Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America or U.S. GAAP.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.

The Company’s most significant estimates and judgments used in the preparation of the financial statements are:

•

Clinical trial expenses;

•

Collaboration agreements;

•

Fair value measurements of stock-based compensation and Series 1 preferred stock (and related dividends); and

•

Income taxes.

Subsequent Events

The Company evaluated all events and transactions that occurred after the balance sheet date through the date of this filing. Except as disclosed below, the Company did not have any material subsequent events that impacted its financial statements or disclosures.

On December 18, 2018, Ziopharm and TriArm Therapeutics, Ltd. (“TriArm”) announced that the companies plan to launch Eden BioCell, Ltd. (“Eden BioCell”) to lead clinical development and commercialization of

Sleeping Beauty

-generated CAR-T therapies in the People’s Republic of China (including Macau and Hong Kong), Taiwan and Korea. TriArm is a cell therapy company with operations in Germany, China and the United States.

For the territory of China, Taiwan and Korea, Ziopharm will license the rights to Eden BioCell for third-generation

Sleeping Beauty

-generated CAR-T therapies targeting the CD19 antigen. Eden BioCell will be jointly-owned by Ziopharm and TriArm. TriArm has committed up to $35.0 million to this joint venture. Under the terms of the agreement, Eden BioCell has rights in the region to CAR-T cells very rapidly manufactured in two days or less using the

Sleeping Beauty

platform to express a CD19-specific CAR and membrane-bound interleukin 15, or mbIL15, along with a kill switch. Each party will share decision-making authority. TriArm will manage all clinical development to execute trials in China for Eden BioCell. On January 3, 2019 Eden BioCell was incorporated in Hong Kong. The definitive agreements are expected to be executed in the first half of 2019.

In February 2019, the Company extended its CRADA with the NCI for the development of adoptive cell transfer, or ACT,-based immunotherapies genetically modified using the

Sleeping Beauty

transposon/transposase system to express TCRs for the treatment of solid tumors. The Company has committed an additional $5.0 million to this program through January 2022.

Cash and Cash Equivalents

Cash equivalents consist primarily of demand deposit accounts and deposits in short-term U.S. treasury money market mutual funds. Cash equivalents are stated at cost, which approximates fair market value.

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains cash accounts in commercial banks, which may, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Property and Equipment

Property and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements are capitalized. Depreciation is provided using the straight-line method over the following estimated useful lives of the related assets, which is between three and five years. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are eliminated from the balance sheets and related gains or losses are reflected in the statements of operations.

Restricted Cash

Restricted cash consists of $105 thousand, which is restricted as collateral for a line of credit and is included in other assets.

Long-Lived Assets

The Company reviews the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the lower of their carrying amounts or fair values less costs to sell.

Operating Segments

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, the Company’s Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment and does not track expenses on a program-by-program basis.

Warrants

The Company assesses whether an equity issued financial instrument is indexed to an entity’s own stock for purposes of determining whether a financial instrument should be treated as a derivative. In applying the methodology, the Company concluded that warrants issued by the Company have terms that meet the criteria to be considered indexed to the Company’s own stock and therefore are classified as equity on the Company’s balance sheet.

Fair Value Measurements

The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value measurements.

•

Level 1—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.

•

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.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017 are as follows:


($ in thousands)				Fair Value Measurements at Reporting Date Using
Description	Balance as of December 31, 2018			Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	24,437		$	24,437	$	—	$	—


($ in thousands)				Fair Value Measurements at Reporting Date Using
Description	Balance as of December 31, 2017			Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	66,156		$	66,156	$	—	$	—

Derivative liabilities	$	(2,424	)	$	—	$	—	$	(2,424	)

The cash equivalents represent deposits in a short-term United States treasury money market mutual fund quoted in an active market and classified as a Level 1 asset.

As discussed further in Notes 6, 8, and 11, the Company issued Intrexon Corporation, or Intrexon, 100,000 shares of the Company’s Series 1 preferred stock, a class of preferred stock authorized by the Company’s board of directors, in consideration of the parties entering into a Third Amendment to Exclusive Channel Partner Agreement, or the 2016 ECP Amendment, amending the existing Exclusive Channel Partner Agreement, effective January 6, 2011 and as amended to date, which the Company refers to as the Channel Agreement, and an Amendment to Exclusive Channel Collaboration Agreement, or the 2016 GvHD Amendment, amending the existing Exclusive Channel Collaboration Agreement, effective September 28, 2015, which the Company refers to as the GvHD Agreement. The Series 1 preferred stock were financial liabilities that consist of a conversion option and a redemption feature and were classified as a Level 3 asset. There were no transfers between asset classes during the year ended December 31, 2018.

At June 30, 2016, the Company’s Series 1 preferred stock was valued using a probability-weighted approach and a Monte Carlo simulation model. Additionally, the monthly dividends issued on the outstanding Series 1 preferred stock were valued using the same probability-weighted approach and a Monte Carlo simulation model. However, there is no adjustment or further revaluation after the initial valuation on the Series 1 preferred stock other than required periodic dividends.

The Company’s Level 3 financial liabilities consisted of a conversion option and a redemption feature associated with the Company’s Series 1 preferred stock issued to Intrexon that had been bifurcated from the Series 1 preferred stock and were accounted for as derivative liabilities at fair value. The preferred stock derivative liabilities were valued using a probability-weighted approach and a Monte Carlo simulation model. The fair value of the embedded derivatives was estimated using the “with” and “without” method where the preferred stock was first valued with all of its features (“with” scenario) and then without derivatives subject to the valuation analysis (“without” scenario). The fair value of the derivatives was then estimated as the difference between the fair value of the preferred stock in the “with” scenario and the preferred stock in the “without” scenario. See Note 8 for additional disclosures on the 2016 ECP Amendment and 2016 GvHD Amendments and Note 11 for additional disclosure on the rights and preferences of the Series 1 preferred stock and valuation methodology. All shares of the Series 1 preferred stock were forfeited by Intrexon on October 5, 2018 in conjunction with the Company’s entry into an Exclusive License Agreement with Precigen, Inc., a wholly owned subsidiary of Intrexon (“Precigen”).

Revenue Recognition from Collaboration Agreements

The Company adopted Accounting Standards Codification, or ASC Topic 606,

Revenue from Contracts with Customers,

or ASC 606, using the modified retrospective approach on January 1, 2018. The Company completed its assessment and the implementation resulted in a cumulative effect adjustment to accumulated deficit as of January 1, 2018 of approximately $8.1 million and a corresponding increase to the contract liability (formerly deferred revenue). The adjustment to the Company’s financial statements due to the adoption of ASC 606 is related to the Company’s Ares Trading Agreement (Note 6), which was the Company’s sole open revenue contract outstanding at January 1, 2018.

The Company primarily generates revenue through collaboration arrangements with strategic partners for the development and commercialization of product candidates. Commencing January 1, 2018, the Company recognized revenue in accordance with ASC 606 which replaced ASC 605,

Multiple Element Arrangements

, as used in historical years. The core principle of ASC 606 is that an entity should recognize revenue to depict the transfer of promised goods and/or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and/or services. To determine the appropriate amount of revenue to be recognized for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following steps: (i) identify the contract(s) with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) each performance obligation is satisfied.

The Company recognizes collaboration revenue under certain of the Company’s license or collaboration agreements that are within the scope of ASC 606. The Company’s contracts with customers typically include promises related to licenses to intellectual property, research and development services and options to purchase additional goods and/or services. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgement to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. Contracts that include an option to acquire additional goods and/or services are evaluated to determine if such option provides a material right to the customer that it would not have received without entering into the contract. If so, the option is accounted for as a separate performance obligation. If not, the option is considered a marketing offer which would be accounted for as a separate contract upon the customer’s election.

The terms of the Company’s arrangements with customers typically include the payment of one or more of the following: (i) non-refundable, up-front payment, (ii) development, regulatory and commercial milestone payments, (iii) future options and (iv) royalties on net sales of licensed products. Accordingly, the transaction price is generally comprised of a fixed fee due at contract inception and variable consideration in the form of milestone payments due upon the achievement of specified events and tiered royalties earned when customers recognize net sales of licensed products. The Company measures the transaction price based on the amount of consideration to which it expects to be entitled in exchange for transferring the promised goods and/or services to the customer. The Company utilizes the most likely amount method to estimate the amount of variable consideration, to predict the amount of consideration to which it will be entitled for its one open contract. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. At the inception of each arrangement that includes development and regulatory milestone payments, the Company evaluates whether the associated event is considered probable of achievement and estimates the amount to be included in the transaction price using the most likely amount method. Milestone payments that are not within the control of the Company or the licensee, such as those dependent upon receipt of regulatory approval, are not considered to be probable of achievement until the triggering event occurs. At the end of each reporting period, the Company reevaluates the probability of achievement of each milestone and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment. For arrangements that include sales-based royalties, including milestone payments based upon the achievement of a certain level of product sales, the Company recognizes revenue upon the later of: (i) when the related sales occur or (ii) when the performance obligation to which some or all of the payment has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any development, regulatory or commercial milestones or royalty revenue resulting from any of its collaboration arrangements. Consideration that would be received for optional goods and/or services is excluded from the transaction price at contract inception.

The Company allocates the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis. However, certain components of variable consideration are allocated specifically to one or more particular performance obligations in a contact to the extent both of the following criteria are met: (i) the terms of the payment relate specifically to the efforts to satisfy the performance obligation or transfer the distinct good or service and (ii) allocating the variable amount of consideration entirely to the performance obligation or the distinct good or service is consistent with the allocation objective of the standard whereby the amount allocated depicts the amount of consideration to which the entity expects to be entitled in exchange for transferring the promised goods or services. The Company develops assumptions that require judgment to determine the standalone selling price for each performance obligation identified in each contract. The key assumptions utilized in determining the standalone selling price for each performance obligation may include forecasted revenues, development timelines, estimated research and development costs, discount rates, likelihood of exercise and probabilities of technical and regulatory success.

Revenue is recognized based on the amount of the transaction price that is allocated to each respective performance obligation when or as the performance obligation is satisfied by transferring a promised good and/or service to the customer. For performance obligations that are satisfied over time, the Company recognizes revenue by measuring the progress toward complete satisfaction of the performance obligation using a single method of measuring progress which depicts the performance in transferring control of the associated goods and/or services to the customer. The Company uses input methods to measure the progress toward the complete satisfaction of performance obligations satisfied over time. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

As it relates to the Ares Trading Agreement (Note 6), the Company recognized the upfront payment associated with its one open contract as a contract liability upon receipt of payment as it requires deferral of revenue recognition to a future period until the Company performs its obligations under the arrangement. Amounts expected to be recognized as revenue within the twelve months following the balance sheet date are classified in current liabilities. Amounts not expected to be recognized as revenue within the twelve months following the balance sheet date are classified as contract liabilities, net of current portion. The Company determined that there were three performance obligations; the first performance obligation consists of the license and research development services and the other two performance obligations are material rights as it relates to potential future targets that have not yet been identified. As described above, the transaction price of $57.5 million was allocated to the performance obligations based on their relative standalone selling prices.

There are multiple distinct performance obligations, including material rights; thus, the Company allocates the transaction price to each distinct performance obligation based on its relative standalone selling price. The standalone selling price is generally determined based on the prices charged to customers or using expected cost-plus margin. Revenue is recognized by measuring the progress toward complete satisfaction of the performance obligations using an input measure. Furthermore, the Company has not capitalized any contract costs under the guidance in ASC 340-40,

Other Assets and Deferred Costs: Contracts with Customers

The Company does not believe that any variable consideration should be included in the transaction price at the date of adoption of ASC 606 on January 1, 2018. Such assessment considered the application of the constraint to ensure that estimates of variable consideration would be included in the transaction price only to the extent the Company had a high degree of confidence that revenue would not be reversed in a subsequent reporting period. The Company will re-evaluate the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as other changes in circumstances occur.

Impact of Topic 606 Adoption

As a result of adopting ASC 606, the Company recorded an $8.1 million adjustment to the opening balance of accumulated deficit in the first quarter of 2018 as a result of the treatment of the up-front consideration received in July 2015 under ASC 605-25 versus ASC 606. Refer below for a summary of the amount by which each financial statement line item was affected by the impact of the cumulative adjustment:


($ in thousands)	Impact of Topic 606 Adoption on the Balance Sheet as of January 1, 2018
Description	As reported under Topic 606			Adjustments			Balances without adoption of Topic 606
Contract liability, current portion	$	622		$	(5,767	)	$	6,389
Contract liability, net of current portion	$	49,037		$	13,898		$	35,139
Accumulated deficit	$	(720,573	)	$	(8,131	)	$	(712,442	)


($ in thousands)	Impact of Topic 606 Adoption on the Statement of Operations for the Year Ended December 31, 2018
Description	As reported under Topic 606			Adjustments			Balances without adoption of Topic 606
Collaboration revenue	$	146		$	(4,732	)	$	4,878
Net loss	$	(53,117	)	$	(4,732	)	$	(48,385	)
Net income (loss) applicable to common shareholders	$	137,246		$	(4,732	)	$	141,978
Net income (loss) per share - basic	$	0.96		$	(0.03	)	$	0.99
Net income (loss) per share - diluted	$	0.96		$	(0.03	)	$	0.99


($ in thousands)	Impact of Topic 606 Adoption on the Statement of Cash Flows for the Year Ended December 31, 2018
Description	As reported under Topic 606			Adjustments			Balances without adoption of Topic 606
Net loss	$	(53,117	)	$	(4,732	)	$	(48,385	)
Changes in contract liability	$	—		$	—		$	—

The most significant change above relates to the Company’s collaboration revenue, which to date has been exclusively generated from its collaboration arrangement with Ares Trading and Precigen, formerly Intrexon (Note 8). Under ASC 605, the Company accounted for the up-front payment over the estimated period of performance of the research and development services which was estimated to be 9 years. In connection with the adoption of ASC 606, the Company uses cost-based input method to measure progress because such method best reflects the satisfaction of the performance obligation. In applying the cost-based input method of revenue recognition, the Company uses actual costs incurred relative to the budgeted costs to complete the research programs. These costs consist primarily of internal full-time equivalent effort and third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs. As a result, although the performance obligations noted above and identified under ASC 606 were generally consistent with the units of account identified under ASC 605, the timing of the allocation of the transaction price to the identified performance obligations under ASC 606 differed from the allocations of consideration under ASC 605. Accordingly, the transaction price ultimately allocated to each performance obligation under ASC 606 differed from the amounts allocated under ASC 605. Additionally, at December 31, 2018, the contract liability is $0 under both methods of revenue recognition (Note 7).

Research and Development Costs

Research and development expenditures are charged to the statement of operations as incurred. Such costs include proprietary research and development activities, purchased research and development, and expenses associated with research and development contracts, whether performed by the Company or contracted with independent third parties.

Income Taxes

Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which the temporary differences are expected to be recovered or settled. The Company evaluates the realizability of its deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.

The Company accounts for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates this tax position on an annual basis. The Company also accrues for potential interest and penalties, related to unrecognized tax benefits in income tax expense (Note 10).

Accounting for Stock-Based Compensation

Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period. Stock-based compensation expense is based on the number of awards ultimately expected to vest and is therefore reduced for an estimate of the awards that are expected to be forfeited prior to vesting. Consistent with prior years, the Company uses the Black-Scholes option pricing model which requires estimates of the expected term option holders will retain their options before exercising them and the estimated volatility of the Company’s common stock price over the expected term.

The Company recognizes the full impact of its share-based employee payment plans in the statements of operations for each of the years ended December 31, 2018, 2017, and 2016 and did not capitalize any such costs on the balance sheets. The Company recognized $3.0 million, $2.5 million, and $3.0 million of compensation expense related to stock options during the years ended December 31, 2018, 2017, and 2016, respectively. In the years ended December 31, 2018, 2017, and 2016, the Company recognized $4.5 million, $6.0 million, and $5.5 million of compensation expense, respectively, related to restricted stock (Note 13). The total compensation expense relating to vesting of stock options and restricted stock awards for the years ended December 31, 2018, 2017, and 2016 was $7.5 million, $8.5 million, and $8.5 million, respectively. The following table presents share-based compensation expense included in the Company’s Statements of Operations:


	Year ended December 31,
(in thousands)	2018		2017		2016
Research and development	$	1,683	$	2,401	$	2,077
General and administrative		5,851		6,053		6,375

Share based employee compensation expense before tax		7,534		8,454		8,452
Income tax benefit		—		—		—

Net share based employee compensation expense	$	7,534	$	8,454	$	8,452

The fair value of each stock option is estimated at the date of grant using the Black-Scholes option pricing model. The estimated weighted-average fair value of stock options granted to employees in 2018, 2017, and 2016 was approximately $1.64, $3.94, and $4.43 per share, respectively. Assumptions regarding volatility, expected term, dividend yield and risk-free interest rate are required for the Black-Scholes model. The volatility assumption is based on the Company’s historical experience. The risk-free interest rate is based on a U.S. treasury note with a maturity similar to the option award’s expected life. The expected life represents the average period of time that options granted are expected to be outstanding. The Company calculated expected term using the simplified method described in SEC Staff Accounting Bulletin, or SAB, No. 107 and No. 110 as it continues to meet the requirements promulgated in SAB No. 110. The assumptions for volatility, expected life, dividend yield and risk-free interest rate are presented in the table below:


	2018	2017	2016
Weighted average risk-free interest rate	2.55 - 3.06%	1.85 - 2.27%	1.27 - 2.09%
Expected life in years	6	6	6
Expected volatility	80.75 - 84.71%	80.31 - 81.03%	79.15 - 82.95%
Expected dividend yield	0	0	0

Net Loss Per Share

Basic net loss per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed using the weighted-average number of common shares outstanding during the period, plus the dilutive effect of outstanding options and warrants, using the treasury stock method and the average market price of the Company’s common stock during the applicable period.


	For the Year Ended December 31,
in thousands, except share and per share data	2018			2017			2016
Basic
Net loss	$	(53,117	)	$	(54,323	)	$	(165,297	)
Preferred stock dividends		(16,998	)		(18,938	)		(7,123	)
Settlement of a related party relationship		207,361			—			—

Net income / (loss) applicable to common shareholders	$	137,246		$	(73,261	)	$	(172,420	)

Weighted-average common shares outstanding		143,508,674			136,938,264			130,391,463

Earnings per share, basic	$	0.96		$	(0.53	)	$	(1.32	)

Diluted
Net Loss	$	(53,117	)	$	(54,323	)	$	(165,297	)
Preferred stock dividends		(16,998	)		(18,938	)		(7,123	)
Precigen license transaction		207,361			—			—

Net income / (loss) applicable to common shareholders	$	137,246		$	(73,261	)	$	(172,420	)

Weighted-average common shares outstanding		143,508,674			136,938,264			130,391,463
Effect of dilutive securities
Stock options		201,362			—			—
Unvested restricted common stock		124			—			—
Warrants		—			—			—

Dilutive potential common shares		201,486			—			—

Shares used in calculating diluted earnings per share		143,710,160			136,938,264			130,391,463

Earnings per share, diluted	$	0.96		$	(0.53	)	$	(1.32	)

Certain shares related to some of the Company’s outstanding common stock options, unvested restricted stock, preferred stock, and warrants have not been included in the computation of diluted net earnings (loss) per share for the years ended December 31, 2018, 2017 and 2016 as the result would be antidilutive. Such potential common shares at December 31, 2018, 2017, and 2016 consist of the following:


	December 31,
	2018		2017		2016
Stock options		5,075,723		4,352,135		3,465,335
Unvested restricted stock		681,946		1,808,559		1,680,492
Preferred stock		—		34,134,524		20,465,067
Warrants		18,939,394		—		—

		24,697,063		40,295,218		25,610,894

During the year ended December 31, 2018, the Company and Precigen, a wholly owned subsidiary Intrexon entered into a License Agreement to replace all existing agreements between the companies that will provide Ziopharm with certain exclusive and non-exclusive rights to technology controlled by Precigen, Inc. The License Agreement was dated October 5, 2018. In consideration of the Company entering into the License Agreement, Intrexon agreed to forfeit and return to the Company all shares of the Company’s Series 1 Preferred Stock held by or payable to Intrexon as of the date of the License Agreement (Note 7).

New Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by requiring the recognition of a right-of-use assets and lease liabilities for most lease arrangements on the balance sheet. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The standard permits two transition methods, (1) to apply the new lease requirements at the beginning of the earliest period presented, or (2) to apply the new lease requirements at the effective date. Under both transition methods there is a cumulative effect adjustment. The Company intends to. It also intends to elect the package of practical expedients permitted under the transition guidance within the new standard, which, among other things, allows us to carry forward the historical lease classification. Additionally, the right-of-use asset is subject to an impairment analysis under ASC 360,

Property, Plant, and Equipment

, at each reporting period, to evaluate asset recoverability. The Company is currently evaluating the potential changes from this ASU to its future financial reporting and disclosures and designing and implementing related processes and controls. The Company expects the standard to have an impact of approximately $1.7 million on its assets and liabilities for the addition of right-of-use assets and lease liabilities, but it does not expect it to have a material impact on the Company’s financial statements.

In August 2016, the FASB issued ASU No. 2016-15,

Classification of Certain Cash Receipts and Cash Payments

or ASU 2016-15, to address how certain cash receipts and cash payments are presented and classified in the statement of cash flows in an effort to reduce existing diversity in practice. The update includes eight specific cash flow issues and provides guidance on the appropriate cash flow presentation for each. ASU 2016-15 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within each annual reporting period. The Company adopted this standard on January 1, 2018. The adoption did not have a material impact on the Company’s financial statements.

In November 2016, the FASB issued ASU 2016-18,

Statement of Cash Flows: Restricted Cash

or ASU 2016-18. The amendments in this update require that amounts generally described as restricted cash and restricted cash equivalents be included within cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 was effective January 1, 2018. As a result of adopting ASU 2016-18, the Company includes its restricted cash balance in the cash and cash equivalents reconciliation of operating, investing and financing activities. The following table provides a reconciliation of cash, cash equivalents, and restricted cash within the statement of financial position that sum to the total of the same such amounts shown in the statement of cash flows.


	December 31,
(in thousands)	2018		2017		2016
Cash and cash equivalents	$	61,729	$	70,946	$	81,053
Restricted cash included in prepaid expenses and other current assets		—		388		—
Restricted cash included in other non-current assets		—		—		388

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	61,729	$	71,334	$	81,441