Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates The accompanying interim condensed consolidated financial statements are unaudited and are comprised of the accounts of CymaBay and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The Company has no unconsolidated subsidiaries or investments accounted for under the equity method. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP), which requires management to make informed estimates and assumptions that impact the amounts and disclosures reported in the condensed consolidated financial statements and accompanying notes, and the requirements of the United States 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 can be condensed or omitted. In management’s opinion, the unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include normal recurring adjustments necessary for the fair presentation of the Company’s financial position and its results of operations and comprehensive loss and its cash flows for the periods presented. These statements do not include all disclosures required by U.S. GAAP and should be read in conjunction with the Company’s financial statements and accompanying notes for the fiscal year ended December 31, 2020, which is contained in the Company’s Annual Report on Form 10-K The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions that affect the amounts and disclosures reported in the condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Actual results could differ materially from those estimates and assumptions. These estimates form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources. Estimates are assessed each reporting period and updated to reflect current information and any changes in estimates will generally be reflected in the period first identified. Fair Value of Financial Instruments The Company’s financial instruments during the periods reported consist of cash and cash equivalents, marketable securities, accrued interest receivable, prepaid research and development expenses, other prepaid expenses and current assets, accounts payable, accrued expenses, a development financing liability, and an embedded derivative liability. Fair value estimates of these instruments are made at a specific point in time based on relevant market information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment. The carrying amounts of the Company’s cash and cash equivalents, accrued interest receivable, prepaid research and development expenses, other prepaid expenses and current assets, accounts payable, and accrued expenses approximate the related fair values. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs and is as follows: Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly. Level 3—Inputs that are significant to the fair value measurement and are unobservable (i.e. supported by little market activity), which requires the reporting entity to develop its own valuation techniques and assumptions. The following tables present the fair value of the Co m a As of September 30, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents: Money market funds $ 39,716 $ — $ — $ 39,716 Total cash equivalents 39,716 — — 39,716 Marketable securities: U.S. and foreign co m — 29,676 — 29,676 U.S. and foreign corporate debt securities — 6,566 — 6,566 Asset-backed securities — 8,583 — 8,583 Total marketable securities — 44,825 — 44,825 Total assets measured at fair value $ 39,716 $ 44,825 $ — $ 84,541 As of December 31, 2020 Level 1 Level 2 Level 3 Total Cash equivalents: Money market funds $ 22,415 $ — $ — $ 22,415 Total cash equivalents 22,415 — — 22,415 Marketable securities: U.S. treasury securities — 15,499 — 15,499 U.S. and foreign commercial paper — 38,561 — 38,561 U.S. and foreign corporate debt securities — 29,189 — 29,189 U.S. agency securities — 23,994 — 23,994 Asset-backed securities — 7,885 — 7,885 Supranational debt securities — 3,002 — 3,002 Total marketable securities — 118,130 — 118,130 Total assets measured at fair value $ 22,415 $ 118,130 $ — $ 140,545 The Company estimates the fair value of its money market funds, corporate debt, . The fair value of the Company’s development financing liability is consistent with its carrying value which is recorded at amortized cost and is based on the estimated timing of regulatory approval and attainment of certain sales milestones and the contractual success fee payments expected to be due therefrom, as discounted using an imputed interest rate. Certain factors and inputs used to estimate the timing and amount of such expected future success payments are unobservable level 3 inputs. The fair value of the Company’s embedded derivative liability was determined to be immaterial as the likelihood of associated contingent payments becoming due and payable by the Company was remote. Cash, Cash Equivalents, and Marketable Securities The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits with commercial banks in checking, interest-bearing, and money market funds. The Company invests excess cash in marketable securities with high credit ratings that are classified in Level 1 and Level 2 of the fair value hierarchy. These securities consist primarily of corporate debt, commercial paper, asset-backed securities, U.S. treasury and agency securities and supranational debt securities and are classified as “available-for-sale.” Realized gains and losses from the sale of marketable securities, if any, are calculated using the For the Company’s investments as of September 30, 2021 , Concentrations of Risk Cash, cash equivalents, and marketable securities consist of financial instruments that potentially subject the Company to a concentration of credit risk to the extent of the fair value recorded on the balance sheet. The Company invests cash that is not required for immediate operating needs primarily in highly liquid instruments that bear minimal risk. The Company has established guidelines relating to the quality, diversification, and maturities of securities to enable the Company to manage its credit risk. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash, cash equivalents and investments and issuers of investments to the extent recorded on the condensed consolidated balance sheets. Certain materials and key components that the Company utilizes in its operations are obtained through single suppliers. Since the suppliers of key components and materials must be named in an NDA filed with the FDA for a product, significant delays can occur if the qualification of a new supplier is required. If delivery of material from the Company’s suppliers were interrupted for any reason, the Company may be unable to supply any of its product candidates for clinical trials. Other Risks and Uncertainties In March 2020, the World Health Organization declared the global novel coronavirus disease (COVID-19) COVID-19 COVID-19 COVID-19 COVID-19 Research and Development Expenses Research and development expenses consist of costs incurred in identifying, developing, and testing product candidates. These expenses consist primarily of costs for research and development personnel, including related stock-based compensation; contract research organizations (CRO) and other third parties that assist in managing, monitoring, and analyzing clinical trials; investigator and site fees; laboratory services; consultants; contract manufacturing services; non-clinical The Company records expenses related to clinical studies and manufacturing development activities based on its estimates of the services received and efforts expended pursuant to contracts with multiple CROs and manufacturing vendors that conduct and manage these activities on its behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows. There may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment. Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of clinical trial milestones. In amortizing or accruing service fees, the Company estimates the time period over which services will be performed, enrollment of subjects, number of sites activated and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the Company’s estimate, the Company will adjust the accrued or prepaid expense balance accordingly. To date, there have been no material differences from the Company’s estimates to the amounts actually incurred. Development Financing Agreement On July 30, 2021, the Company entered into the Financing Agreement with Abingworth, pursuant to which Abingworth committed to provide up to $100 million of funding to the Company to support its development of seladelpar for the treatment of primary biliary cholangitis (PBC). The Company evaluated the Financing Agreement and determined it to be a research and development funding arrangement with the characteristics of a debt instrument as the transfer of financial risk to Abingworth was not considered substantive and genuine. Accordingly, the Company has recorded payments received under the Financing Agreement as part of a development financing liability in its condensed consolidated balance sheets. The Company accounts for the overall development financing liability at amortized cost based on the estimated timing of regulatory approval and attainment of certain sales milestones and the contractual success fee payments expected to be due therefrom, as discounted using an imputed interest rate. The development financing liability will be accreted as interest expense to its expected future repayment amount over the expected life of the agreement using the effective interest method. Certain legal and financial advisory fees incurred specifically to complete the Financing Agreement were capitalized and recorded as a reduction to the carrying amount of the development financing liability and will also be amortized to interest expense using the effective interest rate method. There are several factors that could affect the estimated timing of regulatory approval and attainment of sales milestones, some of which are not entirely within the Company’s control. Therefore, the Company periodically reassesses the estimated timing of regulatory approval and attainment of sales milestones, and the expected contractual success fee payments due therefrom. If the timing and/or amount of such expected payments is materially different than original estimates, the Company will prospectively adjust the accretion of the development financing liability and the imputed interest rate. The Company identified certain contingent repayment features in the Financing Agreement that are required to be bifurcated from the debt host instrument as an embedded derivative liability; however, the Company determined the fair value of these features was immaterial at inception and as of September 30, 2021. The fair value of the embedded derivative liability will be assessed at subsequent reporting dates if material and the liability will be marked to market. To determine the amount to record for the embedded derivative liability, the Company must assess the probability of occurrence of various potential future events that could affect the timing and/or amount of future cash flows related to the development financing arrangement. Stock-Based Compensation Stock-based compensation is measured at fair value on the grant date of the award. Compensation cost is recognized as expense on a straight-line basis over the vesting period for options with service conditions, and forfeitures are accounted for as they occur. The Company uses the Black-Scholes option pricing model to determine the fair value of stock option awards. The determination of fair value for stock-based awards using an option-pricing model requires management to make certain assumptions regarding subjective input variables such as expected term, dividends, volatility and risk-free rate. If actual results are not consistent with the Company’s assumptions and judgments used in making these estimates, the Company may be required to increase or decrease compensation expense, which could be material to the Company’s results of operations. Net Loss Per Common Share Basic net loss per share of common stock is based on the weighted average number of shares of common stock outstanding equivalents during the period. Diluted net loss per share of common stock is calculated as the weighted average number of shares of common stock outstanding adjusted to include the assumed exercises of stock options, if dilutive. In all periods presented, the Company’s outstanding stock options were excluded from the calculation of net loss per share because their effect would be antidilutive. The following table sets forth the computation of basic and diluted net loss per Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Numerator: Net loss $ (22,682 ) $ (11,421 ) $ (63,455 ) $ (35,235 ) Denominator: Weighted average number of common stock shares outstanding 69,022,937 68,887,092 68,985,112 68,884,894 Net loss per share $ (0.33 ) $ (0.17 ) $ (0.92 ) $ (0.51 ) The following table shows the total outstanding securities considered anti-dilutive and therefore excluded from the computation of diluted net loss per share (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Common stock options 10,704 8,126 10,704 8,126 Incentive awards 101 101 101 101 Total 10,805 8,227 10,805 8,227 Recently Adopted Accounting Pronouncements ASU 2019-12 In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes step-up Recently Issued Accounting Pronouncements ASU 2016-13 In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments available-for-sale No. 2019-10, |