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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, 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: 001-39376

 

Poseida Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-2846548

(State or Other Jurisdiction of

Incorporation or Organization)

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

9390 Towne Centre Drive, Suite 200, San Diego, California

92121

(Address of Principal Executive Offices)

(Zip Code)

(858) 779-3100

(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

Common Stock, par value $0.0001 per share

PSTX

Nasdaq Global Select 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, 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

 

 

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

As of August 8, 2022, the registrant had 85,775,587 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

 

POSEIDA THERAPEUTICS, INC.

Index

 

PART I. FINANCIAL INFORMATION

 

Page

 

 

 

Item 1. Financial Statements (Unaudited)

 

4

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

 

4

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021

 

5

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021

 

6

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021

 

7

Notes to Condensed Consolidated Financial Statements

 

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

34

Item 4. Controls and Procedures

 

34

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

Item 1. Legal Proceedings

 

35

Item 1A. Risk Factors

 

35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

83

Item 3. Defaults Upon Senior Securities

 

83

Item 4. Mine Safety Disclosures

 

83

Item 5. Other Information

 

83

Item 6. Exhibits

 

84

Signatures

 

85

 

1


 

 

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 results of operations or financial condition, business strategy, plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

 

our expectations regarding the timing, scope and results of our development activities, including our ongoing and planned clinical trials;

 

the timing of and plans for regulatory filings;

 

our plans to obtain and maintain regulatory approvals of our product candidates in any of the indications for which we plan to develop them, and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;

 

the potential benefits of our product candidates and technologies;

 

our expectations regarding the use of our platform technologies to generate novel product candidates;

 

the market opportunities for our product candidates and our ability to maximize those opportunities;

 

our business strategies and goals;

 

estimates of our expenses, capital requirements, any future revenue, and need for additional financing;

 

our expectations regarding manufacturing capabilities and plans;

 

the performance of our third-party suppliers and manufacturers;

 

our ability to attract and/or retain new and existing collaborators with development, regulatory, manufacturing and commercialization expertise and our expectations regarding the potential benefits to be derived from such collaborations;

 

our expectations regarding our ability to obtain and maintain intellectual property protection for our platform technologies and product candidates and our ability to operate our business without infringing on the intellectual property rights of others;

 

our expectations regarding developments and projections relating to our competitors, competing therapies that are or become available, and our industry;

 

our expectations regarding the impact of the COVID-19 pandemic and the Russia-Ukraine conflict on our business and operations, anticipated timelines, our industry and the economy;

 

future changes in or impact of law and regulations in the United States and foreign countries; and

 

the sufficiency of our existing cash, cash equivalents and short-term investments to fund our operations.

We have based these forward-looking statements on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short- and long-term business operations and objectives and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, advancements, discoveries, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the

2


 

forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms “Poseida”, “the Company,” “we,” “our” and “us” refer to Poseida Therapeutics, Inc. and its subsidiaries.

We regularly make material business and financial information available to our investors using our investor relations website (https://investors.poseida.com). We therefore encourage investors and others interested in Poseida to review the information that we make available on our website, in addition to following our filings with the Securities and Exchange Commission, or the SEC, press releases and conference calls.

3


 

PART I.  FINANCIAL INFORMATION

Item 1.Financial Statements  

 

POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

62,963

 

 

$

206,325

 

Short-term investments

 

 

79,594

 

 

 

 

Accounts receivable

 

 

232

 

 

 

 

Prepaid expenses and other current assets

 

 

5,330

 

 

 

7,548

 

Total current assets

 

 

148,119

 

 

 

213,873

 

Property and equipment, net

 

 

22,756

 

 

 

22,050

 

Operating lease right-of-use assets

 

 

27,981

 

 

 

26,177

 

Intangible assets

 

 

1,320

 

 

 

1,320

 

Goodwill

 

 

4,228

 

 

 

4,228

 

Other long-term assets

 

 

1,051

 

 

 

1,661

 

Total assets

 

$

205,455

 

 

$

269,309

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,661

 

 

$

8,961

 

Accrued expenses and other liabilities

 

 

28,699

 

 

 

23,540

 

Operating lease liabilities, current

 

 

6,686

 

 

 

6,337

 

Deferred revenue, current

 

 

1,047

 

 

 

4,497

 

Total current liabilities

 

 

40,093

 

 

 

43,335

 

Operating lease liabilities, non-current

 

 

26,803

 

 

 

25,504

 

Term debt

 

 

58,065

 

 

 

29,357

 

Deferred CIRM grant liability

 

 

3,992

 

 

 

3,992

 

Deferred revenue, noncurrent

 

 

8,811

 

 

 

9,265

 

Deferred tax liability

 

 

55

 

 

 

55

 

Other long-term liabilities

 

 

1,836

 

 

 

1,590

 

Total liabilities

 

 

139,655

 

 

 

113,098

 

Commitments and Contingencies (Note 11)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value: 250,000,000 shares authorized at June 30, 2022 and December 31, 2021; 62,728,726 and 62,523,596 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

6

 

 

 

6

 

Additional paid-in capital

 

 

573,878

 

 

 

563,064

 

Accumulated other comprehensive loss

 

 

(132

)

 

 

 

Accumulated deficit

 

 

(507,952

)

 

 

(406,859

)

Total stockholders’ equity

 

 

65,800

 

 

 

156,211

 

Total liabilities and stockholders’ equity

 

$

205,455

 

 

$

269,309

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4


 

 

POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration revenue

 

$

2,700

 

 

$

 

 

$

4,135

 

 

$

 

Total revenue

 

 

2,700

 

 

 

 

 

 

4,135

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

35,008

 

 

 

36,008

 

 

 

83,858

 

 

 

65,103

 

General and administrative

 

 

9,237

 

 

 

8,871

 

 

 

18,782

 

 

 

17,240

 

Total operating expenses

 

 

44,245

 

 

 

44,879

 

 

 

102,640

 

 

 

82,343

 

Loss from operations

 

 

(41,545

)

 

 

(44,879

)

 

 

(98,505

)

 

 

(82,343

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,543

)

 

 

(843

)

 

 

(2,620

)

 

 

(1,681

)

Other income, net

 

 

52

 

 

 

17

 

 

 

32

 

 

 

5

 

Net loss before income tax

 

 

(43,036

)

 

 

(45,705

)

 

 

(101,093

)

 

 

(84,019

)

Income tax expense

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(43,036

)

 

$

(45,705

)

 

$

(101,093

)

 

$

(84,019

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on short-term investments

 

 

(132

)

 

 

(14

)

 

 

(132

)

 

 

(4

)

Comprehensive loss

 

$

(43,168

)

 

$

(45,719

)

 

$

(101,225

)

 

$

(84,023

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.69

)

 

$

(0.74

)

 

$

(1.61

)

 

$

(1.35

)

Weighted-average number of shares outstanding, basic and diluted

 

 

62,713,363

 

 

 

62,150,961

 

 

 

62,635,074

 

 

 

62,066,498

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

 

POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at January 1, 2022

 

 

 

62,523,596

 

 

$

6

 

 

$

563,064

 

 

$

 

 

$

(406,859

)

 

$

156,211

 

Issuance of common stock under employee stock compensation plans

 

 

 

181,130

 

 

 

 

 

 

681

 

 

 

 

 

 

 

 

 

681

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

4,867

 

 

 

 

 

 

 

 

 

4,867

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(58,057

)

 

 

(58,057

)

Balance at March 31, 2022

 

 

 

62,704,726

 

 

$

6

 

 

$

568,612

 

 

$

 

 

$

(464,916

)

 

$

103,702

 

Issuance of common stock under employee stock compensation plans

 

 

 

24,000

 

 

 

 

 

 

32

 

 

 

 

 

 

 

 

 

32

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

5,234

 

 

 

 

 

 

 

 

 

5,234

 

Unrealized loss on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

(132

)

 

 

 

 

 

(132

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(43,036

)

 

 

(43,036

)

Balance at June 30, 2022

 

 

 

 

 

 

 

62,728,726

 

 

$

6

 

 

$

573,878

 

 

$

(132

)

 

$

(507,952

)

 

$

65,800

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance at January 1, 2021

 

 

 

 

 

 

 

61,860,897

 

 

$

6

 

 

$

543,842

 

 

$

5

 

 

$

(281,885

)

 

$

261,968

 

Issuance of common stock under employee stock compensation plans

 

 

 

265,839

 

 

 

 

 

 

360

 

 

 

 

 

 

 

 

 

360

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

3,462

 

 

 

 

 

 

 

 

 

3,462

 

Unrealized gain on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

10

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,314

)

 

 

(38,314

)

Balance at March 31, 2021

 

 

 

62,126,736

 

 

$

6

 

 

$

547,664

 

 

$

15

 

 

$

(320,199

)

 

$

227,486

 

Issuance of common stock under employee stock compensation plans

 

 

 

39,431

 

 

 

 

 

 

67

 

 

 

 

 

 

 

 

 

67

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

4,742

 

 

 

 

 

 

 

 

 

4,742

 

Unrealized loss on available-for-sale investments

 

 

 

 

 

 

 

 

 

 

 

 

(14

)

 

 

 

 

 

(14

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45,705

)

 

 

(45,705

)

Balance at June 30, 2021

 

 

 

 

 

 

 

62,166,167

 

 

$

6

 

 

$

552,473

 

 

$

1

 

 

$

(365,904

)

 

$

186,576

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6


 

 

POSEIDA THERAPEUTICS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Operating Activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(101,093

)

 

$

(84,019

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

2,467

 

 

 

2,200

 

Deferred revenue

 

 

(3,903

)

 

 

 

Non-cash loss on contract termination

 

 

5,687

 

 

 

 

Loss on disposal of property and equipment

 

 

205

 

 

 

5

 

Stock-based compensation

 

 

10,101

 

 

 

8,204

 

Accretion of discount on issued term debt

 

 

405

 

 

 

332

 

Accretion of investment discount, net

 

 

(97

)

 

 

114

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(232

)

 

 

 

Prepaid expenses and other current assets

 

 

1,017

 

 

 

1,733

 

Operating lease right-of-use assets

 

 

2,262

 

 

 

1,817

 

Other long-term assets

 

 

610

 

 

 

(208

)

Accounts payable

 

 

(5,859

)

 

 

3,727

 

Accrued expenses and other liabilities

 

 

(205

)

 

 

(2,694

)

Operating lease liabilities

 

 

(2,418

)

 

 

(1,355

)

Net cash used in operating activities

 

 

(91,053

)

 

 

(70,144

)

Investing Activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(1,961

)

 

 

(2,056

)

Purchases of short-term investments

 

 

(79,611

)

 

 

 

Proceeds from maturities of short-term investments

 

 

 

 

 

187,500

 

Net cash provided by (used in) investing activities

 

 

(81,572

)

 

 

185,444

 

Financing Activities:

 

 

 

 

 

 

 

 

Net proceeds from issuance of common stock under employee stock compensation plans

 

 

713

 

 

 

427

 

Payment of debt issuance costs

 

 

(1,450

)

 

 

 

Proceeds from term debt

 

 

30,000

 

 

 

 

Net cash provided by financing activities

 

 

29,263

 

 

 

427

 

Net increase (decrease) in cash and cash equivalents

 

 

(143,362

)

 

 

115,727

 

Cash and cash equivalents at beginning of period

 

 

206,325

 

 

 

83,966

 

Cash and cash equivalents at end of period

 

$

62,963

 

 

$

199,693

 

 

 

 

 

 

 

 

 

 

Non-cash operating, investing and financing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment in accounts payable and accrued liabilities

 

$

1,429

 

 

$

109

 

 

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

 

 

Interest paid

 

$

1,996

 

 

$

1,356

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7


 

 

Note 1. Nature of Business and Basis of Presentation

Nature of Operations

Poseida Therapeutics, Inc. (the “Company” or “Poseida”) is a clinical-stage biopharmaceutical company dedicated to utilizing its proprietary genetic engineering platform technologies to create next generation cell and gene therapeutics with the capacity to cure. The Company has discovered and is developing a broad portfolio of product candidates in a variety of indications based on its core proprietary platforms, including the Company’s non-viral piggyBac DNA Delivery System, Cas-CLOVER Site-specific Gene Editing System and nanoparticle- and AAV-based gene delivery technologies.

The Company is subject to risks and uncertainties common to development-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s therapeutic development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales.

Liquidity and Capital Resources

The Company has experienced net losses and negative cash flows from operations since its inception and has relied on its ability to fund its operations primarily through equity and debt financings and collaborations. For the six months ended June 30, 2022, the Company incurred a net loss of $101.1 million and negative cash flows from operations of $91.1 million. The Company expects to continue to incur net losses and negative cash flows from operations for at least the next several years. As of June 30, 2022, the Company had an accumulated deficit of $508.0 million.

In July 2022, the Company entered into a collaboration and license agreement (the “Roche Collaboration Agreement”) with F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc. (collectively, “Roche”), pursuant to which, among other things, the Company will grant to Roche (i) an exclusive, worldwide license under certain Company intellectual property to develop, manufacture and commercialize allogeneic CAR-T cell therapy products from each of the Company’s existing P-BCMA-ALLO1 and P-CD19CD20-ALLO1 programs, and (ii) an exclusive option to acquire an exclusive, worldwide license under certain Company intellectual property to develop, manufacture and commercialize allogenic CAR-T cell therapy products from each of the Company’s existing P-BCMACD19-ALLO1 program and P-CD70-ALLO1 programs. Under the Roche Collaboration Agreement, subject to regulatory clearance, Roche is obligated to make an upfront payment to the Company of $110.0 million and the Company could also receive up to $110.0 million in near-term fees and milestone and other payments, and all of which has not yet been received.

Additionally, on August 8, 2022, the Company completed the sale of an aggregate of 23,000,000 shares of its common stock in an underwritten public offering, at a price of $3.50 per share, including 3,000,000 shares sold pursuant to the full exercise of the underwriters' option to purchase additional shares. The net proceeds to the Company from the offering were approximately $75.3 million after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

The Company expects that its cash, cash equivalents and short-term investments as of June 30, 2022 of $142.6 million, in combination with the upfront payment of $110.0 million to be received pursuant to the Roche Collaboration Agreement and the net proceeds from the underwritten public offering of approximately $75.3 million, will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these condensed consolidated financial statements. The combination of the upfront payment from Roche and the underwritten public offering have alleviated the previously disclosed substantial doubt about the Company ability to continue as a going concern. In the long term, the Company will need additional financing to support its continuing operations and pursue its business strategy. Until such time as the Company can generate significant revenue from product sales, if ever, it expects to finance its operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. The Company may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on the Company’s financial condition and its ability to pursue its business strategy. The Company will need to generate significant revenue to achieve profitability, and it may never do so.

Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements reflect the Company’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles in the United States of America (“GAAP”), for interim

8


 

financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. The accompanying condensed consolidated financial statements include the accounts of Poseida Therapeutics, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated. These unaudited condensed consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to fairly state the financial position and the results of its operations and cash flows for interim periods presented. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (“SEC”) on March 10, 2022 from which the Company derived its condensed consolidated balance sheet as of December 31, 2021.

Risk and Uncertainties

In March 2020, the World Health Organization made the assessment that a novel strain of coronavirus, SARS-CoV-2, a novel strain of coronavirus, commonly referred to as COVID-19 had become a global pandemic. The impact of this pandemic has been and may continue to be extensive in many aspects of society, which has resulted in and may continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

Impacts to the Company’s business, some of which the Company has experienced to date, include, but are not limited to, temporary closures of its facilities or those of its vendors, disruptions or restrictions on its employees’ ability to travel, disruptions to or delays in ongoing laboratory experiments, preclinical studies, clinical trials, third-party manufacturing supply and other operations, the diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, interruptions or delays in the operations of the U.S. Food and Drug Administration (“FDA”) or other regulatory authorities, and the Company’s ability to raise capital and conduct business development activities.

Russia’s invasion of Ukraine and the retaliatory measures that have been taken, or could be taken in the future, by the United States, NATO, and other countries have created global security concerns that could result in a regional conflict and otherwise have a lasting impact on regional and global economies, any or all of which could disrupt the Company’s supply chain and adversely affect its ability to conduct ongoing and future clinical trials of the Company’s product candidates. The extent to which the ongoing conflict ultimately impacts the Company’s business is highly uncertain and cannot be predicted with confidence at this time.

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, which include, but are not limited to, estimates related to revenue, accrued expenses, research and development expenses, stock-based compensation expense and deferred tax valuation allowances. The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

Fair Value Measurements

Certain financial instruments are required to be recorded at fair value. Other financial instruments, like cash are recorded at cost, which approximates fair value. Cash equivalents and short-term investments are comprised of available-for-sale securities, which are carried at fair value. Additionally, carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of those instruments. The carrying value of the Company’s term debt approximates its fair value due to its variable interest rate, which approximates a market interest rate.

Concentration of Business Risk

The Company operates in one reportable business segment and has one customer. The Company relies, and expects to continue to rely, on a small number of vendors to manufacture supplies and materials for its development programs. These programs could be adversely affected by a significant interruption in these manufacturing services.

Leases

The Company accounts for leases in accordance with Accounting Standards Codification Topic 842, Leases, (“ASC 842”). The Company determines if an arrangement is a lease at contract inception. A lease exists when a contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The definition of a lease embodies

9


 

two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property, plant, and equipment), and (2) the Company has the right to control the use of the identified asset.

Operating leases where the Company is the lessee are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities, current and operating lease liabilities, non-current on its condensed consolidated balance sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date.

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. The rates implicit in the Company’s leases are not known, therefore, the incremental borrowing rate is used based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

The lease term for all of the Company’s leases includes the noncancelable period of the lease. Where the Company’s lease term is impacted by options to extend or terminate the lease, when it is reasonably certain that it will exercise such option, then the lease payments are included in the measurement of the lease asset or liability.

The Company has elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less. The Company recognizes the lease payments associated with its short-term leases as an expense on a straight-line basis over the lease term. There are no variable lease payments associated with these leases. Additionally, the Company has elected to account for the lease and non-lease components together as a single lease component for its real estate asset class.

Revenue Recognition

The Company’s revenues to date have been generated primarily through collaboration and license agreements. The Company’s collaboration and license agreements may contain multiple elements including intellectual property licenses and research, and development services. Consideration the Company receives under these arrangements may include upfront payments, research and development funding, cost reimbursements, research, development, regulatory and commercial milestone payments, and royalty payments.

The Company applies Accounting Standard Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), issued by the Financial Accounting Standards Board (“FASB”) to account for its contracts with customers. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these services and excludes sales incentives and amounts collected on behalf of third parties. The Company analyzes the nature of these performance obligations in the context of individual collaboration and license agreements in order to assess the distinct performance obligations. The Company evaluates its contracts with customers for proper classification in the consolidated statements of operations based on the nature of the underlying activity. Transactions with customers recorded in the Company’s consolidated statements of operations are recorded on either a gross or net basis, depending on the characteristics of the collaborative relationship.

To determine revenue recognition for arrangements within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

Accounts Receivable and Allowance for Credit Losses

Accounts receivable primarily consist of amounts due from customers for services and payments due based on contractual terms. Accounts receivable are recorded when the right to consideration becomes unconditional. For research and development services, the Company generally bills its customers monthly or quarterly as the services are performed. Payment terms on invoiced amounts are typically 30 - 60 days. The Company recognizes estimated allowance for credit losses based on an assessment of a customer’s ability to pay, credit quality of the customer, age of receivable balances and current economic conditions. As of June 30, 2022 and December 31, 2021, the Company recorded no allowance for credit losses.

10


 

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Adopted Accounting Pronouncements

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation- Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) which provides guidance on modifications or exchanges of a freestanding equity-classified written call option that is not within the scope of another Topic. An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument ASU 2021-04 also provides further guidance on measuring the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU 2021-04 also provides guidance on the recognition of the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange on the basis of the substance of the transaction, in the same manner as if cash had been paid as consideration. The Company adopted ASU 2021-04 on January 1, 2022. The adoption of this standard had no impact on the Company’s condensed consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which established ASC 326, Financial Instruments - Credit Losses. This ASU, along with subsequent amendments, improves financial reporting by requiring timely recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This guidance will become effective for the Company beginning January 1, 2023, with early adoption permitted. The Company is currently evaluating the potential impact ASU 2016-13 may have on its financial position and results of operations upon adoption but does not expect the adoption will have a material impact on the Company’s consolidated financial statements and disclosures.

Note 3. Composition of Certain Balance Sheet Components

Property and equipment, net

Property and equipment, net consisted of the following (in thousands):

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Laboratory equipment

 

$

16,993

 

 

$

14,192

 

Leasehold improvements

 

 

14,010

 

 

 

13,910

 

Computer equipment and software

 

 

2,235

 

 

 

2,137

 

Furniture, fixtures and other

 

 

999

 

 

 

948

 

Total property and equipment

 

 

34,237

 

 

 

31,187

 

Less: Accumulated depreciation and amortization

 

 

(11,481

)

 

 

(9,137

)

Total property and equipment, net

 

$

22,756

 

 

$

22,050

 

 

Depreciation and amortization expense associated with property and equipment was $1.3 million and $2.5 million for the three and six months ended June 30, 2022, respectively and $1.1 million and $2.2 million for the three and six months ended June 30, 2021, respectively.

11


 

Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following (in thousands):

 

 

 

June 30,

2022

 

 

December 31,

2021

 

Contract research services

 

$

14,439

 

 

$

12,292

 

Accrued loss on contract termination

 

 

4,493

 

 

 

 

Payroll and related expense

 

 

6,001

 

 

 

8,760

 

Other

 

 

3,766

 

 

 

2,488

 

Total accrued expenses and other liabilities

 

$

28,699

 

 

$

23,540

 

The accrued loss on a contract termination represents a loss resulting from an early termination of the Company’s contract with one of its autologous contract manufacturers during the six months ended June 30, 2022, consisting of future contractual payment obligations.

Note 4. Financial Instruments

The following table summarizes the amortized cost and fair value of securities available-for-sale (in thousands):

 

 

 

Amortized

Cost/Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Fair Value

 

June 30, 2022: