Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, since they are interim statements, the accompanying condensed financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the unaudited condensed financial statements and notes thereto include all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. The operating results presented in these unaudited condensed financial statements are not necessarily indicative of the results that may be expected for any future periods.

Use of Estimates

The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s financial statements relate to determining the standalone selling prices of performance obligations associated with license and collaboration arrangements, accrued research and development expenses and stock-based compensation expenses. The Company bases these estimates on historical experience, knowledge of current events and actions it may undertake in the future, and on various other assumptions that are believed to be reasonable. Actual results may differ materially from these estimates and assumptions. Although the impact of the COVID-19 pandemic to the Company’s business and operating results presents additional uncertainty, the Company continues to use the best information available to update its critical accounting estimates.

Cash, Cash Equivalents and Restricted Cash

The following table presents a reconciliation of cash, cash equivalents and restricted cash to the amounts shown in the unaudited condensed statements of cash flows (in thousands):


	June 30, 2022		June 30, 2021
Cash and cash equivalents	$	290,147	$	426,047
Restricted cash included in other assets		1,876		1,875
Total cash, cash equivalents and restricted cash	$	292,023	$	427,922

Concentration of Credit Risk

Substantially all of the Company’s cash, cash equivalent and marketable securities are held at two financial institutions. Due to the financial strength of the depository institutions, the Company believes these financial institutions represent minimal credit risk. Cash amounts held at financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At June 30, 2022, cash, cash equivalents and marketable securities totaling $818.0 million are either not subject to FDIC insurance, or exceed the FDIC insured limit. The Company’s cash, cash equivalents and marketable securities are invested in short term, high credit quality securities, and as a result, the Company believes represent a minimal credit risk.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, restricted stock units (RSUs) and performance stock units (PSUs). The Company excluded stock options to purchase common stock, RSUs and PSUs from the number of shares used to calculate diluted shares outstanding because the inclusion of these potentially dilutive securities would have been antidilutive.

Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following:


	Six Months Ended June 30,
	2022		2021
Common stock options		6,266,363		5,406,931
RSUs		893,536		192,281
PSUs		234,284		188,518
Total		7,394,183		5,787,730