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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 March 31, 2022

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 001-39538

 

GRAYBUG VISION, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

45-2120079

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

203 Redwood Shores Parkway, Suite 620

Redwood City, CA 94065

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (650487-2800

 

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

 

GRAY

 

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  

The number of shares of the Registrant’s common stock outstanding as of May 5, 2022 was 21,362,773.

 

 

 


 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements

 

 

 

Condensed Consolidated Balance Sheets (See Note 2)

4

 

 

Condensed Consolidated Statements of Operations (unaudited)

5

 

 

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

6

 

 

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)

7

 

 

Condensed Consolidated Statements of Cash Flows (unaudited)

8

 

 

Notes to the Condensed Consolidated Financial Statements (unaudited)

9

Item 2.

 

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

16

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

24

Item 4.

 

Controls and Procedures

24

 

 

 

 

 

 

PART II—OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

25

Item 1A.

 

Risk Factors

25

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

 

Defaults Upon Senior Securities

70

Item 4.

 

Mine Safety Disclosures

70

Item 5.

 

Other Information

70

Item 6.

 

Exhibits

71

SIGNATURES

72

 

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Graybug” and the “Company” refer to Graybug Vision, Inc. This report contains references to trademarks belonging to other entities, which are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

2


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements, other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” or the negative or plural of these words or similar expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

 

the potential of our technologies and our ability to execute on our corporate strategy;

 

our ability to fund our working capital needs;

 

our ability to develop and commercialize our product candidates;

 

our ability to use and expand our technologies to build a pipeline of product candidates;

 

our ability to secure a partnership for GB-102;

 

our ability to obtain and maintain regulatory approval of our product candidates;

 

the strength and breadth of our patent portfolio;

 

the potential for receipt of additional milestone payments;

 

our ability to obtain and adequately protect intellectual property rights for our product candidates;

 

our continued reliance on third parties for manufacturing our product candidates, conducting our clinical trials and certain research activities;

 

our ability to in-license, acquire or invest in complementary businesses, technologies, products or assets to further expand or complement our portfolio of product candidates;

 

expected timing of our clinical trials;

 

the timing and availability of results of our clinical trials and those of our collaborators; and

 

our ability to extend our operating capital.

These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in greater detail under the heading “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. You should not rely upon forward-looking statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, after the date of this report, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise.

We obtained industry, market and competitive position data in this report from our own internal estimates and research as well as from industry and general publications and research surveys and studies conducted by third parties. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information or estimates.

 

3


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

 

 

GRAYBUG VISION, INC.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

March 31,

2022

 

 

December 31,

2021

 

 

 

(unaudited)

 

 

(See Note 2)

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,360

 

 

$

13,364

 

Short-term investments

 

 

46,920

 

 

 

50,306

 

Prepaid expenses and other current assets

 

 

2,942

 

 

 

3,408

 

Total current assets

 

 

58,222

 

 

 

67,078

 

Property and equipment, net

 

 

1,859

 

 

 

1,981

 

Operating lease right-of-use asset

 

 

476

 

 

 

 

Prepaid expenses and other non-current assets

 

 

29

 

 

 

29

 

Total assets

 

$

60,586

 

 

$

69,088

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

541

 

 

$

527

 

Accrued research and development

 

 

1,014

 

 

 

304

 

Operating lease liability, current

 

 

389

 

 

 

 

Other current liabilities

 

 

2,284

 

 

 

3,226

 

Total current liabilities

 

 

4,228

 

 

 

4,057

 

Deferred rent, long term portion

 

 

 

 

 

8

 

Operating lease liability, net of current portion

 

 

102

 

 

 

 

Total liabilities

 

 

4,330

 

 

 

4,065

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

Common stock

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

235,767

 

 

 

234,225

 

Accumulated deficit

 

 

(179,337

)

 

 

(169,188

)

Accumulated other comprehensive loss

 

 

(176

)

 

 

(16

)

Total stockholders’ equity

 

 

56,256

 

 

 

65,023

 

Total liabilities and stockholders’ equity

 

$

60,586

 

 

$

69,088

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

4


GRAYBUG VISION, INC.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

$

6,057

 

 

$

6,448

 

General and administrative

 

 

4,127

 

 

 

5,040

 

Total operating expenses

 

 

10,184

 

 

 

11,488

 

Loss from operations

 

 

(10,184

)

 

 

(11,488

)

Interest income

 

 

35

 

 

 

39

 

Net loss

 

 

(10,149

)

 

 

(11,449

)

Net loss per common share—basic and diluted

 

$

(0.48

)

 

$

(0.54

)

Weighted-average number of shares outstanding used in

   computing net loss per common share—basic and diluted

 

 

21,357,773

 

 

 

21,020,378

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

5


 

GRAYBUG VISION, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Net loss

 

$

(10,149

)

 

$

(11,449

)

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

 

 

(160

)

 

 

4

 

Comprehensive loss

 

$

(10,309

)

 

$

(11,445

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

6


 

 

GRAYBUG VISION, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance—December 31, 2021

 

 

21,357,773

 

 

$

2

 

 

$

234,225

 

 

$

(169,188

)

 

$

(16

)

 

$

65,023

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,542

 

 

 

 

 

 

 

 

 

 

1,542

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,149

)

 

 

 

 

 

(10,149

)

Unrealized loss on available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(160

)

 

 

(160

)

Balance—March 31, 2022

 

 

21,357,773

 

 

$

2

 

 

$

235,767

 

 

$

(179,337

)

 

$

(176

)

 

$

56,256

 

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balance—December 31, 2020

 

 

20,979,265

 

 

$

2

 

 

$

228,155

 

 

$

(133,367

)

 

$

(4

)

 

$

94,786

 

Stock issued on exercise of stock options

 

 

76,679

 

 

 

 

 

 

92

 

 

 

 

 

 

 

 

 

92

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,129

 

 

 

 

 

 

 

 

 

1,129

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(11,449

)

 

 

 

 

 

(11,449

)

Unrealized gain on available-for-sale

   securities, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

Balance—March 31, 2021

 

 

21,055,944

 

 

$

2

 

 

$

229,376

 

 

$

(144,816

)

 

$

 

 

$

84,562

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

7


 

 

GRAYBUG VISION, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(10,149

)

 

$

(11,449

)

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

1,542

 

 

 

1,129

 

Depreciation

 

 

122

 

 

 

118

 

Noncash lease expense

 

 

91

 

 

 

 

Accretion of premium and discounts on short-term investments

 

 

(17

)

 

 

40

 

Acquired in-process research and development

 

 

2,194

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current and non-current assets

 

 

466

 

 

 

1,654

 

Accounts payable

 

 

14

 

 

 

(508

)

Accrued research and development

 

 

489

 

 

 

741

 

Operating lease liability

 

 

(92

)

 

 

 

Other current and non-current liabilities

 

 

(1,184

)

 

 

(989

)

Net cash used in operating activities

 

 

(6,524

)

 

 

(9,264

)

Investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 

 

 

(136

)

Purchases of investments

 

 

(10,757

)

 

 

(21,521

)

Maturity of investments

 

 

14,000

 

 

 

8,000

 

Acquisition of in-process research and development

 

 

(1,723

)

 

 

 

Net cash provided by (used in) investing activities

 

 

1,520

 

 

 

(13,657

)

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

 

 

92

 

Net cash provided by financing activities

 

 

 

 

 

92

 

Net decrease in cash and cash equivalents

 

 

(5,004

)

 

 

(22,829

)

Cash and cash equivalents at beginning of period

 

 

13,364

 

 

 

33,418

 

Cash and cash equivalents at end of period

 

$

8,360

 

 

$

10,589

 

Supplemental disclosure of noncash items:

 

 

 

 

 

 

 

 

Right-of-use asset obtained in exchange for operating lease liability

 

$

567

 

 

$

 

Acquired in-process research and development in accrued liabilities

 

$

471

 

 

$

 

Property and equipment purchases included in accounts payable

 

$

115

 

 

$

87

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

8


 

 

GRAYBUG VISION, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization

Graybug Vision, Inc., the Company or Graybug, is a clinical-stage biopharmaceutical company developing medicines for the treatment of diseases of the retina and optic nerve. The Company presently devotes substantially all of its resources to conducting research and development and raising capital. The Company was founded in May 2011 and maintains facilities in Redwood City, California and Baltimore, Maryland.

The Company is subject to risks common to clinical stage companies in the biopharmaceutical industry, including dependence on the clinical success of its product candidates, ability to obtain regulatory approvals of its product candidates, compliance with regulatory requirements, the need for substantial additional financing and protection of its proprietary technology.

Going Concern Considerations

The Company incurred losses from operations and had negative cash flows from operating activities for the three months ended March 31, 2022, and 2021, and the Company’s accumulated deficit at March 31, 2022 was $179.3 million. The Company’s current operating plan indicates it will continue to incur losses from operations and generate negative cash flows from operating activities, given ongoing expenditures related to extensive research and development and the Company’s lack of revenue-generating activities at this point in the Company’s life cycle. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

In March 2021, the Company decided not to proceed with the significant investment required to initiate two Phase 3 clinical trials for GB-102 in late 2021. As a result, management continues to believe that the Company’s current cash, cash equivalents and short-term investments are adequate to meet its cash needs for at least 12 months from the issuance date of this Quarterly Report on Form 10-Q. The Company will seek to raise additional funds in order to further advance its research and development programs, operate its business, secure research and development collaborations, and meet its obligations as they come due. The Company is pursuing financing alternatives, similar to what the Company has previously executed, which include debt and equity financing. Such sources of capital may not, however, be available to the Company in the necessary time frame, in the amounts that the Company requires, on terms that are acceptable to the Company, or at all. If the Company is unable to raise the necessary funds when needed or reduce spending on currently planned activities, it may not be able to continue the development of its products or the Company could be required to delay, scale back, or eliminate some or all of its research and development programs and other operations, which may materially harm its business, financial position and results of operations.

COVID-19 Pandemic

The impact of the worldwide spread of a novel strain of coronavirus (“COVID-19”) has been unprecedented and unpredictable, including the emergence of new variants of the coronavirus, such as the Delta and Omicron variants, and resurgences in number and rates of infections, but based on the Company’s current assessment, the Company does not expect any material impact on its long-term strategic plans, operations, or its liquidity due to the worldwide spread of COVID-19. However, the Company is continuing to assess the effect on its operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus and new variants thereof throughout the world and its assessment of the impact of COVID-19 may change.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission, or SEC, and, therefore, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been omitted.

In the opinion of management, the information reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for the full year. The condensed balance sheet at December 31, 2021 has been derived from the audited financial statements at that date, but does not include all information and footnotes required by GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 11, 2022.

9


 

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, RainBio, Inc. (RainBio), which was acquired in March 2022 (see Note 5). All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates  

The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting periods. Actual results could differ from those estimates. Significant items subject to estimates include estimates related to accrued research and development expenses, contingent milestone payments, other long-lived assets, stock-based compensation, incremental borrowing rates for leases and the valuation of deferred tax assets. The Company bases its estimates using historical experience, Company forecasts and future plans, current economic conditions, and information from third-party professionals that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities and recorded amounts of expenses that are not readily apparent from other sources, and adjusts those estimates and assumptions when facts and circumstances dictate.

The Company’s results can also be affected by economic, political, legislative, regulatory and legal actions. Economic conditions, such as recessionary trends, inflation, interest, changes in regulatory laws and monetary exchange rates, and government fiscal policies, can have a significant effect on operations. While the Company maintains reserves for anticipated liabilities, the Company could be adversely affected by civil, criminal, regulatory or administrative actions, claims, or related proceedings.

Leases

The Company adopted Accounting Standards Codification (ASC) Topic 842, Leases (ASC 842) on January 1, 2022, as discussed below in the section titled Recently Adopted Accounting Pronouncements. Under ASC 842, the Company determines if an arrangement is or contains a lease at contract inception.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized based on the present value of lease payments over the lease term at the commencement date of the lease. Right-of-use assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less any lease incentive received. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate reflects the rate of interest that a lessee would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease expense for an operating lease is recognized on a straight-line basis over the lease term.

The Company elected the practical expedient to not separate lease and non-lease components for all classes of assets. Additionally, the Company has elected an accounting policy to not recognize short-term leases, which have a lease term of twelve months or less, on the condensed consolidated balance sheet. Variable lease payments are primarily related to property taxes, insurance and common area maintenance, and are recognized as lease cost when incurred.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842), as amended, with guidance regarding the accounting for and disclosure of leases. The update requires lessees to recognize on the balance sheet the liabilities related to all leases, including operating leases, with a term greater than 12 months. This update also requires lessees and lessors to disclose key information about their leasing transactions. As an emerging growth company, this standard is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. The Company adopted this standard on January 1, 2022, using the modified retrospective method by applying the new standard to all leases existing as of the effective date and not restating comparative periods. The Company elected the “package of practical expedients”, which permits the Company to not reassess under this standard its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company elected the short-term lease recognition exemption for all leases that qualify. The impact of adoption and additional disclosures required by the standard have been included in “Summary of Significant Accounting Policies – Leases” above and in Note 5. As a result of the adoption of the new lease accounting guidance, the Company recognized, on January 1, 2022, operating lease right-of-use asset of $0.6 million and operating lease liability of $0.6 million in the unaudited condensed consolidated balance sheet. Prior period amounts before January 1, 2022 have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under previous lease guidance, ASC Topic 840, Leases (ASC 840).

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions and amends certain requirements in the existing income tax guidance to ease accounting

10


 

requirements. As an emerging growth company, this standard is effective for the Company for fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, and must be applied on a retrospective basis. The Company adopted ASU 2019-12 on January 1, 2022, and the adoption did not have a material impact on its condensed consolidated financial statements.

3. Fair Value Measurements

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following three levels:

 

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2: Inputs (other than quoted prices included in Level 1) that are either directly or indirectly observable for the asset or liability. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

 

 

 

March 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,911

 

 

$

 

 

$

 

 

$

6,911

 

Commercial paper

 

 

 

 

 

998

 

 

 

 

 

 

998

 

Total cash equivalents

 

 

6,911

 

 

 

998

 

 

 

 

 

 

7,909

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

 

 

 

2,111

 

 

 

 

 

 

2,111

 

Commercial paper

 

 

 

 

 

33,869

 

 

 

 

 

 

33,869

 

U.S. Treasury notes

 

 

 

 

 

10,940

 

 

 

 

 

 

10,940

 

Total short-term investments

 

 

 

 

 

46,920

 

 

 

 

 

 

46,920

 

Total assets measured at fair value

 

$

6,911

 

 

$

47,918

 

 

$

 

 

$

54,829

 

 

 

 

December 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

8,920

 

 

$

 

 

$

 

 

$

8,920

 

Corporate debt securities

 

 

 

 

 

1,480

 

 

 

 

 

 

1,480

 

Commercial paper

 

 

 

 

 

2,749

 

 

 

 

 

 

2,749

 

Total cash equivalents

 

 

8,920

 

 

 

4,229

 

 

 

 

 

 

13,149

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

 

 

 

1,117

 

 

 

 

 

 

1,117

 

Commercial paper

 

 

 

 

 

41,954

 

 

 

 

 

 

41,954

 

U.S. Treasury notes

 

 

 

 

 

7,235

 

 

 

 

 

 

7,235

 

Total short-term investments

 

 

 

 

 

50,306

 

 

 

 

 

 

50,306

 

Total assets measured at fair value

 

$

8,920

 

 

$

54,535

 

 

$

 

 

$

63,455

 

 

Money market funds are highly liquid investments which are actively traded. The pricing information on the Company’s money market funds are based on quoted prices in active markets for identical securities. This approach results in the classification of these securities as Level 1 of the fair value hierarchy.

The fair value of investments is determined from market pricing and other observable market inputs for similar securities obtained from various third-party data providers. The pricing services utilize industry-standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair

11


 

value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities; issuer credit spreads; benchmark securities; prepayment/default projections based on historical data; and other observable inputs. This approach results in the classification of these securities as Level 2 of the fair value hierarchy.

There were no transfers between Levels 1, 2 or 3 for the periods presented.

 

The following tables present information as to cost, unrealized gains and losses and fair value determination of the Company’s financial assets measured at fair value on a recurring basis (in thousands):

 

 

 

March 31, 2022

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Aggregate

Fair Value

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,911

 

 

$

 

 

$

 

 

$

6,911

 

Commercial paper

 

 

998

 

 

 

 

 

 

 

 

 

 

 

998

 

Total cash equivalents

 

 

7,909

 

 

 

 

 

 

 

 

 

7,909

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

2,125

 

 

 

 

 

 

(14

)

 

 

2,111

 

Commercial paper

 

 

33,970

 

 

 

 

 

 

(101

)

 

 

33,869

 

U.S. Treasury notes

 

 

11,001

 

 

 

 

 

 

(61

)

 

 

10,940

 

Total short-term investments

 

 

47,096

 

 

 

 

 

 

(176

)

 

 

46,920

 

Total assets measured at fair value

 

$

55,005

 

 

$

 

 

$

(176

)

 

$

54,829

 

 

 

 

December 31, 2021

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Aggregate

Fair Value

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

8,920

 

 

$

 

 

$

 

 

$

8,920

 

Corporate debt securities

 

 

1,480

 

 

 

 

 

 

 

 

 

1,480

 

Commercial paper

 

 

2,749

 

 

 

 

 

 

 

 

 

2,749

 

Total cash equivalents

 

 

13,149

 

 

 

 

 

 

 

 

 

13,149

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

1,117

 

 

 

 

 

 

(1

)

 

 

1,116

 

Commercial paper

 

 

41,956

 

 

 

6

 

 

 

(8

)

 

 

41,954

 

U.S. Treasury notes

 

 

7,249

 

 

 

 

 

 

(13

)

 

 

7,236

 

Total short-term investments

 

 

50,322

 

 

 

6

 

 

 

(22

)

 

 

50,306

 

Total assets measured at fair value

 

$

63,471

 

 

$

6

 

 

$

(22

)

 

$

63,455

 

 

As of March 31, 2022 and December 31, 2021, the contractual maturities of all available-for-sale investments were less than 12 months. The Company periodically reviews the available-for-sale investments for other-than-temporary impairment loss. All investments with unrealized losses have been in a loss position for less than 12 months. As a result, the Company did not recognize any other-than-temporary impairment losses as of March 31, 2022 and December 31, 2021.

4. Balance Sheet Components

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

 

 

 

March 31,

2022

 

 

December 31,

2021

 

Salaries and benefits