
| Accrued liabilities |
| Accrued liabilities |
| Accrued liabilities | ||||||||||
Agreements | Nine months ended September 2020 | Nine months ended September 2020 | Nine months ended September 2019 | Three months ended September 2020 | Three months ended September 2019 | Current as of September 2020 | Non-current as of September 2020 | Current as of September 2019 | Non-current as of September 2019 | ||||||||||||||||||
SADA | $ | $ | $ - | $ - | $ - | $ | $ | $ - | $ - |
The below table represents the maximum clinical, regulatory or sales-based miletones as reflected within the agreements, certain of which have been paid in prior periods or are accrued as presented in the table above:
| Maximum |
| Maximum |
| Maximum | ||||
Agreements | Clinical Milestones | Regulatory Milestones | Sales-based milestones | ||||||
SADA | $ | $ | $ |
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Minimum royalties and certain clinical milestones that become due based upon the passage of time under the SADA Agreement are not recorded as a liability as the Company does not consider such obligations to be probable as of September 30, 2020.
Other agreements
We have also entered into various other support agreements with MSK including a sponsored research agreement to provide research services related to the intellectual property licensed under the MSK License Agreement; a master data services agreement, for services provided by approximately
Lease Agreements
In July 2019, the Company entered a development, manufacturing and supply agreement with SpectronRx in South Bend, Indiana, to secure access to clinical and commercial scale radiolabeling capacity for omburtamab. Under the terms of the agreement, SpectronRx has agreed to establish a manufacturing unit designated for the Company within its existing facilities, at which both clinical and commercial supply of radiolabeled omburtamab can be produced. Since the Company possesses the right to substantially all the economic benefits and directs the use of the production area, the Company accounts for the payments related to the access to the manufacturing space under ASC 842 as an operating lease. The term of the lease is
In February 2019, the Company entered into a lease agreement in connection with its
In January 2018, the Company entered into a lease agreement in connection with its corporate headquarters in New York. The term of the lease is
Additionally, the Company entered a
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Total operating lease costs were $
For the three months ended September 30, 2020, the operating lease expenses were recorded as $
Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2020 was $
Maturities of operating lease liabilities at September 30, 2020 were as follows (in thousands):
Operating Leases | |||
| at September 30, 2020 | ||
Remainder of 2020 | $ | | |
Years ending December 31, | |||
2021 | | ||
2022 | | ||
2023 | | ||
2024 | | ||
Total lease payments | | ||
Less: Imputed interest | ( | ||
Total operating lease liabilities at September 30, 2020 | $ | |
Maturities of operating leases at December 31, 2019 were as follows (in thousands):
Operating Leases | |||
| at December 31, 2019 | ||
2020 | $ | | |
2021 | | ||
2022 | | ||
2023 | | ||
2024 | | ||
Total lease payments | | ||
Less: Imputed interest | ( | ||
Total operating lease liabilities at December 31, 2019 | $ | |
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company uses its estimate of its incremental borrowing rate based on the information available at the lease commencement date. As of September 30, 2020, the weighted average remaining lease term is
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NOTE 7—STOCKHOLDERS’ EQUITY
Authorized Stock
As of September 30, 2020 and December 31, 2019, the Company has authorized a total of
Common Stock
Each share of common stock is entitled to
Preferred Stock
Preferred stock may be issued from time to time in one or more series with such designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions as approved by the Company’s Board of Directors.
Stock grant agreements with non-employees
In August 2015, we entered into certain stock grant agreements with non-employees of the Company. We agreed to issue a total of
In April 2020, in connection with the SADA License Agreement, we entered into certain stock grant agreements pursuant to which we agreed to issue a total of
In July 2020, pursuant to the stock grant agreements, we also loaned the
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Issuance of common stock
In November 2019, we completed a secondary public offering and issued
NOTE 8—SHARE-BASED COMPENSATION
2015 Equity Incentive Plan
Our board of directors and stockholders have approved and adopted the 2015 Plan, which provided for the grant of incentive stock options, within the meaning of Section 422 of the Code (the Internal Revenue Code), to our employees and any parent and subsidiary corporations’ employees, and for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants. A total of
2018 Equity Incentive Plan
Our board of directors and stockholders approved and adopted the 2018 Plan, which became effective upon the Company’s initial public offering in September 2018 and which provides for the grant of incentive stock options, within the meaning of Section 422 of the Code (the Internal Revenue Code), to our employees and any parent and subsidiary corporations’ employees, and for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants. A total of
Stock Option Valuation
For the three month periods ended September 30, 2020 and 2019, stock-based compensation for stock option grants were $
For the nine month periods ended September 30, 2020 and 2019, stock-based compensation for stock option grants were $
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$
The following table summarizes common stock options issued and outstanding:
|
|
|
| Weighted | ||||||
Weighted | Aggregate | average | ||||||||
average | intrinsic | remaining | ||||||||
exercise | value | contractual | ||||||||
Options | price | (in thousands) | life (years) | |||||||
Outstanding and expected to vest at December 31, 2019 |
| | $ | | $ | |
| |||
Granted |
| | | |||||||
Exercised | ( | | ||||||||
Forfeited | ( | | ||||||||
Outstanding and expected to vest at September 30, 2020 |
|