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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Jun. 30, 2020

The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). The Company’s fiscal year ends on June 30.

Segment Reporting

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 when making decisions regarding resource allocation and assessing performance. To date, management has viewed the Company’s operations and managed its business as one segment.

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP and guidelines from the Securities and Exchange Commission (the “SEC”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during reporting periods. Actual results could differ from those estimates.

Cash and cash equivalents

Cash consists of funds held in bank accounts. Cash equivalents consist of short-term, highly liquid investments with original maturities of 90 days or less at the time of purchase and generally include money market accounts.

Investments

The Company’s investments have historically consisted of certificates of deposit and debt securities classified as

held-to-maturity. Management

determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation at each balance sheet date. Debt securities are classified as

held-to-maturity

when management has the positive intent and ability to hold the securities to

maturity. Held-to-maturity

securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in investment income, net. Interest income from debt securities classified as

held-to-maturity

is included in investment income, net.

The Company uses the specific identification method to determine the cost basis of securities sold.

Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. The Company evaluates an investment for impairment by considering the length of time and extent to which market value has been less than cost or amortized cost, the financial condition and near-term prospects of the issuer, as well as specific events or circumstances that may influence the operations of the issuer, and the Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery of its amortized cost. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to investment income, net and a new cost basis in the investment is established.

Concentrations of Credit Risk

As of June 30, 2020, the Company’s cash and cash equivalents were held on deposit with two financial institutions that are federally insured. However, a portion of those cash and cash equivalents exceed federally insured limits and, as a result, could potentially expose the Company to significant concentrations of credit risk. To date, the Company has not experienced any losses associated with this credit risk and management continues to believe that this exposure is not significant. The Company invests its excess cash primarily in money market funds, certificates of deposit, and debt instruments of corporations and U.S. government agencies. These investments generally mature within a

two-year

period from their purchase date, which is consistent with the Company’s investment policy that seeks to maintain adequate liquidity and preserve capital.

Inventory

Purchases of clinical materials stored for master and working viral banks that remain at the sites in anticipation of their future use at that site are charged to expense when the related liability is incurred. Since the Company can use each of the raw materials in only a single product, each raw material is deemed to have no future economic value independent of the development status of that unique drug.

Fair value of financial instruments

The Company is required to disclose information regarding all assets and liabilities reported at fair value that enables an assessment of the inputs used when determining the reported fair values. The Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) Topic 820,

Fair Value Measurements and Disclosures

, establishes a hierarchy of inputs used when available. Observable inputs are inputs that market participants would use when pricing an asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use when pricing an asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used when determining the reported fair value of financial instruments and is not a measure of an investment’s credit quality. The three levels of the fair value hierarchy are described below.

Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that a valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company when determining fair value is greatest for financial instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Property and equipment

Property and equipment, which consists of laboratory equipment, furniture and fixtures, computer equipment and leasehold improvements, is recorded at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful life of the underlying asset, which is generally three to ten years (a weighted average useful life of 6.8 years as of June 30, 2020). Leasehold improvements are amortized over the shorter of the estimated useful life of the underlying asset or the related lease term, including any renewal periods that are deemed to be reasonably assured. Repair and maintenance costs that do not improve service potential or extend an asset’s economic life are recorded as an expense when incurred.

Leases

On July 1, 2019, the Company adopted Accounting Standards Update (“ASU”)

No. 2016-02,

Leases.

Prior to July 1, 2019, the Company recognized lease expense in accordance with then-existing U.S. GAAP under FASB ASC Topic 840,

Leases.

Information regarding the Company’s lease accounting, including its adoption of the new accounting standard, is provided below under the heading “New Accounting Pronouncements

Adopted during the year ended June 30, 2020” and Note 3 in these Notes to Financial Statements.

Intangible assets

Intangible assets primarily consist of licenses and patents. The Company obtains licenses from third parties and capitalizes the costs related to exclusive licenses that have alternative future use in multiple potential programs. The Company also capitalizes costs related to filing, issuance and prosecution of patents. The Company reviews its capitalized costs periodically to determine that such costs relate to patent applications that have future value and an alternative future use. The Company writes off costs associated with patents that are no longer being actively pursued or that have no future benefit.

Amortization expense for intangible assets is computed using the straight-line method over the estimated useful life of the underlying asset, which is generally eight to twenty years (a weighted average useful life of 11.7 years as of June 30, 2020). The Company amortizes

in-licensed

patents and patent applications from the date of the applicable license and internally developed patents and patent applications from the date of the initial application. Licenses and patents converted to research use only are immediately expensed.

Impairment of long-lived assets

The Company reviews its long-lived asset groups for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or an asset group may not be recoverable. Such evaluation could be triggered by a number of factors, including current and projected operating results/cash flows and changes in management’s strategic direction, as well as external economic and market factors. The Company evaluates the recoverability of assets and asset groups by determining whether their carrying values can be recovered through undiscounted future cash flows. If events or circumstances indicate that the carrying values might not be recoverable based on undiscounted future cash flows, an impairment charge may be recognized. Management considers various factors when calculating an impairment charge, including trends and prospects, as well as the effects of obsolescence, demand, competition and other macroeconomic information. The Company did not record any impairment charges for long-lived assets during the years ended June 30, 2020 and 2019.

Financing fees

Financing fees consist of costs, including those for legal services, that are necessary to secure commitments under debt financing arrangements. Those costs are deferred and recognized as interest expense over the period of the related financing arrangement using the effective interest method. If a financing arrangement is terminated or otherwise satisfied, any remaining deferred financing fees are immediately recognized as interest expense. The Company’s financial statements present deferred financing fees as a direct reduction of the carrying amount of the corresponding liability.

Revenue recognition

Effective July 1, 2018, the Company adopted the provisions of ASC Topic 606,

Revenue from Contracts with Customers

(“Topic 606”), using the modified retrospective transition method. Under that method, the Company recorded the cumulative effect of initially applying the new standard to all contracts in process as of the date of adoption. Topic 606 applies to all contracts with customers, except for contracts that are within the scope of other standards. The adoption of Topic 606 resulted in an increase of $22.6 million in deferred revenue and accumulated deficit as of July 1, 2018.

The Company may enter into collaboration agreements, which are within the scope of Topic 606, where it licenses rights to its technology and certain of its product candidates and performs research and development services for third parties. The terms of these arrangements may include payment of one or more of the following:

upfront fees; reimbursement of research and development costs; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.

Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine the appropriate amount of revenue to be recognized for arrangements determined to be within the scope of Topic 606, the Company performs the following five steps: (i) identification of the contract; (ii) determination of whether the promised goods or services are performance obligations; (iii) measurement of the transaction price, including any constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts if it is probable that it will collect consideration that the Company is entitled to in exchange for the goods or services it transfers to the customer.

Performance obligations are promises to transfer distinct goods or services to a customer. Promised goods or services are considered distinct when (i) the customer can benefit from the good or service on its own or together with other readily available resources and (ii) the promised good or service is separately identifiable from other promises in the contract. When assessing whether promised goods or services are distinct, the Company considers factors such as the stage of development of the underlying intellectual property, the capabilities of a customer to develop the intellectual property on its own or whether the required expertise is readily available.

The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. The consideration may include both fixed consideration and variable consideration. At the inception of an arrangement that includes variable consideration and at the end of each reporting period, the Company evaluates the amount of potential customer payments and the likelihood that such payments will be received. The Company utilizes either the most likely amount method or the expected amount method to estimate the amount to be received based on which method better predicts the amount expected to be received. If it is probable that a significant revenue reversal would not occur, the variable consideration is included in the transaction price. The Company will assess its revenue generating arrangements to determine whether a significant financing component exists and conclude that a significant financing component does not exist in an arrangement if the: (a) promised consideration approximates the cash selling price of the promised goods and services or any significant difference is due to factors other than financing; and (b) timing of payment approximates the transfer of goods and services and performance is over a relatively short period of time within the context of the entire term of the contract.

The Company’s contracts often include development and regulatory milestone payments. At contract inception, the Company evaluates whether any such milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the customer’s control, such as regulatory approvals, are not included in the transaction price. At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of such development milestones 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 collaboration revenue and earnings in the period of adjustment.

For arrangements that may include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sale occurs or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not recognized any royalty revenue resulting from any of the Company’s collaboration arrangements.

The Company allocates the transaction price based on the estimated stand-alone selling price of the underlying performance obligation or, in the case of certain variable consideration, to one or more performance obligations. The Company uses assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in a contract. The Company utilizes key assumptions to determine the stand-alone selling price, which may include other comparable transactions, pricing considered in negotiating the transaction and the estimated costs to complete the related performance obligation. Certain variable consideration is allocated specifically to one or more performance obligation in a contract when the terms of the variable consideration relate to the satisfaction of a performance obligation and the resulting amounts allocated to each performance obligation are consistent with the amounts the Company would expect to receive for each performance obligation.

For performance obligations consisting of licenses and other promises, the Company utilizes judgment 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 upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. 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 will recognize revenue from upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

The Company receives payments from its customers based on billing terms established in each contract. Such billings generally

have 30-day payment

terms. Upfront payments and fees are recorded as deferred revenue upon receipt or when due until the Company performs its obligations under those arrangements. Amounts are recorded as accounts receivable when the right to consideration is unconditional.

Collaboration arrangements

The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC Topic 808,

Collaborative Arrangements

(“Topic 808”), and to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the life of a collaboration arrangement with special consideration given to changes in the responsibilities of the parties in the arrangement. For collaboration arrangements within the scope of Topic 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of Topic 808 and those that are more reflective of a vendor-customer relationship and, therefore, within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant to Topic 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606.

As discussed below under the heading “New Accounting Pronouncements

Adopted effective July 1, 2020,” the Company adopted ASU

No. 2018-18,

Collaborative Arrangements (Topic

808): Clarifying the Interaction between Topic 808 and Topic 606

, on July 1, 2020; however, the new standard did not have a significant impact on the Company’s financial statements.

The Company’s collaboration arrangements are further discussed at Note 9 in these Notes to Financial Statements.

Income taxes

The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

As required by U.S. GAAP, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting

the more-likely-than-not threshold,

the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Interest and penalties related to uncertain tax positions are reflected in the provision for income taxes. The Company is subject to examination of its income tax returns in the federal and state tax jurisdictions in which it operates for the tax years ended June 30, 2016 through June 30, 2020.

For the years ended June 30, 2020 and 2019, the Company’s provision for income taxes consisted of $83,000 and $76,000, respectively, related to estimated interest and penalties on the Company’s uncertain tax positions. The uncertain tax position liability as of June 30, 2020 and 2019 was $2.1 million and $2.0 million, respectively. The Company’s income taxes are further discussed at Note 11 in these Notes to Financial Statements.

Research and development

Research and development expenses

Research and development expenses include costs incurred in identifying, developing and testing product candidates and generally comprise compensation and related benefits

and non-cash share-based

compensation to research-related employees; laboratory costs; animal and laboratory maintenance and supplies; rent; utilities; clinical

and pre-clinical expenses;

and payments for sponsored research, scientific and regulatory consulting fees and testing.

As part of the process of preparing its financial statements, the Company estimates its accrued expenses. This process involves reviewing quotations and contracts, identifying services that have been performed on the Company’s behalf and estimating the level of services performed and the associated cost incurred for services for which the Company has not yet been invoiced or otherwise notified of the actual cost. The majority of the Company’s service providers invoice monthly in arrears for services performed or when contractual milestones are met. The Company makes estimates of its accrued expenses at the end of each reporting period based on the facts and circumstances known to the Company at that time. The significant estimates in the Company’s accrued research and development expenses relate to expenses incurred with respect to academic research centers, contract research organizations, and other vendors in connection with research and development activities for which the Company has not yet been invoiced.

There are instances where the Company’s service providers require advance payments at the inception of a contract and other circumstances where the Company’s payments to a vendor will exceed the level of services provided, in both cases resulting in a prepayment of research and development expenses. Such prepayments are charged to research and development expense as and when the service is provided or when a specific milestone outlined in the contract is reached.

Prepayments related to research and development activities were $1.0 million and $0.7 million at June 30, 2020 and 2019, respectively, and are included in prepaid and other current assets on the Company’s balance sheets.

Share-based compensation

The Company accounts for share-based awards issued to employees in accordance with ASC Topic 718,

Compensation—Stock Compensation,

and generally recognizes share-based compensation expense on a straight-line basis over the period during which an employee is required to provide service in exchange for the award. In addition, the Company awards stock options and restricted shares of common stock to nonemployees in exchange for consulting services. Prior to July 1, 2019, the Company accounted for these awards in accordance with the provisions of ASC

Subtopic 505-50,

Equity-Based Payments to

Non-employees

(“ASC 505-50”). Under

ASC 505-50, share-based

awards to nonemployees were subject to periodic fair

value re-measurement over

their vesting terms. As discussed below under the heading “New Accounting Pronouncements

Adopted during the year ended June 30, 2020,” the Company adopted

ASU No. 2018-07,

Compensation—Stock Compensation (Topic

718): Improvements to Nonemployee Share-Based Payment Accounting

, on July 1, 2019. As a result, the Company’s accounting for nonemployee awards is now generally consistent with that of employee awards. Beginning on July 1, 2019, the measurement date for nonemployee awards is the date of grant without any subsequent changes in the fair value of the award. Share-based compensation costs for nonemployees are generally recognized as expense as services are provided to the Company over the related service period.

For purposes of calculating share-based compensation expense, the Company estimates the fair value of stock options using a Black-Scholes option-pricing model. The determination of the fair value of a share-based compensation award utilizing the Black-Scholes model is affected by the Company’s stock price and a number of assumptions, including the expected volatility of the Company’s stock, the expected life of the stock option, the risk-free interest rate and expected dividends. Additionally, the Company uses a Monte Carlo simulation model to determine the fair value of restricted stock units for purposes of calculating share-based compensation expense. The Monte Carlo simulation model incorporates the probability of satisfying a market condition and uses transaction details such as the Company’s stock price, contractual terms, maturity and risk-free rates, as well as volatility.

If factors change and the Company employs different assumptions, share-based compensation expense may differ significantly from what has been recorded in the past. If there is a difference between the assumptions used in determining share-based compensation expense and the actual factors that become known over time, specifically with respect to anticipated forfeitures, the Company may change the input factors used in determining share-based compensation costs for future awards. These changes, if any, may materially impact the Company’s results of operations in the period that such changes are made.

Net income or loss per share

Basic net income or loss per share is calculated by dividing net income or loss by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net income or loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effects of common stock equivalents outstanding during the period, determined using the treasury stock method. For purposes of diluted net income or loss per share calculations, stock options, restricted stock awards and performance service awards are considered to be common stock equivalents if they are dilutive. The dilutive impact of common stock equivalents for each of the years ended June 30, 2020 and 2019 was approximately 0.2 million shares. However, the dilutive impact of common stock equivalents was excluded from the calculations of diluted net loss per share for each of the years ended June 30, 2020 and 2019 because their effects were anti-dilutive. Therefore, for each of the years ended June 30, 2020 and 2019, basic and diluted net loss per share were the same.

Comprehensive loss

Comprehensive income or loss consists of net income or loss and changes in equity during a period from transactions and other equity and circumstances generated

from non-owner sources.

For the years ended June 30, 2020 and 2019, the Company’s net loss is the same as its comprehensive loss.

New Accounting Pronouncements

Adopted during the year ended June 30, 2020

Leases

In February 2016, the FASB issued ASU

No. 2016-02,

Leases

(“ASU

2016-02”),

which superseded FASB ASC Topic 840,

Leases

(“Topic 840”) and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The new accounting guidance requires the recognition of long-term lease assets and lease liabilities by lessees and sets forth new disclosure requirements for leases. The standard requires lessees to recognize

right-of-use

assets and lease liabilities on the balance sheet. An entity can transition to ASU

2016-02

using a modified retrospective approach at either the beginning of the earliest comparative period in the financial statements or at the beginning of the period of adoption. A lessee is also required to record a

right-of-use

asset and a lease liability regardless of lease classification. The FASB subsequently issued several ASUs amending the new standard. The Company adopted the new standard effective July 1, 2019 using the modified retrospective approach at the beginning of the period of adoption. As a result, prior periods are presented in accordance with the previous guidance in Topic 840.

ASU

2016-02

provides a number of optional practical expedients during transition. The Company elected a package of practical expedients that permits it to not reassess: (i) whether any expired or existing contracts are or contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. Additionally, upon adopting ASU

2016-02,

the Company did not elect the hindsight practical expedient, which allows companies to use current knowledge and expectations when determining the likelihood of exercising lease options. By not electing this practical expedient, the Company did not reassess the lease term for any leases identified under Topic 840.

The Company will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases using classification criteria in ASU

2016-02

that are substantially similar to the previous guidance in Topic 840. The adoption of ASU

2016-02

resulted in the recognition of

right-of-use

assets – operating leases and related lease liabilities of $3.7 million and $5.8 million, respectively, on the Company’s balance sheet as of July 1, 2019. There was no material impact from ASU

2016-02

on the Company’s Statement of Operations for the year ended June 30, 2020. The Company made a policy election not to record a

right-of-use

asset or lease liability for leases with an expected duration of 12 months or less at inception; however, such leases are not material to the Company. For leases with terms greater than 12 months, the Company records a

right-of-use

asset and lease liability at the present value of the future lease payments.

When it is reasonably certain that the Company will exercise a renewal option for one of its leases, the present value of the lease payments for the affected lease is adjusted accordingly. Variable lease payments that are not dependent on an index or a rate are excluded from the determination of the Company’s

right-of-use

assets and lease liabilities and such payments are recognized as expense in the period when the related obligation is incurred. As the Company’s leases do not provide readily determinable implicit interest rates, an incremental borrowing rate commensurate with a lease’s term is used to discount future lease payments. The application of ASU

2016-02

required netting the unamortized balance of lease incentives and deferred lease obligations against the

right-of-use

assets on the date of adoption. The Company’s operating leases include rent escalation clauses that are factored into the determination of future lease payments when appropriate. The Company does not separate lease and nonlease components of its contracts when applying the provisions of ASU

2016-02.

Refer to Note 3, Leases, in these Notes to Financial Statements for additional information about the Company’s leasing activities.

Share-Based Compensation

In June 2018, the FASB issued ASU

No. 2018-07,

Compensation—Stock Compensation (Topic

718): Improvements to Nonemployee Share-Based Payment Accounting

. The new standard aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards is fixed on the date of grant, which may lower the total recognized cost and reduce income statement volatility. The Company adopted the new standard on July 1, 2019

;

however, there was

only

an immaterial impact on the Company’s financial position and results of operations

as of and

for the year ended June 30, 2020.

Adopted effective July 1, 2020

Fair Value Measurement

In August 2018, the FASB issued ASU

No. 2018-13,

Fair Value Measurement (Topic

820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

. The new standard eliminates, adds and modifies certain disclosure requirements for fair value measurement as part of the FASB’s disclosure framework project. Under the new standard, the amount and reason for a transfer between Level 1 and Level 2 of the fair value hierarchy is no longer required to be disclosed but public companies are required to disclose a range and weighted average of significant unobservable inputs for Level 3 fair value measurements. The Company adopted the new standard on July 1, 2020; however, it did not have a significant impact on the Company’s financial statements.

Collaborative Arrangements

In November 2018, the FASB issued ASU

No. 2018-18,

Collaborative Arrangements (Topic

808): Clarifying the Interaction between Topic 808 and Topic 606

. The new standard clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under Topic 606 when the counterparty is a customer. The new standard also precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. The guidance amends Topic 808 to refer to the

unit-of-account

guidance in Topic 606 and requires it to be used only when assessing whether a transaction is in the scope of Topic 606. The Company adopted the new standard on July 1, 2020; however, it did not have a significant impact on the Company’s financial statements.

To be adopted in future periods

Financial Instruments—Credit Losses

In June 2016, the FASB issued ASU

No. 2016-13,

Financial Instruments – Credit Losses (Topic

326): Measurement of Credit Losses on Financial Instruments

. The new standard requires that financial assets measured at amortized cost be presented at the net amount expected to be collected and separately measure an allowance for credit losses that is deducted from the amortized cost basis of those financial assets. This standard will be effective for the Company on July 1, 2023. Early adoption is permitted. Management continues to evaluate the provisions of this new standard and its potential impact; however, the adoption thereof is not expected to have a significant impact on the Company’s financial statements.

Income Taxes

In December 2019, the FASB issued ASU

No. 2019-12,

Income Taxes (Topic

740): Simplifying the Accounting for Income Taxes

. The new standard includes several provisions that simplify accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and increasing consistency and clarity for the users of financial statements. This standard will be effective for the Company on July 1, 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company’s financial statements.

Investments – Equity Securities, Investments – Equity Method and Joint Ventures, and Derivatives and Hedging

In January 2020, the FASB issued ASU

No. 2020-01,

Investments – Equity Securities (Topic 321), Investments – Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815

. The new standard addresses interactions between the guidance to account for certain equity securities under ASC Topic 321, the guidance to account for investments under the equity method of accounting in ASC Topic 323, and the guidance in ASC Topic 815, which could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with ASC Topic 825,

Financial Instruments

. These amendments improve current U.S. GAAP by reducing diversity in practice and increasing comparability of the accounting for any such interactions. This standard will be effective for the Company on July 1, 2021. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on the Company’s financial statements.