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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, 2023

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: 001-39980

 

Sensei Biotherapeutics, Inc.

(Exact name of Registrant as specified in its Charter)

 

Delaware

83-1863385

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

1405 Research Blvd, Suite 125

Rockville, MD

20850

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (240) 243-8000

 

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, $0.0001 par value per share

 

SNSE

 

The Nasdaq Stock Market LLC

Series A Preferred Stock Purchase Rights

 

 

 

The Nasdaq Stock Market LLC

 

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. YesNo

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). YesNo

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). YesNo

The number of shares of Registrant’s Common Stock outstanding as of May 4, 2023 was 30,980,841.

 

 

 


 

Table of Contents

 

Page

PART I

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Common Stock and Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Condensed Consolidated Financial Statements

5

Item 2.

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

15

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

63

Item 3.

Defaults Upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

64

Signatures

66

 

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

SENSEI BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,109

 

 

$

17,795

 

Marketable securities

 

 

87,396

 

 

 

89,321

 

Prepaid expenses

 

 

2,649

 

 

 

1,129

 

Other current assets

 

 

454

 

 

 

344

 

Total current assets

 

 

98,608

 

 

 

108,589

 

Right of use assets - operating leases, net

 

 

5,297

 

 

 

5,355

 

Right of use assets - financing leases, net

 

 

2,133

 

 

 

2,319

 

Property and equipment, net

 

 

1,814

 

 

 

2,049

 

Other non-current assets

 

 

81

 

 

 

63

 

Total assets

 

$

107,933

 

 

$

118,375

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

4,715

 

 

$

4,473

 

Compensation and employee benefits liabilities

 

 

583

 

 

 

2,462

 

Operating lease liabilities, current

 

 

1,406

 

 

 

1,251

 

Financing lease liabilities, current

 

 

879

 

 

 

880

 

Total current liabilities

 

 

7,583

 

 

 

9,066

 

Operating lease liabilities, non-current

 

 

4,119

 

 

 

4,323

 

Financing lease liabilities, non-current

 

 

1,347

 

 

 

1,579

 

Other non-current liabilities

 

 

34

 

 

 

0

 

Total liabilities

 

 

13,083

 

 

 

14,968

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value and 10,000,000 shares authorized as of March 31, 2023 and December 31, 2022; zero shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value and 250,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 30,971,341 and 30,764,160 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

303,641

 

 

 

302,202

 

Accumulated deficit

 

 

(207,971

)

 

 

(197,794

)

Accumulated other comprehensive loss

 

 

(823

)

 

 

(1,004

)

Total stockholders’ equity

 

 

94,850

 

 

 

103,407

 

Total liabilities and stockholders’ equity

 

$

107,933

 

 

$

118,375

 

 

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

1


 

SENSEI BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)

 

 

 

For the Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

5,204

 

 

$

7,455

 

General and administrative

 

 

5,804

 

 

 

5,032

 

Total operating expenses

 

 

11,008

 

 

 

12,487

 

Loss from operations

 

 

(11,008

)

 

 

(12,487

)

Other income (expense):

 

 

 

 

 

 

Interest income

 

 

969

 

 

 

310

 

Interest expense

 

 

(42

)

 

 

(243

)

Loss on asset disposal

 

 

(105

)

 

 

 

Other income, net

 

 

9

 

 

 

15

 

Net loss

 

 

(10,177

)

 

 

(12,405

)

Net loss per common share, basic and diluted

 

$

(0.33

)

 

$

(0.40

)

Weighted-average number of shares used in computing net loss per common share, basic and diluted

 

 

30,866,087

 

 

 

30,647,679

 

Comprehensive loss:

 

 

 

 

 

 

Net loss

 

$

(10,177

)

 

$

(12,405

)

Other comprehensive items:

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

181

 

 

 

(566

)

Total other comprehensive income (loss)

 

 

181

 

 

 

(566

)

Total comprehensive loss

 

$

(9,996

)

 

$

(12,971

)

 

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

2


 

SENSEI BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMMON STOCK AND STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share data)

 

 

 

Common Stock

 

 

Additional Paid-In

 

 

Accumulated

 

 

Accumulated Other

 

 

Total Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Comprehensive Loss

 

 

Equity

 

Balance at December 31, 2021

 

 

30,609,029

 

 

$

3

 

 

$

296,049

 

 

$

(149,206

)

 

$

(333

)

 

$

146,513

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,515

 

 

 

 

 

 

 

 

 

1,515

 

Exercise of options into common stock

 

 

73,784

 

 

 

 

 

 

237

 

 

 

 

 

 

 

 

 

237

 

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

 

14

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(566

)

 

 

(566

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(12,405

)

 

 

 

 

 

(12,405

)

Balance at March 31, 2022

 

 

30,682,813

 

 

$

3

 

 

$

297,815

 

 

$

(161,611

)

 

$

(899

)

 

$

135,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

30,764,160

 

 

$

3

 

 

$

302,202

 

 

$

(197,794

)

 

$

(1,004

)

 

$

103,407

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,213

 

 

 

 

 

 

 

 

 

1,213

 

Issuance of equity in exchange for compensation

 

 

208,510

 

 

 

 

 

 

302

 

 

 

 

 

 

 

 

 

302

 

Surrender of shares for tax withholding

 

 

(50,343

)

 

 

 

 

 

(76

)

 

 

 

 

 

 

 

 

(76

)

Vesting of restricted stock shares

 

 

49,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

181

 

 

 

181

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(10,177

)

 

 

 

 

 

(10,177

)

Balance at March 31, 2023

 

 

30,971,341

 

 

$

3

 

 

$

303,641

 

 

$

(207,971

)

 

$

(823

)

 

$

94,850

 

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

3


 

SENSEI BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(10,177

)

 

$

(12,405

)

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

 

 

 

 

 

 

Stock-based compensation expense

 

 

1,213

 

 

 

1,515

 

Depreciation and amortization

 

 

161

 

 

 

157

 

Accretion on marketable securities

 

 

(348

)

 

 

197

 

Non-cash lease expense

 

 

316

 

 

 

291

 

Amortization of financing lease right-of-use assets

 

 

197

 

 

 

177

 

Realized gain on marketable securities

 

 

 

 

 

(15

)

Loss on fixed asset disposition

 

 

105

 

 

 

 

Gain on fixed asset disposition

 

 

(9

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses

 

 

(1,580

)

 

 

(2,007

)

Other assets

 

 

(8

)

 

 

175

 

Accounts payable and accrued liabilities

 

 

242

 

 

 

2,644

 

Compensation and employee benefits

 

 

(1,577

)

 

 

(1,193

)

Operating lease liabilities

 

 

(307

)

 

 

(271

)

Other liabilities

 

 

36

 

 

 

(15

)

Net cash used in operating activities

 

 

(11,736

)

 

 

(10,750

)

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(151

)

 

 

(19

)

Purchases of short-term investments

 

 

(9,846

)

 

 

(8,017

)

Sales of short-term investments

 

 

 

 

 

12,365

 

Maturities of short-term investments

 

 

12,300

 

 

 

7,864

 

Proceeds from sale of property and equipment

 

 

9

 

 

 

 

Net cash provided by investing activities

 

 

2,312

 

 

 

12,193

 

Financing activities

 

 

 

 

 

 

Principle payments for financing leases

 

 

(186

)

 

 

(133

)

Proceeds from the exercise of common stock options

 

 

 

 

 

238

 

Payment of employee restricted stock tax withholdings

 

 

(76

)

 

 

 

Employee stock purchase plan proceeds

 

 

 

 

 

14

 

Net cash (used in) provided by financing activities

 

 

(262

)

 

 

119

 

Net (decrease) increase in cash and cash equivalents

 

 

(9,686

)

 

 

1,562

 

Cash and cash equivalents at beginning of period

 

 

17,795

 

 

 

7,159

 

Cash and cash equivalents at end of period

 

$

8,109

 

 

$

8,721

 

Supplemental disclosure of noncash financing information:

 

 

 

 

 

 

Property and equipment additions included in accounts payable and accrued liabilities

 

$

 

 

$

11

 

Property and equipment disposals included in other assets

 

$

(120

)

 

$

 

Issuance of equity in exchange for compensation included in compensation and employee benefits

 

$

302

 

 

$

 

Initial measurement of operating lease right-of-use assets

 

$

258

 

 

$

6,558

 

Initial measurement of operating lease liabilities

 

$

258

 

 

$

5,580

 

Initial measurement of finance lease right-of-use assets

 

$

 

 

$

411

 

 

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

4


 

SENSEI BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED consolidated FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND OPERATIONS

Business

Sensei Biotherapeutics, Inc. (the “Company” or “Sensei”) is an immuno-oncology company that was incorporated in 1999 as a Maryland corporation until incorporated in Delaware on December 1, 2017. The Company is focused on the discovery and development of next-generation therapeutics for cancer patients.

Liquidity and capital resources

Since its inception, the Company has devoted substantially all of its resources to advancing development of its portfolio of programs, establishing and protecting its intellectual property, conducting research and development activities, organizing and staffing the Company, business planning, raising capital and providing general and administrative support for these operations. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, technical risks associated with the successful research, development and manufacturing of product candidates, 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. Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

Since its inception, the Company has incurred substantial losses and had a net loss of $10.2 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had an accumulated deficit of $208.0 million. The Company expects to generate operating losses and negative operating cash flows for the foreseeable future.

The Company expects that its cash, cash equivalents and marketable securities as of March 31, 2023 of $95.5 million will be sufficient to fund its operations for at least the next twelve months from the date of issuance of these financial statements. The Company will need additional financing to support its continuing operations and pursue its growth 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.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company has prepared the accompanying condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States (“US GAAP”). The condensed consolidated financial statements include those accounts of the Company and its subsidiaries after elimination of all intercompany accounts and transactions.

Unaudited interim financial information

The condensed consolidated financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted from these condensed consolidated financial statements, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K. The results for any interim period are not necessarily indicative of results for any future period.

5


 

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of expenses during the reporting periods presented. Estimates are used for, but are not limited to, depreciation of equipment, the Company’s enterprise value, fair value of financial instruments, the Company’s ability to continue as a going concern and contingencies. Actual results may differ from those estimates.

Cash and cash equivalents

Cash equivalents are highly liquid investments with an original maturity of 90 days or less at the date of purchase and consist of time deposits and investments in money market funds with commercial banks and financial institutions. At March 31, 2023, cash and cash equivalents included cash on deposit at commercial banks and a money market fund that invests in U.S. Government securities.

Marketable securities

Investments consist of marketable securities with original maturities greater than 90 days. The Company has classified its investments with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio of marketable securities to be available-for-sale. Accordingly, these investments are recorded at fair value (Level 2). Unrealized gains and losses are reported as the accumulated other comprehensive items in stockholders’ equity. Amortization and accretion of premiums and discounts are recorded in other income (expense). Realized gains or losses on debt securities are included in interest income or interest expense, respectively. If any adjustment to fair value reflects a decline in value of the investment, the Company considers all available evidence to evaluate the extent to which the decline is other than temporary and, if so, marks the investment to market on the Company’s statement of operations and comprehensive loss.

Property and Equipment

Property and equipment are recorded at cost and depreciated or amortized over the estimated useful lives of the assets. Repairs or maintenance costs are expensed as incurred. Depreciation is computed using the straight-line method over the following estimated useful lives:

Office equipment and furniture

37 years

Research equipment

17 years

Leases

Effective January 1, 2022, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASC 842”) using the modified retrospective method. At lease inception, the Company determines if an arrangement is or contains a lease, and if so, assesses the lease for classification as either an operating or finance lease. A lease is classified as a finance lease if any one of the following criteria are met: (i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful life of the asset, (iv) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset, or (v) the leased asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease. A lease is classified as an operating lease if it does not meet any of these criteria.

Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and current and non-current lease liabilities, as applicable. The Company elected not to separate lease and non-lease components for all underlying assets. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the options. For leases that existed prior to the adoption of ASC 842, the Company used the remaining lease term to determine the appropriate incremental borrowing rate.

Recently Issued Accounting Standards Updates

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides guidance for estimating credit losses on certain types of financial instruments, including trade receivables, by introducing an approach based on expected losses. ASU 2016-13 also amends the

6


 

accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The guidance requires a modified retrospective transition method and early adoption is permitted. In November 2019, FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses, Derivatives and Hedging, and Leases (“ASU 2019-10”), which defers the adoption of ASU 2016-13 for smaller reporting companies until periods beginning after December 15, 2022. The Company has adopted the new guidance as of January 1, 2023, and it did not have a material impact on its financial statements and related disclosures.

 

3. MARKETABLE SECURITIES

Marketable securities consist of the following as of March 31, 2023 (in thousands):

 

 

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Commercial paper

 

$

30,393

 

 

$

-

 

 

$

(31

)

 

$

30,362

 

Corporate bonds

 

 

49,225

 

 

 

-

 

 

 

(474

)

 

 

48,751

 

U.S. Government agencies

 

 

8,601

 

 

 

6

 

 

 

(324

)

 

 

8,283

 

Total

 

$

88,219

 

 

$

6

 

 

$

(829

)

 

$

87,396

 

 

As of March 31, 2023, all marketable securities held by the Company had remaining contractual maturities of one year or less, except for corporate bonds and U.S. government agencies securities with a fair value of $31.7 million that had maturities of one to three years.

As of March 31, 2023, $0.3 million and $0.5 million of unrealized losses were associated with marketable securities with contractual maturities of one year or less and more than one year, respectively.

There were no impairments of the Company’s assets measured and carried at fair value during the three months ended March 31, 2023.

4. PROPERTY AND EQUIPMENT, NET

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

 

 

 

March 31,
2023

 

 

December 31,
2022

 

Research equipment

 

$

2,607

 

 

$

2,707

 

Office equipment and furniture

 

 

532

 

 

 

532

 

Leasehold improvement

 

 

253

 

 

 

253

 

Total property and equipment

 

 

3,392

 

 

 

3,492

 

Less accumulated depreciation and amortization

 

 

(1,578

)

 

 

(1,442

)

Property and equipment, net

 

$

1,814

 

 

$

2,049

 

 

Depreciation and amortization expense for the three months ended March 31, 2023 and 2022 was $161 thousand and $157 thousand, respectively.

Effective January 1, 2022, the Company adopted ASC 842 and reclassed capital leases that were previously classified as property and equipment, net were presented separately under right of use assets - financing leases, net on the Company's condensed consolidated balance sheet. $2.2 million relates to items previously classified under research equipment and $70 thousand relates to items previously classified under office equipment and furniture on the table above. These leases are further described in Note 6.

 

7


 

5. FAIR VALUE MEASUREMENTS

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

 

 

 

Fair value measurements at March 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

    Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

      Money market funds

 

$

5,850

 

 

$

-

 

 

$

-

 

 

$

5,850

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

   Commercial paper

 

 

-

 

 

 

30,362

 

 

 

-

 

 

 

30,362

 

   Corporate bonds

 

 

-

 

 

 

48,751

 

 

 

-

 

 

 

48,751

 

   U.S. Government agencies

 

 

-

 

 

 

8,283

 

 

 

-

 

 

 

8,283

 

Total

 

$

5,850

 

 

$

87,396

 

 

$

-

 

 

$

93,246

 

When developing fair value estimates, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. When available, the Company uses quoted market prices to measure fair value. The valuation technique used to measure fair value for the Company's Level 1 and Level 2 assets is a market approach, using prices and other relevant information generated by market transactions involving identical or comparable assets. If market prices are not available, the fair value measurement is based on models that use primarily market-based parameters including yield curves, volatilities, credit ratings and currency rates. In certain cases where market rate assumptions are not available, the Company is required to make judgments about assumptions market participants would use to estimate the fair value of a financial instrument.

There were no transfers among Level 1, Level 2 or Level 3 categories in the three months ended March 31, 2023 and 2022.

6. COMMITMENTS AND CONTINGENCIES

Operating Leases

As of March 31, 2023, the Company leases office and laboratory facilities under operating leases, which expire at various dates through 2027. The Company has $678 thousand in letters of credit outstanding as security on certain of these leases. As part of its adoption of ASC 842, the Company recorded operating right-of-use assets and operating lease liabilities for these leases as of January 1, 2022.

The Company entered into an operating sublease agreement on January 18, 2023 (the "Sublease") with respect to part of its existing Boston office and laboratory facilities (the "Head Lease"). The Company accounted for the Head Lease and the Sublease as separate contracts and there was no effect on the right-of-use asset or lease liability associated with the Head Lease. The Sublease is long-term and has an effective end date of more than one year from March 31, 2023. The Head Lease rent expense is presented separately from income related to the Sublease and both are reported as components of operating expenses on the condensed consolidated statements of operations and comprehensive loss. The Company recorded $55