10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 2021

OR

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

Commission File Number: 001-37783

 

Clearside Biomedical, Inc.

 

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

45-2437375

(State or other jurisdiction of

incorporation or organization)

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

900 North Point Parkway, Suite 200

Alpharetta, GA

30005

(Address of principal executive offices)

(Zip Code)

(678) 270-3631

Registrant’s telephone number, including area code

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

 

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 $0.001 per share

CLSD

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, 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 November 5, 2021, the registrant had 59,666,519 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


 

 

 

Page

 

PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

 

 

Balance Sheets as of September 30, 2021 and December 31, 2020

3

 

Statements of Operations for the three and nine months ended September 30, 2021 and 2020

4

 

Statements of Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020

5

 

Statements of Cash Flows for the nine months ended September 30, 2021 and 2020

6

 

Notes to the Financial Statements

7

Item 2.

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

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

Item 4.

Controls and Procedures

23

 

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

25

Item 6.

Exhibits

26

Signatures

27

 

 

 

 


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CLEARSIDE BIOMEDICAL, INC.

Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 

 

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

25,217

 

 

$

17,287

 

Prepaid expenses

 

 

1,187

 

 

 

722

 

Other current assets

 

 

119

 

 

 

109

 

Total current assets

 

 

26,523

 

 

 

18,118

 

Property and equipment, net

 

 

283

 

 

 

416

 

Operating lease right-of-use asset

 

 

412

 

 

 

528

 

Restricted cash

 

 

160

 

 

 

260

 

Total assets

 

$

27,378

 

 

$

19,322

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

776

 

 

$

1,997

 

Accrued liabilities

 

 

2,996

 

 

 

1,582

 

Current portion of long-term debt

 

 

 

 

 

991

 

Current portion of operating lease liabilities

 

 

384

 

 

 

373

 

Deferred revenue

 

 

5,000

 

 

 

5,000

 

Total current liabilities

 

 

9,156

 

 

 

9,943

 

Operating lease liabilities

 

 

374

 

 

 

616

 

Total liabilities

 

 

9,530

 

 

 

10,559

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized and no
   shares issued at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized at
   September 30, 2021 and December 31, 2020;
59,626,519 and
   
51,860,941 shares issued and outstanding at September 30, 2021
   and December 31, 2020, respectively

 

 

60

 

 

 

52

 

Additional paid-in capital

 

 

291,988

 

 

 

264,578

 

Accumulated deficit

 

 

(274,200

)

 

 

(255,867

)

Total stockholders’ equity

 

 

17,848

 

 

 

8,763

 

Total liabilities and stockholders’ equity

 

$

27,378

 

 

$

19,322

 

 

See accompanying notes to the financial statements

3


 

CLEARSIDE BIOMEDICAL, INC.

Statements of Operations

(in thousands, except share and per share data)

(unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

License and other revenue

 

$

3,074

 

 

$

3,432

 

 

$

3,888

 

 

$

7,883

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

5,147

 

 

 

3,490

 

 

 

14,697

 

 

 

10,601

 

General and administrative

 

 

2,816

 

 

 

2,374

 

 

 

8,525

 

 

 

8,107

 

Total operating expenses

 

 

7,963

 

 

 

5,864

 

 

 

23,222

 

 

 

18,708

 

Loss from operations

 

 

(4,889

)

 

 

(2,432

)

 

 

(19,334

)

 

 

(10,825

)

Other income

 

 

2

 

 

 

 

 

 

1,001

 

 

 

 

Other expense

 

 

 

 

 

(1

)

 

 

 

 

 

(273

)

Net loss

 

$

(4,887

)

 

$

(2,433

)

 

$

(18,333

)

 

$

(11,098

)

Net loss per share of common stock — basic and diluted

 

$

(0.08

)

 

$

(0.05

)

 

$

(0.32

)

 

$

(0.24

)

Weighted average shares outstanding — basic and diluted

 

 

59,474,346

 

 

 

46,976,649

 

 

 

58,095,080

 

 

 

45,653,068

 

 

See accompanying notes to the financial statements.

 

4


 

CLEARSIDE BIOMEDICAL, INC.

Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

 

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Paid-In-Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

51,860,941

 

 

$

52

 

 

$

264,578

 

 

$

(255,867

)

 

$

8,763

 

Issuance of common shares under a direct
   registered offering

 

 

4,209,050

 

 

 

4

 

 

 

11,074

 

 

 

 

 

 

11,078

 

Issuance of common shares under at-the-market
   sales agreement

 

 

1,186,579

 

 

 

2

 

 

 

3,247

 

 

 

 

 

 

3,249

 

Exercise of stock options

 

 

62,493

 

 

 

 

 

 

38

 

 

 

 

 

 

38

 

Vesting and settlement of restricted stock units

 

 

227,754

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares under employee stock
   purchase plan

 

 

31,908

 

 

 

 

 

 

54

 

 

 

 

 

 

54

 

Share-based compensation expense

 

 

 

 

 

 

 

 

1,154

 

 

 

 

 

 

1,154

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,351

)

 

 

(7,351

)

Balance at March 31, 2021

 

 

57,578,725

 

 

 

58

 

 

 

280,145

 

 

 

(263,218

)

 

 

16,985

 

Issuance of common shares under at-the-market
   sales agreement

 

 

1,397,436

 

 

 

1

 

 

 

7,083

 

 

 

 

 

 

7,084

 

Exercise of stock options

 

 

21,673

 

 

 

 

 

 

33

 

 

 

 

 

 

33

 

Vesting and settlement of restricted stock units

 

 

93,757

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

 

 

 

 

 

 

1,331

 

 

 

 

 

 

1,331

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(6,095

)

 

 

(6,095

)

Balance at June 30, 2021

 

 

59,091,591

 

 

 

59

 

 

 

288,592

 

 

 

(269,313

)

 

 

19,338

 

Issuance of common shares under at-the-market
   sales agreement

 

 

307,404

 

 

 

1

 

 

 

1,874

 

 

 

 

 

 

1,875

 

Exercise of stock options

 

 

100,194

 

 

 

 

 

 

149

 

 

 

 

 

 

149

 

Vesting and settlement of restricted stock units

 

 

93,757

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares under employee stock
   purchase plan

 

 

33,573

 

 

 

 

 

 

57

 

 

 

 

 

 

57

 

Share-based compensation expense

 

 

 

 

 

 

 

 

1,316

 

 

 

 

 

 

1,316

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(4,887

)

 

 

(4,887

)

Balance at September 30, 2021

 

 

59,626,519

 

 

$

60

 

 

$

291,988

 

 

$

(274,200

)

 

$

17,848

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Paid-In-Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

 

44,413,372

 

 

$

44

 

 

$

248,770

 

 

$

(237,657

)

 

$

11,157

 

Issuance of common shares under at-the-market
   sales agreement

 

 

455,186

 

 

 

1

 

 

 

1,192

 

 

 

 

 

 

1,193

 

Share-based compensation expense

 

 

 

 

 

 

 

 

1,001

 

 

 

 

 

 

1,001

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,911

)

 

 

(2,911

)

Balance at March 31, 2020

 

 

44,868,558

 

 

 

45

 

 

 

250,963

 

 

 

(240,568

)

 

 

10,440

 

Issuance of common shares under at-the-market
   sales agreement

 

 

800,170

 

 

 

1

 

 

 

1,606

 

 

 

 

 

 

1,607

 

Exercise of stock options

 

 

58,333

 

 

 

 

 

 

72

 

 

 

 

 

 

72

 

Vesting and settlement of restricted stock units

 

 

512,550

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares under employee
   stock purchase plan

 

 

35,359

 

 

 

 

 

 

31

 

 

 

 

 

 

31

 

Share-based compensation expense

 

 

 

 

 

 

 

 

891

 

 

 

 

 

 

891

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(5,754

)

 

 

(5,754

)

Balance at June 30, 2020

 

 

46,274,970

 

 

 

46

 

 

 

253,563

 

 

 

(246,322

)

 

 

7,287

 

Issuance of common shares under at-the-market
   sales agreement

 

 

1,382,564

 

 

 

2

 

 

 

2,283

 

 

 

 

 

 

2,285

 

Exercise of stock options

 

 

194,883

 

 

 

 

 

 

144

 

 

 

 

 

 

144

 

Vesting and settlement of restricted stock units

 

 

375,025

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

 

 

 

 

 

 

 

 

841

 

 

 

 

 

 

841

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,433

)

 

 

(2,433

)

Balance at September 30, 2020

 

 

48,227,442

 

 

$

48

 

 

$

256,831

 

 

$

(248,755

)

 

$

8,124

 

 

See accompanying notes to the financial statements.

 

5


 

CLEARSIDE BIOMEDICAL, INC.

Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(18,333

)

 

$

(11,098

)

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

 

 

 

 

 

 

Depreciation

 

 

133

 

 

 

136

 

Share-based compensation expense

 

 

3,801

 

 

 

2,733

 

Gain on extinguishment of debt

 

 

(998

)

 

 

 

Non-cash interest expense

 

 

 

 

 

59

 

Accretion of debt discount

 

 

 

 

 

129

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(475

)

 

 

1,441

 

Other assets and liabilities

 

 

(115

)

 

 

(105

)

Accounts payable and accrued liabilities

 

 

200

 

 

 

(1,979

)

Net cash used in operating activities

 

 

(15,787

)

 

 

(8,684

)

Investing activities

 

 

 

 

 

 

Acquisition of property and equipment

 

 

 

 

 

(55

)

Net cash provided by (used in) investing activities

 

 

 

 

 

(55

)

Financing activities

 

 

 

 

 

 

Proceeds from registered direct offering, net of issuance costs

 

 

11,078

 

 

 

 

Proceeds from at-the-market sales agreement, net of issuance costs

 

 

12,208

 

 

 

5,084

 

Proceeds from exercise of stock options

 

 

220

 

 

 

217

 

Proceeds from shares issued under employee stock purchase plan

 

 

111

 

 

 

31

 

Proceeds from long-term debt

 

 

 

 

 

991

 

Payments made on long-term debt

 

 

 

 

 

(5,340

)

Net cash provided by financing activities

 

 

23,617

 

 

 

983

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

7,830

 

 

 

(7,756

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

17,647

 

 

 

22,955

 

Cash, cash equivalents and restricted cash, end of period

 

$

25,477

 

 

$

15,199

 

Supplemental disclosure of noncash financing activities

 

 

 

 

 

 

Forgiveness of PPP Loan and accrued interest

 

$

998

 

 

$

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

September 30,

 

 

 

2021

 

 

2020

 

Cash and cash equivalents

 

$

25,217

 

 

$

14,839

 

Restricted cash (including $100 for each period recorded in other current assets)

 

 

260

 

 

 

360

 

Cash, cash equivalents and restricted cash at end of period

 

$

25,477

 

 

$

15,199

 

 

See accompanying notes to the financial statements.

 

6


 

CLEARSIDE BIOMEDICAL, INC.

Notes to the Financial Statements

(unaudited)

 

 

1. The Company

Clearside Biomedical, Inc. (the “Company”) is a biopharmaceutical company focused on revolutionizing the delivery of therapies to the back of the eye through the suprachoroidal space (SCS®). Incorporated in the State of Delaware on May 26, 2011, the Company has its corporate headquarters in Alpharetta, Georgia.

The Company’s activities since inception have primarily consisted of developing product and technology rights, raising capital and performing research and development activities. The Company has no current source of revenue to sustain present activities, and does not expect to generate meaningful revenue until and unless the Company's licensees successfully commercialize XIPERE™, its other licensees receive regulatory approval and successfully commercializes its product candidates or the Company commercializes its product candidates either on its own or with a third party. The Company is subject to a number of risks and uncertainties similar to those of other life science companies at a similar stage of development, including, among others, the need to obtain adequate additional financing, successful development efforts including regulatory approval of products, compliance with government regulations, successful commercialization of potential products, protection of proprietary technology and dependence on key individuals.

Liquidity

The Company had cash and cash equivalents of $25.2 million as of September 30, 2021. On January 6, 2021, the Company entered into a securities purchase agreement with certain institutional purchasers that purchased 4.2 million shares of its common stock in a registered direct offering at a price of $2.851 per share. The Company raised net proceeds of $11.1 million after deducting offering expenses. During the nine months ended September 30, 2021, the Company sold 2.9 million shares of its common stock for net proceeds of $12.2 million under its at-the-market agreement with Cowen and Company, LLC.

In August 2021, the Company entered into an amendment to the Arctic Vision License Agreement (as defined in Note 10 - License and Other Agreements) to expand the territories covered by the license to include India and the ASEAN Countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam). In September 2021, the Company entered into a second amendment to the Arctic Vision License Agreement to expand the territories covered by the license to include Australia and New Zealand. The Company received an aggregate of $3.0 million in consideration for the expansion of the licensed territory.

On October 25, 2021, the Company announced that the U.S. Food and Drug Administration (the "FDA") approved XIPERE (triamcinolone acetonide injectable suspension) for the treatment of macular edema associated with uveitis, a form of eye inflammation. The Company is entitled to an aggregate of $9.0 million in milestone payments related to the approval of XIPERE from Arctic Vision (Hong Kong) Limited and Bausch + Lomb. In addition, the Company is entitled to receive $10.0 million from Bausch upon completion of pre-launch activities for XIPERE. Bausch expects to launch XIPERE in the United States in the first quarter of 2022.

The Company has funded its operations primarily through the sale of common stock and convertible preferred stock and the issuance of long-term debt. The Company will continue to need to obtain additional financing to fund future operations, including completing the development, partnering and potential commercialization of its primary product candidates. The Company will need to obtain financing to conduct additional trials for the regulatory approval of its product candidates if requested by regulatory bodies, and completing the development of any product candidates. If such products were to receive regulatory approval, the Company would need to obtain financing to prepare for the potential commercialization of its product candidates, if the Company decides to commercialize the products on its own.

The Company has suffered recurring losses and negative cash flows from operations since inception and anticipates incurring additional losses until such time, if ever, that it can generate significant revenue from its licensees' commercialization of XIPERE. In the absence of product or other revenues, the amount, timing, nature or source of which cannot be predicted, the Company’s losses will continue as it conducts its research and development activities.

Based on its current plans and forecasted expenses, the Company expects that its cash and cash equivalents as of the filing date, November 10, 2021, will enable it to fund its planned operating expenses and capital expenditure requirements into 2023. This estimate assumes receipt of the $9.0 million of milestone payments that the Company is entitled receive from its licensees as a result of the FDA approval of XIPERE. In addition, the estimate assumes receipt of the $10.0 million milestone payment that the Company is entitled to receive from Bausch upon completion of pre-launch activities for XIPERE. The Company has based this estimate on assumptions that may prove to be wrong, and it could exhaust its capital resources sooner than expected. Until the Company can generate sufficient revenue, the Company will need to finance future cash needs through public or private equity offerings, license agreements, debt financings or restructurings, collaborations, strategic alliances and marketing or distribution arrangements.

7


 

 

2. Significant Accounting Policies

Basis of Presentation

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Unaudited Interim Financial Information

The accompanying balance sheet as of September 30, 2021, statements of operations for the three and nine months ended September 30, 2021 and 2020, statements of stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2021, its results of its operations for the three and nine months ended September 30, 2021 and 2020, its changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, 2021 and 2020. The financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2021 and 2020 are unaudited. The results for the nine months ended September 30, 2021 are not indicative of results to be expected for the year ending December 31, 2021, any other interim periods or any future year or period. These unaudited financial statements should be read in conjunction with the audited financial statements and related footnotes, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expenses during the reporting periods. Significant items subject to such estimates and assumptions include revenue recognition, the accounting for useful lives to calculate depreciation and amortization, clinical trial expense accruals, share-based compensation expense and income tax valuation allowance. Actual results could differ from these estimates.

Effects of COVID-19

The COVID-19 pandemic has created global volatility, economic uncertainty and general market disruption. Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require us to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information is obtained and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to our financial statements.

Revenue Recognition

The Company recognizes revenue from its contracts with customers under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). The Company’s primary revenue arrangements are license agreements which typically include upfront payments, regulatory and commercial milestone payments and royalties based on future product sales. The arrangements may also include payments for the Company’s SCS Microinjector devices as well as payments for assistance and oversight of the customer’s use of the Company’s technology. In determining the amount of revenue to be recognized under these agreements, the Company performs the following steps: (i) identifies the promised goods and services to be transferred in the contract, (ii) identifies the performance obligations, (iii) determines the transaction price, (iv) allocates the transaction price to the performance obligations and (v) recognizes revenue as the performance obligations are satisfied.

The Company receives payments from its customers based on billing schedules established in each contract. Upfront and other payments may require deferral of revenue recognition to a future period until the Company performs its obligations under the arrangement. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

8


 

Research and Development Costs

Research and development costs are charged to expense as incurred and include:

employee-related expenses, including salaries, benefits, travel and share-based compensation expense for research and development personnel;
expenses incurred under agreements with contract research organizations, contract manufacturing organizations and consultants that conduct preclinical studies and clinical trials;
costs associated with preclinical and clinical development activities;
costs associated with submitting regulatory approval applications for the Company’s product candidates;
costs associated with training physicians on the suprachoroidal injection procedure and educating and providing them with appropriate product candidate information;
costs associated with technology and intellectual property licenses;
costs for the Company’s research and development facility; and
depreciation expense for assets used in research and development activities.

Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided to the Company by its vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the patterns of costs incurred, and are reflected in the financial statements as prepaid or accrued expense.

Share-Based Compensation

Compensation cost related to share-based awards granted to employees is measured based on the estimated fair value of the award at the grant date. The Company estimates the fair value of stock options using a Black-Scholes option pricing model. Compensation expense for options granted to non-employees is determined as the fair value of consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. The fair value of restricted stock units granted is measured based on the market value of the Company’s common stock on the date of grant. Share-based compensation costs are expensed on a straight-line basis over the relevant vesting period.

Compensation cost related to shares purchased through the Company’s employee stock purchase plan, which is considered compensatory, is based on the estimated fair value of the shares on the offering date, including consideration of the discount and the look back period. The Company estimates the fair value of the shares using a Black-Scholes option pricing model. Compensation expense is recognized over the six-month withholding period prior to the purchase date.

All share-based compensation costs are recorded in general and administrative or research and development costs in the statements of operations based upon the underlying employees’ roles within the Company.

Cash Equivalents

Cash equivalents consist of short-term, highly liquid investments with an original term of three months or less at the date of purchase.

Concentration of Credit Risk Arising From Cash Deposits in Excess of Insured Limits

The Company maintains its cash in bank deposits that at times may exceed federally insured limits. The Company has not experienced any loss in such accounts. The Company believes it is not exposed to any significant risks with respect to its cash balances.

Recent Accounting Pronouncements

In December 2019, the FASB issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new ASU also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates. These changes aim to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing the disclosures. The Company adopted ASU 2019-12 on January 1, 2021, and the adoption did not have a material impact on its financial statements and related disclosures. 

 

9


 

 

3. Property and Equipment, Net

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

 

 

Estimated
Useful Lives
(Years)

 

September 30,
2021

 

 

December 31,
2020

 

Furniture and fixtures

 

5

 

$

337

 

 

$

337

 

Machinery and equipment

 

5

 

 

176

 

 

 

176

 

Computer equipment

 

3

 

 

13

 

 

 

13

 

Leasehold improvements

 

Lesser of
useful life
or
remaining
lease term

 

 

667

 

 

 

667

 

 

 

 

 

 

1,193

 

 

 

1,193

 

Less: Accumulated depreciation

 

 

 

 

(910

)

 

 

(777

)

 

 

 

 

$

283

 

 

$

416

 

 

4. Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Accrued research and development

 

$

1,594

 

 

$

234

 

Accrued employee costs

 

 

1,145

 

 

 

1,132

 

Accrued professional fees

 

 

82

 

 

 

56

 

Accrued expense

 

 

175

 

 

 

160

 

 

 

$

2,996

 

 

$

1,582

 

 

5. CARES Act Paycheck Protection Program Loan

On April 20, 2020, the Company entered into a loan agreement with Silicon Valley Bank (the “PPP Lender”) under the terms of which the PPP Lender made a loan to the Company in an aggregate principal amount of $