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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

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

For the quarterly period ended March 31, 2019

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: 001-37519

 

AIMMUNE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

45-2748244

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

8000 Marina Blvd., Suite 300

Brisbane, California 94005

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (650) 614-5220

 

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  

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

 

AIMT

 

NASDAQ Global Market

As of April 30, 2019, the registrant had 62,492,435 shares of common stock, $0.0001 par value per share, outstanding.

 

 


AIMMUNE THERAPEUTICS, INC.

TABLE OF CONTENTS

 

 

 

Page

s

 

 

 

 

 

PART I. – FINANCIAL INFORMATION

 

3

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited)

 

3

 

 

Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018

 

3

 

 

Condensed Consolidated Statements of Comprehensive Loss for the Quarters Ended March 31, 2019 and 2018

 

4

 

  

Condensed Consolidated Statements of Stockholders’ Equity as of March 31, 2019 and March 31, 2018

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the Quarters Ended March 31, 2019 and 2018

 

7

 

 

Notes to Condensed Consolidated Financial Statements

 

8

Item 2.

 

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

 

19

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

24

Item 4.

 

Controls and Procedures

 

25

 

 

 

 

 

PART II. – OTHER INFORMATION

 

26

Item 1.

 

Legal Proceedings

 

26

Item 1A.

 

Risk Factors

 

26

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

65

Item 3.

 

Defaults Upon Senior Securities

 

65

Item 4.

 

Mine Safety Disclosures

 

65

Item 5.

 

Other Information

 

65

Item 6.

 

Exhibits

 

66

SIGNATURES

 

68

 

 

 


PART I. – FINANCIAL INFORMATION

Item 1. Financial Statements

AIMMUNE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

 

 

March 31,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

81,058

 

 

$

107,511

 

Short-term investments

 

 

202,113

 

 

 

196,421

 

Prepaid expenses and other current assets

 

 

8,220

 

 

 

8,687

 

Total current assets

 

 

291,391

 

 

 

312,619

 

Long-term investments

 

 

13,177

 

 

 

 

Property and equipment, net

 

 

26,824

 

 

 

26,328

 

Operating lease right of use assets

 

 

12,247

 

 

 

 

Prepaid expenses and other assets

 

 

514

 

 

 

608

 

Total assets

 

$

344,153

 

 

$

339,555

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,517

 

 

$

8,833

 

Accrued liabilities

 

 

25,588

 

 

 

29,144

 

Operating lease liabilities, current

 

 

1,967

 

 

 

 

Other current liabilities

 

 

19

 

 

 

35

 

Total current liabilities

 

 

38,091

 

 

 

38,012

 

Long term debt, net of discount

 

 

37,268

 

 

 

 

Operating lease liabilities, non-current

 

 

11,633

 

 

 

 

Other liabilities

 

 

860

 

 

 

2,596

 

Total liabilities

 

 

87,852

 

 

 

40,608

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

   Preferred stock, par value $0.0001 per share - 10,000 shares authorized at

     March 31, 2019 and December 31, 2018; 0 shares issued and outstanding at

     March 31, 2019 and December 31, 2018

 

 

 

 

 

 

Common stock, par value $0.0001 per share—290,000 shares authorized as of

  March 31, 2019, and December 31, 2018; 62,470 and 62,142 shares issued and

  outstanding as of March 31, 2019, and December 31, 2018, respectively

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

786,681

 

 

 

775,283

 

Accumulated other comprehensive gain/(loss)

 

 

63

 

 

 

(108

)

Accumulated deficit

 

 

(530,449

)

 

 

(476,234

)

Total stockholders’ equity

 

 

256,301

 

 

 

298,947

 

Total liabilities and stockholders’ equity

 

$

344,153

 

 

$

339,555

 

 

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

3


AIMMUNE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands, except per share amounts)

(Unaudited)

 

 

Quarter Ended March 31,

 

 

2019

 

2018

 

Operating expenses

 

 

 

 

 

 

Research and development

$

31,316

 

$

33,446

 

General and administrative

 

23,712

 

$

16,673

 

Total operating expenses

 

55,028

 

 

50,119

 

Loss from operations

 

(55,028

)

 

(50,119

)

Interest income, net

 

791

 

 

636

 

Loss before provision for income taxes

 

(54,237

)

 

(49,483

)

Provision for income taxes

 

29

 

 

17

 

Net loss

$

(54,266

)

$

(49,500

)

Other comprehensive gain (loss) , net of tax:

 

 

 

 

 

 

Unrealized gains (losses) on investments

 

171

 

 

(17

)

Comprehensive loss

$

(54,095

)

$

(49,517

)

 

 

 

 

 

 

 

Net loss per common share, basic and diluted

$

(0.87

)

$

(0.92

)

Weighted average shares used in computing net loss per common

   share, basic and diluted

 

62,022

 

 

53,578

 

 

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

 


4


AIMMUNE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss)/Gain

 

 

deficit

 

 

Equity

 

Balance as of December 31, 2018

 

 

62,142

 

 

$

6

 

 

$

775,283

 

 

$

(108

)

 

$

(476,234

)

 

$

298,947

 

Issuance of common stock

   upon exercise of vested

   options

 

 

328

 

 

 

 

 

 

3,633

 

 

 

 

 

 

 

 

 

3,633

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,765

 

 

 

 

 

 

 

 

 

7,765

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

 

 

171

 

 

 

 

 

 

 

171

 

Accumulated depreciation upon adoption of ASU Topic 842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

51

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54,266

)

 

 

(54,266

)

Balance as of March 31, 2019

 

 

62,470

 

 

$

6

 

 

$

786,681

 

 

$

63

 

 

$

(530,449

)

 

$

256,301

 

 

 

 

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

5


AIMMUNE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2017

 

 

51,091

 

 

$

5

 

 

$

443,390

 

 

$

(108

)

 

$

(265,482

)

 

$

177,805

 

Issuance of common stock

   upon exercise of vested

   options

 

 

308

 

 

 

 

 

 

2,743

 

 

 

 

 

 

 

 

 

2,744

 

Issuance of common stock

   upon securities agreement

 

 

300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

   upon public offering

 

 

6,325

 

 

 

1

 

 

 

190,453

 

 

 

 

 

 

 

 

 

190,453

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,607

 

 

 

 

 

 

 

 

 

7,607

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(17

)

 

 

 

 

 

(17

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,500

)

 

 

(49,500

)

Balance as of March 31, 2018

 

 

58,024

 

 

$

6

 

 

$

644,193

 

 

$

(125

)

 

$

(314,982

)

 

$

329,092

 

 

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

 

 

6


AIMMUNE THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Quarter Ended March 31,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(54,266

)

 

$

(49,500

)

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

 

 

 

 

 

 

 

 

Depreciation expense

 

 

666

 

 

 

356

 

Stock-based compensation expense

 

 

7,765

 

 

 

7,607

 

Non-cash interest expense

 

 

1,065

 

 

 

 

Amortization of premium on investment securities

 

 

(542

)

 

 

(25

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other assets

 

 

1,433

 

 

 

(36

)

Accounts payable

 

 

1,945

 

 

 

(431

)

Accrued liabilities

 

 

(3,555

)

 

 

2,448

 

Other liabilities

 

 

(340

)

 

 

(183

)

Net cash used in operating activities

 

 

(45,829

)

 

 

(39,764

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,372

)

 

 

(2,383

)

Purchase of investments

 

 

(85,564

)

 

 

(64,274

)

Maturities of investments

 

 

67,408

 

 

 

50,802

 

Net cash used in investing activities

 

 

(19,528

)

 

 

(15,855

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Borrowings under debt agreement

 

 

40,000

 

 

 

 

Debt issuance costs, net

 

 

(3,856

)

 

 

 

Proceeds from underwritten public offering, net of offering costs

 

 

 

 

 

189,463

 

Net cash proceeds from exercise of stock options, including early exercise

 

 

3,250

 

 

 

1,993

 

Tax withholdings related to net share settlements of restricted stock units

 

 

(490

)

 

 

 

Net cash provided by financing activities

 

 

38,904

 

 

 

191,456

 

Net increase (decrease) in cash and cash equivalents

 

 

(26,453

)

 

 

135,837

 

Cash and cash equivalents at the beginning of the period

 

 

107,511

 

 

 

73,487

 

Cash and cash equivalents at the end of the period

 

$

81,058

 

 

$

209,324

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Property and equipment purchases included in accounts payable and accrued liabilities

 

$

1,051

 

 

$

1,788

 

Receivable for underwritten public offering

 

 

 

 

$

990

 

Debt issuance costs, discount and interest payable

 

$

981

 

 

 

 

 

Receivable for stock option exercises

 

$

383

 

 

$

752

 

 

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

 

 

7


AIMMUNE THERAPEUTICS, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2019

(Unaudited)

 

1. Formation and Business of the Company

Aimmune Therapeutics, Inc., or the Company, is a clinical-stage biopharmaceutical company advancing a new therapeutic approach, including the development of proprietary product candidates, for the treatment of peanut and other food allergies. Our therapeutic approach, which we refer to as Characterized Oral Desensitization Immunotherapy, or CODITTM, is a therapeutic approach designed to desensitize patients to food allergens using rigorously characterized biologic products, defined treatment protocols and tailored support services. We are headquartered in Brisbane, California, and were incorporated in the state of Delaware on June 24, 2011.

Since inception, we have incurred net losses and negative cash flows from operations. During the quarter ended March 31, 2019, we incurred a net loss of $54.3 million, and we used $45.8 million of cash in operations. As of March 31, 2019, we had an accumulated deficit of $530.4 million, and we do not expect to experience positive cash flows in the near future. As of March 31, 2019, we had cash, cash equivalents and investments of $296.3 million. We believe that our existing capital resources will be sufficient to fund our planned operations for at least the next 12 months and through expected regulatory approval in the United States for AR101, our lead CODITTM product candidate. We have financed our operations to date primarily through private placements of our equity securities, our initial public offering, or IPO, of common stock in August 2015, an underwritten public offering of common stock in February and March 2018 and our loan agreement entered into in January 2019. Our ability to continue to meet our obligations and to achieve our business objectives is dependent upon a number of factors, which include obtaining U.S. Food and Drug Administration, or FDA, and European Medicines Agency, or EMA, approval, raising additional capital the successful and timely completion of our clinical trials, our ability to control expenses and generating sufficient revenue in the United States and Europe. Failure to obtain FDA and EMA approval, commercialize our lead product candidate, manage discretionary expenditures, or raise additional financing, as required, may adversely impact our ability to achieve our intended business objectives.

2. Summary of Significant Accounting Policies

Basis of Preparation

The accompanying condensed consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles, or GAAP, in the United States and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2018, has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements have been prepared on the same basis as our annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of our financial information. The results of operations for the quarter ended March 31, 2019, are not necessarily indicative of the results to be expected for the year ending December 31, 2019, or for any other interim period or for any other future year. We operate in one reportable segment.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the SEC.

Basis of Consolidation

The accompanying condensed consolidated financial statements include the accounts of our wholly-owned subsidiaries. All significant intercompany transactions have been eliminated.

Use of Estimates

The preparation of the accompanying condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of costs and expenses during the reporting period. We base our estimates and assumptions on historical experience when available and on various factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results could differ from these estimates under different assumptions or conditions.

8


Significant Accounting Policies

There have been no significant changes to the accounting policies during the quarter ended March 31, 2019, as compared to the significant accounting policies described in Note 2 of the “Notes to Consolidated Financial Statements” in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, except as noted below.

Recently Adopted Accounting Pronouncements

 

We adopted Accounting Standards Update, or ASU No. 2016-02, Leases (Topic 842), as of January 1, 2019 using the alternative modified retrospective approach provided in ASU No. 2018-11, Lease (Topic 841): Targeted Improvements. In doing so, we have continued to apply ASC 840 in the comparative periods and recognized the cumulative-effect of applying Topic 842 to retained earnings on January 1, 2019. We elected a package of practical expedients for leases that commenced prior to January 1, 2019, which among other things, allowed us to carry forward the historical lease assessment for: (i) whether any expired or existing contracts are or contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs capitalization for any existing leases. We have also elected a practical expedient, by class of underlying asset, not to separate non- lease components from lease components and instead to account for each separate lease component and the non- lease components associated with that lease component as a single lease component. We have made an accounting policy election to not apply the recognition requirements to leases with a lease term of 12 months or less. We have recognized those lease payments in the consolidated statements of operations on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

 

Adoption of this standard has resulted in the recognition of operating lease right of use assets $12.2 million and lease liabilities of $13.6 million as of March 31, 2019. The standard did not materially impact our consolidated statement of operations or our consolidated statements of cash flows.

 

We adopted ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting (Topic 718), as of January 1, 2019, which amends ASC Topic 718, “Compensation—Stock Compensation”. The ASU simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under the ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. Upon adoption of this standard, share-based awards issued to nonemployees are measured at the grant date and are not subject to remeasurement. We have elected to continue to use the contractual term as the estimated expected term. The adoption of ASU No. 2018-07 did not have a material impact on our financial statements and is expected to reduce the volatility in stock-based compensation expense for nonemployees recognized from period to period.

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

In August 2018, the Financial Accounting Standards Board, or the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which adds and modifies certain disclosure requirements for fair value measurements. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in unrealized gains and losses included in other comprehensive income. ASU 2018-13 is effective for fiscal periods beginning after December 15, 2019, with early adoption permitted. We are currently evaluating the impact that the adoption of ASU 2018-13 will have on our consolidated financial statements and related disclosures.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 modifies the other-than-temporary impairment model for available-for-sale debt securities and requires an estimate of expected credit losses when the fair value is below the amortized cost of the asset. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact that the adoption of ASU 2016-13 will have on our consolidated financial statements and related disclosures.

 

3. Available-for-Sale Securities and Fair Value Measurements

We define fair value 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 on the measurement date.

9


Our valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. We classify these inputs into the following hierarchy:

 

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

 

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

 

Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The following tables set forth our financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands):

 

 

 

March 31, 2019

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and money market funds

 

$

74,044

 

 

$

 

 

$

 

 

$

74,044

 

Agency securities

 

 

 

 

 

$

2,191

 

 

 

 

 

 

$

2,191

 

Corporate securities

 

 

 

 

 

4,823

 

 

 

 

 

$

4,823

 

Total cash and cash equivalents

 

$

74,044

 

 

$

7,014

 

 

$

 

 

$

81,058

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency securities

 

$

 

 

$

22,771

 

 

$

 

 

$

22,771

 

Corporate securities

 

 

 

 

 

63,653

 

 

 

 

 

 

63,653

 

U.S. government securities

 

 

 

 

 

128,866

 

 

 

 

 

 

128,866

 

Total investments

 

$

 

 

$

215,290

 

 

$

 

 

$

215,290

 

 

 

 

 

 

December 31, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and money market funds

 

$

107,511

 

 

$

 

 

$

 

 

$

107,511

 

Total cash and cash equivalents

 

$

107,511

 

 

$

 

 

$

 

 

$

107,511

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency securities

 

 

 

 

 

17,352

 

 

 

 

 

 

17,352

 

Corporate securities

 

 

 

 

 

54,474

 

 

 

 

 

 

54,474

 

Commercial paper

 

 

 

 

 

5,965

 

 

 

 

 

 

5,965

 

U.S. government securities

 

 

 

 

 

118,630

 

 

 

 

 

 

118,630

 

Total investments

 

$

 

 

$

196,421

 

 

$

 

 

$

196,421

 

 

10


Our valuation techniques used to measure the fair value of money market funds were derived from quoted prices in active markets for identical assets. The valuation techniques used to measure the fair value of investments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. Investments are carried at fair value. During the quarters ended March 31, 2019 and 2018, there were no transfers between Level 1 and Level 2 of the fair value hierarchy.

Available-for-sale investments are carried at fair value and are included in the tables above. The aggregate market value, cost basis, and gross unrealized gains and losses of available-for-sale investments by security type, classified in cash equivalents and investments, as of March 31, 2019 and December 31, 2018, are as follows (in thousands):

 

 

 

March 31, 2019

 

 

 

Amortized

Cost

 

 

Gross

Unrealized Gains

 

 

Gross

Unrealized Losses

 

 

Total

Fair Value

 

Agency securities

 

$

24,961

 

 

$

4

 

 

$

(2

)

 

$

24,963

 

Corporate securities

 

 

68,472

 

 

 

23

 

 

 

(20

)

 

 

68,475

 

U.S. government securities

 

 

128,809

 

 

 

72

 

 

 

(15

)

 

 

128,866

 

Total available-for-sale investments

 

$

222,242

 

 

$

99

 

 

$

(37

)

 

$

222,304

 

 

 

 

December 31, 2018

 

 

 

Amortized

Cost

 

 

Gross

Unrealized Gains

 

 

Gross

Unrealized Losses

 

 

Total

Fair Value

 

Agency securities

 

$

17,361

 

 

$

 

 

$

(9

)

 

$

17,352

 

Corporate securities

 

 

54,536

 

 

 

 

 

 

(62

)

 

 

54,474

 

Commercial paper

 

 

5,965

 

 

 

 

 

 

 

 

 

5,965

 

U.S. government securities

 

 

118,667

 

 

 

14

 

 

 

(51

)

 

 

118,630

 

Total available-for-sale investments

 

$

196,529

 

 

$

14

 

 

$

(122

)

 

$

196,421

 

 

At March 31, 2019, all of the available-for-sale securities have contractual maturities within twenty-one months. We periodically review our available-for-sale investments for other-than-temporary impairment loss. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and our intent to sell. For debt securities, we also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. During the quarters ended March 31, 2019 and 2018, we did not recognize any other-than-temporary impairment losses. All marketable securities with unrealized losses have been in a loss position for less than twelve months.

 

The carrying value of the Company’s long-term debt approximates its fair value at each balance sheet date due to its variable interest rate, which approximates a market interest rate.

 

 

 

4. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):

 

 

 

March 31, 2019

 

 

December 31, 2018

 

Furniture and equipment

 

$

2,624

 

 

$

2,221

 

Computer equipment

 

 

2,380

 

 

 

2,073

 

Manufacturing equipment

 

 

5,446

 

 

 

1,733

 

Leased equipment

 

 

100

 

 

 

100

 

Leasehold improvements

 

 

15,458

 

 

 

4,469

 

Buildings

 

 

 

 

 

688

 

Construction in progress

 

 

4,627

 

 

 

18,295

 

Property and equipment, gross

 

 

30,635

 

 

 

29,579

</