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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-50768

 

ACADIA PHARMACEUTICALS INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

06-1376651

(State of Incorporation)

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

 

12830 El Camino Real, Suite 400

San Diego, California

92130

(Address of Principal Executive Offices)

(Zip Code)

 

(858) 558-2871

(Registrant’s Telephone Number, Including Area Code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class 

Trading Symbol

Name of Each Exchange on Which Registered 

Common Stock, par value $0.0001 per share

ACAD

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.    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  

Total shares of common stock outstanding as of the close of business on October 22, 2020:

 

Class 

 

Number of Shares Outstanding 

Common Stock, $0.0001 par value

 

158,978,087

 

 

 

 


 

ACADIA PHARMACEUTICALS INC.

FORM 10-Q

TABLE OF CONTENTS

 

 

 

PAGE NO.

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

1

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

2

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity

 

5

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements

 

6

 

 

 

 

 

Item 2.

 

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

 

16

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

25

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

25

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

26

 

 

 

 

 

Item 1A.

 

Risk Factors

 

27

 

 

 

 

 

Item 6.

 

Exhibits

 

61

 

 

 

SIGNATURES

 

62

 

 

 

i


 

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

 

September 30,

2020

 

 

December 31,

2019

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

452,352

 

 

$

189,680

 

Investment securities, available-for-sale

 

 

192,089

 

 

 

507,749

 

Accounts receivable, net

 

 

46,344

 

 

 

35,781

 

Interest and other receivables

 

 

1,440

 

 

 

2,093

 

Inventory

 

 

7,979

 

 

 

6,341

 

Prepaid expenses

 

 

30,009

 

 

 

18,606

 

Total current assets

 

 

730,213

 

 

 

760,250

 

Property and equipment, net

 

 

8,427

 

 

 

3,180

 

Operating lease right-of-use assets

 

 

48,232

 

 

 

9,524

 

Intangible assets, net

 

 

1,477

 

 

 

2,585

 

Restricted cash

 

 

5,770

 

 

 

4,787

 

Other assets

 

 

1,545

 

 

 

2,857

 

Total assets

 

$

795,664

 

 

$

783,183

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

3,471

 

 

$

7,222

 

Accrued liabilities

 

 

88,385

 

 

 

67,604

 

Total current liabilities

 

 

91,856

 

 

 

74,826

 

Operating lease liabilities

 

 

45,343

 

 

 

6,361

 

Other long-term liabilities

 

 

3,598

 

 

 

2,861

 

Total liabilities

 

 

140,797

 

 

 

84,048

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 5,000,000 shares authorized at September 30, 2020

   and December 31, 2019; no shares issued and outstanding at September 30, 2020 and

   December 31, 2019

 

 

 

 

 

 

Common stock, $0.0001 par value; 225,000,000 shares authorized at September 30, 2020

   and December 31, 2019; 158,863,541 shares and 155,275,300 shares issued and

   outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

16

 

 

 

15

 

Additional paid-in capital

 

 

2,573,288

 

 

 

2,402,945

 

Accumulated deficit

 

 

(1,918,946

)

 

 

(1,704,122

)

Accumulated other comprehensive income

 

 

509

 

 

 

297

 

Total stockholders’ equity

 

 

654,867

 

 

 

699,135

 

Total liabilities and stockholders’ equity

 

$

795,664

 

 

$

783,183

 

 

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

 

 

1


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product sales, net

 

$

120,577

 

 

$

94,586

 

 

$

320,748

 

 

$

240,750

 

Total revenues

 

 

120,577

 

 

 

94,586

 

 

 

320,748

 

 

 

240,750

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product sales

 

 

2,005

 

 

 

2,416

 

 

 

7,703

 

 

 

8,324

 

License fees and royalties

 

 

2,796

 

 

 

2,273

 

 

 

7,546

 

 

 

5,940

 

Research and development

 

 

120,083

 

 

 

62,622

 

 

 

257,014

 

 

 

182,865

 

Selling, general and administrative

 

 

81,592

 

 

 

72,696

 

 

 

267,909

 

 

 

233,767

 

Total operating expenses

 

 

206,476

 

 

 

140,007

 

 

 

540,172

 

 

 

430,896

 

Loss from operations

 

 

(85,899

)

 

 

(45,421

)

 

 

(219,424

)

 

 

(190,146

)

Interest income, net

 

 

1,242

 

 

 

2,432

 

 

 

6,056

 

 

 

7,893

 

Other (expense) income

 

 

(202

)

 

 

747

 

 

 

(1,262

)

 

 

506

 

Loss before income taxes

 

 

(84,859

)

 

 

(42,242

)

 

 

(214,630

)

 

 

(181,747

)

Income tax expense

 

 

(199

)

 

 

(264

)

 

 

194

 

 

 

476

 

Net loss

 

$

(84,660

)

 

$

(41,978

)

 

$

(214,824

)

 

$

(182,223

)

Net loss per common share, basic and diluted

 

$

(0.54

)

 

$

(0.29

)

 

$

(1.37

)

 

$

(1.26

)

Weighted average common shares outstanding, basic and diluted

 

 

158,129

 

 

 

145,906

 

 

 

156,683

 

 

 

144,741

 

 

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

 

 

2


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

 

$

(84,660

)

 

$

(41,978

)

 

$

(214,824

)

 

$

(182,223

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on investment securities

 

 

(967

)

 

 

(136

)

 

 

216

 

 

 

789

 

Foreign currency translation adjustments

 

 

(4

)

 

 

2

 

 

 

(4

)

 

 

3

 

Comprehensive loss

 

$

(85,631

)

 

$

(42,112

)

 

$

(214,612

)

 

$

(181,431

)

 

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

 

 

3


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(214,824

)

 

$

(182,223

)

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

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

63,227

 

 

 

62,502

 

Amortization of premiums and accretion of discounts on investment securities

 

 

821

 

 

 

(3,052

)

Amortization of intangible assets

 

 

1,108

 

 

 

1,108

 

Loss (gain) on strategic investment

 

 

1,262

 

 

 

(506

)

Loss on disposal of assets

 

 

281

 

 

 

 

Depreciation

 

 

986

 

 

 

1,023

 

Non-cash in-process research and development

 

 

44,280

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(10,563

)

 

 

(4,714

)

Interest and other receivables

 

 

653

 

 

 

234

 

Inventory

 

 

(1,671

)

 

 

(426

)

Prepaid expenses

 

 

(11,403

)

 

 

(641

)

Operating lease right-of-use assets

 

 

2,863

 

 

 

2,856

 

Other assets

 

 

50

 

 

 

98

 

Accounts payable

 

 

(3,751

)

 

 

277

 

Accrued liabilities

 

 

17,853

 

 

 

3,301

 

Operating lease liabilities

 

 

(587

)

 

 

(2,070

)

Long-term liabilities

 

 

737

 

 

 

810

 

Net cash used in operating activities

 

 

(108,678

)

 

 

(121,423

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchases of investment securities

 

 

(100,808

)

 

 

(260,859

)

Maturities of investment securities

 

 

415,863

 

 

 

305,089

 

Purchases of property and equipment

 

 

(5,588

)

 

 

(922

)

Net cash provided by investing activities

 

 

309,467

 

 

 

43,308

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

62,870

 

 

 

328,789

 

Net cash provided by financing activities

 

 

62,870

 

 

 

328,789

 

Effect of exchange rate changes on cash

 

 

(4

)

 

 

3

 

Net increase in cash, cash equivalents and restricted cash

 

 

263,655

 

 

 

250,677

 

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

 

 

Beginning of period

 

 

194,467

 

 

 

139,584

 

End of period

 

$

458,122

 

 

$

390,261

 

Supplemental disclosure of noncash information:

 

 

 

 

 

 

 

 

Common stock issued in connection with merger agreement

 

$

44,280

 

 

$

 

Property and equipment purchases in accounts payable and accrued liabilities

 

$

926

 

 

$

41

 

 

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

 


4


 

ACADIA PHARMACEUTICALS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Total stockholders’ equity, beginning balances

 

$

663,013

 

 

$

388,914

 

 

$

699,135

 

 

$

479,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

15

 

 

 

14

 

 

 

15

 

 

 

14

 

Issuance of common stock from exercise of stock options and units

 

 

1

 

 

 

 

 

 

1

 

 

 

 

Issuance of common stock in public offering, net of issuance

   costs

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Ending balance

 

 

16

 

 

 

15

 

 

 

16

 

 

 

15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional paid-in capital:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

2,495,804

 

 

 

1,997,454

 

 

 

2,402,945

 

 

 

1,948,300

 

Issuance of common stock in connection with merger agreement

 

 

44,280

 

 

 

 

 

 

44,280

 

 

 

 

Issuance of common stock in public offering, net of

   issuance costs

 

 

 

 

 

271,462

 

 

 

 

 

 

271,462

 

Issuance of common stock from exercise of stock options and units

 

 

11,714

 

 

 

48,504

 

 

 

58,899

 

 

 

55,127

 

Issuance of common stock pursuant to employee stock

   purchase plan

 

 

 

 

 

 

 

 

3,970

 

 

 

2,199

 

Stock-based compensation

 

 

21,490

 

 

 

22,520

 

 

 

63,194

 

 

 

62,852

 

Ending balance

 

 

2,573,288

 

 

 

2,339,940

 

 

 

2,573,288

 

 

 

2,339,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated deficit:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

(1,834,286

)

 

 

(1,609,108

)

 

 

(1,704,122

)

 

 

(1,468,863

)

Net loss

 

 

(84,660

)

 

 

(41,978

)

 

 

(214,824

)

 

 

(182,223

)

Ending balance

 

 

(1,918,946

)

 

 

(1,651,086

)

 

 

(1,918,946

)

 

 

(1,651,086

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

 

1,480

 

 

 

554

 

 

 

297

 

 

 

(372

)

Other comprehensive (loss) income

 

 

(971

)

 

 

(134

)

 

 

212

 

 

 

792

 

Ending balance

 

 

509

 

 

 

420

 

 

 

509

 

 

 

420

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity, ending balances

 

$

654,867

 

 

$

689,289

 

 

$

654,867

 

 

$

689,289

 

 

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

 

 

5


 

ACADIA PHARMACEUTICALS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Business

Acadia Pharmaceuticals Inc. (the “Company”), based in San Diego, California, is a biopharmaceutical company focused on the development and commercialization of innovative medicines to address unmet medical needs in central nervous system disorders. The Company was originally incorporated in Vermont in 1993 as Receptor Technologies, Inc. and reincorporated in Delaware in 1997.

In April 2016, the U.S. Food and Drug Administration (“FDA”) approved the Company’s first drug, NUPLAZID® (pimavanserin), for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis (“PD Psychosis”). NUPLAZID became available for prescription in the United States in May 2016.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K (“Annual Report”) filed with the Securities and Exchange Commission (the “SEC”). The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying financial statements reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair statement of the financial position, results of operations, cash flows, and stockholders’ equity for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

 

Risk and Uncertainties

The global pandemic resulting from the disease known as COVID-19, caused by a novel strain of coronavirus, SARS-CoV-2, has caused national and global economic and financial market disruptions and has impacted the Company’s business, including by causing the vast majority of the Company’s workforce to work remotely since March 2020. Although the Company did not see a material impact on its net revenue for the nine months ended September 30, 2020 due to the COVID-19 pandemic, the Company cannot predict the duration or magnitude of the pandemic or the full impact that it may have on the Company’s financial condition, operations, suppliers, and workforce.

During the nine months ended September 30, 2020, there have been no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, except as described below and in Note 6, investments.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the statement of cash flows that sum to the total of the same such amounts shown in the statement of cash flows (in thousands):

 

 

 

Nine Months Ended September 30, 2020

 

 

Nine Months Ended September 30, 2019

 

 

 

Beginning of

period

 

 

End of

period

 

 

Beginning of

period

 

 

End of

period

 

Cash and cash equivalents

 

$

189,680

 

 

$

452,352

 

 

$

134,758

 

 

$

385,474

 

Restricted cash

 

 

4,787

 

 

 

5,770

 

 

 

4,826

 

 

 

4,787

 

Total cash, cash equivalents and restricted cash shown in

   the statement of cash flows

 

$

194,467

 

 

$

458,122

 

 

$

139,584

 

 

$

390,261

 

 

6


 

Accounts Receivable

Accounts receivable are recorded net of customer allowances for distribution fees, prompt payment discounts, chargebacks, and credit losses. Allowances for distribution fees, prompt payment discounts and chargebacks are based on contractual terms. As described further in Note 10, Recent Accounting Pronouncements, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 326-20, Financial Instruments – Credit Losses (“ASC 326-20”) as of January 1, 2020. The Company estimated the current expected credit losses of its accounts receivable by assessing the risk of loss and available relevant information about the collectability, including historical credit losses, existing contractual payment terms, actual payment patterns of its customers, individual customer circumstances, and reasonable and supportable forecast of economic conditions expected to exist throughout the contractual life of the receivable. Based on its assessment, as of September 30, 2020 the Company determined that an allowance for credit loss was not required.

Although the Company has not historically experienced significant credit losses, the Company’s exposure may increase due to uncertainties associated with the global economic recession and other disruptions resulting from the COVID-19 pandemic.

License Fees and Royalties

The Company expenses amounts paid to acquire licenses associated with products under development when the ultimate recoverability of the amounts paid is uncertain and the technology has no alternative future use when acquired. Acquisitions of technology licenses are charged to expense or capitalized based upon management’s assessment regarding the ultimate recoverability of the amounts paid and the potential for alternative future use. The Company has determined that technological feasibility for its product candidates is reached when the requisite regulatory approvals are obtained to make the product available for sale.

In connection with the FDA approval of NUPLAZID in April 2016, the Company made a one-time milestone payment of $8.0 million pursuant to its 2006 license agreement with the Ipsen Group in which the Company licensed certain intellectual property rights that complement its patent portfolio for its serotonin platform, including NUPLAZID. The Company capitalized the $8.0 million payment as an intangible asset and is amortizing the asset on a straight-line basis over the estimated useful life of the licensed patents through the second half of 2021. The Company recorded amortization expense related to its intangible asset of $0.4 million and $1.1 million for each of the three and nine months ended September 30, 2020 and 2019, respectively. As of September 30, 2020, estimated future amortization expense related to the Company’s intangible asset was $0.4 million for the remainder of 2020 and $1.1 million for 2021.

Royalties incurred in connection with the Company’s license agreement with the Ipsen Group, as disclosed in Note 9, Commitments and Contingencies, are expensed to license fees and royalties as revenue from product sales is recognized.

Acquisitions

The Company accounts for acquisitions of an asset or group of similar identifiable assets that do not meet the definition of a business as asset acquisition using the cost accumulation method, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of their relative fair values. No goodwill is recognized in an asset acquisition. Intangible assets acquired in an asset acquisition for use in research and development activities which have no alternative future use are expensed as in-process research and development on the acquisition date. Intangible assets acquired for use in research and development activities which have an alternative future use are capitalized as in-process research and development. Future costs to develop these assets are recorded to research and development expense as they are incurred. Contingent milestone payments associated with asset acquisitions are recognized when probable and estimable. These amounts are expensed to research and development if there is no alternative future use associated with the asset, or capitalized as an intangible asset if alternative future use of the asset exists.

3. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common stock equivalents outstanding for the period determined using the treasury stock method. For purposes of this calculation, stock options, employee stock purchase plan rights, restricted stock units, and warrants are considered to be common stock equivalents but are not included in the calculations of diluted net loss per share for the periods presented as their effect would be anti-dilutive. The Company incurred net losses for all periods presented and there were no reconciling items for potentially dilutive securities. More specifically, at September 30, 2020 and 2019, stock options, employee stock purchase plan rights, restricted stock units, and warrants totaling approximately 19,704,000 shares and 20,912,000 shares, respectively, were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive.

7


 

4. Stock-Based Compensation

The following table summarizes the total stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the periods presented (in thousands):

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Cost of product sales

 

$

495

 

 

$

372

 

 

$

2,087

 

 

$

2,344

 

Research and development

 

 

7,953

 

 

 

8,680

 

 

 

23,645

 

 

 

24,461

 

Selling, general and administrative

 

 

12,924

 

 

 

12,971

 

 

 

37,495

 

 

 

35,697

 

 

 

$

21,372

 

 

$

22,023

 

 

$

63,227

 

 

$

62,502

 

 

5. Balance Sheet Details

Inventory consisted of the following (in thousands):

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Raw material

 

$

2,083

 

 

$

3,175

 

Work in process

 

 

4,045

 

 

 

1,685

 

Finished goods

 

 

1,851

 

 

 

1,481

 

 

 

$

7,979

 

 

$

6,341

 

Accrued liabilities consisted of the following (in thousands):

 

 

 

September 30,

2020

 

 

December 31,

2019

 

Accrued research and development services

 

$

28,106

 

 

$

14,273

 

Accrued compensation and benefits

 

 

24,197

 

 

 

21,080

 

Accrued consulting and professional fees

 

 

18,537

 

 

 

13,691

 

Accrued sales allowances

 

 

7,910

 

 

 

11,326

 

Current portion of lease liabilities

 

 

3,857

 

 

 

3,434

 

Accrued royalties

 

 

2,438

 

 

 

1,971

 

Other

 

 

3,340

 

 

 

1,829

 

 

 

$

88,385

 

 

$

67,604

 

 

6. Investments

The carrying value and amortized cost of the Company’s investments, summarized by major security type, consisted of the following (in thousands):

 

 

 

September 30, 2020

 

 

 

Amortized

Cost

 

 

Unrealized

Gains

 

 

Unrealized

Losses

 

 

Estimated

Fair

Value

 

U.S. Treasury notes

 

$

74,004

 

 

$

134

 

 

$

 

 

$

74,138

 

Government sponsored enterprise securities

 

 

14,660

 

 

 

6

 

 

 

 

 

 

14,666

 

Corporate debt securities

 

 

80,513

 

 

 

286

 

 

 

 

*

 

80,799

 

Commercial paper

 

 

22,412

 

 

 

74

 

 

 

 

 

 

22,486

 

 

 

$

191,589