mtcr-10q_20200930.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

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: 001-39512

 

 

Metacrine, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-2297384

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

3985 Sorrento Valley Blvd., Suite C

San Diego, California

92121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (858) 369-7800

 

 

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

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

 

MTCR

 

The Nasdaq Global 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  

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes      No  

The number of outstanding shares of the registrant’s common stock on November 9, 2020 was 25,956,300.

 

 

 


Metacrine, Inc.

Table of Contents

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

1

Item 2.

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

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

Controls and Procedures

25

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3.

Defaults Upon Senior Securities

68

Item 4.

Mine Safety Disclosures

68

Item 5.

Other Information

68

Item 6.

Exhibits

68

 

 

 

 


PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Metacrine, Inc.

Unaudited Condensed Consolidated Balance Sheets

(In thousands, except par value and share amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

98,281

 

 

$

15,668

 

Short-term investments

 

 

10,958

 

 

 

39,983

 

Prepaid expenses and other current assets

 

 

1,663

 

 

 

1,692

 

Total current assets

 

 

110,902

 

 

 

57,343

 

Property and equipment, net

 

 

690

 

 

 

735

 

Operating lease right-of-use asset

 

 

1,740

 

 

 

2,203

 

Total assets

 

$

113,332

 

 

$

60,281

 

Liabilities, Convertible Preferred Stock, and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

655

 

 

$

239

 

Accrued liabilities

 

 

2,725

 

 

 

3,549

 

Current portion of operating lease liability

 

 

722

 

 

 

600

 

Total current liabilities

 

 

4,102

 

 

 

4,388

 

Unvested stock liability

 

 

34

 

 

 

109

 

Warrant liability

 

 

-

 

 

 

184

 

Operating lease liability, net of current portion

 

 

1,199

 

 

 

1,748

 

Long-term debt, net of debt discount

 

 

9,309

 

 

 

9,099

 

Other long-term liabilities

 

 

525

 

 

 

525

 

Commitments and contingencies (Note 3)

 

 

 

 

 

 

 

 

Convertible preferred stock, $0.0001 par value; authorized shares – 10,000,000 and 85,683,310 at September 30, 2020 and December 31, 2019, respectively; issued and outstanding shares – none and 85,093,688 at September 30, 2020 and December 31, 2019, respectively; Liquidation preference – none and $123,100 at September 30, 2020 and December 31, 2019, respectively.

 

 

-

 

 

 

122,465

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; authorized shares – 200,000,000 and 111,098,749 at September 30, 2020 and December 31, 2019, respectively; issued shares – 25,957,408 and 2,682,397 at September 30, 2020 and December 31, 2019, respectively; outstanding shares – 25,909,488 and 2,484,848 at September 30, 2020 and December 31, 2019, respectively.

 

 

3

 

 

 

-

 

Additional paid-in-capital

 

 

208,076

 

 

 

5,164

 

Accumulated other comprehensive income

 

 

14

 

 

 

41

 

Accumulated deficit

 

 

(109,930

)

 

 

(83,442

)

Total stockholders’ equity (deficit)

 

 

98,163

 

 

 

(78,237

)

Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)

 

$

113,332

 

 

$

60,281

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

1


Metacrine, Inc.

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

6,217

 

 

$

7,647

 

 

$

19,973

 

 

$

19,497

 

General and administrative

 

 

2,693

 

 

 

1,069

 

 

 

6,087

 

 

 

3,057

 

Total operating expenses

 

 

8,910

 

 

 

8,716

 

 

 

26,060

 

 

 

22,554

 

Loss from operations

 

 

(8,910

)

 

 

(8,716

)

 

 

(26,060

)

 

 

(22,554

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

82

 

 

 

344

 

 

 

445

 

 

 

1,111

 

Interest expense

 

 

(258

)

 

 

(93

)

 

 

(765

)

 

 

(93

)

Change in fair value of warrant liability

 

 

45

 

 

 

-

 

 

 

(75

)

 

 

-

 

Other income (expense)

 

 

(13

)

 

 

-

 

 

 

(33

)

 

 

-

 

Total other income (expense)

 

 

(144

)

 

 

251

 

 

 

(428

)

 

 

1,018

 

Net loss

 

$

(9,054

)

 

$

(8,465

)

 

$

(26,488

)

 

$

(21,536

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on available-for-sale securities, net

 

 

(65

)

 

 

-

 

 

 

(27

)

 

 

115

 

Comprehensive loss

 

$

(9,119

)

 

$

(8,465

)

 

$

(26,515

)

 

$

(21,421

)

Net loss per share, basic and diluted

 

$

(1.41

)

 

$

(3.51

)

 

$

(6.89

)

 

$

(9.17

)

Weighted average shares of common stock outstanding,

   basic and diluted

 

 

6,436,546

 

 

 

2,409,227

 

 

 

3,845,793

 

 

 

2,349,635

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

2


Metacrine, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(26,488

)

 

$

(21,536

)

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

 

 

 

 

 

 

 

 

Depreciation

 

 

217

 

 

 

187

 

Stock-based compensation

 

 

3,151

 

 

 

1,442

 

Non-cash interest expense

 

 

210

 

 

 

23

 

Accretion of discounts on investments, net

 

 

(91

)

 

 

(579

)

Amortization of right-of-use asset

 

 

463

 

 

 

432

 

Change in fair value of warrant liability

 

 

75

 

 

 

-

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

29

 

 

 

89

 

Accounts payable and accrued liabilities

 

 

(1,260

)

 

 

1,646

 

Lease liability

 

 

(427

)

 

 

(374

)

Net cash used in operating activities

 

 

(24,121

)

 

 

(18,670

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(172

)

 

 

(56

)

Purchases of short-term investments

 

 

(7,944

)

 

 

(48,827

)

Sale and maturities of short-term investments

 

 

37,033

 

 

 

60,225

 

Net cash provided by investing activities

 

 

28,917

 

 

 

11,342

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock from initial public offering, net of issuance costs

 

 

77,750

 

 

 

-

 

Proceeds from exercise of common stock options

 

 

69

 

 

 

30

 

Repurchase of unvested common stock

 

 

(2

)

 

 

(1

)

Proceeds from issuance of long-term debt, net of issuance cost

 

 

-

 

 

 

9,717

 

Net cash provided by financing activities

 

 

77,817

 

 

 

9,746

 

Net increase in cash and cash equivalents

 

 

82,613

 

 

 

2,418

 

Cash and cash equivalents at beginning of period

 

 

15,668

 

 

 

15,965

 

Cash and cash equivalents at end of period

 

$

98,281

 

 

$

18,383

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

554

 

 

$

-

 

Supplemental non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Conversion of convertible preferred stock to common stock

 

$

122,465

 

 

$

-

 

Conversion of convertible preferred stock warrant to common stock warrant

 

$

259

 

 

$

-

 

Issuance costs in accounts payable and accrued liabilities

 

$

852

 

 

$

-

 

Initial fair value of warrant liability

 

$

-

 

 

$

184

 

Vesting of common stock

 

$

73

 

 

$

75

 

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

3


 

Metacrine, Inc.

Unaudited Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

For the Nine Months Ended September 30, 2020 and 2019

(In thousands, except share amounts)

 

 

 

 

Convertible Preferred

Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income

 

 

Accumulated

deficit

 

 

Total

stockholders'

equity (deficit)

 

Balance at December 31, 2019

 

 

85,093,688

 

 

$

122,465

 

 

 

2,484,848

 

 

$

 

 

$

5,164

 

 

$

41

 

 

$

(83,442

)

 

$

(78,237

)

Issuance of common stock from initial public offering, net of issuance costs

 

 

 

 

 

 

 

 

6,540,000

 

 

 

1

 

 

 

76,897

 

 

 

 

 

 

 

 

 

76,898

 

Conversion of preferred stock to common stock from completion of initial public offering

 

 

(85,093,688

)

 

 

(122,465

)

 

 

16,685,014

 

 

 

2

 

 

 

122,463

 

 

 

 

 

 

 

 

 

122,465

 

Conversion of convertible preferred stock warrant to common stock warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

259

 

 

 

 

 

 

 

 

 

259

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,151

 

 

 

 

 

 

 

 

 

3,151

 

Exercise of stock options

 

 

 

 

 

 

 

 

54,266

 

 

 

 

 

 

69

 

 

 

 

 

 

 

 

 

69

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

145,360

 

 

 

 

 

 

73

 

 

 

 

 

 

 

 

 

73

 

Unrealized gain/(loss) on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(27

)

 

 

 

 

 

(27

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,488

)

 

 

(26,488

)

Balance at September 30, 2020

 

 

 

 

$

 

 

 

25,909,488

 

 

$

3

 

 

$

208,076

 

 

$

14

 

 

$

(109,930

)

 

$

98,163

 

 

 

 

 

Convertible Preferred

Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income

 

 

Accumulated

deficit

 

 

Total

stockholders'

equity (deficit)

 

Balance at December 31, 2018

 

 

85,093,688

 

 

$

122,465

 

 

 

2,249,749

 

 

$

 

 

$

3,097

 

 

$

(53

)

 

$

(54,509

)

 

$

(51,465

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,442

 

 

 

 

 

 

 

 

 

1,442

 

Exercise of stock options

 

 

 

 

 

 

 

 

22,344

 

 

 

 

 

 

30

 

 

 

 

 

 

 

 

 

30

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

161,548

 

 

 

 

 

 

75

 

 

 

 

 

 

 

 

 

75

 

Unrealized gain/(loss) on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

115

 

 

 

 

 

 

115

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,536

)

 

 

(21,536

)

Balance at September 30, 2019

 

 

85,093,688

 

 

$

122,465

 

 

 

2,433,641

 

 

$

 

 

$

4,644

 

 

$

62

 

 

$

(76,045

)

 

$

(71,339

)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

4


 

Metacrine, Inc.

Unaudited Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

For the Three Months Ended September 30, 2020 and 2019

(In thousands, except share amounts)

 

 

 

Convertible Preferred

Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income

 

 

Accumulated

deficit

 

 

Total

stockholders'

equity (deficit)

 

Balance at June 30, 2020

 

 

85,093,688

 

 

$

122,465

 

 

 

2,600,373

 

 

$

 

 

$

6,584

 

 

$

79

 

 

$

(100,876

)

 

$

(94,213

)

Issuance of common stock from initial public offering, net of issuance costs

 

 

 

 

 

 

 

 

6,540,000

 

 

 

1

 

 

 

76,897

 

 

 

 

 

 

 

 

 

76,898

 

Conversion of preferred stock to common stock from completion of initial public offering

 

 

(85,093,688

)

 

 

(122,465

)

 

 

16,685,014

 

 

 

2

 

 

 

122,463

 

 

 

 

 

 

 

 

 

122,465

 

Conversion of convertible preferred stock warrant to common stock warrant

 

 

 

 

 

 

 

 

 

 

 

 

 

 

259

 

 

 

 

 

 

 

 

 

259

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,791

 

 

 

 

 

 

 

 

 

1,791

 

Exercise of stock options

 

 

 

 

 

 

 

 

35,882

 

 

 

 

 

 

58

 

 

 

 

 

 

 

 

 

58

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

48,219

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

24

 

Unrealized gain/(loss) on investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(65

)

 

 

 

 

 

(65

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,054

)

 

 

(9,054

)

Balance at September 30, 2020

 

 

 

 

$

 

 

 

25,909,488

 

 

$

3

 

 

$

208,076

 

 

$

14

 

 

$

(109,930

)

 

$

98,163

 

 

 

 

 

Convertible Preferred

Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

income

 

 

Accumulated

deficit

 

 

Total

stockholders'

equity (deficit)

 

Balance at June 30, 2019

 

 

85,093,688

 

 

$

122,465

 

 

 

2,383,729

 

 

$

 

 

$

4,134

 

 

$

62

 

 

$

(67,580

)

 

$

(63,384

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

484

 

 

 

 

 

 

 

 

 

484

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

49,912

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

26

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,465

)

 

 

(8,465

)

Balance at September 30, 2019

 

 

85,093,688

 

 

$

122,465

 

 

 

2,433,641

 

 

$

 

 

$

4,644

 

 

$

62

 

 

$

(76,045

)

 

$

(71,339

)

 

See accompanying notes to the unaudited condensed consolidated financial statements.

 

 

5


 

Metacrine, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1. Basis of Presentation

Organization

Metacrine, Inc. (the “Company”) was incorporated in the state of Delaware on September 17, 2014 and is based in San Diego, California. The Company is a clinical-stage biopharmaceutical company focused on building an innovative pipeline of differentiated drugs to treat liver and gastrointestinal diseases.

Principles of Consolidation

In May 2019, the Company established a wholly-owned Australian subsidiary, Metacrine, Pty Ltd, in order to conduct various clinical activities for its product candidates. The unaudited condensed consolidated financial statements include the accounts of the Company and Metacrine, Pty Ltd. The functional currency of both the Company and Metacrine, Pty Ltd is the U.S. dollar. Assets and liabilities that are not denominated in the functional currency are remeasured into U.S. dollars at foreign currency exchange rates in effect at the balance sheet date except for nonmonetary assets, which are remeasured at historical foreign currency exchange rates in effect at the date of transaction. Net realized and unrealized gains and losses from foreign currency transactions and remeasurement are reported in other income (expense) in the unaudited condensed consolidated statements of operations and comprehensive loss. All intercompany accounts and transactions have been eliminated in consolidation.

Initial Public Offering

On September 18, 2020, the Company closed its initial public offering (“IPO”) of 6,540,000 shares of common stock at a public offering price of $13.00 per share. The Company raised $76.9 million in net proceeds from the IPO after deducting underwriters’ discounts and commissions of $6.0 million and issuance costs of $2.2 million. The net proceeds from the Company’s IPO included $0.9 million in unpaid issuance costs classified in accounts payable and accrued liabilities as of September 30, 2020.

 

Upon closing of the Company’s IPO, all of the Company’s outstanding preferred stock were automatically converted into 16,685,014 shares of common stock.

Reverse Stock Split

On September 8, 2020, the Company effected a 1-for-5.1 reverse stock split of its common stock. The par value and the authorized shares of the common stock were not adjusted as a result of the reverse stock split. The reverse stock split resulted in an adjustment to the Series Preferred conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion. The unaudited condensed consolidated financial statements and accompanying notes give retroactive effect to the reverse stock split for all periods presented.

Liquidity and Capital Resources

From its inception through September 30, 2020, the Company has devoted substantially all its efforts to organizing and staffing, business planning, raising capital, researching, discovering and developing its pipeline in FXR and other drug targets, and general and administrative support for these operations and has funded its operations primarily with the net proceeds from the issuance of convertible preferred stock, common stock, and long-term debt. The Company has incurred net losses and negative cash flows from operations since inception and had an accumulated deficit of $109.9 million and $83.4 million as of September 30, 2020 and December 31, 2019, respectively. Management expects the Company will incur substantial operating losses for the foreseeable future in order to complete clinical trials and launch and commercialize any product candidates for which it receives regulatory approval. The Company will need to raise additional capital through a combination of equity offerings, debt financings, additional borrowings under the Company’s existing loan agreement, collaborations, and other similar arrangements. The COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets. The Company’s ability to raise additional capital may be adversely impacted by potential worsening of global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the pandemic. If the disruption persists and deepens, the Company could experience an inability to access additional capital. As of September 30, 2020, the Company had available cash, cash equivalents, and short-term investments of $109.2 million and working capital of $106.8 million to fund future operations. Management has prepared cash flow forecasts which indicate that, based on the Company’s current cash resources available and working capital, the Company will have sufficient resources to fund its operations for at least one year after the date the financial statements are issued.

Use of Estimates

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of the Company’s unaudited condensed consolidated financial statements requires it to make estimates and assumptions that impact the reported amounts of assets, liabilities, and expenses

6


Metacrine, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (continued)

 

and the disclosure of contingent assets and liabilities. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to accruals for research and development expenses and stock-based compensation. These estimates and assumptions are based on current facts, historical experience, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Fair Value Measurement

The following tables summarize the Company’s financial instruments measured at fair value on a recurring basis:

 

 

 

 

 

 

 

Fair Value Measurements At

Reporting Date Using

 

 

 

Total

 

 

Quoted

Prices in

Active

Markets

For

Identical

Assets

(Level 1)

 

 

Significant

Other

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

As of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

3,249

 

 

$

 

 

$

3,249

 

 

$

 

Corporate debt securities

 

 

4,707

 

 

 

 

 

 

4,707

 

 

 

 

Asset backed securities

 

 

3,002

 

 

 

 

 

 

3,002

 

 

 

 

Total assets measured at fair value

 

$

10,958

 

 

$

 

 

$

10,958

 

 

$

 

As of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

$

9,694

 

 

$

 

 

$

9,694

 

 

$

 

Corporate debt securities

 

 

24,781

 

 

 

 

 

 

24,781

 

 

 

 

Asset backed securities

 

 

5,508

 

 

 

 

 

 

5,508

 

 

 

 

Total assets measured at fair value

 

$

39,983

 

 

$

 

 

$

39,983

 

 

$

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock warrant liability

 

$

184

 

 

$

 

 

$

 

 

$

184

 

 

Upon completion of the Company’s IPO, the Series C convertible preferred stock warrant was automatically converted into a warrant to purchase 23,122 shares of common stock. The Company adjusted the carrying value of the Series C convertible preferred stock warrant to reflect its estimated fair value on the IPO date and will not be recognizing any fair value adjustments subsequent to its conversion to a common stock warrant.

 

The assumptions used in the Black-Scholes option pricing model to determine the fair value of the warrant liability were as follows:

 

 

 

September 15,

2020

(Conversion

Date)

 

 

December 31,

2019

 

Fair value of underlying preferred stock

 

$

13.00

 

 

$

9.79