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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2020

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 001-38650

Y-mAbs Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

    

47-4619612

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

230 Park Avenue

Suite 3350

New York, NY 10169

(Address of principal executive offices)

(Zip Code)

(646)-885-8505

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

    

Trading Symbol

    

Name of each exchange on which registered:

Common Stock, $0.0001 par value

YMAB

NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer 

    

Accelerated filer 

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No  .

There were 40,513,657 shares of Common Stock ($0.0001 par value) outstanding as of November 2, 2020.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our business strategy, future operations and results thereof, future financial position, future revenue, projected costs, prospects, current and prospective products, product approvals, research and development costs, current and prospective collaborations, timing and likelihood of success, plans and objectives of management, expected market growth and future results of current and anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “contemplate,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

the implementation of our business model and our plans to develop and commercialize our lead product candidates and other product candidates, including the potential clinical efficacy and other benefits thereof;
the rate and degree of market acceptance and clinical utility any current or future product candidate for which we may receive marketing approval;
our ability and plans in continuing to build out our commercial infrastructure and successfully launching, marketing, and selling naxitamab, omburtamab and any current or future product candidate for which we may receive marketing approval, including our plans with respect to the focus and activities of our sales force, the nature of our marketing, market access and patient support activities and related assumptions;
the pricing and reimbursement of, and the extent to which patient assistance programs are utilized for naxitamab, omburtamab or any current or future product candidate for which we may receive marketing approval;
our ongoing and future clinical trials for our lead product candidates naxitamab and omburtamab, whether conducted by us or by any of our collaborators, including the timing of initiation of these trials, the pace of enrollment, the completion of enrollment, the availability of data from these trials, the expected dates of Biological License Application, or BLA, submission and approval by the United States Food and Drug Administration, or FDA, and equivalent foreign regulatory authorities and of the anticipated results;
our pre-clinical studies and future clinical trials for our other product candidates and our research and development programs, whether conducted by us or by any of our collaborators, including the timing of initiation of these trials, the pace of enrollment, the expected date of completion and of the anticipated results;
the timing of and our ability to obtain and maintain regulatory, marketing and reimbursement approvals for our product candidates;
our ability to retain the continued service of our key employees and to identify, hire and retain additional qualified employees, including a direct sales force;
our plans for remediation of material weaknesses in our internal control over financial reporting;
our commercialization, marketing and manufacturing capabilities and strategy;

1

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our intellectual property position and strategy and the scope of protection we are able to establish and maintain for the intellectual property rights covering our product candidates and technology;
our ability to identify and develop additional product candidates and technologies with significant commercial potential;
our plans and ability to enter into collaborations or strategic partnerships for the development and commercialization of our product candidates and future operations;
the potential benefits of any future collaboration or strategic partnerships;
our expectations related to the use of our cash and cash equivalents, how long that cash is expected to last;
the need for, timing and amount of any future financing transaction;
our financial performance, including our estimates regarding revenues, expenses, capital expenditure requirements;
developments relating to our competitors and our industry;
adverse effects on our business, financial condition and results of operations from the global COVID-19 pandemic, including the pace of global economic recovery from the pandemic;
the impact of government laws and regulations;
our ability to comply with healthcare laws and regulations in the United States and any foreign countries, including, without limitation, those applying to the marketing and sale of pharmaceutical products; and
our expectations regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, licensing arrangements, collaborations, joint ventures or investments that we may make.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

2

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Page

PART I — FINANCIAL INFORMATION

Item 1.

Consolidated Financial Statements:

4

Consolidated Balance Sheets (unaudited) as of September 30, 2020 and December 31, 2019

4

Consolidated Statements of Net Loss and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2020 and 2019

5

Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2020 and 2019

6

Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2020 and 2019

7

Notes to Consolidated Financial Statements (unaudited)

8

Item 2.

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

22

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

38

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

102

Item 3.

Defaults Upon Senior Securities

103

Item 4.

Mine Safety Disclosures

103

Item 5.

Other Information

103

Item 6.

Exhibits

103

You should read this Quarterly Report and the documents we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from the plans, intentions, and expectations disclosed in the forward-looking statements we may make.

3

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PART I – FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

Y-MABS THERAPEUTICS, INC.

Consolidated Balance Sheets

(unaudited)

(in thousands, except share data)

    

September 30, 

    

December 31, 

2020

2019

ASSETS

 

  

 

  

CURRENT ASSETS

 

  

 

  

Cash and cash equivalents

$

131,267

$

207,136

Other current assets

 

1,942

 

4,819

Total current assets

 

133,209

 

211,955

Property and equipment, net

 

1,888

 

2,052

Operating lease right-of-use assets

5,123

1,989

Other assets

 

2,975

 

370

TOTAL ASSETS

$

143,195

$

216,366

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

LIABILITIES

 

  

 

  

Accounts payable

$

10,320

$

8,520

Accrued liabilities

 

7,570

 

4,550

Operating lease liabilities, current portion

1,887

516

Total current liabilities

 

19,777

13,586

Accrued milestone and royalty payments

 

2,466

 

1,921

Operating lease liabilities, long-term portion

2,517

1,714

Other liabilities

1,923

242

TOTAL LIABILITIES

 

26,683

 

17,463

Commitments and contingencies (Note 6)

 

  

 

  

STOCKHOLDERS’ EQUITY

 

  

 

  

Preferred stock, $0.0001 par value, 5,500,000 shares authorized at September 30, 2020 and December 31, 2019; none issued at September 30, 2020 and December 31, 2019

 

 

Common stock, $0.0001 par value, 100,000,000 shares authorized at September 30, 2020 and December 31, 2019; 40,472,435 and 39,728,416 shares issued at September 30, 2020 and December 31, 2019, respectively

 

4

 

4

Additional paid in capital

 

381,803

 

364,712

Accumulated other comprehensive income / (loss)

 

(28)

 

50

Accumulated deficit

 

(265,267)

 

(165,863)

TOTAL STOCKHOLDERS’ EQUITY

 

116,512

 

198,903

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

143,195

$

216,366

The accompanying notes are an integral part of the consolidated financial statements

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Y-MABS THERAPEUTICS, INC.

Consolidated Statements of Net Loss and Comprehensive Loss

(unaudited)

(In thousands, except share and per share data)

Three months ended September 30, 

    

Nine months ended September 30, 

2020

2019

    

2020

2019

OPERATING EXPENSES

 

  

 

  

 

  

 

  

Research and development

$

21,005

$

19,660

$

69,686

$

46,665

General and administrative

 

11,636

 

4,699

 

30,155

 

12,581

Total operating expenses

 

32,641

 

24,359

 

99,841

 

59,246

Loss from operations

 

(32,641)

 

(24,359)

 

(99,841)

 

(59,246)

OTHER INCOME, NET

 

  

 

  

 

  

 

  

Interest and other income / (expenses), net

 

(191)

 

437

 

437

 

1,354

NET LOSS

$

(32,832)

$

(23,922)

$

(99,404)

$

(57,892)

Other comprehensive income / (loss)

 

  

 

  

 

  

 

  

Foreign currency translation

 

(12)

 

134

 

(78)

 

124

COMPREHENSIVE LOSS

$

(32,844)

$

(23,788)

$

(99,482)

$

(57,768)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.82)

$

(0.70)

$

(2.49)

$

(1.69)

Weighted average common shares outstanding, basic and diluted

 

40,187,173

 

34,371,927

 

39,971,766

 

34,253,739

The accompanying notes are an integral part of the consolidated financial statements

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Y-MABS THERAPEUTICS, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

(In thousands, except share data)

Accumulated

Other

Common Stock

Additional

Comprehensive

Accumulated

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Income / (Loss)

    

Deficit

    

Equity

Balance December 31, 2018

 

34,193,666

$

3

$

225,352

$

7

$

(84,835)

$

140,527

Stock-based compensation expense

864

864

Foreign currency translation

56

56

Net loss

(15,934)

(15,934)

Balance March 31, 2019

34,193,666

3

226,216

63

(100,769)

125,513

Stock-based compensation expense

971

971

Foreign currency translation

(66)

(66)

Net loss

(18,036)

(18,036)

Balance June 30, 2019

34,193,666

3

227,187

(3)

(118,805)

108,382

Issuance of common stock to non-employees

400,000

Stock-based compensation expense

1,345

1,345

Foreign currency translation

134

134

Net loss

(23,922)

(23,922)

Balance September 30, 2019

34,593,666

$

3

$

228,532

$

131

$

(142,727)

$

85,939

Accumulated

Other

Common Stock

Additional

Comprehensive

Accumulated

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Income / (Loss)

    

Deficit

    

Equity

Balance December 31, 2019

39,728,416

$

4

$

364,712

$

50

$

(165,863)

$

198,903

Exercise of stock options

25,778

370

370

Stock-based compensation expense

3,429

2,211

2,211

Foreign currency translation

25

25

Net loss

(26,179)

(26,179)

Balance March 31, 2020

39,757,623

4

367,293

75

(192,042)

175,330

Issuance of common stock to non-employees

256,896

8,707

8,707

Stock-based compensation expense

2,455

2,455

Foreign currency translation

(91)

(91)

Net loss

(40,393)

(40,393)

Balance June 30, 2020

40,014,519

4

378,455

(16)

(232,435)

146,008

Exercise of stock options

57,916

215

215

Issuance of common stock to non-employee

400,000

Stock-based compensation expense

3,133

3,133

Foreign currency translation

(12)

(12)

Net loss

(32,832)

(32,832)

Balance September 30, 2020

 

40,472,435

$

4

$

381,803

$

(28)

$

(265,267)

$

116,512

The accompanying notes are an integral part of the consolidated financial statements

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Y-MABS THERAPEUTICS, INC.

Consolidated Statements of Cash Flows

(unaudited)

(In thousands)

Nine months ended September 30, 

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES

 

  

 

  

 

Net loss

$

(99,404)

$

(57,892)

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

 

 

  

Depreciation and amortization

 

279

 

87

Stock-based compensation

 

7,799

 

3,180

Non-cash expense in connection with equity issuance to MSK/MIT

1,331

Non-cash expense in connection with equity issuance to inventors

7,376

Foreign currency transactions

 

(62)

 

123

Changes in assets and liabilities:

 

 

  

Other current assets

 

1,939

 

2,262

Other assets

 

2

 

(131)

Accounts payable

 

1,800

 

1,031

Accrued liabilities and other

 

5,404

 

2,422

NET CASH USED IN OPERATING ACTIVITIES

 

(73,536)

 

(48,918)

CASH FLOWS FROM INVESTING ACTIVITIES

 

  

 

  

Purchase of property and equipment

 

(131)

 

(818)

Loans to inventors

(2,610)

NET CASH USED IN INVESTING ACTIVITIES

 

(2,741)

 

(818)

CASH FLOWS FROM FINANCING ACTIVITIES

 

  

 

  

Proceeds from exercised stock options

585

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

585

 

Effect of exchange rates on cash and cash equivalents

 

(177)

 

57

NET DECREASE IN CASH AND CASH EQUIVALENTS

 

(75,869)

 

(49,679)

Cash and cash equivalents at the beginning of period

 

207,136

 

147,871

Cash and cash equivalents at the end of period

$

131,267

$

98,192

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES

 

  

 

  

Property and equipment purchases in accounts payable

752

Right-of-use assets obtained in exchange for lease obligations

2,679

901

The accompanying notes are an integral part of the consolidated financial statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—ORGANIZATION AND DESCRIPTION OF BUSINESS

Y-mAbs Therapeutics, Inc. (“we,” “us,” “our,” the “Company,” or “Y-mAbs”) is a late-stage clinical biopharmaceutical company focused on the development and commercialization of novel antibody-based therapeutic products for the treatment of cancer.

The Company is headquartered in New York, New York and was incorporated on April 30, 2015 under the laws of the State of Delaware.

NOTE 2—BASIS OF PRESENTATION

The Company has not generated any revenue and has incurred losses since inception. Operations of the Company are subject to certain risks and uncertainties, including, among others, uncertainty of drug candidate development; technological uncertainty; uncertainty regarding patents and proprietary rights; uncertainty in obtaining FDA approval in the United States and regulatory approval in other jurisdictions; marketing or sales capability or experience; uncertainty in getting adequate payer coverage and reimbursement; dependence on key personnel; compliance with government regulations and the need to obtain additional financing. The Company’s drug candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities.

The Company’s drug candidates are in various stages of development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies.

The Company’s financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has experienced negative cash flows from operations since inception and had an accumulated deficit of $265.3 million as of September 30, 2020 and $165.9 million as of December 31, 2019. Through September 30, 2020, the Company has funded its operations through proceeds from sales of shares of its common stock, including its initial public offering in September 2018 and its secondary public offering in November 2019. The future viability of the Company, until such time that the Company has commercialized any of its products, is dependent on its ability to raise additional capital to finance its operations.

As of September 30, 2020, the Company had cash and cash equivalents of $131.3 million. As of the issuance date of the quarterly financial statements as of and for the nine months ended September 30, 2020, the Company expects that its cash and cash equivalents at September 30, 2020 will be sufficient to fund its operating expenses and capital expenditure requirements through at least the next twelve months, irrespective of whether any product approvals are obtained.

The Company may raise additional capital to fund future operations through the sale of its equity securities, incurring debt, entering into licensing or collaboration agreements with partners, grants or other sources of financing. Sufficient funds may not be available to the Company on attractive terms or at all when needed from equity or debt financing. If FDA approvals for naxitamab or omburtamab do not occur or are significantly delayed, and the Company is

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unable to obtain additional financing from these or other sources when needed, it will likely be necessary to take other actions to enhance its liquidity position which may include significantly reducing the current rate of spending through delaying, scaling back current operations, or suspending certain research and development programs and other operational programs.

The accompanying unaudited consolidated financial statements reflect the accounts of the Company and its wholly-owned subsidiary and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, Accounting Standards Codification (“ASC”) Topic 270-10 and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. The unaudited interim financial statements include all adjustments (consisting only of normal recurring nature) necessary in the judgment of management for a fair statement of the results for the periods presented. All intercompany balances and transactions have been eliminated. The Company has evaluated subsequent events through the date of this filing. Operating results for the three and nine-month periods ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020, any other interim periods, or any future year or period. The December 31, 2019 consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. You should read these unaudited interim condensed consolidated financial statements in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year ended December 31, 2019. Effective January 1, 2020, the Company adopted Accounting Standards Update No. 2018-15 (“ASU 2018-15”), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service. The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements.

Operating Leases

As described below, the Company adopted Topic 842 as of January 1, 2019. The Company determines if an arrangement includes a lease at inception. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses its estimated incremental borrowing rate based on information available at the lease commencement date. Because most of the Company’s leases do not provide an implicit rate of return, an incremental borrowing rate is used based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The Company’s incremental borrowing rate for a lease is the estimated rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that it will exercise any such options. None of the Company’s leases contain any residual value guarantees. Lease expense is recognized on a straight-line basis over the expected lease term. Related variable lease costs incurred are not material to the Company.

Topic 842 also provides practical expedients and certain exemptions for an entity’s ongoing accounting post implementation. The Company currently elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize right-of-use assets or liabilities, and this includes not recognizing right-of-use assets or liabilities for existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components for all of our leases. The Company has made an accounting policy election to account for each separate lease component of a contract and its associated non-lease components as a single lease component. See the Lease Agreements section in Note 6 for the related disclosures.

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Cash and Cash Equivalents

The Company considers all highly liquid instruments with original maturities of three months or less from date of purchase to be cash equivalents. All cash and cash equivalents are held in highly rated securities including a Treasury money market fund which is unrestricted as to withdrawal or use. To date, the Company has not experienced any losses on its cash and cash equivalents. The carrying amount of cash and cash equivalents approximates its fair value due to its short-term and liquid nature. We maintain cash balances in excess of insured limits. We do not anticipate any losses with respect to such cash balances.

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:

• Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets;

• Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and

• Level 3 — Unobservable inputs for the asset or liability, which include management's own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk.

Cash equivalents held in money market funds are valued using other significant observable inputs, which represent a Level 2 measurement within the fair value hierarchy. The Company has no other cash equivalents.

The following tables present the Company’s fair value hierarchy for its financial instruments, which are measured at fair value on a recurring basis (in thousands):

Fair Value Measurements at September 30, 2020 Using:

    

Level 1

    

Level 2

    

Level 3

    

Total

Cash equivalents:

Money market funds

$

$

120,297

$

$

120,297

$

$

120,297

$

$

120,297

Fair Value Measurements at December 31, 2019 Using:

    

Level 1

    

Level 2

    

Level 3

    

Total

Cash equivalents:

Money market funds

$

$

197,879

$

$

197,879

$

$

197,879

$

$

197,879

For the quarter ended September 30, 2020, there were no transfers between Level 1, Level 2, and Level 3.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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 expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the accrual for research and development expenses, the accrual of milestone and royalty payments, and the valuation of stock options. Estimates

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are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets. We have made estimates of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods. Actual results may differ from these estimates.

Segment Information

The Company is engaged solely in the discovery and development of novel antibody-based therapeutic products for the treatment of cancer. Accordingly, the Company has determined that it operates in one operating segment.

Recently Issued Accounting Pronouncements – Adopted

In August 2018, the FASB issued Accounting Standards Update No. 2018 -13 (“ASU2018-13”), Fair Value Measurement (Topic 820) Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 allows to remove the reasons for transfer between Level 1 and Level 2 assets, and adds the changes in unrealized gains and losses for recurring level 3 fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued Accounting Standards Update No. 2018-15 (“ASU 2018-15”), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 clarifies certain aspects of ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement, which was issued in April 2015. Specifically, ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software (and hosting arrangements that include an internal-use software license). ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years with early adoption permitted. The adoption of this standard on January 1, 2020 did not have a material impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (“ASU 2016-02”), Leases, which is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018 with early adoption permitted. Under ASU 2016-02, lessees will be required to recognize for all leases, at the commencement date of the lease, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease measured on a discounted basis, and a right-to-use asset, which is an asset that represents the lessee’s right to use or control the use of a specified asset for the lease term. Topic 842 was subsequently amended by ASU 2017-13, Revenue and Leases: Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments; ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; ASU No. 2018-11, Targeted Improvements and ASU No. 2018-20, Narrow Scope Improvements for Lessors.

The Company adopted the new leasing standards using the modified retrospective transition approach as of January 1, 2019, with no restatement of prior periods or cumulative adjustment to retained earnings. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company used the effective date as our date of initial application. Consequently, financial information was not updated and the disclosures required under the new standard are not provided for dates and periods before January 1, 2019. The new standard also provides a number of optional practical

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expedients in transition. The Company elected the package of practical expedients, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.

Upon adoption of the new leasing standards, the Company recognized a lease liability of $1.8 million and a related right-of-use asset of $1.5 million with the difference being due to the elimination of previously reported deferred rent. Please reference Note 6—License Agreement and Commitments for details.

NOTE 4—NET LOSS PER SHARE

Basic net loss per share (“EPS”) is calculated by dividing net income or loss attributable to common stockholders by the weighted average common stock outstanding. Diluted EPS is calculated by adjusting weighted average common shares outstanding for the dilutive effect of common stock options and restricted stock units. In periods in which a net loss is recorded, no effect is given to potentially dilutive securities, since the effect would be antidilutive. Securities that could potentially dilute basic EPS in the future were not included in the computation of diluted EPS because to do so would have been antidilutive. The calculations of basic and diluted net loss per share are as follows:

Three months ended September 30, 

Nine months ended September 30, 

    

2020

2019

    

2020

2019

(in thousands, except per share amounts)

Net loss (numerator)

$

(32,832)

$

(23,922)

$

(99,404)

$

(57,892)

Weighted-average shares (denominator)

 

40,187

 

34,372

 

39,972

 

34,254

Basic and diluted net loss per share

$

(0.82)

$

(0.70)

$

(2.49)

$

(1.69)

Potentially dilutive securities excluded from the computation of diluted earnings per share relate to stock options outstanding and unvested restricted shares and RSUs and totaled 5,056,288 shares as of September 30, 2020 and 4,124,169 shares as of September 30, 2019, and were excluded because including them would have an anti-dilutive impact.

NOTE 5—ACCRUED LIABILITIES

Accrued short-term liabilities at September 30, 2020 and December 31, 2019 are as follows:

September 30, 

    

December 31, 

    

2020

2019

(in thousands)

Accrued licensing, milestone and royalty payments

$

1,334

$

354

Accrued clinical costs

 

729

 

1,584

Accrued compensation and board fees

 

3,853

 

1,475

Accrued manufacturing costs

1,319

760

Other

 

335

 

377

Total

$

7,570

$

4,550

NOTE 6—LICENSE AGREEMENTS AND COMMITMENTS

As of September 30, 2020, the Company has entered into two license agreements and certain other agreements with Memorial Sloan Kettering Cancer Center (“MSK”). The license agreements, as previously disclosed in our annual report on Form 10-K, are the MSK License and the CD33 License Agreement. In addition, the Company has entered into the SADA License Agreement with MSK and Massachusetts Institute of Technology (“MIT”). Through a Settlement and Assumption and Assignment of the MSK License and Y-mAbs Sublicense Agreement (“SAAA”) with MabVax, Inc. (“MabVax”) and MSK, the Company has established a direct license with MSK relating to the GD2-GD3 Vaccine, which was originally sublicensed by the Company in 2018 from MabVax. These license agreements with MSK and MIT

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grant the Company certain patent rights and intellectual property rights, and in consideration thereof, the Company agreed to make certain payments and issue shares of the Company’s common stock to MSK and MIT. Certain of the payments are contingent milestone and royalty payments, as disclosed in the table below. Amounts disclosed in Note 5 for accrued milestone and royalty payments are inclusive of obligations under the MSK License, CD33 License Agreement and SADA License Agreement, collectively.

We have the following significant license agreements and related commitments which include all obligations that have been paid or accrued as of and for the period ending September 30, 2020:

    

Cash paid

    

Expense

    

Expense

    

Expense

    

Expense

    

Accrued liabilities

    

Accrued liabilities

    

Accrued liabilities

    

Accrued liabilities

Agreements

Nine months ended September 2020

Nine months ended September 2020

Nine months ended September 2019

Three months ended September 2020

Three months ended September 2019

Current as of September 2020

Non-current as of September 2020

Current as of December 2019

Non-current as of December 2019

MSK

$ 80,000

$ -

$ -

$ -

$ -

$ 234,000

$ 1,411,000

$ 254,000

$ 1,471,000

CD33

100,000

450,000

100,000

450,000

MabVax

The below table represents the maximum clinical, regulatory or sales-based miletones as reflected within the agreements, certain of which have been paid in prior periods or are accrued as presented in the table above:

    

Maximum

    

Maximum

    

Maximum

    

Agreements

Clinical Milestones

Regulatory Milestones

Sales-based milestones

MSK

$ 2,450,000

$ 9,000,000

$ 20,000,000

CD33

550,000

500,000

7,500,000

MabVax

200,000

1,200,000

Minimum royalties and certain clinical milestones that become due based upon the passage of time under the CD33 License Agreement and the MabVax Agreement are not recorded as a liability as the Company does not consider such obligations to be probable as of September 30, 2020.

SADA License Agreement

On April 15, 2020, we entered into a license agreement (the “SADA License Agreement”) with MSK and Massachusetts Institute of Technology (“MIT”) that grants us an exclusive worldwide, sublicensable license to MSK’s and MIT’s rights to certain patent and intellectual property to develop, make, and commercialize licensed products and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics and cancer treatments using the SADA BiDE Pre-targeted Radioimmunotherapy Platform (“SADA technology”). We have assessed the licensing and other rights acquired and given the lack of outputs upon acquisition and that no employees were acquired, among other factors, we have concluded that the licensing rights represented an asset acquisition.

The patents and patent applications covered by this agreement are directed, in part, to the SADA technology, as well as a number of SADA constructs developed by MSK. Upon entering into the SADA License Agreement and in exchange for the licenses granted thereunder, we concluded that the technology acquired under the licensing arrangement had no alternative future use. This conclusion was based on consideration of the rights conveyed under the agreement, extent of further development necessary and presence of uncertainty prior to obtaining regulatory approval for any product. Accordingly, we expensed and paid MSK and MIT an upfront payment of $1,995,000. During the quarter ended June 30, 2020, we expensed $3,331,000 associated with stock grants available to MSK and MIT. This includes $1,331,000 related to 42,900 shares of common stock issued to the licensors on the effective date of the agreement based on the fair value of the stock on the grant date and $2,000,000 of future stock grants which will be paid on the anniversary date of the SADA License Agreement in 2021 and 2022. These awards survive the potential termination of the licensing arrangement, unless a breach by the licensors occurs, and can be settled in cash or stock at the determination of the Company. During the quarter ended June 30, 2020, we expensed $7,376,000 related to 213,996 shares issued to two non-employee researchers based on the fair value of the shares on the grant date. Please reference Note 7-Stockholders’ Equity for additional details.

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The SADA License Agreement requires us to pay to MSK and MIT mid to high single-digit royalties based on annual net sales of licensed products or the performance of licensed services by us and our affiliates and sublicensees. We are obligated to pay annual minimum royalties of $40,000, increasing to $60,000 once a patent has been issued, over the royalty term, commencing on the tenth anniversary of the license agreement. These amounts are non-refundable but are creditable against royalty payments otherwise due under the SADA License Agreement.

The Company is also obligated to pay MSK and MIT certain clinical, regulatory and sales-based milestone payments under the SADA License Agreement. Certain of the clinical and regulatory milestone payments become due at the earlier of completion of the related milestone activity or the date indicated in the SADA License Agreement. Total clinical and regulatory milestones potentially due under the SADA License Agreement are $4,730,000 and $18,125,000, respectively. There are also sales-based milestones, totaling $23,750,000, that become due should the Company achieve certain amounts of sales of licensed products.

In addition, to the extent we enter into sublicense arrangements, we are obligated to pay to MSK and MIT a percentage of certain payments received from sublicensees of the rights licensed to us by MSK and MIT, which percentage will be based upon the achievement of certain clinical milestones. The Company has not entered into any sublicenses related to the SADA License Agreement. For each of the constructs previously generated by MSK using the SADA technology and sold for the Company by a sublicensee, the Company may pay sales milestones up to $60,000,000, in total, based on the achievement of various levels of cumulative net sales made by the sublicensee.

Failure by the Company to meet certain conditions under the arrangement could cause the related license to such licensed products to be canceled and could result in termination of the entire arrangement with MSK and MIT. In addition, the Company may terminate the SADA License Agreement with prior written notice.

Research and development is inherently uncertain and as described above, should such research and development fail, the SADA License Agreement is cancelable at the Company’s option. The Company will also consider the development risk and each party’s termination rights under the agreement when considering whether any clinical or regulatory based milestone payments, certain of which also contain time-based payment requirements, are probable. The Company records milestones in the period in which the contingent liability is probable and the amount is reasonably estimable. During the three and nine month period ended September 30, 2020, we expensed $0 and $605,000, respectively, of milestones under the SADA License Agreement. This includes all time-based milestones coming due within 36 months of the effective date of the agreement as this represents the time period we expect will be required to gather necessary clinical data to determine which patent rights to further pursue, if any, under the SADA License Agreement. The Company does not consider any other milestones under the SADA License Agreement to be probable as of September 30, 2020.

We have the following SADA related balances and commitments which include all obligations that have been paid or accrued as of and for the priod ending September 30, 2020:

    

Cash paid

    

Expense

    

Expense

    

Expense

    

Expense

    

Accrued liabilities

    

Accrued liabilities

    

Accrued liabilities

    

Accrued liabilities

Agreements

Nine months ended September 2020

Nine months ended September 2020

Nine months ended September 2019

Three months ended September 2020

Three months ended September 2019

Current as of September 2020

Non-current as of September 2020

Current as of September 2019

Non-current as of September 2019

SADA

$ 1,995,000

$ 13,307,000

$ -

$ -

$ -

$ 1,000,000

$ 1,605,000

$ -

$ -

The below table represents the maximum clinical, regulatory or sales-based miletones as reflected within the agreements, certain of which have been paid in prior periods or are accrued as presented in the table above:

    

Maximum

    

Maximum

    

Maximum

Agreements

Clinical Milestones

Regulatory Milestones

Sales-based milestones

SADA

$ 4,730,000

$ 18,125,000

$ 23,750,000

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Minimum royalties and certain clinical milestones that become due based upon the passage of time under the SADA Agreement are not recorded as a liability as the Company does not consider such obligations to be probable as of September 30, 2020.

Other agreements

We have also entered into various other support agreements with MSK including a sponsored research agreement to provide research services related to the intellectual property licensed under the MSK License Agreement; a master data services agreement, for services provided by approximately five full time employees at MSK, who are engaged in transferring clinical data, databases, regulatory files and other know-how included in the MSK License Agreement to the Company; a master clinical trial agreement pursuant to which we committed to fund certain clinical trials at MSK; two separate core facility service agreements pursuant to which we committed to obtaining certain laboratory services from MSK; a CD33 sponsored research agreement pursuant to which we agreed to pay MSK to provide research services over a period of two years related to the intellectual property licensed under the CD33 License Agreement; and in October 2020 we entered into a SADA sponsored research agreement pursuant to which we agreed to pay MSK to provide research services over a period of three years related to the intellectual property licensed under the SADA License Agreement. For the three months ended September 30, 2020 and 2019, we incurred research and development expenses of $1,050,000 and $1,384,000, respectively, under these agreements. For the nine months ended September 30, 2020 and 2019, we incurred research and development expenses of $3,028,000 and $5,307,000, respectively, under these agreements.

Lease Agreements

In July 2019, the Company entered a development, manufacturing and supply agreement with SpectronRx in South Bend, Indiana, to secure access to clinical and commercial scale radiolabeling capacity for omburtamab. Under the terms of the agreement, SpectronRx has agreed to establish a manufacturing unit designated for the Company within its existing facilities, at which both clinical and commercial supply of radiolabeled omburtamab can be produced. Since the Company possesses the right to substantially all the economic benefits and directs the use of the production area, the Company accounts for the payments related to the access to the manufacturing space under ASC 842 as an operating lease. The term of the lease is two years from the commencement date of August 31, 2020. Upon the lease commencement date, we recorded $3,617,000 as right of use asset and $2,680,000 as lease liability with the difference of $937,000 being due to prepayment of an initial fee of $500,000 to commence design and construction of the production area and access fees of $437,000. The company will pay additional access fees of $2,796,000 in equal monthly installments of approximately $117,000 starting in September 2020 for two years. There are no renewal options within this agreement.

In February 2019, the Company entered into a lease agreement in connection with its 4,500 square feet laboratory in New Jersey. The term of the lease is three years from the date the Company occupied the premises, with an option to extend for an additional two years which the Company expects to exercise and has included in the determination of the related lease liability. Fixed rent payable under the lease is approximately $144,000 per annum and is payable in equal monthly installments of approximately $12,000.

In January 2018, the Company entered into a lease agreement in connection with its corporate headquarters in New York. The term of the lease is five years from the date the Company begins to occupy the premises. Fixed rent payable under the lease is approximately $384,000 per annum and is payable in equal monthly installments of approximately $32,000, which are recognized on a straight-line basis.

Additionally, the Company entered a three-year lease agreement for the lease of certain office space in Denmark in February 2018, as amended in November 2018 and February 2019. The lease is payable in monthly installments of approximately $19,000, which are recognized on a straight-line basis.

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Total operating lease costs were $330,000 and $174,000 for the three months ended September 30, 2020 and 2019, respectively, and $680,000 and $502,000 for the nine months ended September 30, 2020 and 2019, respectively.

For the three months ended September 30, 2020, the operating lease expenses were recorded as $280,000 in research and development expense and $50,000 in general and administrative expense. For the three months ended September 30, 2019, the expenses were recorded as $129,000 in research and development expense and $45,000 in general and administrative expense. For the nine months ended September 30, 2020, the expenses were recorded as $529,000 in research and development expense and $151,000 in general and administrative expense. For the nine months ended September 30, 2019, the expenses were recorded as $367,000 in research and development expense and $135,000 in general and administrative expense.

Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2020 was $201,000 and $594,000, respectively, and was included in net cash used in operating activities in the Company’s Consolidated Statements of Cash Flows.

Maturities of operating lease liabilities at September 30, 2020 were as follows (in thousands):

Operating Leases

    

at September 30, 2020

Remainder of 2020

$

541

Years ending December 31,

2021

2,168

2022

1,587

2023

540

2024

64

Total lease payments

4,900

Less: Imputed interest

(496)

Total operating lease liabilities at September 30, 2020

$

4,404

Maturities of operating leases at December 31, 2019 were as follows (in thousands):

Operating Leases

    

at December 31, 2019

2020

$

749

2021

753

2022

646

2023

539

2024

77

Total lease payments

2,764

Less: Imputed interest

(534)

Total operating lease liabilities at December 31, 2019

$

2,230

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company uses its estimate of its incremental borrowing rate based on the information available at the lease commencement date. As of September 30, 2020, the weighted average remaining lease term is 2.42 years and the weighted average discount rate used to determine the operating lease liability was 7.6%.

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NOTE 7—STOCKHOLDERS’ EQUITY

Authorized Stock

As of September 30, 2020 and December 31, 2019, the Company has authorized a total of 105,500,000 shares, 100,000,000 of which are common stock, par value $0.0001 per share, and 5,500,000 of which are preferred stock, par value $0.0001 per share.

Common Stock

Each share of common stock is entitled to one vote. Common stockholders are entitled to receive dividends, as may be declared by the board of directors, if any, subject to preferential dividend rights of the preferred stock, none of which have been issued. The Company had issued 40,472,435 shares of its common stock as of September 30, 2020 and 39,728,416 shares of its common stock as of December 31, 2019.

Preferred Stock

Preferred stock may be issued from time to time in one or more series with such designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions as approved by the Company’s Board of Directors. No preferred stock has been issued as of September 30, 2020 or December 31, 2019.

Stock grant agreements with non-employees

In August 2015, we entered into certain stock grant agreements with non-employees of the Company. We agreed to issue a total of 2,800,000 shares to two non-employee researchers who were involved in the development of technology licensed from MSK in consideration for their prior service. These two researchers were employees of MSK. The shares are released according to a vesting schedule. A total of 560,000 shares were issued in 2015, and a total of 448,000 shares issued in each of 2016 and 2017. In 2018, a total of 544,000 shares were issued to the two researchers, whereby one of the two grants was fully issued. In 2019 a total of 400,000 shares were issued to one of the physicians, and the remaining 400,000 shares were issued in August 2020, subject to certain conditions. No future shares will be issued under this award. The total award was expensed at its estimated fair value in 2015, as no future service was required to continue to vest in and receive the shares.

In April 2020, in connection with the SADA License Agreement, we entered into certain stock grant agreements pursuant to which we agreed to issue a total of 213,996 shares to two non-employee researchers who were involved in the development of the SADA technology licensed from MSK and MIT in consideration for their prior service. All 213,996 shares were issued in April 2020 into escrow with 40% of the shares immediately vesting at the time of issuance and the remaining 60% of the shares subject to vesting ratably over the next three years on the anniversary date of the agreement. The shares are subject to forfeiture to the extent the SADA License Agreement is terminated prior to the vesting of the shares. There is no cash settlement feature, and no future service is required for researchers to vest and receive the shares. While the shares vest over time, there is no performance condition for the shares. In April 2020, we recorded an expense within research and development totaling $7,376,000 related to the shares which represents the fair value of the shares on the grant date.

In July 2020, pursuant to the stock grant agreements, we also loaned the two researchers a total of $2,610,000 related to their individual tax payments due in conjunction with the stock grants. Each of the loans are evidenced by a three year Secured Promissory Note. The outstanding principal amounts of the loans, together with all accrued interest thereon at the rate of 1% per annum, is due and payable on the maturity date of the loans. The loans are secured by Pledge and Security Agreements, pursuant to which the researchers have pledged the shares as security for repayment of the loans with interest rates that are at market. The loans are recorded at amortized cost, which approximates fair value due to the short-term nature and minimal changes in market interest rates.

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Issuance of common stock

In November 2019, we completed a secondary public offering and issued 5,134,750 shares of our Common Stock at a purchase price of $28.00 per share for an aggregate consideration of $134,704,000, net of issuance costs of $9,100,000.

NOTE 8—SHARE-BASED COMPENSATION

2015 Equity Incentive Plan

Our board of directors and stockholders have approved and adopted the 2015 Plan, which provided for the grant of incentive stock options, within the meaning of Section 422 of the Code (the Internal Revenue Code), to our employees and any parent and subsidiary corporations’ employees, and for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants. A total of 4,500,000 shares of our common stock were reserved for issuance pursuant to the 2015 Plan. Options granted under the 2015 Plan vest according to the schedule specified in the grant agreements, which is generally a four-year period and generally become immediately exercisable upon the occurrence of a change in control, as defined. Upon the 2018 Equity Incentive Plan (the “2018 Plan’) becoming effective in September 2018, no further grants are allowed under the 2015 Plan.

2018 Equity Incentive Plan

Our board of directors and stockholders approved and adopted the 2018 Plan, which became effective upon the Company’s initial public offering in September 2018 and which provides for the grant of incentive stock options, within the meaning of Section 422 of the Code (the Internal Revenue Code), to our employees and any parent and subsidiary corporations’ employees, and for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units to our employees, directors and consultants and our parent and subsidiary corporations’ employees and consultants. A total of 5,500,000 shares of our common stock, inclusive of the awards previously granted under the 2015 Equity Incentive Plan, are reserved for issuance pursuant to the 2018 Plan. In addition, the number of shares available for issuance under the 2018 Plan will also include an annual increase on the first day of each fiscal year beginning in 2019, equal to 4% of the outstanding shares of common stock as of the last day of our immediately preceding fiscal year. The exercise price of options granted under the plans must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes of our outstanding stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well as other types of consideration permitted by applicable law. Options granted under the 2018 Plan vest according to the schedule specified in the grant agreements, which is generally a four-year period and generally become immediately exercisable upon the occurrence of a change in control, as defined.

Stock Option Valuation

For the three month periods ended September 30, 2020 and 2019, stock-based compensation for stock option grants were $3,083,000 and $1,324,000, respectively, for options granted to employees and directors. For the three months ended September 30, 2020, the expenses were recorded as $686,000 in research and development expense and $2,397,000 in general and administrative expense. For the three months ended September 30, 2019, the expenses were recorded as $263,000 in research and development expense and $1,061,000 in general and administrative expense.

For the nine month periods ended September 30, 2020 and 2019, stock-based compensation for stock option grants were $7,676,000 and $3,124,000, respectively, for options granted to employees and directors. For the nine months ended September 30, 2020, the expenses were recorded as $1,712,000 in research and development expense and

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$5,964,000 in general and administrative expense. For the nine months ended September 30, 2019, the expenses were recorded as $577,000 in research and development expense and $2,547,000 in general and administrative expense.

The following table summarizes common stock options issued and outstanding:

    

    

    

    

Weighted

Weighted

Aggregate

average

average

intrinsic

remaining

exercise

value

contractual

Options

price

(in thousands)

life (years)

Outstanding and expected to vest at December 31, 2019

 

4,005,873

$

10.67

$

82,944

 

7.34

Granted

 

1,196,000

35.98

Exercised

(83,694)

6.99

Forfeited

(89,667)

25.00

Outstanding and expected to vest at September 30, 2020

 

5,028,512

$

16.50

$

113,742