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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, 2020

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: 001-37620

 

KURA ONCOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

61-1547851

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

3033 Science Park Road, Suite 220, San Diego, CA

 

92121

(Address of Principal Executive Offices)

 

(Zip Code)

(858) 500-8800

(Registrant’s Telephone Number, Including Area Code)

 

 

(Former Name, Former Address or Former Fiscal Year If Changed Since Last Report)

 

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

 

KURA

 

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, a 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  

As of the close of business on April 30, 2020, the registrant had 45,436,664 shares of Common Stock ($0.0001 par value) outstanding.

 

 

 


KURA ONCOLOGY, INC.

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

Item 1. Financial Statements

 

 

 

 

 

Condensed Balance Sheets − As of March 31, 2020 (unaudited) and December 31, 2019

1

 

 

 

 

Condensed Statements of Operations and Comprehensive Loss – Three months ended March 31, 2020 and 2019 (unaudited)

2

 

 

 

 

Condensed Statements of Stockholders’ Equity – Three months ended March 31, 2020 and 2019 (unaudited)

3

 

 

 

 

Condensed Statements of Cash Flows – Three Months Ended March 31, 2020 and 2019 (unaudited)

4

 

 

 

 

Notes to Condensed Financial Statements (unaudited)

5

 

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

 

 

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

19

 

 

 

 

Item 4. Controls and Procedures

19

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

20

 

 

 

 

Item 1A. Risk Factors

20

 

 

 

 

Item 5. Other Information

55

 

 

 

 

Item 6. Exhibits

56

 

 

Signatures

58

 

 

 

 


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KURA ONCOLOGY, INC.

Condensed Balance Sheets

(In thousands, except par value data) 

 

 

 

 

March 31,

2020

 

 

December 31,

2019

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

33,811

 

 

$

26,135

 

Short-term investments

 

 

183,124

 

 

 

210,756

 

Accounts receivable, related party

 

 

31

 

 

 

30

 

Prepaid expenses and other current assets

 

 

4,164

 

 

 

2,682

 

Total current assets

 

 

221,130

 

 

 

239,603

 

Property and equipment, net

 

 

805

 

 

 

44

 

Restricted cash

 

 

210

 

 

 

 

Other long-term assets

 

 

4,317

 

 

 

2,325

 

Total assets

 

$

226,462

 

 

$

241,972

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

13,554

 

 

$

15,314

 

Current portion of long-term debt, net

 

 

1,000

 

 

 

250

 

Total current liabilities

 

 

14,554

 

 

 

15,564

 

Long-term debt, net

 

 

6,500

 

 

 

7,250

 

Other long-term liabilities

 

 

2,207

 

 

 

377

 

Total liabilities

 

 

23,261

 

 

 

23,191

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000 shares authorized; no shares

     issued and outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000 shares authorized;

     45,430 and 45,384 shares issued and outstanding as of

     March 31, 2020 and December 31, 2019, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

434,722

 

 

 

431,322

 

Accumulated other comprehensive income

 

 

561

 

 

 

331

 

Accumulated deficit

 

 

(232,087

)

 

 

(212,877

)

Total stockholders' equity

 

 

203,201

 

 

 

218,781

 

Total liabilities and stockholders' equity

 

$

226,462

 

 

$

241,972

 

 

See accompanying notes to unaudited condensed financial statements.

 

1


KURA ONCOLOGY, INC.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating Expenses:

 

 

 

 

 

 

 

 

Research and development (includes related party

     amounts of $132 and $53 for the three months ended

     March 31, 2020 and 2019, respectively)

 

$

12,575

 

 

$

10,382

 

General and administrative (includes related party

     amounts of $111 and $87 for the three months ended

     March 31, 2020 and 2019, respectively)

 

 

7,625

 

 

 

4,569

 

Total operating expenses

 

 

20,200

 

 

 

14,951

 

Other Income (Expense):

 

 

 

 

 

 

 

 

Management fee income, related party

 

 

15

 

 

 

126

 

Interest income

 

 

1,119

 

 

 

1,030

 

Interest expense

 

 

(144

)

 

 

(145

)

Total other income

 

 

990

 

 

 

1,011

 

Net Loss

 

$

(19,210

)

 

$

(13,940

)

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.42

)

 

$

(0.37

)

Weighted average number of shares used in computing

     net loss per share, basic and diluted

 

 

45,411

 

 

 

38,168

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss:

 

 

 

 

 

 

 

 

Net loss

 

$

(19,210

)

 

$

(13,940

)

Other comprehensive income:

 

 

 

 

 

 

 

 

Unrealized gain on marketable securities

     and foreign currency

 

 

230

 

 

 

149

 

Comprehensive Loss

 

$

(18,980

)

 

$

(13,791

)

 

 See accompanying notes to unaudited condensed financial statements.

 

 

 

2


KURA ONCOLOGY, INC.

Condensed Statements of Stockholders’ Equity

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

45,384

 

 

$

5

 

 

$

431,322

 

 

$

331

 

 

$

(212,877

)

 

$

218,781

 

Share-based compensation expense

 

 

 

 

 

 

 

3,153

 

 

 

 

 

 

 

 

 

3,153

 

Issuance of common stock from exercise of options

 

46

 

 

 

 

 

 

247

 

 

 

 

 

 

 

 

 

247

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

230

 

 

 

 

 

 

230

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,210

)

 

 

(19,210

)

Balance at March 31, 2020

 

45,430

 

 

$

5

 

 

$

434,722

 

 

$

561

 

 

$

(232,087

)

 

$

203,201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2018

 

38,148

 

 

$

4

 

 

$

310,849

 

 

$

(131

)

 

$

(149,737

)

 

$

160,985

 

Share-based compensation expense

 

 

 

 

 

 

 

2,269

 

 

 

 

 

 

 

 

 

2,269

 

Issuance of common stock from exercise of options

 

21

 

 

 

 

 

 

102

 

 

 

 

 

 

 

 

 

102

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

149

 

 

 

 

 

 

149

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,940

)

 

 

(13,940

)

Balance at March 31, 2019

 

38,169

 

 

$

4

 

 

$

313,220

 

 

$

18

 

 

$

(163,677

)

 

$

149,565

 

See accompanying notes to unaudited condensed financial statements.

 

 

 

 

3


KURA ONCOLOGY, INC.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(19,210

)

 

$

(13,940

)

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

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

3,153

 

 

 

2,269

 

Amortization of premium and accretion of discount on

     marketable securities, net

 

 

(110

)

 

 

(540

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, related party

 

 

(1

)

 

 

45

 

Prepaid expenses and other current assets

 

 

(1,482

)

 

 

146

 

Other long-term assets

 

 

160

 

 

 

(182

)

Accounts payable and accrued expenses

 

 

(2,391

)

 

 

(2,065

)

Other long-term liabilities

 

 

59

 

 

 

16

 

Net cash used in operating activities

 

 

(19,822

)

 

 

(14,251

)

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Maturities and sales of marketable securities

 

 

39,246

 

 

 

66,656

 

Purchases of marketable securities

 

 

(11,274

)

 

 

(50,848

)

Purchases of property and equipment

 

 

(511

)

 

 

 

Net cash provided by investing activities

 

 

27,461

 

 

 

15,808

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

247

 

 

 

102

 

Net cash provided by financing activities

 

 

247

 

 

 

102

 

Net increase in cash, cash equivalents and restricted cash

 

 

7,886

 

 

 

1,659

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

26,135

 

 

 

16,119

 

Cash, cash equivalents and restricted cash at end of period

 

$

34,021

 

 

$

17,778

 

See accompanying notes to unaudited condensed financial statements.

 

4


KURA ONCOLOGY, INC.

Notes to Unaudited Condensed Financial Statements

 

1. Organization and Basis of Presentation

The Company

Kura Oncology, Inc. is a clinical-stage biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline consists of small molecule product candidates that target cancer signaling pathways where there is a strong scientific and clinical rationale to improve outcomes, and we intend to pair them with molecular or cellular diagnostics to identify those patients most likely to respond to treatment. We plan to advance our product candidates through a combination of internal development and strategic partnerships while maintaining significant development and commercial rights.

References in these Notes to Unaudited Condensed Financial Statements to the “Company,” “we,” “our” or “us,” refer to Kura Oncology, Inc.

Basis of Presentation

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission on February 25, 2020, from which we derived our balance sheet as of December 31, 2019. The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying unaudited condensed financial statements do not include all of the information and notes required by GAAP for complete financial statements. The accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of our management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

The preparation of the unaudited condensed financial statements in accordance with GAAP requires our management to make estimates and assumptions that affect the amounts reported on our unaudited condensed financial statements and accompanying notes. The amounts reported could differ under different estimates and assumptions. On an ongoing basis, we evaluate our estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances. Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to inform our critical accounting estimates. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from management’s estimates.

The extent to which the COVID-19 pandemic may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with any confidence, such as the duration and severity of the COVID-19 pandemic, steps required or mandated by governments to mitigate the impact of COVID-19 or the effectiveness of actions to prevent, contain and treat COVID-19, particularly in the geographies where we, our third party manufacturers, contract research organizations or current and planned clinical trial sites operate. We cannot presently predict the scope and severity of any potential business disruptions, interruptions or shutdowns. If we or any of the third parties with whom we engage, however, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on our business and our results of operation and financial condition.

 

 

5


2. Summary of Significant Accounting Policies

Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation.

Restricted Cash

Under the terms of an office lease entered into in March 2020, we are required to maintain a standby letter of credit during the term of the lease. As of March 31, 2020, restricted cash of $0.2 million was pledged as collateral for the letter of credit.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the unaudited condensed balance sheets that sum to the total of the amounts shown in the unaudited condensed statements of cash flows, in thousands:

 

 

March 31, 2020

 

 

December 31, 2019

 

 

March 31, 2019

 

 

December 31, 2018

 

Cash and cash equivalents

 

$

33,811

 

 

$

26,135

 

 

$

17,778

 

 

$

16,119

 

Restricted cash

 

 

210

 

 

 

 

 

 

 

 

 

 

Total

 

$

34,021

 

 

$

26,135

 

 

$

17,778

 

 

$

16,119

 

 

Net Loss per Share

Net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by dividing the net loss by the weighted-average number of common shares and common stock equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, outstanding stock options, an outstanding warrant and employee stock purchase plan rights are excluded from the calculation of diluted net loss per common share for the periods presented as their effect would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the antidilutive effect of the securities. More specifically, for the three months ended March 31, 2020 and 2019, outstanding stock options, an outstanding warrant and employee stock purchase plan rights totaling approximately 5,368,000 shares and 4,383,000 shares, respectively, were excluded from the calculation of diluted net loss per share because to do so would be anti-dilutive.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments, in order to improve financial reporting of expected credit losses on financial instruments and other commitments to extend credit. ASU 2016-13 requires that an entity measure and recognize expected credit losses for financial assets held at amortized cost and replaces the incurred loss impairment methodology in prior GAAP with a methodology that requires consideration of a broader range of information to estimate credit losses, and establishes additional disclosures related to credit risks. We adopted ASU 2016-13 on January 1, 2020. The adoption of the new standard did not have a material impact on our unaudited condensed financial statements. We will continue to actively monitor the impact of the recent coronavirus (COVID-19) pandemic on expected credit losses.

 

 


6


3. Investments

We invest in available-for-sale securities consisting of money market funds, corporate debt securities, U.S. Treasury securities and commercial paper. Available-for-sale securities are classified as part of either cash and cash equivalents or short-term investments on our unaudited condensed balance sheets.

The following tables summarize, by major security type, our investments that are measured at fair value on a recurring basis, in thousands:

 

 

 

 

March 31, 2020

 

 

Maturities

(years)

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

1 or less

 

$

30,881

 

 

$

 

 

$

 

 

$

30,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

2 or less

 

 

84,224

 

 

 

15

 

 

 

(89

)

 

 

84,150

 

U.S. Treasury securities

2 or less

 

 

71,063

 

 

 

635

 

 

 

 

 

 

71,698

 

Commercial paper

1 or less

 

 

27,276

 

 

 

 

 

 

 

 

 

27,276

 

Total short-term investments

 

 

 

182,563

 

 

 

650

 

 

 

(89

)

 

 

183,124

 

Total

 

 

$

213,444

 

 

$

650

 

 

$

(89

)

 

$

214,005

 

 

 

 

 

December 31, 2019

 

 

Maturities

(years)

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

1 or less

 

$

18,445

 

 

$

 

 

$

 

 

$

18,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

2 or less

 

 

113,466

 

 

 

182

 

 

 

 

 

 

113,648

 

U.S. Treasury securities

2 or less

 

 

76,108

 

 

 

149

 

 

 

 

 

 

76,257

 

Commercial paper

1 or less

 

 

20,851

 

 

 

 

 

 

 

 

 

20,851

 

Total short-term investments

 

 

 

210,425

 

 

 

331

 

 

 

-

 

 

 

210,756

 

Total

 

 

$

228,870

 

 

$

331

 

 

$

 

 

$

229,201

 

The available-for-sale investments are classified as current assets, even though the stated maturity date may be one year or more beyond the current balance sheet date, which reflects management’s intention to use the proceeds from sales of these securities to fund our operations, as necessary. As of March 31, 2020, $173.0 million of our short-term investments had maturities less than one year, and $10.1 million had maturities between one to two years. Realized gains and losses were de minimus for the three months ended March 31, 2020.

We evaluate our available-for-sale debt securities for credit losses when the amortized cost basis exceeds fair value. The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in interest income through an allowance account. Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive income (loss). When evaluating an investment for impairment, we review factors such as the severity of the impairment, changes in underlying credit ratings, forecasted recovery, our intent to sell or the likelihood that we would be required to sell the investment before its anticipated recovery in market value and the probability that the scheduled cash payments will continue to be made. We recorded no allowance for credit losses in the statement of operations and comprehensive loss during the three months ended March 31, 2020.

7


4. Fair Value Measurements

As of March 31, 2020 and December 31, 2019, we had cash equivalents and short-term investments measured at fair value on a recurring basis. Available-for-sale marketable securities consist of U.S. Treasury securities, which were measured at fair value using Level 1 inputs, and corporate debt securities and commercial paper, which were measured at fair value using Level 2 inputs. We determine the fair value of Level 2 related securities with the aid of valuations provided by third parties using proprietary valuation models and analytical tools. These valuation models and analytical tools use market pricing or prices for similar instruments that are both objective and publicly available, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers. We validate the fair values of Level 2 financial instruments by comparing these fair values to a third-party pricing source.

The following tables summarize, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy, in thousands:

 

 

 

March 31, 2020

 

 

 

Balance

 

 

Level 1

 

 

Level 2

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

30,881

 

 

$

30,881

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

84,150

 

 

 

 

 

84,150

 

U.S. Treasury securities

 

 

71,698

 

 

 

71,698

 

 

 

 

Commercial paper

 

 

27,276

 

 

 

 

 

 

27,276

 

Total short-term investments

 

 

183,124

 

 

 

71,698

 

 

 

111,426

 

Total

 

$

214,005

 

 

$

102,579

 

 

$

111,426

 

 

 

 

December 31, 2019

 

 

 

Balance

 

 

Level 1

 

 

Level 2

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

18,445

 

 

$

18,445

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

113,648

 

 

 

 

 

 

113,648

 

U.S. Treasury securities

 

 

76,257

 

 

 

76,257

 

 

 

 

Commercial paper

 

 

20,851

 

 

 

 

 

 

20,851

 

Total short-term investments

 

 

210,756

 

 

 

76,257

 

 

 

134,499

 

Total

 

$

229,201

 

 

$

94,702

 

 

$

134,499

 

We believe that our term loan facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the term loan facility approximates fair value. The fair value of our term loan facility is determined using Level 2 inputs in the fair value hierarchy.

5. Balance Sheet Detail

Property and equipment consisted of the following, in thousands:

 

 

 

March 31, 2020

 

 

December 31, 2019

 

Computer software and equipment and laboratory equipment

 

$

136

 

 

$

136

 

Furniture and fixtures

 

 

511

 

 

 

 

Leasehold improvements

 

 

250

 

 

 

 

Property and equipment, gross

 

 

897

 

 

 

136

 

Less: accumulated depreciation

 

 

(92

)

 

 

(92

)

Property and equipment, net

 

$

805

 

 

$

44

 

 

8


Furniture and fixtures and leasehold improvements are being constructed for our new office facilities and have not been placed into service as of March 31, 2020.

Accounts payable and accrued liabilities consisted of the following, in thousands:

 

 

 

March 31, 2020

 

 

December 31, 2019

 

Accounts payable

 

$

2,453

 

 

$

3,526

 

Accrued research and development expenses

 

 

7,052

 

 

 

6,970

 

Accrued compensation and benefits

 

 

2,088

 

 

 

3,694

 

Other accrued expenses

 

 

1,961

 

 

 

1,124

 

Total accounts payable and accrued expenses

 

$

13,554

 

 

$

15,314

 

 

6. Leases

 We have a sublease with a related party for office space in San Diego, California, or Sublease, and a lease for office space in Cambridge, Massachusetts, that existed before January 1, 2019 and were classified as operating leases. In March 2019, the Sublease was amended to extend the expiration date from October 31, 2019 to April 30, 2020 with the monthly rent increased from approximately $16,000 to approximately $24,000 per month effective November 1, 2019. In April 2020, the Sublease was amended to extend the expiration date from April 30, 2020 to June 30, 2020 with no change to the amount of monthly rent. See Note 8, Related Party Transactions, for further details of the Sublease.

In January 2020, we entered into an office lease agreement for our future corporate offices in San Diego, California, or San Diego Lease, which would have commenced on May 1, 2020. In May 2020, the commencement date has subsequently been amended to August 1, 2020, as described in Note 9, Subsequent Events. The San Diego Lease term is five years and four months and provides for a one-time option to extend for a period of five additional years. The monthly base rent is approximately $58,000 for the first year, which amount will increase by 3.0% per year over the initial term. In addition, the lease is subject to charges for common area maintenance and other costs. The lease provides four month rent abatement periods during the first year of the lease and approximately $1.0 million in reimbursement for allowable tenant improvements, which effectively reduce the total lease payments owed for the lease. The San Diego Lease is considered to be an operating lease. For accounting purposes, the lease commencement date was determined to be March 2020 when we had control of the office space. We recorded operating lease right-of-use, or ROU, asset and operating lease liability of approximately $2.2 million on our unaudited condensed balance sheet.

 In March 2020, we entered into a lease for office space in Boston, Massachusetts, or the Boston Lease, commencing on April 1, 2020 and expiring on July 31, 2024. The lease provides for one option to extend the lease for a period of five additional years. The monthly base rent will be approximately $105,500 for the first year, which amount will increase by 2.0% per year over the initial term. In addition to base monthly rent, we will be obligated to pay for common area maintenance and other costs. Under the terms of the Boston Lease, we are required to maintain a standby letter of credit of approximately $0.2 million during the term of the lease. As of March 31, 2020, we had not taken control of the space and the lease term had not commenced; therefore, no ROU asset or lease liability has been recorded.

Maturities of lease liabilities as of March 31, 2020 are as follows, in thousands:

Year Ending December 31,

 

 

 

 

2020 (remaining)*

 

$

(739

)

2021

 

 

706

 

2022