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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

The accompanying condensed consolidated financial statements have been prepared in conformity with the rules and regulations of the Securities and Exchange Commission and generally accepted accounting principles in the United States (“GAAP”) for interim financial reporting. Accordingly, certain detailed disclosures which would normally be included with annual financial statements have been omitted. In the opinion of management, all normal recurring adjustments necessary for a fair presentation have been made. These condensed consolidated financial statements should be read in conjunction with the Company's 2022 Annual Report on Form 10-K. Interim results are not necessarily indicative of results for a full year.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, majority owned subsidiaries and variable interest entities if the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated.

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, revenues and expenses, and the disclosure of contingent liabilities in the condensed consolidated financial statements. Estimates used in the preparation of these condensed consolidated financial statements include, among others, revenue recognition, stock-based compensation, the fair value of assets acquired and liabilities assumed in a business combination, the fair value of non-cash consideration received from customers, the fair value of certain notes receivable, the fair value of certain investments including equity method investments, the fair value of warrant liabilities, the allocation of equity method investment losses under the hypothetical liquidation at book value (“HLBV”) method, the incremental borrowing rate used in determining lease liabilities, allowance for credit losses, accrued expenses and income taxes.

The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Reported amounts and disclosures reflect the overall economic conditions that management believes are most likely to occur, and the anticipated measures management intends to take. Actual results could differ materially from those estimates. All revisions to accounting estimates are recognized in the period in which the estimates are revised.

Significant Accounting Policies

There have been no new or material changes to the Company’s significant accounting policies during the six months ended June 30, 2023 as compared to the significant accounting policies described in Note 2 to the Company's 2022 consolidated financial statements included in the 2022 Annual Report on Form 10-K.

Retrospective Application of a Change in Accounting Principle

The Company adopted Accounting Standards Update No. 2016-02, Leases (“ASC 842”), which supersedes the guidance in Accounting Standards Codification Topic 840, Leases (“ASC 840”), effective January 1, 2022. As the Company elected the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Jumpstart Our Business Startups Act of 2012, ASC 842 was adopted in connection with the preparation of the Company’s annual consolidated financial statements as of and for the year ended December 31, 2022. As such, the comparative information for the three and six months ended June 30, 2022 has been adjusted herein to reflect the impact of the adoption of ASC 842 as of January 1, 2022.

Select line items from the condensed consolidated statement of operations and comprehensive loss reflecting the adoption of ASC 842 are as follows (in thousands):


	Three Months Ended June 30, 2022									Six Months Ended June 30, 2022
	As Previously Reported			Adjustments			As Adjusted			As Previously Reported			Adjustments			As Adjusted
Costs and operating expenses:
Research and development	$	289,188		$	871		$	290,059		$	611,908		$	1,727		$	613,635
Total operating expenses		791,526			871			792,397			1,634,446			1,727			1,636,173
Loss from operations		(646,908	)		(871	)		(647,779	)		(1,321,423	)		(1,727	)		(1,323,150	)
Other income (expense):
Interest income, net		1,674			590			2,264			1,277			1,164			2,441
Other income (expense), net		(51	)		281			230			1,586			563			2,149
Total other income (expense), net		(23,707	)		871			(22,836	)		58,031			1,727			59,758

Select line items from the condensed consolidated statements of stockholders’ equity reflecting the adoption of ASC 842 are as follows (in thousands):


	As of June 30, 2022
	As Previously Reported			Adjustments		As Adjusted
Accumulated deficit	$	(3,557,255	)	$	5,195	$	(3,552,060	)
Total stockholders' equity		1,567,056			5,195		1,572,251

Select line items from the condensed consolidated statements of cash flows reflecting the adoption of ASC 842 are as follows (in thousands):


	Six Months Ended June 30, 2022
	As Previously Reported			Adjustments			As Adjusted
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	$	19,096		$	(1,128	)	$	17,968
Amortization of finance lease right-of-use assets		—			1,004			1,004
Non-cash lease expense		—			7,536			7,536
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		4,973			(600	)		4,373
Accrued expenses and other current liabilities		(12,758	)		(123	)		(12,881	)
Operating lease liabilities, current and non-current		—			(5,332	)		(5,332	)
Deferred rent, non-current		1,468			(1,468	)		—
Cash flows from financing activities:
Principal payments on finance leases		—			(609	)		(609	)
Principal payments on capital leases and lease financing obligation		(720	)		720			—

Recently Issued Accounting Pronouncements

There were no new recently issued accounting pronouncements that are of significance or potential significance to the Company from those disclosed herein and within Note 2 to the Company's 2022 consolidated financial statements included in the 2022 Annual Report on Form 10-K.