Dynavax Technologies Corporation
DYNAVAX TECHNOLOGIES CORP (Form: 10-Q, Received: 11/03/2017 16:09:25)

 

 

 

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 September 30, 2017

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: 001-34207

 

Dynavax Technologies Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

33-0728374

(State or other jurisdiction of
incorporation or organization)

 

(IRS Employer
Identification No.)

2929 Seventh Street, Suite 100

Berkeley, CA 94710-2753

(510) 848-5100

(Address, including Zip Code, and telephone number, including area code, of the registrant’s principal executive offices)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 registration was required to submit and post 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 Act). Yes   No 

As of November 1, 2017, the registrant had outstanding 60,596,251 shares of common stock.

 

 

 

 


INDEX

DYNAVAX TECHNOLOGIES CORPORATION

 

 

Page No.

PART I FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements (unaudited)

4

 

Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016

4

 

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016

5

 

Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2017 and 2016

5

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

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

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

23

Item 4.

Controls and Procedures

23

 

PART II OTHER INFORMATION

 

 

Item 1.

Legal Proceedings

24

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

39

Item 5.

Other Information

39

Item 6.

Exhibits

40

 

SIGNATURES

42

 

2


FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to a number of risks and uncertainties. All statements that are not historical facts are forward-looking statements, including statements about our ability to successfully develop, timely achieve regulatory approval for and commercialize HEPLISAV-B™, our ability to successfully develop and obtain regulatory approval of our early stage product candidates, SD-101 and DV281, and our other early stage compounds, our business, collaboration and regulatory strategy, our intellectual property position, our product development efforts, our ability to successfully commercialize our product candidates, including HEPLISAV-B, our ability to manufacture commercial supply and meet regulatory requirements, the timing of the introduction of our products, uncertainty regarding our capital needs and future operating results and profitability, anticipated sources of funds as well as our plans, objectives, strategies, expectations and intentions. These statements appear throughout this Quarterly Report on Form 10-Q and can be identified by the use of forward-looking language such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” or “intend,” or the negative of these terms or other variations or comparable terminology.

Actual results may vary materially from those in our forward-looking statements as a result of various factors that are identified in “Item 1A—Risk Factors” and “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this document. No assurance can be given that the risk factors described in this Quarterly Report on Form 10-Q are all of the factors that could cause actual results to vary materially from the forward-looking statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Readers should not place undue reliance on these forward-looking statements and are cautioned that any such forward-looking statements are not guarantees of future performance. We assume no obligation to update any forward-looking statements.

This Quarterly Report on Form 10-Q includes trademarks and registered trademarks of Dynavax Technologies Corporation. Products or service names of other companies mentioned in this Quarterly Report on Form 10-Q may be trademarks or registered trademarks of their respective owners. References herein to “we,” “our,” “us,” “Dynavax” or the “Company” refer to Dynavax Technologies Corporation and its subsidiary.

 

 

 

3


P ART I. FINA NCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS

Dynavax Technologies Corporation

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

 

 

September 30,

 

 

December 31,

 

 

2017

 

 

2016

 

 

(unaudited)

 

 

(Note 1)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

20,096

 

 

$

24,289

 

Marketable securities available-for-sale

 

171,584

 

 

 

57,126

 

Accounts and other receivables

 

783

 

 

 

1,342

 

Prepaid expenses and other current assets

 

4,633

 

 

 

6,842

 

Total current assets

 

197,096

 

 

 

89,599

 

Property and equipment, net

 

16,622

 

 

 

17,174

 

Goodwill

 

2,213

 

 

 

1,971

 

Restricted cash

626

 

 

602

 

Other assets

 

1,270

 

 

334

 

Total assets

$

217,827

 

 

$

109,680

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

2,243

 

 

$

3,796

 

Accrued research and development

 

3,079

 

 

 

5,048

 

Accrued liabilities

 

7,567

 

 

 

11,192

 

Total current liabilities

 

12,889

 

 

 

20,036

 

Other long-term liabilities

504

 

 

443

 

Total liabilities

 

13,393

 

 

 

20,479

 

Commitments and contingencies (Note 4)

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock: $0.001 par value; 5,000 shares authorized at September 30, 2017 and

   December 31, 2016; no shares issued and outstanding at September 30, 2017 and

   December 31, 2016

 

-

 

 

 

-

 

Common stock: $0.001 par value; 139,000 and 69,500 shares authorized at

   September 30, 2017 and December 31, 2016, respectively; 60,587 and 38,599 shares

   issued and outstanding at September 30, 2017 and December 31, 2016, respectively

61

 

 

39

 

Additional paid-in capital

 

1,085,433

 

 

 

904,957

 

Accumulated other comprehensive loss

 

(1,156

)

 

 

(3,624

)

Accumulated deficit

 

(879,904

)

 

 

(812,171

)

Total stockholders’ equity

 

204,434

 

 

 

89,201

 

Total liabilities and stockholders’ equity

$

217,827

 

 

$

109,680

 

 

See accompanying notes.

4


Dynavax Technologies Corporation

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration revenue

$

-

 

 

$

-

 

 

$

-

 

 

$

2,578

 

Grant revenue

 

53

 

 

 

162

 

 

 

306

 

 

 

289

 

Service and license revenue

 

-

 

 

 

-

 

 

 

-

 

 

 

884

 

Total revenues

 

53

 

 

 

162

 

 

 

306

 

 

 

3,751

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

16,417

 

 

 

23,234

 

 

 

47,576

 

 

 

66,051

 

General and administrative

 

6,027

 

 

 

11,766

 

 

 

18,111

 

 

 

29,086

 

Restructuring

 

-

 

 

 

-

 

 

 

2,783

 

 

 

-

 

Total operating expenses

 

22,444

 

 

 

35,000

 

 

 

68,470

 

 

 

95,137

 

Loss from operations

 

(22,391

)

 

 

(34,838

)

 

 

(68,164

)

 

 

(91,386

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

429

 

 

 

170

 

 

 

809

 

 

 

615

 

Other (expense) income, net

 

(166

)

 

 

(26

)

 

 

(378

)

 

 

68

 

Net loss

$

(22,128

)

 

$

(34,694

)

 

$

(67,733

)

 

$

(90,703

)

Basic and diluted net loss per share

$

(0.38

)

 

$

(0.90

)

 

$

(1.36

)

 

$

(2.36

)

Weighted average shares used to compute basic and diluted net loss

   per share

 

57,650

 

 

 

38,512

 

 

 

49,785

 

 

 

38,493

 

 

 

 

Dynavax Technologies Corporation

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Net loss

$

(22,128

)

 

$

(34,694

)

 

$

(67,733

)

 

$

(90,703

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

   available-for-sale

 

14

 

 

 

(61

)

 

 

(31

)

 

 

7

 

Cumulative foreign currency translation adjustments

 

759

 

 

 

208

 

 

 

2,499

 

 

 

511

 

Total other comprehensive income

 

773

 

 

 

147

 

 

 

2,468

 

 

 

518

 

Total comprehensive loss

$

(21,355

)

 

$

(34,547

)

 

$

(65,265

)

 

$

(90,185

)

 

See accompanying notes .

5


Dynavax Technologies Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Nine Months Ended September 30,

 

 

2017

 

 

2016

 

Operating activities

 

 

 

 

 

 

 

Net loss

$

(67,733

)

 

$

(90,703

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

2,456

 

 

 

1,574

 

Gain on disposal of property and equipment

 

(32

)

 

 

-

 

Accretion of discounts and amortization of premiums on marketable securities

 

(104

)

 

 

155

 

Reversal of deferred rent upon lease amendment

 

(209

)

 

 

-

 

Cash-settled portion of stock-based compensation expense

 

-

 

 

 

602

 

Stock compensation expense

 

10,844

 

 

 

10,030

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts and other receivables

 

559

 

 

 

(896

)

Prepaid expenses and other current assets

 

(1,841

)

 

 

804

 

Other assets

 

(936

)

 

 

(99

)

Accounts payable

 

(1,499

)

 

 

704

 

Accrued liabilities and other long term liabilities

 

(1,274

)

 

 

(286

)

Deferred revenues

 

-

 

 

 

(2,654

)

Net cash used in operating activities

 

(59,769

)

 

 

(80,769

)

Investing activities

 

 

 

 

 

 

 

Purchases of marketable securities

 

(192,684

)

 

 

(122,027

)

Proceeds from maturities of marketable securities

 

78,298

 

 

 

186,670

 

Purchases of property and equipment, net

 

(374

)

 

 

(6,516

)

Net cash (used in) provided by investing activities

 

(114,760

)

 

 

58,127

 

Financing activities

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net

 

169,187

 

 

 

-

 

Proceeds from exercise of stock options and restricted stock awards, net

 

285

 

 

 

131

 

Proceeds from Employee Stock Purchase Plan

 

292

 

 

 

616

 

Net cash provided by financing activities

 

169,764

 

 

 

747

 

Effect of exchange rate changes on cash and cash equivalents

 

572

 

 

 

104

 

Net decrease in cash and cash equivalents

 

(4,193

)

 

 

(21,791

)

Cash and cash equivalents at beginning of period

 

24,289

 

 

 

44,812

 

Cash and cash equivalents at end of period

$

20,096

 

 

$

23,021

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

Accrual for litigation settlement and insurance recovery (Note 4)

$

-

 

 

$

4,050

 

Release of accrual for litigation settlement and insurance recovery (Note 4)

$

4,050

 

 

$

-

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

Disposal of fully depreciated property and equipment

$

-

 

 

$

1,160

 

Net change in unrealized (loss) gain on marketable securities

$

(31

)

 

$

7

 

Common stock issuance costs - cash not paid as of period end

$

110

 

 

$

-

 

 

 

 

See accompanying notes.

 

 

 

6


Dynavax Technologies Corporation

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1. Organization and Summary of Significant Accounting Policies

Dynavax Technologies Corporation (“we,” “our,” “us,” “Dynavax” or the “Company”), is a clinical-stage immunotherapy company focused on leveraging the power of the body’s innate and adaptive immune response through toll-like receptor (“TLR”) stimulation. Our current product candidates are being investigated for use in multiple cancer indications, as a vaccine for the prevention of hepatitis B and as a disease modifying therapy for asthma. We were incorporated in California in August 1996 under the name Double Helix Corporation, and we changed our name to Dynavax Technologies Corporation in September 1996. We reincorporated in Delaware in 2000.

Basis of Presentation

Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. In our opinion, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which we consider necessary to present fairly our financial position and the results of our operations and cash flows. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted. Interim-period results are not necessarily indicative of results of operations or cash flows to be expected for a full-year period or any other interim-period. The condensed consolidated balance sheet at December 31, 2016 has been derived from audited financial statements at that date, but excludes disclosures required by GAAP for complete financial statements.

The unaudited condensed consolidated financial statements and these notes should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the Securities and Exchange Commission (the “SEC”).

The unaudited condensed consolidated financial statements include the accounts of Dynavax and our wholly-owned subsidiary, Dynavax GmbH. All significant intercompany accounts and transactions among these entities have been eliminated from the condensed consolidated financial statements. We operate in one business segment: the discovery and development of biopharmaceutical products.

Liquidity and Financial Condition

As of September 30, 2017, we had cash, cash equivalents and marketable securities of $191.7 million. During the nine months ended September 30, 2017, we received approximately $169 million in net proceeds from our underwritten public offering in August 2017 and an At Market Issuance Sales Agreement (the “2015 ATM Agreement”) and we used $59.8 million of cash in operating activities.

We have incurred significant operating losses and negative cash flows from operations since our inception. We expect spending to increase in connection with the development and manufacturing of our product candidates, particularly SD-101 and DV281, our lead investigational cancer immunotherapeutic product candidates, and to support commercialization of HEPLISAV-B, if it is approved by the U.S. Food and Drug Administration (“FDA”), as well as human clinical trials for our other product candidates and additional applications and advancement of our technology. In order to continue these activities, we will need additional funding. This may occur through strategic alliance and licensing arrangements and/or future public or private debt and equity financings. Sufficient funding may not be available, or if available, may be on terms that significantly dilute or otherwise adversely affect the rights of existing stockholders. If adequate funds are not available in the future, we may need to delay, reduce the scope of or put on hold one or more development programs while we seek strategic alternatives, which could have an adverse impact on our ability to achieve our intended business objectives.

Our ability to raise additional capital in the equity and debt markets is dependent on a number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that we would be able to raise such additional capital at a price or on terms that are favorable to us.

7


Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make informed estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Management’s estimates are based on historical information available as of the date of the condensed consolidated financial statements and various other assumptions we believe are reasonable under the circumstances. Actual results could differ materially from these estimates.

Summary of Significant Accounting Policies

There have been no material changes in our significant accounting policies during the nine months ended September 30, 2017, as compared with those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.  

Revenue Recognition

Our revenues consist of amounts earned from collaborations, grants and fees from services and licenses. We enter into license and manufacturing agreements and collaborative research and development arrangements with pharmaceutical and biotechnology partners that may involve multiple deliverables. Our arrangements may include one or more of the following elements: upfront license payments, cost reimbursement for the performance of research and development activities, milestone payments, other contingent payments, contract manufacturing service fees, royalties and license fees. Each deliverable in the arrangement is evaluated to determine whether it meets the criteria to be accounted for as a separate unit of accounting or whether it should be combined with other deliverables. In order to account for the multiple-element arrangements, we identify the deliverables included within the arrangement and evaluate which deliverables represent separate units of accounting. Analyzing the arrangement to identify deliverables requires the use of judgment, and each deliverable may be an obligation to deliver services, a right or license to use an asset, or another performance obligation. We recognize revenue when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured.

Non-refundable upfront fees received for license and collaborative agreements and other payments under collaboration agreements where we have continuing performance obligations related to the payments are deferred and recognized over our estimated performance period. Revenue is recognized on a ratable basis, unless we determine that another method is more appropriate, through the date at which our performance obligations are completed. Management makes its best estimate of the period over which we expect to fulfill our performance obligations, which may include clinical development activities. Given the uncertainties of research and development collaborations, significant judgment is required to determine the duration of the performance period. We recognize revenues for costs that are reimbursed under collaborative agreements as the related research and development costs are incurred.

Contingent consideration received for the achievement of a substantive milestone is recognized in its entirety in the period in which the milestone is achieved. A milestone is defined as an event having all of the following characteristics: (i) there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved, (ii) the event can only be achieved based in whole or in part on either the entity’s performance or a specific outcome resulting from the entity’s performance and (iii) if achieved, the event would result in additional payments being due to the entity.

Our license and collaboration agreements with our partners provide for payments to be paid to us upon the achievement of milestones. Given the challenges inherent in developing biologic products, there is substantial uncertainty whether any such milestones will be achieved at the time we entered into these agreements. In addition, we evaluate whether milestones meet the criteria to be considered substantive. The conditions include: (i) work is contingent on either of the following: (a) the vendor’s performance to achieve the milestone or (b) the enhancement of the value of the deliverable item or items as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone; (ii) it relates solely to past performance and (iii) it is reasonable relative to all the deliverable and payment terms within the arrangement. As a result of our analysis, we may consider our development milestones to be substantive. Milestone payments that are contingent upon the achievement of substantive at-risk performance criteria are recognized in full upon achievement of those milestone events in accordance with the terms of the agreement. All revenue recognized to date under our collaborative agreements has been nonrefundable.

Our license and collaboration agreements with certain partners also provide for contingent payments based solely upon the performance of our partner. We expect to recognize the contingent payments as revenue upon receipt, provided that all other revenue recognition criteria have been satisfied.

Revenues from manufacturing services are recognized upon meeting the criteria for substantial performance and acceptance by the customer.

Revenue from royalty payments is contingent on future sales activities by our licensees. Royalty revenue is recognized when all revenue recognition criteria have been satisfied.

8


Revenue from government and private agency grants is recognized as the related research exp enses are incurred and to the extent that funding is approved.

Research and Development Expenses and Accruals

Research and development expenses include personnel and facility-related expenses, outside contracted services including clinical trial costs, manufacturing and process development costs, research costs and other consulting services and non-cash stock-based compensation. Research and development costs are expensed as incurred. Amounts due under contracts with third parties may be either fixed fee or fee for service, and may include upfront payments, monthly payments and payments upon the completion of milestones or receipt of deliverables. Non-refundable advance payments under agreements are capitalized and expensed as the related goods are delivered or services are performed.

We contract with third parties to perform various clinical trial activities in the on-going development of potential products. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows to our vendors. Payments under the contracts depend on factors such as the achievement of certain events, successful enrollment of patients, and completion of portions of the clinical trial or similar conditions. Our accrual for clinical trials is based on estimates of the services received and efforts expended pursuant to contracts with clinical trial centers and clinical research organizations. We may terminate these contracts upon written notice and we are generally only liable for actual effort expended by the organizations to the date of termination, although in certain instances we may be further responsible for termination fees and penalties. We estimate our research and development expenses and the related accrual as of each balance sheet date based on the facts and circumstances known to us at that time. There have been no material adjustments to the prior period accrued estimates for clinical trial activities through September 30, 2017.

Restructuring

Restructuring costs are comprised of severance costs related to workforce reductions. We recognize restructuring charges when the liability is incurred. Employee termination benefits are accrued at the date management has committed to a plan of termination and employees have been notified of their termination dates and expected severance payments.

Recent Accounting Pronouncements

Accounting Standards Update 2014-09

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue Recognition, Revenue from Contracts with Customers, which amends the guidance in former ASC 605, Revenue Recognition, which provides a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most current revenue recognition guidance. In July 2015, the FASB deferred the effective date for annual reporting periods beginning after December 15, 2017 (including interim periods within those periods) , with early application permitted . Accordingly, the updated standard is effective for the Company in the first fiscal quarter of 2018. The FASB issued supplemental adoption guidance and clarification to Accounting Standards Update (“ASU”) 2014-09 in March 2016, April 2016 and May 2016 within ASU 2016-08 "Revenue From Contracts With Customers: Principal vs. Agent Considerations," ASU 2016-10 "Revenue From Contracts with Customers: Identifying Performance Obligations and Licensing," and ASU 2016-12 "Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients," respectively. We anticipate adoption of ASC 606 using the modified retrospective method on January 1, 2018. Based on preliminary assessment, the adoption of this guidance is not expected to materially impact the Company’s revenue recognition as there are currently no collaboration agreements where we have significant performance obligations.  We will reevaluate the impact of this guidance as we enter into new revenue arrangements and will continue to review variable consideration, potential disclosures, and the method of adoption in order to complete the evaluation of the impact on the consolidated financial statements. In addition, we will continue to monitor additional changes, modifications, clarifications or interpretations undertaken by the FASB, which may impact the current conclusions.

Accounting Standards Update 2016-02

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The ASU requires companies to recognize lease right-of-use assets and lease liabilities by lessees for all operating leases with lease terms greater than 12 months. The ASU is effective for annual periods beginning after December 15, 2018 and interim periods therein on a modified retrospective basis, and will be effective for us starting in the first quarter of fiscal 2019 with early adoption permitted. We are currently evaluating the impact this guidance will have on our consolidated financial statements and believe the adoption will modify our analyses and disclosures of lease agreements considering operating leases are a significant portion of the Company’s total lease commitments.

9


Accounting Standards Update 2016-18

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force).   This ASU requires that the reconciliation of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents.  The ASU is effective for annual periods beginning after December 15, 2018 with early adoption permitted.  The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-04

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and other (Topic 350), which simplifies the test for goodwill impairment by eliminating a previous requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. We will adopt the standard effective January 1, 2020. The adoption is not expected to have a material impact on our consolidated financial statements.

Accounting Standards Update 2017-09

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.  The ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The ASU is effective for annual periods beginning after December 15, 2017 with early adoption permitted.  The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

 

2. Fair Value Measurements

We measure 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

 

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities;

 

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices 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 assets or liabilities; and

 

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities; therefore, requiring an entity to develop its own valuation techniques and assumptions.

The carrying amounts of cash equivalents, accounts and other receivables, accounts payable and accrued liabilities are considered reasonable estimates of their respective fair value because of their short-term nature.

10


Recurring Fair Value Measurements

The following table represents the fair value hierarchy for our financial assets (cash equivalents and marketable securities) measured at fair value on a recurring basis (in thousands):

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

14,124

 

 

$

-

 

 

$

-

 

 

$

14,124

 

U.S. Treasuries

 

-

 

 

 

33,649

 

 

 

-

 

 

 

33,649

 

U.S. government agency securities

 

-

 

 

 

95,731

 

 

 

-

 

 

 

95,731

 

Corporate debt securities

 

-

 

 

 

45,204

 

 

 

-

 

 

 

45,204

 

Total

$

14,124

 

 

$

174,584

 

 

$

-

 

 

$

188,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

$

18,981

 

 

$

-

 

 

$

-

 

 

$

18,981

 

U.S. Treasuries

 

-

 

 

 

3,499

 

 

 

-

 

 

 

3,499

 

U.S. government agency securities

 

-

 

 

 

30,437

 

 

 

-

 

 

 

30,437

 

Corporate debt securities

 

-

 

 

 

24,941

 

 

 

-

 

 

 

24,941

 

Total

$

18,981

 

 

$

58,877

 

 

$

-

 

 

$

77,858

 

Money market funds are highly liquid investments and are actively traded. The pricing information on these investment instruments is readily available and can be independently validated as of the measurement date. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

U.S. Treasuries, U.S. Government agency securities and corporate debt securities are measured at fair value using Level 2 inputs. We review trading activity and pricing for these investments as of each measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third party data providers. These inputs represent quoted prices for similar assets in active markets or these inputs have been derived from observable market data. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2017.

 

11


3. Cash, cash equivalents and marketable securities

Cash, cash equivalents and marketable securities consist of the following (in thousands):

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Estimated Fair Value

 

September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

2,972

 

 

$

-

 

 

$

-

 

 

$

2,972

 

Money market funds

 

14,124

 

 

 

-

 

 

 

-

 

 

 

14,124

 

Corporate debt securities

 

3,000

 

 

 

-

 

 

 

-

 

 

 

3,000

 

Total cash and cash equivalents

 

20,096

 

 

 

-

 

 

 

-

 

 

 

20,096

 

Marketable securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

33,664

 

 

 

-

 

 

 

(15

)

 

 

33,649

 

U.S. government agency securities

 

95,748

 

 

 

-

 

 

 

(17

)

 

 

95,731

 

Corporate debt securities

 

42,200

 

 

 

4

 

 

 

-

 

 

 

42,204

 

Total marketable securities available-for-sale

 

171,612

 

 

 

4

 

 

 

(32

)

 

 

171,584

 

Total cash, cash equivalents and marketable securities

$

191,708

 

 

$

4

 

 

$

(32

)

 

$

191,680

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

3,557

 

 

$

-

 

 

$

-

 

 

$

3,557

 

Money market funds

 

18,981

 

 

 

-

 

 

 

-

 

 

 

18,981

 

U.S. government agency securities

 

1,751

 

 

 

-

 

 

 

-

 

 

 

1,751

 

Total cash and cash equivalents

 

24,289

 

 

 

-

 

 

 

-

 

 

 

24,289

 

Marketable securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

3,499

 

 

 

-

 

 

 

-

 

 

 

3,499

 

U.S. government agency securities

 

28,685

 

 

 

3

 

 

 

(2

)

 

 

28,686

 

Corporate debt securities

 

24,938

 

 

 

5

 

 

 

(2

)

 

 

24,941

 

Total marketable securities available-for-sale

 

57,122

 

 

 

8

 

 

 

(4

)

 

 

57,126

 

Total cash, cash equivalents and marketable securities

$

81,411

 

 

$

8

 

 

$

(4

)

 

$

81,415

 

 

The maturities of our marketable securities available-for-sale are as follows (in thousands):

 

 

 

September 30, 2017

 

 

 

Amortized Cost

 

 

Estimated Fair Value

 

Mature in one year or less

 

$

171,612

 

 

$

171,584

 

Mature after one year through two years

 

 

-

 

 

 

-

 

 

 

$

171,612

 

 

$

171,584

 

 

There were no realized gains or losses from the sale of marketable securities during the nine months ended September 30, 2017 and 2016.

We have classified our entire investment portfolio as available-for-sale and available for use in current operations and accordingly have classified all investments as short-term. Available-for-sale securities are carried at fair value based on inputs that are observable, either directly or indirectly, such as quoted market prices for similar securities; quoted prices 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 securities, with unrealized gains and losses included in accumulated other comprehensive loss in stockholders’ equity. Realized gains and losses and declines in value, if any, judged to be other than temporary on available-for-sale securities are included in interest income or expense. The cost of securities sold is based on the specific identification method. Management assesses whether declines in the fair value of investment securities are other than temporary. In determining whether a decline is other than temporary, management considers the following factors:

 

Whether the investment has been in a continuous realized loss position for over 12 months;

 

the duration to maturity of our investments;

 

our intention and ability to hold the investment to maturity and if it is not more likely than not that we will be required to sell the investment before recovery of the amortized cost bases;

12


 

the credit rating, financial condition and near-term prospects of the issuer; and

 

the type of investments made.

To date, there have been no declines in fair value that have been identified as other than temporary.

 

 

4. Commitments and Contingencies

We lease our facilities in Berkeley, California (“Berkeley Lease”) and Düsseldorf, Germany (“Düsseldorf Lease”) under operating leases that expire in December 2025 and March 2023, respectively. In May 2017, we amended the Berkeley Lease to extend the term of the lease to expire in December 2025 and to terminate the lease of an adjacent building.  The early termination of the adjacent building’s lease did not result in a termination fee as the lease rate under the amended Berkeley Lease was not above market rates.  In addition, as a result of the early termination, we reversed the deferred rent liability of $0.2 million against rent expense during the nine months ended September 30, 2017.  The amended Berkeley Lease provides for periods of escalating rent. The total cash payments over the life of the Berkeley Lease and Dusseldorf Lease are divided by the total number of months in the lease period and the average rent is charged to expense each month during the lease period.

Total net rent expense related to our operating leases for the three month periods ended September 30, 2017 and 2016, was $0.7 million and $0.6 million, respectively. Total net rent expense related to our operating leases for the nine month periods ended September 30, 2017 and 2016 was $1.7 million and $1.6 million, respectively.  Deferred rent was $0.5 million and $0.3 million as of September 30, 2017 and December 31, 2016, respectively.

Future minimum payments under the non-cancelable portion of our operating leases at September 30, 2017, are as follows (in thousands):

 

Years ending December 31,

 

 

 

 

2017 (remaining)

 

$

544

 

2018

 

 

2,349

 

2019

 

 

2,552

 

2020

 

 

2,614

 

2021

 

 

2,542

 

Thereafter

 

 

9,130

 

Total

 

$

19,731

 

In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that obligate us to make payments to the contractual counterparties upon the occurrence of future events, including a $2.5 million payment due upon approval of HEPLISAV-B. In addition, in the normal course of operations, we have entered into license and other agreements and intend to continue to seek additional rights relating to compounds or technologies in connection with our discovery, manufacturing and development programs. Under the terms of the agreements, we may be required to pay future up-front fees, milestones and royalties on net sales of products originating from the licensed technologies, if any, or other payments contingent upon the occurrence of future events that cannot reasonably be estimated.

We rely on and have entered into agreements with research institutions, contract research organizations and clinical investigators as well as clinical and commercial material manufacturers. These agreements are terminable by us upon written notice. Generally, we are liable only for actual effort expended by the organizations at any point in time during the contract through the notice period.

From time to time, we may be involved in claims, suits, and proceedings arising from the ordinary course of our business, including actions with respect to intellectual property claims, commercial claims, and other matters. Such claims, suits, and proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of the outcome, such legal proceedings can have an adverse impact on us because of legal costs, diversion of management resources, and other factors. In addition, it is possible that a resolution of one or more such proceedings could result in substantial damages, fines, penalties or orders requiring a change in our business practices, which could in the future materially and adversely affect our financial position, financial statements, results of operations, or cash flows in a particular period.

13


On September 7, 2016, we entered into a Stipulation of Settlement to settle the case entitled In re Dynavax Technologies Securities Litigation filed in 2013. The settlement, which was approved by the U.S. District Court for the Northern District of California on February 6, 2017, provide d for a payment of $4.1 million by us and results in a dismissal and release of all claims against all defendants, inclu ding us. The settlement was paid by our insurers in February 2017. The $4.1 million accrued liability and corresponding $4.1 million prepaid expense and other current asset reflected in our consolidated balance sheet as of December 31, 2016 were released d uring the first quarter of 2017.

In February 2017, we tentatively agreed to a settlement for derivative complaints filed in 2013, all of which will be paid by our insurers. We recorded an accrual of $0.9 million reflected in accrued liabilities in the consolidated balance sheet as of December 31, 2016 and do not expect any significant additional charges related to this matter. In addition, we record anticipated recoveries under existing insurance contracts when recovery is assured. We recorded a current asset in the amount of $0.9 million reflected in prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2016. Amounts recorded for contingencies can result from a complex series of judgments about future events and uncertainties and can rely heavily on estimates and assumptions.

 

5. Collaborative Research and Development Agreements

AstraZeneca

Pursuant to a research collaboration and license agreement with AstraZeneca AB (“AstraZeneca”), as amended, we discovered and performed initial clinical development of AZD1419, a TLR9 agonist product candidate for the treatment of asthma.

In June 2016, all of our remaining performance obligations under our agreement with AstraZeneca were completed. As no further performance obligations remain, we revised the estimated period of performance of development work to June 2016 from September 2016, and recognized remaining deferred payments as revenue as of June 30, 2016. The revision of the performance period led to the recognition of an additional $0.8 million in collaboration revenue during 2016.

In November 2016, AstraZeneca initiated the Phase 2a trial of AZD1419 in asthma patients. Upon AstraZeneca’s initiation of the Phase 2a trial, we earned a milestone payment of $7.2 million, which was offset against $7.4 million in unused development funding previously advanced by AstraZeneca. We recognized the $7.2 million milestone as revenue during the fourth quarter of 2016. The remaining balance of unused development funding, net of the $7.2 million milestone payment, was $0.2 million which was paid during the first quarter of 2017. No liability related to unused development funding remains on the accompanying condensed consolidated balance sheet as of September 30, 2017.

Under the terms of the agreement, as amended, we are eligible to receive up to approximately $100 million in additional milestone payments, based on the achievement of certain development and regulatory objectives. Additionally, upon commercialization of AZD1419, we are eligible to receive tiered royalties ranging from the mid to high single-digits based on product sales of any products originating from the collaboration. We have the option to co-promote in the United States products arising from the collaboration, if any. AstraZeneca has the right to sublicense its rights upon our prior consent.

The following table summarizes the revenues earned under our agreement with AstraZeneca, included as collaboration revenue in our consolidated statements of operations (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Initial payment

$

-

 

 

$

-

 

 

$

-

 

 

$

521

 

Subsequent payment

 

-

 

 

 

-

 

 

 

-

 

 

 

1,953

 

Performance of research activities

 

-

 

 

 

-

 

 

 

-

 

 

 

104

 

Total

$

-

 

 

$

-

 

 

$

-

 

 

$

2,578

 

 

As of September 30, 2017 and December 31, 2016, no deferred revenue from the initial payment, subsequent payment or development funding payments remained.

Absent early termination, the agreement will expire when all of AstraZeneca’s payment obligations expire. AstraZeneca has the right to terminate the agreement at any time upon prior written notice and either party may terminate the agreement early upon written notice if the other party commits an uncured material breach of the agreement.

 

14


 

6. Net Loss Per Share

 

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period and giving effect to all potentially dilutive common shares using the treasury-stock method. For purposes of this calculation, outstanding options and stock awards are considered to be potentially dilutive common shares and are only included in the calculation of diluted net loss per share when their effect is dilutive. Stock options and stock awards totaling approximately 6,120,000 and 4,680,000 shares of common stock as of September 30, 2017 and 2016, respectively, were excluded from the calculation of diluted net loss per share for the three and nine months ended September 30, 2017 and 2016, because the effect of their inclusion would have been anti-dilutive. For periods in which we have a net loss and no instruments are determined to be dilutive, such as the three and nine months ended September 30, 2017 and 2016, basic and diluted net loss per share are the same.

 

7. Common Stock

Common Stock Outstanding

As of September 30, 2017, there were 60,587,000 shares of our common stock outstanding.

In August 2017, we completed an underwritten public offering of 5,750,000 shares of our common stock and received net proceeds of approximately $80.8 million.

During 2017, we sold 15,997,202 shares of o ur common stock and received net cash proceeds of $88.2 million pursuant to an At the Market Agreement that terminated in June 2017. See Note 10.

 

8. Equity Plans and Stock-Based Compensation

Option activity under our stock-based compensation plans during the nine months ended September 30, 2017 was as follows (in thousands except per share amounts):

 

 

 

Shares Underlying  Outstanding Options

(in thousands)

 

 

Weighted-Average Exercise

Price Per Share

 

 

Weighted-Average Remaining Contractual Term (years)

 

 

Aggregate Intrinsic Value

(in thousands)

 

Balance at December 31, 2016

 

 

3,975

 

 

$

21.38

 

 

 

 

 

 

 

 

 

Options granted

 

 

329

 

 

$

6.99

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(50

)

 

$

11.82

 

 

 

 

 

 

 

 

 

Options cancelled:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options forfeited (unvested)

 

 

(351

)

 

$

18.43

 

 

 

 

 

 

 

 

 

Options cancelled (vested)

 

 

(217

)

 

$

29.11

 

 

 

 

 

 

 

 

 

Balance at September 30, 2017

 

 

3,686

 

 

$

20.05

 

 

 

5.79

 

 

$

13,420

 

Vested and expected to vest at September 30, 2017

 

 

3,671

 

 

$

20.06

 

 

 

5.79

 

 

$

13,390

 

Exercisable at September 30, 2017

 

 

2,394

 

 

$

22.18

 

 

 

5.40

 

 

$

5,948

 

 

In June 2017, stockholders of the Company approved a proposal to increase the aggregate number of shares of common stock authorized for issuance under the 2011 Equity Incentive Plan, as amended, by 1,600,000 shares.

Restricted stock unit activity under our stock-based compensation plans during the nine months ended September 30, 2017 was as follows (in thousands except per share amounts):

 

 

Number of Shares (In thousands)

 

 

Weighted-Average Grant-Date Fair Value

 

Non-vested as of December 31, 2016

 

699

 

 

$

12.12

 

Granted

 

2,136

 

 

 

4.83

 

Vested

 

(171

)

 

 

18.62

 

Forfeited or expired

 

(221

)

 

 

8.44

 

Non-vested as of September 30, 2017

 

2,443

 

 

$

5.62

 

 

15


The aggregate intrinsic value of the restricted stock units outstanding as of September 30, 2017 , based on our stock price on that date, was $ 52 . 5 million. Fair value of restricted stock units is determined at the date of grant using our closing stock pric e.

As of September 30, 2017, approximately 21,000 shares underlying stock options and approximately 63,000 restricted stock unit awards with performance-based vesting criteria were outstanding. Vesting criteria for these restricted stock units awards with performance-based awards were not probable as of September 30, 2017.

 

Under our stock-based compensation plans, option awards generally vest over a three or four-year period contingent upon continuous service, and expire seven to ten years from the date of grant (or earlier upon termination of continuous service). The fair value-based measurement of each option is estimated on the date of grant using the Black-Scholes option valuation model.

The fair value-based measurements and weighted-average assumptions used in the calculations of these measurements are as follows:

 

 

Stock Options

 

 

Stock Options

 

 

Employee Stock Purchase Plan

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Weighted-average fair value

$

8.11

 

 

$

8.90

 

 

$

4.73

 

 

$

9.67

 

 

$

3.05

 

 

$

7.86

 

Risk-free interest rate

 

1.9

%

 

 

1.1

%

 

 

1.9

%

 

 

1.4

%

 

 

1.0

%

 

 

0.6

%

Expected life (in years)

 

4.5

 

 

 

4.5

 

 

 

4.5

 

 

 

4.9

 

 

 

1.2

 

 

 

1.2

 

Volatility

 

0.9

 

 

 

0.7

 

 

 

0.9

 

 

 

0.7

 

 

 

1.0

 

 

 

0.6

 

 

Compensation expense is based on awards ultimately expected to vest and reflects estimated forfeitures. The components of stock-based compensation expense were (in thousands):

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Research and development

$

1,973

 

 

$

1,639

 

 

$

5,707

 

 

$

4,490

 

General and administrative

 

1,687

 

 

 

2,022

 

 

 

5,137

 

 

 

5,540

 

Total

$

3,660

 

 

$

3,661

 

 

$

10,844

 

 

$

10,030

 

 

As of September 30, 2017, the total unrecognized compensation cost related to non-vested equity awards including all awards with time-based vesting amounted to $22.0 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.7 years. Additionally, as of September 30, 2017, the total unrecognized compensation cost related to equity awards with performance-based vesting criteria not deemed probable of vesting amounted to $0.4 million.

Employee Stock Purchase Plan

The 2014 Employee Stock Purchase Plan, as amended, (the “Purchase Plan”) provides for the purchase of common stock by eligible employees and became effective on May 28, 2014. The purchase price per share is the lesser of (i) 85% of the fair market value of the common stock on the commencement of the offer period (generally, the sixteenth day in February or August) or (ii) 85% of the fair market value of the common stock on the exercise date, which is the last day of a purchase period (generally, the fifteenth day in February or August). For the nine months ended September 30, 2017, employees have acquired 84,247 shares of our common stock under the Purchase Plan and 98,227 shares of our common stock remained available for future purchases under the Purchase Plan.

9. Restructuring

In January 2017, we implemented organizational restructuring and cost reduction plans to align around our immuno-oncology business while allowing us to advance HEPLISAV-B through the FDA review and approval process. To achieve these cost reductions, we suspended manufacturing activities, commercial preparations and other long term investment related to HEPLISAV-B and reduced our global workforce by approximately 40 percent.   

In the first quarter of 2017 we recorded charges of $2.8 million related to severance, other termination benefits and outplacement services. There were no additional charges during the three months ended June 30, 2017 and September 30, 2017.   Of that amount, we paid $2.7 million during the nine month period ended September 30, 2017 and expect to pay the remaining amount in the fourth quarter of 2017.

16


The outstanding restructuring liabilities are included in accrued liabilities on the condensed consolidated balance sheets. As of September 30, 2017 , the components of the liabilities were as follows (in thousands):

 

 

Employee Severance and Other Benefits

 

Restructuring charges

$

2,783

 

Cash payments

 

(2,738

)

Balance at September 30, 2017

$

45

 

10. Subsequent Event

In November 2017, we entered into an At the Market sales agreement under which we can offer and sell our common stock from time to time up to aggregate sales proceeds of $150 million.   

 

17


ITEM 2.

M ANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve a number of risks and uncertainties. Our actual results could differ materially from those indicated by forward-looking statements as a result of various factors, including but not limited to, the period for which we estimate our cash resources are sufficient, the availability of additional funds, as well as those set forth under “Risk Factors” and those that may be identified from time to time in our reports and registration statements filed with the Securities and Exchange Commission.

The following discussion and analysis is intended to provide an investor with a narrative of our financial results and an evaluation of our financial condition and results of operations. This discussion should be read in conjunction with the unaudited Condensed Consolida