UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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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:
(Exact Name of Registrant as Specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 |
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Accelerated filer |
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Non-accelerated filer |
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Small reporting company |
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Emerging growth company |
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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
As of July 27, 2020, the registrant had
Table of Contents
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
APELLIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except per share amounts)
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June 30, |
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December 31, |
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2020 |
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2019 |
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Assets |
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(Unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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— |
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Prepaid assets |
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Restricted cash |
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— |
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Other current assets |
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Total current assets |
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Non-current Assets: |
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Right-of-use assets |
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Property and equipment, net |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Current portion of right of use liabilities |
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Total current liabilities |
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Long-term liabilities: |
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Convertible senior notes |
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Development derivative liability |
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Operating lease liabilities |
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Total liabilities |
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Stockholders' equity: |
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Preferred stock, $ shares issued and outstanding at June 30, 2020 and December 31, 2019 |
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Common stock, $ at June 30, 2020 and December 31, 2019; issued and outstanding at June 30, 2020, and issued and outstanding at December 31, 2019 |
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Additional paid-in capital |
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Accumulated other comprehensive income/(loss) |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements
1
APELLIS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(Amounts in thousands, except per share amounts)
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For the Three Months Ended June 30, |
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For the Six Months Ended June 30, |
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2020 |
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2019 |
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2020 |
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2019 |
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Operating expenses: |
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Research and development |
$ |
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$ |
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$ |
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$ |
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General and administrative |
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Operating loss |
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( |
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( |
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( |
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( |
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Loss on extinguishment of debt |
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— |
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— |
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— |
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( |
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Gain/(loss) from remeasurement of development derivative liability |
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( |
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( |
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( |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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( |
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Other income/(expense), net |
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( |
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Net loss |
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( |
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( |
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( |
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( |
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Other comprehensive gain/(loss): |
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Unrealized gain on marketable securities |
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— |
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— |
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Foreign currency gain/(loss) |
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( |
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( |
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Total other comprehensive gain/(loss) |
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( |
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( |
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Comprehensive loss, net of tax |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per common share, basic and diluted |
$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted-average number of common shares used in net loss per common share, basic and diluted |
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See accompanying notes to unaudited condensed consolidated financial statements
2
Apellis Pharmaceuticals, Inc.
CONDENSED Consolidated Statements of CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(Amounts in thousands)
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Accumulated |
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Common Stock |
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Additional |
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Other |
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Total |
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Outstanding |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Income/(Loss) |
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Deficit |
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Equity |
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Balance at January 1, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock in follow-on offering, net of offering costs |
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— |
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— |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Unrealized gain on available-for-sale investments |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Foreign currency loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance at March 31, 2020 |
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( |
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Deferred issuance costs |
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— |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Unrealized loss on available-for-sale investments |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Recognition of debt discount on convertible notes |
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— |
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— |
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— |
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— |
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Purchase of capped call transactions and associated costs |
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— |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock to employee stock purchase plan |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Foreign currency gain |
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— |
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— |
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— |
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— |
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Balance at June 30, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements
3
Apellis Pharmaceuticals, Inc.
CONDENSED Consolidated Statements of CHANGES IN STOCKHOLDERS’ EQUITY
CoNTINUED
(Unaudited)
(Amounts in thousands)
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Accumulated |
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Common Stock |
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Additional |
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Other |
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Total |
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Outstanding |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance at January 1, 2019 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock in follow-on offering, net of offering costs |
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— |
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— |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Foreign currency gain |
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— |
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— |
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— |
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— |
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Balance at March 31, 2019 |
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( |
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( |
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Deferred issuance costs |
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— |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Foreign currency loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance at June 30, 2019 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements
4
Apellis Pharmaceuticals, Inc.
CONDENSED Consolidated Statements of Cash Flows
(Unaudited)
(Amounts in thousands)
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For the Six Months Ended June 30, |
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2020 |
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2019 |
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Operating Activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Share-based compensation expense |
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Loss on early extinguishment of debt |
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— |
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Loss from remeasurement of development derivative liability |
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Amortization of right-of-use assets |
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Depreciation expense |
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Amortization of debt discounts |
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— |
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Amortization of term loan facility discounts |
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— |
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Amortization of discounts for convertible notes, net of financing costs |
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— |
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Changes in operating assets and liabilities: |
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Prepaid assets |
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Other current assets |
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( |
) |
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( |
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Other assets |
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( |
) |
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( |
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Accounts payable |
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Accrued expenses |
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( |
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Other liabilities |
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— |
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Net cash used in operating activities |
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( |
) |
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( |
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Investing Activities |
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Purchase of property and equipment |
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( |
) |
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( |
) |
Purchase of available-for-sale securities |
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( |
) |
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— |
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Proceeds from maturity of available-for-sale securities |
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— |
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Net cash used in investing activities |
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( |
) |
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( |
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Financing Activities |
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Proceeds from issuance of common stock, net of issuance costs |
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Proceeds from development derivative liability |
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Payments for capped call transactions and associated costs |
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( |
) |
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— |
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Proceeds from issuance of convertible notes, net of issuance costs |
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— |
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Proceeds from exercise of stock options |
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Proceeds from issuance of common stock under employee share purchase plan |
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— |
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Repayment of term loan facility |
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— |
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( |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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( |
) |
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Net increase in cash, cash equivalents and restricted cash |
|
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( |
) |
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Cash, cash equivalents and restricted cash at beginning of period |
|
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Cash, cash equivalents and restricted cash at end of period |
|
$ |
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$ |
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Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets: |
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Cash and cash equivalents |
|
$ |
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$ |
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Restricted cash |
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|
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— |
|
Total cash, cash equivalents, and restricted cash |
|
$ |
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$ |
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|
Supplemental Disclosure of Financing Activities |
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Cash paid for Interest |
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$ |
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$ |
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|
See accompanying notes to unaudited condensed consolidated financial statements
5
APELLIS PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2020 and 2019
(unaudited)
(Amounts in thousands, except per share amounts)
1. Nature of Organization and Operations
Apellis Pharmaceuticals, Inc. (the “Company”) is a clinical-stage biopharmaceutical company focused on the development of novel therapeutic compounds to treat disease through the inhibition of the complement system, which is an integral component of the immune system, at the level of C3, the central protein in the complement cascade.
The Company was incorporated in September 2009 under the laws of the State of Delaware and has its principal office in Waltham, Massachusetts.
The Company’s operations since inception have been limited to organizing and staffing the Company, acquiring rights to product candidates, business planning, raising capital and developing its product candidates.
The Company is subject to risks common in the biotechnology industry including, but not limited to, raising additional capital, development by its competitors of new technological innovations, its ability to successfully complete preclinical and clinical development of product candidates and receive timely regulatory approval of products, market acceptance of the Company’s products, protection of proprietary technology, healthcare cost containment initiatives, and compliance with governmental regulations, including those of the U.S. Food and Drug Administration (“FDA”). Additionally, the Company is subject to risks arising from the Coronavirus Disease 2019 (COVID-19) pandemic, which could have adverse effects upon its business and operations, including on its ability to initiate, conduct and complete clinical trials.
Convertible Notes Offering
On May 12, 2020, the Company completed a private offering of $
The net proceeds from the sale of the 2020 Convertible Notes were approximately $
The 2020 Convertible Notes form a single series with, and have the same terms as, the Company’s $
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Capped Call Transactions
On May 6, 2020, concurrently with the pricing of the 2020 Convertible Notes, the Company entered into capped call transactions with
Follow-on Public Offerings
On January 13, 2020, the Company issued and sold
Liquidity and Financial Condition
The accompanying unaudited condensed consolidated financial statements have been prepared on the basis of the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of July 30, 2020, the date of issuance of these unaudited condensed consolidated financial statements, the Company believes that its cash and cash equivalents of $