Prior-Period Financial Statements | 11. Prior-Period Financial Statements The Company adopted ASC 606 on January 1, 2018 using the full retrospective method and as a result the Company has revised its comparative financial statements for the prior period as if ASC 606 had been in effect for that period. The most significant changes to revenue recognition under ASC 606 relate to the timing of revenue recognized for arrangements that include licensing of our technologies. Under ASC 606 revenue related to licensing of access to our technologies is recognized at inception of the agreement, generally the effective date of the agreement. For existing licensing arrangements, the effect of ASC 606 is to shift revenue to earlier periods. Approximately $11.3 million of licensing revenue that was being recognized over the five-year period 2016-2021 is being recognized in the second quarter of 2016. The other significant change under ASC 606 relates to the timing of collaboration revenue when the Company completes its performance obligations for delivery of a drug candidate to its collaboration partners after applying its technologies. For existing collaborations, the effect of ASC 606 is to accelerate revenue recognition to earlier periods. Approximately $6.25 million of collaboration revenue recognized in 2017 and 2018 under historical accounting guidance is being recognized in 2016 under ASC 606. An additional $20.5 million of collaboration revenue that would be recognized in 2018 is being recognized in 2017. The following tables summarize the effects of adopting ASC topic 606 on our financial statements. As Reported Effect of Adoption of As Revised 2017 ASC 606 2017 Assets Current assets Cash and cash equivalents $ 16,528 $ — $ 16,528 Marketable securities 207,603 — 207,603 Accounts receivable 1,142 — 1,142 Prepaid expenses and other current assets 5,606 — 5,606 Total current assets 230,879 — 230,879 Property and equipment, net 7,088 — 7,088 Patents, licenses, and other intangible assets, net 11,148 — 11,148 Marketable securities - long term 139,198 — 139,198 Income tax receivable 1,524 — 1,524 Loan receivable — 86 86 Interest receivable — 14 14 Other assets 265 — 265 Total assets $ 390,102 $ 100 $ 390,202 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 6,869 $ — $ 6,869 Accrued expenses 5,480 — 5,480 Current portion of deferred rent 26 — 26 Current portion of deferred revenue 88,813 (28,695) 60,118 Income taxes 157 — 157 Total current liabilities 101,345 (28,695) 72,650 Deferred rent, less current portion 1,088 — 1,088 Deferred revenue, less current portion 5,623 (5,623) — Total liabilities 108,056 (34,318) 73,738 Commitments and contingencies Stockholders’ equity Preferred stock, $0.01 par value: 10,000,000 authorized shares; -0- issued and outstanding shares at December 31, 2017 — — — Common stock, $0.01 par value: 200,000,000 authorized shares at December 31, 2017; 47,002,488 issued and outstanding at December 31, 2017 470 — 470 Additional paid-in capital 570,670 — 570,670 Accumulated other comprehensive income loss (1,808) — (1,808) Accumulated deficit (287,286) 34,418 (252,868) Stockholders’ equity 282,046 34,418 316,464 Total liabilities and stockholders’ equity $ 390,102 $ 100 $ 390,202 As Reported As Revised Three Months Ended Effect of Three Months Ended June 30, Adoption of June 30, 2017 ASC 606 2017 Revenue Collaborations, licenses and milestones $ 13,340 $ (840) $ 12,500 Operating expenses Research and development 16,919 — 16,919 General and administrative 4,091 — 4,091 Total operating expenses 21,010 — 21,010 Loss from operations (7,670) (840) (8,510) Other income (expenses) Interest income 1,038 — 1,038 Interest expense (3) — (3) Other income 30 — 30 Total other income, net 1,065 — 1,065 Loss before income tax expense (6,605) (840) (7,445) Income tax expense 280 — 280 Net loss (6,885) (840) (7,725) Other comprehensive income (loss) Net unrealized loss on marketable securities (44) — (44) Comprehensive loss $ (6,929) $ (840) $ (7,769) Basic and diluted net loss per common share $ (0.15) $ (0.02) $ $ (0.17) As Reported As Revised Six Months Ended Effect of Six Months Ended June 30, Adoption of June 30, 2017 ASC 606 2017 Revenue Collaborations, licenses and milestones $ 17,681 $ (1,681) $ 16,000 Operating expenses Research and development 31,967 — 31,967 General and administrative 8,903 — 8,903 Total operating expenses 40,870 — 40,870 Loss from operations (23,189) (1,681) (24,870) Other income (expenses) Interest income 2,095 — 2,095 Interest expense (5) — (5) Other income 30 — 30 Total other income, net 2,120 — 2,120 Loss before income tax expense (21,069) (1,681) (22,750) Income tax expense 450 — 450 Net loss (21,519) (1,681) (23,200) Other comprehensive income (loss) Net unrealized gain on marketable securities 201 — 201 Comprehensive loss $ (21,318) $ (1,681) $ (22,999) Basic and diluted net loss per common share $ (0.46) $ (0.04) $ $ (0.50) Accumulated Additional Other Total Common Stock Paid Comprehensive Accumulated Stockholders’ Stockholders’ Equity Shares Amount in-Capital Loss Deficit Equity Balance, December 31, 2016 as originally reported 46,567,978 $ 466 $ 552,889 $ (1,441) $ (237,960) $ 313,954 Adoption of ASU 2016-09 — — 401 — (401) — Adoption of ASC 606 — — — — 23,979 23,979 Balance, December 31, 2016 as revised 46,567,978 466 553,290 (1,441) (214,382) 337,933 Issuance of common stock upon exercise of stock awards 363,603 4 2,793 — — 2,797 Issuance of common stock under the Employee Stock Purchase Plan 70,907 — 936 — — 936 Comprehensive loss — — — (367) (48,925) (49,292) Stock-based compensation — — 13,651 — — 13,651 Balance, December 31, 2017 47,002,488 $ 470 $ 570,670 $ (1,808) $ (263,307) $ 306,025 Adoption of ASC topic 606 — — — — 10,439 10,439 Balance, December 31, 2017 as revised 47,002,488 $ 470 $ 570,670 $ (1,808) $ (252,868) $ 316,464 As Reported As Revised Six Months Ended Effect of Six Months Ended June 30, Adoption of June 30, 2017 ASC 606 2017 Cash flows from operating activities Net loss $ (21,519) $ (1,681) $ (23,200) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 864 — 864 Amortization of premium on marketable securities 1,356 — 1,356 Stock-based compensation 6,607 — 6,607 Abandonment of capitalized intangible assets 225 — 225 Changes in operating assets and liabilities: Accounts receivable (6,260) — (6,260) Interest receivable (144) (14) (158) Prepaid expenses and other assets (4,727) — (4,727) Accounts payable 3,500 — 3,500 Accrued expenses (2,708) — (2,708) Income taxes 390 — 390 Deferred rent (12) — (12) Deferred revenue (1,080) 1,781 701 Net cash used in operating activities (23,508) 86 (23,422) Cash flows from investing activities Purchase of marketable securities (33,440) — (33,440) Purchase of intangible assets (1,092) — (1,092) Purchase of property and equipment (1,256) — (1,256) Proceeds from sale and maturities of marketable securities 53,866 — 53,866 Repayment of loan — (86) (86) Net cash provided by investing activities 18,078 (86) 17,992 Cash flows from financing activities Proceeds from issuance of common stock upon exercise of stock awards 1,680 — 1,680 Proceeds from issuance of common stock under the Employee Stock Purchase Plan 442 442 Net cash provided by financing activities 2,122 — 2,122 Net decrease in cash and cash equivalents (3,308) — (3,308) Cash and cash equivalents , beginning of period 14,528 — 14,528 Cash and cash equivalents , end of period $ 11,220 $ — $ 11,220 |