10-Q
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 
June 30, 2019
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:
001-37539
 
Global Blood Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware​​​​​​​
 
27-4825712
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
171 Oyster Point Boulevard, Suite 300
South San Francisco,
CA
94080
(Address of principal executive offices)
(650)
741-7700
(Registrant’s telephone number, including area code)
 
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. (Check one):
Large accelerated filer
 
 
Accelerated filer
 
             
Non-accelerated filer
 
 
Smaller reporting company
 
             
 
 
Emerging growth company
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  
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.  
As of August 2, 2019, there were
60,018,500
shares of the registrant’s common stock, par value $0.001 per share, outstanding.
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 $0.001 per share
 
GBT
 
The NASDAQ Global Select Market
     
 
 
 
TABLE OF CONTENTS
 
 
Page
 
   
3
 
Item 1.
     
3
 
     
3
 
     
4
 
     
5
 
     
6
 
     
7
 
Item 2.
     
15
 
Item 3.
     
22
 
Item 4.
     
22
 
         
   
22
 
Item 1.
     
22
 
Item 1A.
     
23
 
Item 2.
     
60
 
Item 3.
     
60
 
Item 4.
     
60
 
Item 5.
     
60
 
Item 6.
     
60
 
         
   
62
 
 
 
Table of Contents
 
 
PART I. – FINANCIAL INFORMATION
Item 1.
Financial Statements
GLOBAL BLOOD THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
 
June 30, 2019
   
December 31, 2018
 
 
(Unaudited)
   
 
Assets
   
     
 
Current assets:
   
     
 
Cash and cash equivalents
  $
338,454
    $
275,357
 
Short-term marketable securities
   
320,098
     
202,177
 
Prepaid expenses and other current assets
   
8,207
     
8,246
 
                 
Total current assets
   
666,759
     
485,780
 
Property and equipment, net
   
12,345
     
14,981
 
Long-term marketable securities
   
73,176
     
114,281
 
Operating lease r
ight-of-use
assets
   
13,964
     
—  
 
Restricted cash
   
2,395
     
2,395
 
Other assets, noncurrent
   
193
     
206
 
                 
Total assets
  $
768,832
    $
617,643
 
                 
Liabilities and Stockholders’ Equity
   
     
 
Current liabilities:
   
     
 
Accounts payable
  $
6,755
    $
6,046
 
Accrued liabilities
   
23,369
     
16,792
 
Accrued compensation
   
8,241
     
10,036
 
Other liabilities, current
   
1,348
     
899
 
                 
Total current liabilities
   
39,713
     
33,773
 
Operating lease liabilities, noncurrent
   
24,048
     
—  
 
Other liabilities, noncurrent
   
881
     
11,071
 
                 
Total liabilities
   
64,642
     
44,844
 
Commitments and contingencies
 
 
 
 
 
 
 
 
Stockholders’ equity:
   
     
 
Preferred stock, $0.001 par value, 5,000,000 shares authorized as of June 30, 2019 (unaudited) and December 31, 2018;
no
shares issued and outstanding
   
  
     
—  
 
Common stock, $0.001 par value, 150,000,000 shares authorized as of June 30, 2019 (unaudited) and December 31, 2018, respectively; 59,906,199 and 55,640,299 shares issued and outstanding as of June 30, 2019 (unaudited) and December 31, 2018, respectively
   
60
     
56
 
Additional
paid-in
capital
   
1,281,333
     
1,044,941
 
Accumulated other comprehensive income (loss)
   
1,191
     
(48
)
Accumulated deficit
   
(578,394
)    
(472,150
)
                 
Total stockholders’ equity
   
704,190
     
572,799
 
                 
Total liabilities and stockholders’ equity
  $
768,832
    $
617,643
 
                 
See accompanying notes to unaudited condensed consolidated financial statements.
 
3
 
Table of Contents
 
 
GLOBAL BLOOD THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
(In thousands, except share and per share amounts)
                                 
 
Three Months Ended June 30,
   
Six Months Ended June 30,
 
 
2019
   
2018
   
2019
   
2018
 
Operating expenses:
   
     
     
     
 
Research and development
  $
36,010
    $
31,573
    $
70,476
    $
61,517
 
General and administrative
   
24,794
     
10,914
     
42,849
     
23,665
 
                                 
Total operating expenses
   
60,804
     
42,487
     
113,325
     
85,182
 
                                 
Loss from operations
   
(60,804
)    
(42,487
)    
(113,325
)    
(85,182
)
Other income (expense):
   
     
     
     
 
Interest income, net
   
3,546
     
2,115
     
7,196
     
3,287
 
Other income (expenses), net
   
(63
)    
4
     
(115
)    
(29
)
                                 
Total other income, net
   
3,483
     
2,119
     
7,081
     
3,258
 
                                 
Net loss
   
(57,321
)    
(40,368
)    
(106,244
)    
(81,924
)
Other comprehensive loss:
   
     
     
     
 
Net unrealized gain on marketable securities, net of tax
   
615
     
82
     
1,239
     
94
 
                                 
Comprehensive loss
  $
(56,706
)   $
(40,286
)   $
(105,005
)   $
(81,830
)
                                 
Basic and diluted net loss per common share
  $
(1.01
)   $
(0.78
)   $
(1.88
)   $
(1.65
)
                                 
Weighted-average number of shares used in computing basic and diluted net loss per common share
   
56,539,760
     
51,742,904
     
56,386,560
     
49,767,633
 
                                 
 
 
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
4
 
Table of Contents
 
GLOBAL BLOOD THERAPEUTICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share amounts)
                                                 
 
 
Common Stock
   
Additional
Paid-
In Capital
   
Accumulated
Other
Comprehensive
Loss
   
Accumulated
Deficit
   
Total
Stockholders’
Equity
   
 
 
 
 
 
 
 
Shares
   
Amount
   
Balance at December 31, 2018
   
55,640,299
    $
56
    $
1,044,941
    $
(48
)   $
(472,150
)   $
572,799
 
Issuance of common stock upon equity offerings, net of issuance costs
   
511,363
     
—  
     
21,246
     
—  
     
—  
     
21,246
 
Issuance of common stock upon exercise of stock options
   
52,288
     
—  
     
817
     
—  
     
—  
     
817
 
Issuance of common stock upon vesting of restricted share units, net of shares withheld for employee taxes
   
78,155
     
—  
     
(686
)    
—  
     
—  
     
(686
)
Issuance of common stock pursuant to ESPP purchases
   
30,745
     
—  
     
1,128
     
—  
     
—  
     
1,128
 
Vesting of restricted stock purchases
   
24,195
     
—  
     
80
     
—  
     
—  
     
80
 
Stock-based compensation expense
   
—  
     
—  
     
9,453
     
—  
     
—  
     
9,453
 
Net unrealized gain on marketable securities
   
—  
     
—  
     
—  
     
624
     
—  
     
624
 
Net loss
   
—  
     
—  
     
—  
     
—  
     
(48,923
)    
(48,923
)
                                                 
Balance at March 31, 2019
   
56,337,045
    $
56
    $
1,076,979
    $
576
    $
(521,073
)   $
556,538
 
Issuance of common stock upon equity offerings, net of issuance costs
   
3,375,527
     
3
     
192,294
     
—  
     
—  
     
192,297
 
Issuance of common stock upon exercise of stock options
   
123,513
     
1
     
2,331
     
—  
     
—  
     
2,332
 
Issuance of common stock upon vesting of restricted share units, net of shares withheld for employee taxes
   
47,258
     
—  
     
(1,297
)    
—  
     
—  
     
(1,297
)
Vesting of restricted stock purchases
   
22,856
     
—  
     
78
     
—  
     
—  
     
78
 
Stock-based compensation expense
   
—  
     
—  
     
10,948
     
—  
     
—  
     
10,948
 
Net unrealized gain on marketable securities
   
—  
     
—  
     
—  
     
615
     
—  
     
615
 
Net loss
   
—  
     
—  
     
—  
     
—  
     
(57,321
)    
(57,321
)
                                                 
Balance at June 30, 2019
   
59,906,199
    $
60
    $
1,281,333
    $
1,191
    $
(578,394
)   $
704,190
 
                                                 
                                 
 
 
Common Stock
   
Additional
Paid-
In Capital
   
Accumulated
Other
Comprehensive
Loss
   
Accumulated
Deficit
   
Total
Stockholders’
Equity
   
 
 
 
 
 
 
 
Shares
   
Amount
   
Balance at December 31, 2017
   
46,131,723
    $
46
    $
617,051
    $
(336
)   $
(297,957
)   $
318,804
 
Issuance of common stock upon equity offerings, net of issuance costs
   
4,994,736
     
5
     
255,062
     
—  
     
—  
     
255,067
 
Issuance of common stock upon exercise of stock options
   
259,150
     
1
     
2,168
     
—  
     
—  
     
2,169
 
Issuance of common stock upon vesting of restricted share units, net of shares withheld for employee taxes
   
143,400
     
—  
     
(5,404
)    
—  
     
—  
     
(5,404
)
Issuance of common stock pursuant to ESPP purchases
   
36,748
     
—  
     
784
     
—  
     
—  
     
784
 
Vesting of restricted stock purchases
   
71,246
     
—  
     
105
     
—  
     
—  
     
105
 
Stock-based compensation expense
   
—  
     
—  
     
7,784
     
—  
     
—  
     
7,784
 
Net unrealized gain on marketable securities
   
—  
     
—  
     
—  
     
11
     
—  
     
11
 
Net loss
   
—  
     
—  
     
—  
     
—  
     
(41,556
)    
(41,556
)
                                                 
Balance at March 31, 2018
   
51,637,003
    $
52
    $
877,550
    $
(325
)   $
(339,513
)   $
537,764
 
Offering cost related to the December 2017 follow-on 
offerings 
   
—  
     
—  
     
52
     
—  
     
—  
     
52
 
Issuance of common stock upon exercise of stock options
   
148,954
     
—  
     
1,118
     
—  
     
—  
     
1,118
 
Issuance of common stock upon vesting of restricted share units, net of shares withheld for employee taxes
   
10,123
     
—  
     
—  
     
—  
     
—  
     
—  
 
Vesting of restricted stock purchases
   
71,014
     
—  
     
104
     
—  
     
—  
     
104
 
Stock-based compensation expense
   
—  
     
—  
     
7,800
     
—  
     
—  
     
7,800
 
Net unrealized gain on marketable securities
   
—  
     
—  
     
—  
     
83
     
—  
     
83
 
Net loss
   
—  
     
—  
     
—  
     
—  
     
(40,368
)    
(40,368
)
                                                 
Balance at June 30, 2018
   
51,867,094
    $
52
    $
886,624
    $
(242
)   $
(379,881
)   $
506,553
 
                                                 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
5
Table of Contents
 
GLOBAL BLOOD THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
                 
 
Six Months Ended 
June 30,
 
 
2019
   
2018
 
CASH FLOWS FROM OPERATING ACTIVITIES:
   
     
 
Net loss
  $
(106,244
)   $
(81,924
)
Adjustments to reconcile net loss to net cash used in operating activities:
   
     
 
Depreciation and amortization
   
4,187
     
1,342
 
Amortization (accretion) of premium (discount) on marketable securities
   
(1,204
)    
107
 
Amortization of operating lease
right-of-use
assets
   
212
     
—  
 
Stock-based compensation
   
20,401
     
15,584
 
Changes in operating assets and liabilities:
   
     
 
Prepaid expenses and other assets
   
59
     
(2,419
)
Accounts payable
   
558
     
(3,717
)
Accrued liabilities
   
6,136
     
1,894
 
Accrued compensation
   
(1,795
)    
(2,339
)
Operating lease liabilities
   
(563
)    
—  
 
Other liabilities
   
  
     
572
 
                 
Net cash used in operating activities
   
(78,253
)    
(70,900
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
   
     
 
Purchase of property and equipment
   
(548
)    
(3,300
)
Purchase of marketable securities
   
(195,297
)    
(112,558
)
Maturities of marketable securities
   
120,923
     
76,778
 
                 
Net cash used in investing activities
   
(74,922
)    
(39,080
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
   
     
 
Proceeds from issuance of common stock in public offering, net of issuance costs
   
213,989
     
255,119
 
Proceeds from issuance of common stock in settlement of employee stock purchase plan and exercise of stock options
   
4,266
     
3,896
 
Tax paid related to net share settlement of equity awards
   
(1,983
)    
(5,404
)
                 
Net cash provided by financing activities
   
216,272
     
253,611
 
                 
Net increase in cash, cash equivalents and restricted cash
   
63,097
     
143,631
 
Cash, cash equivalents and restricted cash at beginning of period
   
277,752
     
199,378
 
                 
Cash, cash equivalents and restricted cash at end of period
  $
340,849
    $
343,009
 
                 
SUPPLEMENTAL DISCLOSURES OF
NON-CASH
INVESTING AND FINANCING INFORMATION:
   
     
 
Leasehold improvements paid for by landlord
  $
851
    $
—  
 
                 
Accrued purchase of property and equipment
  $
147
    $
(1,401
)
                 
Accrued offering costs
  $
446
    $
—  
 
                 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited condensed consolidated financial statements.
 
6
Table of Contents
 
GLOBAL BLOOD THERAPEUTICS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Basis of Presentation
Global Blood Therapeutics, Inc. (the “Company”, “we”, “us”, and “our”) was incorporated in Delaware in February 2011 and commenced operations in May 2012. We are a clinical-stage biopharmaceutical company determined to discover, develop and deliver innovative treatments that provide hope to underserved patient communities. Our primary activities have been establishing our facilities, recruiting personnel, preparing for commercialization, conducting development of our product candidates, including clinical trials, and raising capital. Our principal operations are based in South San Francisco, California, and we operate in one segment.
Follow-on
Offerings
In December 2018, we completed a
follow-on
offering and issued 3,409,090 shares of common stock at a price of $41.54 per share with proceeds of $141.1 million net of underwriting costs and commissions and offering expenses. In addition, in January 2019, we sold an additional 511,363 shares of our common stock directly to the underwriters when they exercised their over-allotment option at the price of $41.54 per share for proceeds of $21.2 million net of underwriting costs and commissions.
In June 2019, we completed a
follow-on
offering and issued 3,375,527 shares of common stock at a price of $57.12 per share with proceeds of $192.1 million net of underwriting costs and commissions, and estimated offering expenses. In addition, in July 2019, we sold an additional
100,000
shares of our common stock directly to the underwriters when they exercised their over-allotment option at the price of $
57.12
per share for proceeds of $
5.7
million net of underwriting costs and commissions.
Need for Additional Capital
In the course of our development activities, we have sustained operating losses and we expect such losses to continue over the next several years. Our ultimate success depends on the outcome of our research and development activities. Since inception through June 30, 2019, we have incurred cumulative net losses of $578.4 million. We expect to incur additional losses in the future to conduct product research and development and we recognize the need to raise additional capital to fully implement our business plan. We intend to raise such capital through the issuance of additional equity, and potentially through borrowings, and strategic alliances with partner companies. However, if such financing is not available at adequate levels, we will need to
re-evaluate
our operating plans. We believe that our existing cash and cash equivalents and marketable securities will be sufficient to fund our cash requirements for at least twelve months subsequent to the issuance of these financial statements.
2. Summary of Significant Accounting Policies
Basis of Preparation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2018 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as our annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of our financial information. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period or for any other future year.
The accompanying unaudited interim condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2018 included in our Annual Report on Form
10-K,
filed with the SEC on February 27, 2019.
Use of Estimates
The preparation of the accompanying consolidated financial statements in accordance with U.S. GAAP requires us 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 consolidated financial statements, and the reported amounts of costs and expenses during the reporting period. We base our estimates and assumptions on historical experience when available and on various factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results could differ from these estimates under different assumptions or conditions.
 
7
Table of Contents
 
Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.
Significant Accounting Policies
Except as noted below, there have been no material revisions in our significant accounting policies described in Note 2 to the consolidated financial statements included in our Annual Report on Form
10-K
for the year ended December 31, 2018.
Leases
Leases (Topic 842) Effective January 1, 2019
We determine if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether we have the right to control the identified asset.
Right-of-use
(“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. ROU assets are based on the measurement of the lease liability and also include any lease payments made prior to or on lease commencement and exclude lease incentives received and initial direct costs incurred, as applicable.
As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. We give consideration to our credit risk, term of the lease, total lease payments and adjust for the impacts of collateral, as necessary, when calculating our incremental borrowing rates. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise any such options. Lease cost for our operating leases is recognized on a straight-line basis over the lease term.
We have elected to not separate lease and
non-lease
components for any leases within its existing classes of assets and, as a result, account for any lease and
non-lease
components as a single lease component. We have also elected to not recognize any leases within its existing classes of assets with a term of 12 months or less.
Leases (Topic 840) Prior to the Adoption of Topic 842
We enter into lease agreements for our office and laboratory facilities. These leases are classified as operating leases. Rent expense is recognized on a straight-line basis over the noncancelable term of the lease and, accordingly, we record the difference between cash rent payments and the recognition of rent expense as a deferred rent liability, which is included within other liabilities on the consolidated balance sheet. Incentives granted under our facilities leases, including rent holiday and allowances to fund leasehold improvements, are deferred and are recognized as adjustments to rental expense on a straight-line basis over the noncancelable term of the lease.
Accounting Pronouncements Adopted
Leases (Topic 842)
In February 2016 the Financial Accounting Standards Board issued Accounting Standards Update
2016-02,
Leases (“Topic 842” or “ASU
2016-02”).
ASU
2016-02
amends a number of aspects of lease accounting, including requiring lessees to recognize almost all leases with a term greater than one year as a ROU asset and corresponding liability, measured at the present value of the lease payments. On January 1, 2019, we adopted Topic 842 using the modified retrospective approach as of the adoption date. Results for the three and six months ended June 30, 2019 are presented under Topic 842. No prior period amounts were adjusted and continue to be reported in accordance with previous lease guidance, Accounting Standards Codification Topic 840, Leases (“Topic 840”).
The new standard provides a number of optional practical expedients in transition. We elected the practical expedients to not reassess its prior conclusions about lease identification under the new standard, to not reassess lease classification, and to not reassess initial direct costs. We did not elect the practical expedient allowing the
use-of-hindsight
which would require us to reassess the lease term of its leases based on all facts and circumstances through the effective date and did not elect the practical expedient pertaining to land easements as this is not applicable to our current contract portfolio.
 
8
Table of Contents
 
The impact of our adoption of Topic 842 on the accompanying consolidated balance sheet as of January 1, 2019 was as follows (in thousands):
 
December 31, 2018
   
Adjustments Due to
our Adoption of Topic
842
   
January 1, 2019
 
Assets:
   
     
     
 
Operating lease ROU assets
  $
—  
    $
14,177
    $
14,177
 
Liabilities:
   
     
     
 
Operating lease liabilities, current as included in other liabilities, current
   
—  
     
1,176
     
1,176
 
Deferred rent, current as included in other liabilities, current
   
712
     
(712
)    
—  
 
Operating lease liabilities, noncurrent
   
—  
     
24,754
     
24,754
 
Deferred rent, noncurrent as included in other liabilities, noncurrent
   
11,041
     
(11,041
)    
—  
 
The adjustments due to our adoption of Topic 842 related to the recognition of ROU assets and lease liabilities for the existing operating leases. A cumulative-effect adjustment to beginning retained earnings was not required.
3. Fair Value Measurements
Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Our financial instruments consist of cash and cash equivalents, marketable securities, restricted cash, accounts payable and accrued liabilities. Cash and cash equivalents, marketable securities and restricted cash are reported at their respective fair values on our condensed consolidated balance sheets. The remaining financial instruments are reported on our condensed consolidated balance sheets at cost that approximate current fair values due to their relatively short maturities.
Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:
Level
 
 
1
– Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level
 
 
2
– Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level
 
 
3
– Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
The following table summarizes our financial assets measured at fair value on a recurring basis (in thousands):
 
June 30, 2019
 
 
Total
   
Level 1
   
Level 2
   
Level 3
 
Financial Assets:
   
     
     
     
 
Money market funds
  $
333,452
    $
333,452
    $
—  
    $
—  
 
Corporate debt securities
   
134,311
     
—  
     
134,311
     
—  
 
U.S. government agency securities
   
112,367
     
—  
     
112,367
     
—  
 
Certificates of deposits
   
6,758
     
—  
     
6,758
     
—  
 
U.S. government securities
   
144,838
     
—  
     
144,838
     
—  
 
                                 
Total financial assets
  $
731,726
    $
333,452
    $
398,274
    $
—  
 
                                 
 
9
 
Table of Contents
 
 
 
December 31, 2018
 
 
Total
   
Level 1
   
Level 2
   
Level 3
 
Financial Assets:
   
     
     
     
 
Money market funds
  $
275,234
    $
275,234
    $
—  
    $
 —  
 
Corporate debt securities
   
110,027
     
—  
     
110,027
     
—  
 
U.S. government agency securities
   
88,028
     
—  
     
88,028
     
—  
 
Certificates of deposits
   
6,675
     
—  
     
6,675
     
—  
 
U.S. government securities
   
111,728
     
—  
     
111,728
     
—  
 
                                 
Total financial assets
  $
591,692
    $
275,234
    $
316,458
    $
 —  
 
                                 
We estimate the fair values of our investments in corporate debt securities, government and government related securities and certificates of deposits by taking into consideration valuations obtained from third-party pricing services. The fair value of our marketable securities classified within Level 2 is based upon observable inputs that may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads,
two-sided
markets, benchmark securities, bids, offers and reference data including market research publications. At June 30, 2019 and December 31, 2018, the weighted average remaining contractual maturities of our Level 2 investments was less than one year and all of these investments are rated
A-1/P-1/F1
or A/A2, or higher by Moody’s and S&P. There were no transfers between Level 1 and Level 2 during the periods presented.
4.
Available-for-Sale
Securities
Estimated fair values of
available-for-sale
securities are generally based on prices obtained from commercial pricing services. The following table is a summary of
available-for-sale
securities recorded in cash and cash equivalents, restricted cash, or marketable securities in our condensed consolidated balance sheets (in thousands):
 
June 30, 2019
   
December 31, 2018
 
 
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
(Losses)
   
Estimated Fair
Value
   
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
(Losses)
   
Estimated Fair
Value
 
Financial Assets:
   
     
     
     
     
     
     
     
 
Money market funds
  $
333,452
    $
—  
    $
—  
    $
333,452
    $
275,234
    $
 —  
    $
—  
    $
275,234
 
Corporate debt securities
   
133,775
     
536
     
—  
     
134,311
     
110,053
     
69
     
(95
)    
110,027
 
U.S. government agency securities
   
112,169
     
200
     
(2
)    
112,367
     
88,042
     
40
     
(54
)    
88,028
 
Certificates of deposits
   
6,714
     
44
     
—  
     
6,758
     
6,681
     
1
     
(7
)    
6,675
 
U.S. government securities
   
144,425
     
413
     
—  
     
144,838
     
111,730
     
60
     
(62
)    
111,728
 
                                                                 
Total
  $
730,535
    $
1,193
    $
(2
)   $
731,726
    $
591,740
    $
170
    $
(218
)   $
591,692
 
                                                                 
The following table summarizes the classification of the
available-for-sale
securities on our condensed consolidated balance sheets (in thousands):
 
June 30, 2019
   
December 31, 2018
 
Cash and cash equivalents
  $
338,452
    $
275,234
 
Short-term marketable securities
   
320,098
     
202,177
 
Long-term marketable securities
   
73,176
     
114,281
 
                 
Total
  $
731,726
    $
591,692
 
                 
We do not intend to sell the investments that are in an unrealized loss position, and it is unlikely that we will be required to sell the investments before recovery of their amortized cost basis, which may be maturity. We have determined that the gross unrealized losses on our marketable securities were temporary in nature during the periods presented.
 
10
Table of Contents
 
5. Balance Sheet Components
Property and Equipment
Property and equipment consists of the following (in thousands):
                 
 
June 30, 2019
   
December 31, 2018
 
Laboratory equipment
  $
7,935
    $
7,363
 
Computer equipment
   
1,501
     
1,501
 
Leasehold improvements
   
13,785
     
13,785
 
Construction-in-progress
   
1,213
     
239
 
                 
Total property and equipment
   
24,434
     
22,888
 
Less: accumulated depreciation and
amortization
   
(12,089
)    
(7,907
)
                 
Property and equipment, net
  $
12,345
    $
14,981
 
                 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities
Accrued liabilities consist of the following (in thousands):
                 
 
June 30, 2019
   
December 31, 2018
 
Accrued clinical and manufacturing expenses
  $
18,602
    $
15,121
 
Accrued professional and consulting services
   
4,336
     
1,016
 
Other
   
431
     
655
 
                 
Total accrued liabilities
  $
23,369
    $
16,792
 
                 
 
 
 
 
 
 
 
 
 
 
Other liabilities, current and noncurrent
Other liabilities consist of the following (in thousands):
                 
 
June 30, 2019
   
December 31, 2018
 
Operating lease liabilities, current
  $
1,318
    $
—  
 
Restricted shares subject to repurchase, current
   
—  
     
157