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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number 001-37345

 

CHINOOK THERAPEUTICS, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

94-3348934

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

400 Fairview Avenue North, Suite 900

Seattle, WA 98109

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (206) 485-7241

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

KDNY

The Nasdaq Stock Market LLC

(The Nasdaq Global Select Market)

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.    Yes      No  

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).    Yes      No  

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

 

 

 

Accelerated filer

 

 

 

 

 

 

 

 

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      No  

The number of shares of Registrant’s Common Stock outstanding as of May 6, 2022 was 55,177,252.

 

 

 

 


 

 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

Item 1.

 

Condensed Consolidated Financial Statements (unaudited)

3

 

 

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

3

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021

4

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2022 and 2021

5

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

6

 

 

Notes to the Condensed Consolidated Financial Statements

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

 

Controls and Procedures

29

 

 

 

 

 

 

PART II—OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

32

Item 1A.

 

Risk Factors

32

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

71

Item 3.

 

Defaults Upon Senior Securities

71

Item 4.

 

Mine Safety Disclosures

71

Item 5.

 

Other Information

71

Item 6.

 

Exhibits

71

EXHIBIT INDEX

72

SIGNATURES

73

 

 

2


 

 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

Chinook Therapeutics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

(Unaudited) 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

103,500

 

 

$

181,724

 

Marketable securities

 

 

172,599

 

 

 

105,113

 

Accounts receivable

 

 

2,947

 

 

 

10,061

 

Prepaid expenses and other current assets

 

 

6,727

 

 

 

3,741

 

Total current assets

 

 

285,773

 

 

 

300,639

 

Marketable securities

 

 

53,933

 

 

 

68,215

 

Property and equipment, net

 

 

18,263

 

 

 

18,935

 

Restricted cash

 

 

2,074

 

 

 

2,074

 

Operating lease right-of-use assets

 

 

53,922

 

 

 

55,385

 

Investment in equity securities

 

 

41,200

 

 

 

41,200

 

Equity method investment

 

 

7,201

 

 

 

8,205

 

Intangible assets, net

 

 

25,580

 

 

 

26,009

 

In-process research & development

 

 

36,550

 

 

 

36,550

 

Goodwill

 

 

117

 

 

 

117

 

Other assets

 

 

6,657

 

 

 

6,474

 

Total assets

 

$

531,270

 

 

$

563,803

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

9,039

 

 

 

8,580

 

Accrued and other current liabilities

 

 

12,946

 

 

 

17,104

 

Operating lease liabilities

 

 

4,581

 

 

 

4,401

 

Contingent value rights liability

 

 

10,000

 

 

 

10,000

 

Total current liabilities

 

 

36,566

 

 

 

40,085

 

Contingent value rights liability - non-current

 

 

23,963

 

 

 

24,591

 

Contingent consideration liability

 

 

4,750

 

 

 

5,160

 

Deferred tax liabilities

 

 

735

 

 

 

735

 

Operating lease liabilities, net of current maturities

 

 

38,461

 

 

 

39,589

 

Total liabilities

 

 

104,475

 

 

 

110,160

 

Commitments and contingencies (Note 12)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000 shares authorized as of

   March 31, 2022 and December 31, 2021; no shares issued and outstanding at

   March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 300,000 shares authorized as of

   March 31, 2022 and December 31, 2021; 55,117 and 54,761 shares issued

   and outstanding at March 31, 2022 and December 31, 2021

 

 

6

 

 

 

5

 

Additional paid-in capital

 

 

691,776

 

 

 

685,459

 

Accumulated deficit

 

 

(263,450

)

 

 

(231,766

)

Accumulated other comprehensive loss

 

 

(1,537

)

 

 

(55

)

Total stockholders’ equity

 

 

426,795

 

 

 

453,643

 

Total liabilities and stockholders’ equity

 

$

531,270

 

 

$

563,803

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

Chinook Therapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Collaboration and license revenue

 

$

2,697

 

 

$

351

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

26,252

 

 

 

25,697

 

General and administrative

 

 

7,868

 

 

 

9,543

 

Change in fair value of contingent consideration and

   contingent value rights liabilities

 

 

(1,038

)

 

 

1,839

 

Amortization of intangible assets

 

 

429

 

 

 

420

 

Total operating expenses

 

 

33,511

 

 

 

37,499

 

Loss from operations

 

 

(30,814

)

 

 

(37,148

)

Other expense, net

 

 

(95

)

 

 

(67

)

Loss before income taxes and share of net loss of equity

   method investment

 

 

(30,909

)

 

 

(37,215

)

Share of net loss of equity method investment

 

 

(775

)

 

 

 

Net loss

 

$

(31,684

)

 

$

(37,215

)

Net loss per share attributable to common stockholders, basic and

   diluted

 

$

(0.54

)

 

$

(0.88

)

Weighted-average shares used in computing net loss per share

   attributable to common stockholders, basic and diluted

 

 

58,340

 

 

 

42,136

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of tax of $0

 

 

107

 

 

 

38

 

Unrealized gain (loss) on marketable debt securities, net of tax of $0

 

 

(1,589

)

 

 

16

 

Total other comprehensive income (loss)

 

 

(1,482

)

 

 

54

 

Comprehensive loss

 

$

(33,166

)

 

$

(37,161

)

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

4


 

 

Chinook Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2021

 

 

54,761

 

 

$

5

 

 

$

685,459

 

 

$

(231,766

)

 

$

(55

)

 

 

453,643

 

Issuance of common stock upon exercise of stock options and

   vesting of restricted stock units

 

 

356

 

 

 

1

 

 

 

2,048

 

 

 

 

 

 

 

 

 

2,049

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,269

 

 

 

 

 

 

 

 

 

4,269

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,482

)

 

 

(1,482

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(31,684

)

 

 

 

 

 

(31,684

)

Balance at March 31, 2022

 

 

55,117

 

 

$

6

 

 

$

691,776

 

 

$

(263,450

)

 

$

(1,537

)

 

$

426,795

 

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance at December 31, 2020

 

 

42,282

 

 

$

4

 

 

$

463,436

 

 

$

(128,829

)

 

$

11

 

 

$

334,622

 

Issuance of common stock upon exercise of stock options and

   warrants

 

 

100

 

 

 

 

 

 

580

 

 

 

 

 

 

 

 

 

580

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,478

 

 

 

 

 

 

 

 

 

2,478

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54

 

 

 

54

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(37,215

)

 

 

 

 

 

(37,215

)

Balance at March 31, 2021

 

 

42,382

 

 

$

4

 

 

$

466,494

 

 

$

(166,044

)

 

$

65

 

 

$

300,519

 

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


 

 

Chinook Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(31,684

)

 

$

(37,215

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

866

 

 

 

804

 

Loss on disposal of property and equipment

 

 

234

 

 

 

 

Amortization of intangible assets

 

 

429

 

 

 

420

 

Non-cash operating lease expense

 

 

1,528

 

 

 

1,291

 

Stock-based compensation expense

 

 

4,269

 

 

 

2,478

 

Change in fair value of contingent consideration and contingent value rights liabilities

 

 

(1,038

)

 

 

1,839

 

Accretion of discounts and amortization of premiums on marketable securities

 

 

406

 

 

 

 

Share of net loss of equity method investment

 

 

775

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

7,114

 

 

 

6

 

Prepaid expenses and other assets

 

 

(3,155

)

 

 

(9

)

Accounts payable

 

 

745

 

 

 

3,814

 

Accrued and other liabilities

 

 

(4,191

)

 

 

(720

)

Operating lease liabilities

 

 

(1,020

)

 

 

(694

)

Deferred revenue

 

 

 

 

 

(95

)

Net cash used in operating activities

 

 

(24,722

)

 

 

(28,081

)

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(79,033

)

 

 

(33,657

)

Proceeds from marketable securities

 

 

23,834

 

 

 

41,818

 

Purchases of property and equipment

 

 

(374

)

 

 

(594

)

Proceeds from sale of property and equipment

 

 

 

 

 

267

 

Net cash provided by (used in) investing activities

 

 

(55,573

)

 

 

7,834

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options and warrants

 

 

2,049

 

 

 

580

 

Previously incurred issuance costs related to an underwritten public offering

   paid during period

 

 

(286

)

 

 

 

Net cash provided by financing activities

 

 

1,763

 

 

 

580

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

308

 

 

 

9

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(78,224

)

 

 

(19,658

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

183,798

 

 

 

189,500

 

Cash, cash equivalents and restricted cash at end of period

 

$

105,574

 

 

$

169,842

 

Reconciliation of Cash, Cash Equivalents and Restricted Cash

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

103,500

 

 

$

168,092

 

Restricted cash

 

 

2,074

 

 

 

1,750

 

Total cash, cash equivalents and restricted cash

 

$

105,574

 

 

$

169,842

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities

 

$

1,861

 

 

$

1,423

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities

 

 

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable and in accrued

   and other current liabilities

 

$

157

 

 

$

76

 

Receivable from option exercises

 

$

1,325

 

 

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

6


 

Chinook Therapeutics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

1. Description of Business

Chinook Therapeutics, Inc. (the “Company”, “Chinook”, “we”, “our”, or “us”) is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing precision medicines for kidney diseases. On October 5, 2020, Aduro Biotech, Inc. (“Aduro”) completed its merger with Chinook Therapeutics U.S., Inc. (“Private Chinook”), pursuant to the terms of a merger agreement dated as of June 1, 2020, and amended on August 17, 2020, by which a wholly owned subsidiary of Aduro merged with and into Private Chinook, with Private Chinook continuing as a wholly owned subsidiary of Aduro (the “Merger”). Immediately following the Merger, Aduro changed its name to “Chinook Therapeutics, Inc.” and the business conducted by Private Chinook became the primary business conducted by the Company. Refer to Note 3 “Reverse Merger and Contingent Value Rights” for more information.

Our lead clinical program is atrasentan, an endothelin receptor antagonist that was in-licensed from AbbVie in late 2019. In March 2021, we initiated the phase 3 ALIGN trial of atrasentan for IgA nephropathy (“IgAN”) and in April 2021, we initiated the phase 2 AFFINITY basket trial of atrasentan for proteinuric glomerular diseases. Our second product candidate, BION-1301, is an anti-APRIL monoclonal antibody also in phase 1/2 development for patients with IgAN. Our third product candidate is CHK-336, an oral small molecule LDHA inhibitor for the treatment of primary and secondary hyperoxaluria and idiopathic kidney stone formation. In April 2022, we initiated a phase 1 clinical trial of CHK-336 in healthy volunteers. In addition, we are building our precision medicine pipeline through research and discovery programs for other rare, severe chronic kidney diseases. We were incorporated in Delaware and are headquartered in Seattle, Washington.

 

2. Basis of Presentation and Consolidation, Use of Estimates and Recent Accounting Pronouncements

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. These financial statements have been prepared on the same basis as our annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial information. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other interim period or for any other future year.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2021 included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 17, 2022.

The condensed consolidated financial statements include the accounts of Chinook Therapeutics, Inc. and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of expenses during the reporting periods. Such estimates include the valuation of intangible assets, acquired property and equipment, investments, contingent value rights (“CVR”) liability, contingent consideration liability, lease right-of-use assets, and lease obligations, as well as accruals for research and development activities, stock-based compensation expense, and income taxes. Actual results could differ from those estimates.

Risks and Uncertainties

We are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, reliance on single-source vendors and collaborators, availability of raw materials, patentability of our products and processes and clinical efficacy and safety of our products under development, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional

7


 

research and development efforts, including extensive preclinical studies, clinical trials and regulatory approval, prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting.

Our product candidates are still in development and, to date, none of our product candidates have been approved for sale and, therefore, we have not generated any revenue from product sales.

There can be no assurance that our research and development will be successfully completed, that adequate protection for our intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if our product development efforts are successful, it is uncertain when, if ever, we will generate revenue from product sales. We operate in an environment of rapid technological change and substantial competition from other pharmaceutical and biotechnology companies. In addition, we are dependent upon the services of our employees, consultants and other third parties.

Moreover, the current COVID-19 pandemic, which is impacting worldwide economic activity, poses risk that we or our employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time which may delay the start-up and conduct of our clinical trials, and negatively impact manufacturing and testing activities performed by third parties. Any significant delays may impact the use and sufficiency of our existing cash reserves, and we may be required to raise additional capital earlier than we had previously planned. We may be unable to raise additional capital if and when needed, which may result in further delays or suspension of our development plans. The extent to which the pandemic will impact our business will depend on future developments that are highly uncertain and cannot be predicted at this time.

Recent Accounting Pronouncements

Recent Accounting Pronouncements, Not Yet Adopted

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. This ASU replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in earlier recognition of credit losses. The standard is effective for smaller reporting companies in fiscal years beginning after December 15, 2022 with early adoption permitted for all periods beginning after December 15, 2018. We do not plan to early adopt ASU No. 2016-13 and are currently evaluating the impact the adoption of this ASU will have on our consolidated financial statements.

Recently Adopted Accounting Pronouncements 

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815- 40), which provides guidance on modifications or exchanges of a freestanding equity-classified written call option (such as a warrant) that is not within the scope of another Topic. This new standard provides clarification and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. We adopted the standard on January 1, 2022 and concluded that adoption of the standard did not have a material impact on our condensed consolidated financial statements.

3. Reverse Merger and Contingent Value Rights

We completed our Merger with Aduro on October 5, 2020. At the effective time of the Merger, we also entered into an agreement pursuant to which Aduro’s common stockholders of record as of the close of business on October 2, 2020 received one CVR for each outstanding share of Aduro common stock held by such stockholder on such date (the “CVR Agreement”). Each CVR represents the contractual right to receive payments from us upon the receipt of consideration resulting from milestones and royalties from certain pre-existing agreements and the disposition or licensing of any of Aduro’s non-renal assets, net of deductions permitted under the CVR Agreement, including taxes and certain other expenses.

 

 

4. Cash, Cash Equivalents and Marketable Securities

 

Cash, cash equivalents and marketable securities consisted of the following (in thousands):

8


 

 

 

 

March 31, 2022

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Estimated

Fair Value

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

42,703

 

 

$

 

 

$

 

 

$

42,703

 

Money market funds

 

 

25,506

 

 

 

 

 

 

 

 

 

25,506

 

Commercial paper

 

 

30,287

 

 

 

 

 

 

(2

)

 

 

30,285

 

U.S. government and agency securities

 

 

5,006

 

 

 

 

 

 

 

 

 

5,006

 

Total cash and cash equivalents

 

$

103,502

 

 

$

 

 

$

(2

)

 

$

103,500

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

33,550

 

 

$

1

 

 

$

(27

)

 

$

33,524

 

U.S. government and agency securities

 

 

128,214

 

 

 

1

 

 

 

(1,001

)

 

 

127,214

 

Corporate debt securities

 

 

66,487

 

 

 

 

 

 

(693

)

 

 

65,794

 

Total marketable securities

 

$

228,251

 

 

$

2

 

 

$

(1,721

)

 

$

226,532

 

 

 

 

December 31, 2021

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Estimated

Fair Value

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

44,499

 

 

$

 

 

$

 

 

$

44,499

 

Money market funds

 

 

117,023

 

 

 

 

 

 

 

 

 

117,023

 

Commercial paper

 

 

16,898

 

 

 

 

 

 

(1

)

 

 

16,897

 

Corporate debt securities

 

 

3,306

 

 

 

 

 

 

(1

)

 

 

3,305

 

Total cash and cash equivalents

 

$

181,726

 

 

$

 

 

$

(2

)

 

$

181,724

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

34,978

 

 

$

 

 

$

(10

)

 

$

34,968

 

U.S. government and agency securities

 

 

85,309

 

 

 

1

 

 

 

(88

)

 

 

85,222

 

Corporate debt securities

 

 

53,172

 

 

 

4

 

 

 

(38

)

 

 

53,138

 

Total marketable securities

 

$

173,459

 

 

$

5

 

 

$

(136

)

 

$

173,328

 

 

The amortized cost and estimated fair value of our available-for-sale marketable securities by contractual maturity are summarized below as of March 31, 2022 (in thousands):

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Estimated

Fair Value

 

Mature in one year or less

 

$

173,306

 

 

$

2

 

 

$

(709

)

 

$

172,599

 

Mature after one year through two years

 

 

54,945

 

 

 

 

 

 

(1,012

)

 

 

53,933

 

Total available-for-sale marketable securities

 

$

228,251

 

 

$

2

 

 

$

(1,721

)

 

$

226,532

 

 

None of our marketable securities were in a continuous unrealized loss position as of March 31, 2022. We review individual securities in our portfolio to determine whether a decline in a security’s fair value below the amortized cost basis is other-than-temporary. We determined that as of March 31, 2022, there were no investments in our portfolio that were other-than-temporarily impaired. 

5. Fair Value Measurements

We record certain financial assets and liabilities at fair value in accordance with the provisions of Accounting Standards Codification (“ASC”) Topic 820 on fair value measurements. As defined in the guidance, fair value, defined as an exit price, represents the amount that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants. As a result, fair value is a market-based approach that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering these assumptions, the guidance defines a three-tier valuation hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value.

Level 1: Unadjusted quoted prices in active, accessible markets for identical assets or liabilities.

Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly.

9


 

Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The determination of a financial instrument’s level within the fair value hierarchy is based on an assessment of the lowest level of any input that is significant to the fair value measurement. We consider observable data to be market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The following tables present information about our financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

 

 

 

March 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and money market funds

 

$

68,209

 

 

$

 

 

$

 

 

$

68,209

 

Commercial paper

 

 

 

 

 

30,285

 

 

 

 

 

 

30,285

 

U.S. government and agency securities

 

&