Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | May 04, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | MADRIGAL PHARMACEUTICALS, INC. | |
Entity Central Index Key | 0001157601 | |
Entity File Number | 001-33277 | |
Current Fiscal Year End Date | --12-31 | |
Entity Tax Identification Number | 04-3508648 | |
Entity Incorporation, State or Country Code | DE | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,429,154 | |
City Area Code | 267 | |
Local Phone Number | 824-2827 | |
Trading Symbol | MDGL | |
Security Exchange Name | NASDAQ | |
Title of 12(b) Security | Common Stock, $0.0001 Par Value Per Share | |
Entity Address, Address Line One | Four Tower Bridge | |
Entity Address, Address Line Two | 200 Barr Harbor Drive, Suite 200 | |
Entity Address, City or Town | West Conshohocken | |
Entity Address, Postal Zip Code | 19428 | |
Entity Address, State or Province | PA |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 66,651 | $ 46,697 |
Marketable securities | 341,859 | 392,348 |
Prepaid expenses and other current assets | 976 | 1,152 |
Total current assets | 409,486 | 440,197 |
Property and equipment, net | 1,373 | 1,184 |
Right-of-use asset | 598 | 675 |
Total assets | 411,457 | 442,056 |
Current liabilities: | ||
Accounts payable | 1,115 | 1,178 |
Accrued expenses | 24,269 | 23,637 |
Lease liability | 319 | 315 |
Total current liabilities | 25,703 | 25,130 |
Long-term liabilities: | ||
Lease liability | 279 | 361 |
Total long term liabilities | 279 | 361 |
Total liabilities | 25,982 | 25,491 |
Stockholders' equity: | ||
Preferred stock, par value $0.0001 per share authorized: 5,000,000 shares at March 31, 2020 and December 31, 2019; 1,969,797 shares issued and outstanding at March 31, 2020 and December 31, 2019 | ||
Common stock, par value $0.0001 per share authorized: 200,000,000 at March 31, 2020 and December 31, 2019; 15,429,154 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 2 | 2 |
Additional paid-in-capital | 644,413 | 639,567 |
Accumulated other comprehensive gain (loss) | 415 | 216 |
Accumulated deficit | (259,355) | (223,220) |
Total stockholders' equity | 385,475 | 416,565 |
Total liabilities and stockholders' equity | $ 411,457 | $ 442,056 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 1,969,797 | 1,969,797 |
Preferred stock, shares outstanding | 1,969,797 | 1,969,797 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 15,429,154 | 15,429,154 |
Common stock, shares outstanding | 15,429,154 | 15,429,154 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating expenses: | ||
Research and development | $ 33,400 | $ 12,373 |
General and administrative | 4,605 | 5,746 |
Total operating expenses | 38,005 | 18,119 |
Loss from operations | (38,005) | (18,119) |
Interest income | 1,870 | 3,039 |
Net loss | $ (36,135) | $ (15,080) |
Net loss per common share: | ||
Basic and diluted net loss per common share (in dollars per share) | $ (2.34) | $ (0.98) |
Basic and diluted weighted average number of common shares outstanding | 15,429,154 | 15,364,465 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net Loss | $ (36,135) | $ (15,080) |
Other comprehensive income (loss): | ||
Unrealized gain on available-for-sale securities | 199 | 497 |
Comprehensive loss | $ (35,936) | $ (14,583) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Preferred Stock | Common stock | Additional paid-in Capital | Accumulated other comprehensive income (loss) | Accumulated deficit |
Balance at Dec. 31, 2018 | $ 476,984 | $ 2 | $ 616,573 | $ (319) | $ (139,272) | |
Balance (in shares) at Dec. 31, 2018 | 1,969,797 | 15,409,023 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Exercise of common stock options (in shares) | 83 | 8,041 | 83 | |||
Compensation expense related to stock options for services | $ 6,022 | $ 6,022 | ||||
Unrealized gain (loss) on marketable securities | 497 | 497 | ||||
Net loss | (15,080) | (15,080) | ||||
Balance at Mar. 31, 2019 | 468,506 | $ 2 | 622,678 | 178 | (154,352) | |
Balance (in shares) at Mar. 31, 2019 | 1,969,797 | 15,417,064 | ||||
Balance at Dec. 31, 2019 | $ 416,565 | $ 2 | 639,567 | 216 | (223,220) | |
Balance (in shares) at Dec. 31, 2019 | 15,429,154 | 1,969,797 | 15,429,154 | |||
Increase (Decrease) in Stockholders' Equity | ||||||
Compensation expense related to stock options for services | $ 4,846 | 4,846 | ||||
Unrealized gain (loss) on marketable securities | 199 | 199 | ||||
Net loss | (36,135) | (36,135) | ||||
Balance at Mar. 31, 2020 | $ 385,475 | $ 2 | $ 644,413 | $ 415 | $ (259,355) | |
Balance (in shares) at Mar. 31, 2020 | 15,429,154 | 1,969,797 | 15,429,154 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (36,135) | $ (15,080) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 4,846 | 6,022 |
Depreciation and amortization expense | 125 | 28 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | 175 | 888 |
Accounts payable | (63) | 1,889 |
Accrued expense | 632 | (179) |
Accrued interest, net of interest received on maturity of investments | (86) | (46) |
Net cash used in operating activities | (30,506) | (6,478) |
Cash flows from investing activities: | ||
Purchases of marketable securities | (58,647) | (173,837) |
Sales and maturities of marketable securities | 109,421 | 170,387 |
Purchases of property and equipment, net of disposals | (314) | (41) |
Net cash provided by (used in) investing activities | 50,460 | (3,491) |
Cash flows from financing activities: | ||
Proceeds from the sale of related party stock and exercise of common stock options, net of transaction costs | 0 | 83 |
Net cash provided by financing activities | 0 | 83 |
Net increase (decrease) in cash and cash equivalents | 19,954 | (9,886) |
Cash and cash equivalents at beginning of period | 46,697 | 57,379 |
Cash and cash equivalents at end of period | 66,651 | 47,493 |
Supplemental disclosure of cash flow information: | ||
Obtaining a right-of-use asset in exchange for a lease liability | $ 0 | $ 900 |
Organization, Business and Basi
Organization, Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Business and Basis of Presentation | 1. Organization, Business, and Basis of Presentation Organization and Business Madrigal Pharmaceuticals, Inc. (the “Company” or “Madrigal”) is a clinical-stage pharmaceutical company developing novel, high-quality, small-molecule drugs addressing major unmet needs in cardiovascular, metabolic, and liver diseases. The Company’s lead compound, MGL-3196 non-alcoholic non-alcoholic Madrigal was originally incorporated as a private company (“Private Madrigal”) on August 19, 2011 and operations commenced in September 2011. On July 22, 2016, Private Madrigal completed a reverse merger (the “Merger”) into Synta Pharmaceuticals Corp. (“Synta”). Upon the consummation of the Merger, the historical financial statements of Private Madrigal became the Company’s historical financial statements. Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete annual financial statements. However, we believe that the disclosures included in these financial statements are adequate to make the information presented not misleading. The unaudited condensed financial statements, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of such interim results. The interim results are not necessarily indicative of the results that we will have for the full year ending December 31, 2020 or any subsequent period. These unaudited condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2019. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principle of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash in bank accounts, the balance of which, at times, exceeds Federal Deposit Insurance Corporation insured limits. The primary objective of the Company’s investment activities is to preserve its capital for the purpose of funding operations and the Company does not enter into investments for trading or speculative purposes. The Company’s cash is deposited in highly rated financial institutions in the United States. The Company invests in money market funds and high-grade, commercial paper and corporate bonds, which management believes are subject to minimal credit and market risk. Marketable Securities Marketable securities consist of investments in high-grade corporate obligations and government and government agency obligations that are classified as available-for-sale. Since these securities are available to fund current operations, they are classified as current assets on the consolidated balance sheets. The Company adjusts the cost of available-for-sale available-for-sale Marketable securities are stated at fair value, including accrued interest, with their unrealized gains and losses included as a component of accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity. The fair value of these securities is based on quoted prices and observable inputs on a recurring basis. Realized gains and losses are determined on the specific identification method. During the three months ended March 31, 2020 and 2019, the Company did not have any realized gains or losses on marketable securities. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include cash equivalents, and marketable securities, approximate their fair values. The fair value of the Company’s financial instruments reflects the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy has the following three levels: Level 1—quoted prices in active markets for identical assets and liabilities. Level 2—observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3—unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. As of March 31, 2020, the Company’s financial assets valued based on Level 1 inputs consisted of cash and cash equivalents in a money market fund and its financial assets valued based on Level 2 inputs consisted of high-grade corporate bonds and commercial paper. During the three months ended March 31, 2020 and 2019, the Company did not have any transfers of financial assets between Levels 1 and 2. As of March 31, 2020 and December 31, 2019, the Company did not have any financial liabilities that were recorded at fair value on a recurring basis on the balance sheet. Research and Development Costs Research and development costs are expensed as incurred. Research and development costs are comprised of costs incurred in performing research and development activities, including internal costs (including stock-based compensation), costs for consultants, milestone payments under licensing agreements, and other costs associated with the Company’s preclinical and clinical programs. In particular, the Company has conducted safety studies in animals, optimized and implemented the manufacturing of our drug, and conducted Phase 1-3 Patents Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expense in the Company’s consolidated statements of operations. Stock-Based Compensation The Company recognizes stock-based compensation expense based on the grant date fair value of stock options granted to employees, officers, and directors. The Company uses the Black-Scholes option pricing model to determine the grant date fair value as management believes it is the most appropriate valuation method for its option grants. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility and expected lives of the options. The expected lives for options granted represent the period of time that options granted are expected to be outstanding. The Company uses the simplified method for determining the expected lives of options. Expected volatility is based upon an industry estimate or blended rate including the Company’s historical trading activity. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company estimates the forfeiture rate based on historical data. This analysis is re-evaluated Certain of the employee stock options granted by the Company are structured to qualify as incentive stock options (“ISOs”). Under current tax regulations, the Company does not receive a tax deduction for the issuance, exercise or disposition of ISOs if the employee meets certain holding requirements. If the employee does not meet the holding requirements, a disqualifying disposition occurs, at which time the Company may receive a tax deduction. The Company does not record tax benefits related to ISOs unless and until a disqualifying disposition is reported. In the event of a disqualifying disposition, the entire tax benefit is recorded as a reduction of income tax expense. The Company has not recognized any income tax benefit for its share-based compensation arrangements due to the fact that the Company does not believe it is more likely than not it will realize the related deferred tax assets. Income Taxes The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company currently maintains a 100% valuation allowance on its deferred tax assets. Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner Basic and Diluted Loss Per Common Share Basic net loss per share is computed using the weighted average number of common shares outstanding during the period, excluding restricted stock that has been issued but is not yet vested. Diluted net loss per common share is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method. However, for the three months ended March 31, 2020 and 2019, diluted net loss per share is the same as basic net loss per share because the inclusion of weighted average shares of unvested restricted common stock, common stock issuable upon the exercise of stock options, and common stock issuable upon the conversion of preferred stock would be anti-dilutive. The following table summarizes outstanding securities not included in the computation of diluted net loss per common share, as their inclusion would be anti-dilutive: Three Months Ended March 31, 2020 2019 Common stock options 1,728,112 1,367,077 Unvested restricted common stock — 52,063 Preferred stock 1,969,797 1,969,797 Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, f 2016-13 2016-13 |
Liquidity and Uncertainties
Liquidity and Uncertainties | 3 Months Ended |
Mar. 31, 2020 | |
Liquidity and Uncertainties | |
Liquidity and Uncertainties | 3. Liquidity and Uncertainties The Company is subject to risks common to development stage companies in the biopharmaceutical industry including, but not limited to, uncertainty of product development and commercialization, dependence on key personnel, uncertainty of market acceptance of products and product reimbursement, product liability, uncertain protection of proprietary technology, potential inability to raise additional financing necessary for development and commercialization, and compliance with the U.S. Food and Drug Administration and other government regulations. The Company has incurred losses since inception, including approximately $36.1 million for the three months ended March 31, 2020, resulting in an accumulated deficit of approximately $259.4 million as of March 31, 2020. Management expects to incur losses for the foreseeable future. To date, the Company has funded its operations primarily through the issuance of convertible debt, the proceeds from the Merger on July 22, 2016, and proceeds from sales of the Company’s common and Series A Convertible Preferred Stock. The Company believes that its cash, cash equivalents and marketable securities at March 31, 2020 will be sufficient to fund operations past one year from the issuance of these financial statements. To meet its future capital needs, the Company intends to raise additional capital through debt or equity financings, collaborations, partnerships or other strategic transactions. However, there can be no assurance that the Company will be able to complete any such transactions on acceptable terms or otherwise. The inability of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition. The Company has the ability to delay certain research activities and related clinical expenses if necessary due to liquidity concerns until a date when those concerns are relieved. |
Cash, Cash Equivalents and Mark
Cash, Cash Equivalents and Marketable Securities | 3 Months Ended |
Mar. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Marketable Securities | 4. Cash, Cash Equivalents and Marketable Securities A summary of cash, cash equivalents and available-for-sale March 31, 2020 Cost Unrealized Unrealized Fair gains losses value Cash and cash equivalents: Cash (Level 1) $ 1,668 $ — $ — $ 1,668 Money market funds (Level 1) 63,532 — — 63,532 Corporate debt securities due within 3 months of date of purchase (Level 2) 1,451 — — 1,451 Total cash and cash equivalents 66,651 — — 66,651 Marketable securities: Corporate debt securities due within 1 year of date of purchase (Level 2) 320,478 680 (261 ) 320,897 Corporate debt securities due within 1 to 2 years of date of purchase 20,966 39 (43 ) 20,962 Total cash, cash equivalents and marketable securities $ $ 719 $ (304 ) $ December 31, 2019 Cost Unrealized Unrealized Fair gains losses value Cash and cash equivalents: Cash (Level 1) $ 1,772 $ — $ — $ 1,772 Money market funds (Level 1) 44,925 — — 44,925 Corporate debt securities due within 3 months of date of purchase (Level 2) — — — — Total cash and cash equivalents 46,697 — — 46,697 Marketable securities: Corporate debt securities due within 1 year of date of purchase (Level 2) 309,365 220 (40 ) 309,545 Corporate debt securities due within 1 to 2 years of date of purchase 82,767 39 (3 ) 82,803 Total cash, cash equivalents and marketable securities $ $ 259 $ (43 ) $ 439,045 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities, Current [Abstract] | |
Accrued Liabilities | 5. Accrued Liabilities Accrued liabilities as of March 31, 2020 and December 31, 2019 consisted of the following (in thousands) : March 31, December 31, 2020 2019 Accrued contract research costs $ 18,105 $ 13,775 Compensation and benefits 1,124 2,779 Professional fees 816 1,177 Other 4,224 5,906 $ 24,269 $ 23,637 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 6. Stockholders’ Equity Common Stock Each common stockholder is entitled to one vote for each share of common stock held. Each share of common stock is entitled to receive dividends, as and when declared by the Company’s board of directors. The Company has never declared cash dividends on its common stock and does not expect to do so in the foreseeable future. Preferred Stock The Series A Preferred Stock has a par value of $0.0001 per share and is convertible into shares of the common stock at a one-to-one certain limitations and provisions winding-up as-if-converted-to Stock will generally have no voting rights, except as required by law. Shares of the Series A Preferred Stock will be entitled to receive dividends before shares of any other class or series of capital stock of the Company (other than dividends in the form of the Common Stock) generally equal to the dividend payable on each share of the Common Stock, on an as-converted basis. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | 7. Stock-based Compensation T non-statutory The following table summarizes stock option activity during the three months ended March 31, 2020: Shares Weighted Outstanding at January 1, 2020 1,461,987 $ 64.67 Options granted 266,125 90.75 Outstanding at March 31, 2020 1,728,112 $ 68.69 Exercisable at March 31, 2020 1,025,465 $ 45.81 The total cash received by the Company as a result of stock option exercises was $0 and $0.1 million, respectively, for the three months ended March 31, 2020 and 2019. The weighted-average grant date fair values, based on the Black-Scholes option model, of options granted during the three months ended March 31, 2020 and 2019 were $68.71 and $101.08, respectively. Stock-Based Compensation Expense Stock-based compensation expense during the three months ended March 31, 2020 and 2019 was as follows (in thousands): Three Months Ended March 31, 2020 2019 Stock-based compensation expense by type of award: Stock options $ 4,846 $ 5,901 Restricted stock — 121 Total stock-based compensation expense $ 4,846 $ 6,022 Effect of stock-based compensation expense by line item: Research and development $ 2,078 $ 1,877 General and administrative 2,768 4,145 Total stock-based compensation expense included in net loss $ 4,846 $ 6,022 Unrecognized stock-based compensation expense on stock options as of March 31, 2020 was $44.2 million with a weighted average remaining period of 3.0 years. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8 The Company has a Research, Development and Commercialization Agreement with Hoffmann-La The agreement requires future milestone payments to Roche. Remaining milestones under the agreement total $8 million and are earned by achieving specified objectives related to future regulatory approval in the United States and Europe of a product developed from resmetirom. A single-digit royalty payment range is based on net sales of products developed from resmetirom, subject to certain reductions. Except as described above, the Company has not achieved any additional product development or regulatory milestones and had no Licensed Product sales for the three months ended March 31, 2020 and 2019. The Company has entered into customary contractual arrangements and letters of intent in support of its |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Principle of Consolidation | Principle of Consolidation The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant intercompany balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities, and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash in bank accounts, the balance of which, at times, exceeds Federal Deposit Insurance Corporation insured limits. The primary objective of the Company’s investment activities is to preserve its capital for the purpose of funding operations and the Company does not enter into investments for trading or speculative purposes. The Company’s cash is deposited in highly rated financial institutions in the United States. The Company invests in money market funds and high-grade, commercial paper and corporate bonds, which management believes are subject to minimal credit and market risk. |
Marketable Securities | Marketable Securities Marketable securities consist of investments in high-grade corporate obligations and government and government agency obligations that are classified as available-for-sale. Since these securities are available to fund current operations, they are classified as current assets on the consolidated balance sheets. The Company adjusts the cost of available-for-sale available-for-sale Marketable securities are stated at fair value, including accrued interest, with their unrealized gains and losses included as a component of accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity. The fair value of these securities is based on quoted prices and observable inputs on a recurring basis. Realized gains and losses are determined on the specific identification method. During the three months ended March 31, 2020 and 2019, the Company did not have any realized gains or losses on marketable securities. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, which include cash equivalents, and marketable securities, approximate their fair values. The fair value of the Company’s financial instruments reflects the amounts that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy has the following three levels: Level 1—quoted prices in active markets for identical assets and liabilities. Level 2—observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. Level 3—unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company measures the fair value of its marketable securities by taking into consideration valuations obtained from third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker-dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs. As of March 31, 2020, the Company’s financial assets valued based on Level 1 inputs consisted of cash and cash equivalents in a money market fund and its financial assets valued based on Level 2 inputs consisted of high-grade corporate bonds and commercial paper. During the three months ended March 31, 2020 and 2019, the Company did not have any transfers of financial assets between Levels 1 and 2. As of March 31, 2020 and December 31, 2019, the Company did not have any financial liabilities that were recorded at fair value on a recurring basis on the balance sheet. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development costs are comprised of costs incurred in performing research and development activities, including internal costs (including stock-based compensation), costs for consultants, milestone payments under licensing agreements, and other costs associated with the Company’s preclinical and clinical programs. In particular, the Company has conducted safety studies in animals, optimized and implemented the manufacturing of our drug, and conducted Phase 1-3 |
Patents | Patents Costs to secure and defend patents are expensed as incurred and are classified as general and administrative expense in the Company’s consolidated statements of operations. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes stock-based compensation expense based on the grant date fair value of stock options granted to employees, officers, and directors. The Company uses the Black-Scholes option pricing model to determine the grant date fair value as management believes it is the most appropriate valuation method for its option grants. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility and expected lives of the options. The expected lives for options granted represent the period of time that options granted are expected to be outstanding. The Company uses the simplified method for determining the expected lives of options. Expected volatility is based upon an industry estimate or blended rate including the Company’s historical trading activity. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The Company estimates the forfeiture rate based on historical data. This analysis is re-evaluated Certain of the employee stock options granted by the Company are structured to qualify as incentive stock options (“ISOs”). Under current tax regulations, the Company does not receive a tax deduction for the issuance, exercise or disposition of ISOs if the employee meets certain holding requirements. If the employee does not meet the holding requirements, a disqualifying disposition occurs, at which time the Company may receive a tax deduction. The Company does not record tax benefits related to ISOs unless and until a disqualifying disposition is reported. In the event of a disqualifying disposition, the entire tax benefit is recorded as a reduction of income tax expense. The Company has not recognized any income tax benefit for its share-based compensation arrangements due to the fact that the Company does not believe it is more likely than not it will realize the related deferred tax assets. |
Income Taxes | Income Taxes The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax basis of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. The Company currently maintains a 100% valuation allowance on its deferred tax assets. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner |
Basic and Diluted Loss Per Common Share | Basic and Diluted Loss Per Common Share Basic net loss per share is computed using the weighted average number of common shares outstanding during the period, excluding restricted stock that has been issued but is not yet vested. Diluted net loss per common share is computed using the weighted average number of common shares outstanding and the weighted average dilutive potential common shares outstanding using the treasury stock method. However, for the three months ended March 31, 2020 and 2019, diluted net loss per share is the same as basic net loss per share because the inclusion of weighted average shares of unvested restricted common stock, common stock issuable upon the exercise of stock options, and common stock issuable upon the conversion of preferred stock would be anti-dilutive. The following table summarizes outstanding securities not included in the computation of diluted net loss per common share, as their inclusion would be anti-dilutive: Three Months Ended March 31, 2020 2019 Common stock options 1,728,112 1,367,077 Unvested restricted common stock — 52,063 Preferred stock 1,969,797 1,969,797 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, f 2016-13 2016-13 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of the outstanding securities not included in the computation of diluted net loss per common share as their inclusion would be anti-dilutive | The following table summarizes outstanding securities not included in the computation of diluted net loss per common share, as their inclusion would be anti-dilutive: Three Months Ended March 31, 2020 2019 Common stock options 1,728,112 1,367,077 Unvested restricted common stock — 52,063 Preferred stock 1,969,797 1,969,797 |
Cash, Cash Equivalents and Ma_2
Cash, Cash Equivalents and Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Summary of cash, cash equivalents and available-for-sale marketable securities | A summary of cash, cash equivalents and available-for-sale March 31, 2020 Cost Unrealized Unrealized Fair gains losses value Cash and cash equivalents: Cash (Level 1) $ 1,668 $ — $ — $ 1,668 Money market funds (Level 1) 63,532 — — 63,532 Corporate debt securities due within 3 months of date of purchase (Level 2) 1,451 — — 1,451 Total cash and cash equivalents 66,651 — — 66,651 Marketable securities: Corporate debt securities due within 1 year of date of purchase (Level 2) 320,478 680 (261 ) 320,897 Corporate debt securities due within 1 to 2 years of date of purchase 20,966 39 (43 ) 20,962 Total cash, cash equivalents and marketable securities $ $ 719 $ (304 ) $ December 31, 2019 Cost Unrealized Unrealized Fair gains losses value Cash and cash equivalents: Cash (Level 1) $ 1,772 $ — $ — $ 1,772 Money market funds (Level 1) 44,925 — — 44,925 Corporate debt securities due within 3 months of date of purchase (Level 2) — — — — Total cash and cash equivalents 46,697 — — 46,697 Marketable securities: Corporate debt securities due within 1 year of date of purchase (Level 2) 309,365 220 (40 ) 309,545 Corporate debt securities due within 1 to 2 years of date of purchase 82,767 39 (3 ) 82,803 Total cash, cash equivalents and marketable securities $ $ 259 $ (43 ) $ 439,045 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities as of March 31, 2020 and December 31, 2019 consisted of the following (in thousands) : March 31, December 31, 2020 2019 Accrued contract research costs $ 18,105 $ 13,775 Compensation and benefits 1,124 2,779 Professional fees 816 1,177 Other 4,224 5,906 $ 24,269 $ 23,637 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of stock option activity | The following table summarizes stock option activity during the three months ended March 31, 2020: Shares Weighted Outstanding at January 1, 2020 1,461,987 $ 64.67 Options granted 266,125 90.75 Outstanding at March 31, 2020 1,728,112 $ 68.69 Exercisable at March 31, 2020 1,025,465 $ 45.81 |
Schedule of stock-based compensation expense | Stock-based compensation expense during the three months ended March 31, 2020 and 2019 was as follows (in thousands): Three Months Ended March 31, 2020 2019 Stock-based compensation expense by type of award: Stock options $ 4,846 $ 5,901 Restricted stock — 121 Total stock-based compensation expense $ 4,846 $ 6,022 Effect of stock-based compensation expense by line item: Research and development $ 2,078 $ 1,877 General and administrative 2,768 4,145 Total stock-based compensation expense included in net loss $ 4,846 $ 6,022 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Valuation allowance on deferred tax assets (as a percent) | 100.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Basic and Diluted Loss Per Common Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock options | ||
Anti-dilutive securities | ||
Outstanding securities not included in the computation of diluted net loss per common share as their inclusion would be anti-dilutive (in shares) | 1,728,112 | 1,367,077 |
Unvested restricted common stock | ||
Anti-dilutive securities | ||
Outstanding securities not included in the computation of diluted net loss per common share as their inclusion would be anti-dilutive (in shares) | 52,063 | |
Preferred Stock | ||
Anti-dilutive securities | ||
Outstanding securities not included in the computation of diluted net loss per common share as their inclusion would be anti-dilutive (in shares) | 1,969,797 | 1,969,797 |
Liquidity and Uncertainties (De
Liquidity and Uncertainties (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Liquidity and Uncertainties | |||
Net loss | $ 36,135 | $ 15,080 | |
Accumulated deficit | $ 259,355 | $ 223,220 |
Cash, Cash Equivalents and Ma_3
Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Cash, Cash Equivalents and Marketable Securities | ||
Total cash, cash equivalents and marketable securities, Unrealized gains | $ 719 | $ 259 |
Total cash, cash equivalents and marketable securities, Unrealized losses | (304) | (43) |
Carrying value | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | 66,651 | 46,697 |
Total cash, cash equivalents and marketable securities, Cost | 408,095 | 438,829 |
Fair value | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | 66,651 | 46,697 |
Total cash, cash equivalents and marketable securities, Fair value | $ 408,510 | $ 439,045 |
Corporate debt securities due within 3 months of date of purchase | ||
Cash, Cash Equivalents and Marketable Securities | ||
Maturity period from date of purchase to classify an investment as marketable securities | 3 months | 3 months |
Corporate debt securities due within 3 months of date of purchase | Carrying value | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | $ 1,451 | |
Corporate debt securities due within 3 months of date of purchase | Fair value | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | $ 1,451 | |
Corporate debt securities due within 1 year of date of purchase | ||
Cash, Cash Equivalents and Marketable Securities | ||
Maturity period from date of purchase to classify an investment as marketable securities | 1 year | 1 year |
Corporate debt securities due within 1 year of date of purchase | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Marketable securities, unrealized gains | $ 680 | $ 220 |
Marketable securities, unrealized losses | (261) | (40) |
Corporate debt securities due within 1 year of date of purchase | Carrying value | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Marketable securities, cost | 320,478 | 309,365 |
Corporate debt securities due within 1 year of date of purchase | Fair value | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Marketable securities, fair value | $ 320,897 | $ 309,545 |
Corporate debt securities due within 1 to 2 years of date of purchase | Maximum [Member] | ||
Cash, Cash Equivalents and Marketable Securities | ||
Maturity period from date of purchase to classify an investment as marketable securities | 2 years | 2 years |
Corporate debt securities due within 1 to 2 years of date of purchase | Minimum [Member] | ||
Cash, Cash Equivalents and Marketable Securities | ||
Maturity period from date of purchase to classify an investment as marketable securities | 1 year | 1 year |
Corporate debt securities due within 1 to 2 years of date of purchase | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Marketable securities, unrealized gains | $ 39 | $ 39 |
Marketable securities, unrealized losses | (43) | (3) |
Corporate debt securities due within 1 to 2 years of date of purchase | Carrying value | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Marketable securities, cost | 20,966 | 82,767 |
Corporate debt securities due within 1 to 2 years of date of purchase | Fair value | Level 2 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Marketable securities, fair value | 20,962 | 82,803 |
Cash | Carrying value | Level 1 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | 1,668 | 1,772 |
Cash | Fair value | Level 1 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | 1,668 | 1,772 |
Money market funds | Carrying value | Level 1 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | 63,532 | 44,925 |
Money market funds | Fair value | Level 1 | ||
Cash, Cash Equivalents and Marketable Securities | ||
Cash and cash equivalents | $ 63,532 | $ 44,925 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities, Current [Abstract] | ||
Accrued contract research costs | $ 18,105 | $ 13,775 |
Compensation and benefits | 1,124 | 2,779 |
Professional fees | 816 | 1,177 |
Other | 4,224 | 5,906 |
Total | $ 24,269 | $ 23,637 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) | 3 Months Ended |
Mar. 31, 2020Vote | |
Stockholders' Equity Note [Abstract] | |
Number of votes per share that common stockholders are entitled to receive | 1 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) | 1 Months Ended | ||
Jun. 30, 2017Vote$ / sharesshares | Mar. 31, 2020$ / shares | Dec. 31, 2019$ / shares | |
Stockholders' Equity (Deficit) | |||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Series A Convertible Preferred Stock | |||
Stockholders' Equity (Deficit) | |||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||
Preferred stock conversion ratio | shares | 1 | ||
Preferred shares number voting rights | Vote | 0 |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | |
Maximum | |||
Stock-based compensation expense | |||
Expiration period | 10 years | ||
Stock options | |||
Stock-based compensation expense | |||
Options outstanding to purchase of common stock | 1,461,987 | 1,728,112 | |
Shares available for future issuance | 1,085,220 | ||
Shares | |||
Outstanding at the beginning of the year (in shares) | 1,461,987 | ||
Options granted (in shares) | 266,125 | ||
Outstanding at the end of the year (in shares) | 1,728,112 | ||
Exercisable at the end of the year (in shares) | 1,025,465 | ||
Weighted average exercise price | |||
Outstanding at the beginning of the year (in dollars per share) | $ 64.67 | ||
Options granted (in dollars per share) | 90.75 | ||
Outstanding at the end of the year (in dollars per share) | $ 68.69 | ||
Exercisable at the end of the year (in dollars per share) | $ 45.81 | ||
Additional disclosures | |||
Proceeds resulting from exercise of stock options | $ 0 | $ 0.1 | |
Weighted-average grant date fair value of options (in dollars per share) | $ 68.71 | $ 101.08 |
Stock-based Compensation - Expe
Stock-based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock-based compensation expense | ||
Stock-based compensation expense | $ 4,846 | $ 6,022 |
Research and development | ||
Stock-based compensation expense | ||
Stock-based compensation expense | 2,078 | 1,877 |
General and administrative | ||
Stock-based compensation expense | ||
Stock-based compensation expense | 2,768 | 4,145 |
Stock options | ||
Stock-based compensation expense | ||
Stock-based compensation expense | 4,846 | 5,901 |
Unvested restricted common stock | ||
Stock-based compensation expense | ||
Stock-based compensation expense | $ 0 | $ 121 |
Stock-based Compensation - Unre
Stock-based Compensation - Unrecognized Expense (Details) - Stock options $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Unrecognized stock-based compensation expense | |
Unrecognized stock compensation expense | $ 44.2 |
Weighted average remaining period (in years) | 3 years |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies | ||
Licensed product sales | $ 0 | $ 0 |
Research, Development and Commercialization Agreement | Hoffmann-La Roche ("Roche") | ||
Commitments and Contingencies | ||
Remainder of future milestone payments | $ 8,000,000 |