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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, 2021

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: 000-51173

 

Catalyst Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

56-2020050

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

 

611 Gateway Blvd., Suite 710

South San Francisco, California

94080

(Address of Principal Executive Offices)

(Zip Code)

(650) 871-0761

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered or to be 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

 

CBIO

 

NASDAQ

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, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “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 July 30, 2021, the number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 31,365,701.

 

 

 

 


 

CATALYST BIOSCIENCES, INC.

TABLE OF CONTENTS

 

 

 

 

 

Page No.

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

3

 

 

 

 

 

Item 1.

 

Financial Statements:

 

3

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited)

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2021 and 2020 (unaudited)

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020 (unaudited)

 

6

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)

 

7

 

 

 

 

 

 

 

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

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

 

17

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

27

 

 

 

 

 

PART II. OTHER INFORMATION

 

28

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

28

 

 

 

 

 

Item 1A.

 

Risk Factors

 

28

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

30

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

30

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

30

 

 

 

 

 

Item 5.

 

Other Information

 

30

 

 

 

 

 

Item 6.

 

Exhibits

 

30

 

 

 

 

 

Exhibit Index

 

31

 

 

 

 

 

Signatures

 

32

 

 

 

 


 

 

PART I. FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

Catalyst Biosciences, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

June 30, 2021

 

 

December 31, 2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

73,621

 

 

$

30,360

 

Short-term investments

 

 

12,902

 

 

 

48,994

 

Accounts receivable

 

 

1,971

 

 

 

3,313

 

Prepaid and other current assets

 

 

8,332

 

 

 

6,843

 

Total current assets

 

 

96,826

 

 

 

89,510

 

Long-term investments

 

 

 

 

 

2,543

 

Other assets, noncurrent

 

 

1,169

 

 

 

528

 

Right-of-use assets

 

 

3,107

 

 

 

1,832

 

Property and equipment, net

 

 

684

 

 

 

433

 

Total assets

 

$

101,786

 

 

$

94,846

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,834

 

 

$

5,931

 

Accrued compensation

 

 

2,516

 

 

 

2,476

 

Deferred revenue

 

 

2,038

 

 

 

1,983

 

Other accrued liabilities

 

 

7,366

 

 

 

6,743

 

Operating lease liability

 

 

1,814

 

 

 

663

 

Total current liabilities

 

 

15,568

 

 

 

17,796

 

Operating lease liability, noncurrent

 

 

1,054

 

 

 

981

 

Total liabilities

 

 

16,622

 

 

 

18,777

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000,000 shares authorized; zero shares issued

   and outstanding

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 shares authorized; 31,349,740 and

   22,097,820 shares issued and outstanding at June 30, 2021 and

   December 31, 2020, respectively

 

 

31

 

 

 

22

 

Additional paid-in capital

 

 

442,258

 

 

 

390,803

 

Accumulated other comprehensive income

 

 

2

 

 

 

5

 

Accumulated deficit

 

 

(357,127

)

 

 

(314,761

)

Total stockholders’ equity

 

 

85,164

 

 

 

76,069

 

Total liabilities and stockholders’ equity

 

$

101,786

 

 

$

94,846

 

 

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

 

 

3


 

 

Catalyst Biosciences, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License

 

$

 

 

$

23

 

 

$

 

 

$

15,068

 

Collaboration

 

 

1,132

 

 

 

1,635

 

 

 

2,599

 

 

 

2,956

 

License and collaboration revenue

 

 

1,132

 

 

 

1,658

 

 

 

2,599

 

 

 

18,024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of license

 

 

 

 

 

23

 

 

 

 

 

 

3,070

 

Cost of collaboration

 

 

1,139

 

 

 

1,719

 

 

 

2,619

 

 

 

3,151

 

Research and development

 

 

15,389

 

 

 

12,906

 

 

 

32,402

 

 

 

26,170

 

General and administrative

 

 

4,518

 

 

 

4,371

 

 

 

9,930

 

 

 

8,062

 

Total operating expenses

 

 

21,046

 

 

 

19,019

 

 

 

44,951

 

 

 

40,453

 

Loss from operations

 

 

(19,914

)

 

 

(17,361

)

 

 

(42,352

)

 

 

(22,429

)

Interest and other income (expense), net

 

 

(14

)

 

 

113

 

 

 

(14

)

 

 

1,128

 

Net loss

 

$

(19,928

)

 

$

(17,248

)

 

$

(42,366

)

 

$

(21,301

)

Net loss per share attributable to common

   stockholders, basic and diluted

 

$

(0.64

)

 

$

(0.96

)

 

$

(1.42

)

 

$

(1.31

)

Shares used to compute net loss per share attributable to

   common stockholders, basic and diluted

 

 

31,348,602

 

 

 

17,891,475

 

 

 

29,875,202

 

 

 

16,241,963

 

 

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

 

 

4


 

 

Catalyst Biosciences, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

(19,928

)

 

$

(17,248

)

 

$

(42,366

)

 

$

(21,301

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale debt securities

 

 

(3

)

 

 

(99

)

 

 

(3

)

 

 

7

 

Total comprehensive loss

 

$

(19,931

)

 

$

(17,347

)

 

$

(42,369

)

 

$

(21,294

)

 

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

 

 

5


 

 

Catalyst Biosciences, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

Convertible

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

 

 

$

 

 

 

22,097,820

 

 

$

22

 

 

$

390,803

 

 

$

5

 

 

$

(314,761

)

 

$

76,069

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

10,149

 

 

 

 

 

 

1,026

 

 

 

 

 

 

 

 

 

1,026

 

Issuance of common stock from stock

   grants and option exercises

 

 

 

 

 

 

 

 

38,058

 

 

 

 

 

 

182

 

 

 

 

 

 

 

 

 

182

 

Issuance of common stock for public offering, net

   of issuance costs of $3,563

 

 

 

 

 

 

 

 

9,185,000

 

 

 

9

 

 

 

49,241

 

 

 

 

 

 

 

 

 

49,250

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,438

)

 

 

(22,438

)

Balance at March 31, 2021

 

 

 

 

 

 

 

 

31,331,027

 

 

 

31

 

 

 

441,252

 

 

 

5

 

 

 

(337,199

)

 

 

104,089

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

13,713

 

 

 

 

 

 

983

 

 

 

 

 

 

 

 

 

983

 

Issuance of common stock from stock

   grants and option exercises

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

 

23

 

 

 

 

 

 

 

 

 

23

 

Unrealized loss on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,928

)

 

 

(19,928

)

Balance at June 30, 2021

 

 

 

 

$

 

 

 

31,349,740

 

 

$

31

 

 

$

442,258

 

 

$

2

 

 

$

(357,127

)

 

$

85,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2019

 

 

 

 

$

 

 

 

12,040,835

 

 

$

12

 

 

$

326,810

 

 

$

34

 

 

$

(258,520

)

 

$

68,336

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

7,817

 

 

 

 

 

 

805

 

 

 

 

 

 

 

 

 

805

 

Issuance of common stock from stock

   grants and option exercises

 

 

 

 

 

 

 

 

62,969

 

 

 

 

 

 

339

 

 

 

 

 

 

 

 

 

339

 

Issuance of common stock for public offering, net

   of issuance costs of $2,514

 

 

 

 

 

 

 

 

5,307,692

 

 

 

5

 

 

 

31,981

 

 

 

 

 

 

 

 

 

31,986

 

Unrealized gain on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106

 

 

 

 

 

 

 

106

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,053

)

 

 

(4,053

)

Balance at March 31, 2020

 

 

 

 

 

 

 

 

17,419,313

 

 

 

17

 

 

 

359,935

 

 

 

140

 

 

 

(262,573

)

 

 

97,519

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

16,048

 

 

 

 

 

 

834

 

 

 

 

 

 

 

 

 

834

 

Issuance of common stock for public offering, net

   of issuance costs of $2,045

 

 

 

 

 

 

 

 

4,615,384

 

 

 

5

 

 

 

27,950

 

 

 

 

 

 

 

 

 

27,955

 

Unrealized loss on available-for-sale debt securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(99

)

 

 

 

 

 

(99

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,248

)

 

 

(17,248

)

Balance at June 30, 2020

 

 

 

 

$

 

 

 

22,050,745

 

 

$

22

 

 

$

388,719

 

 

$

41

 

 

$

(279,821

)

 

$

108,961

 

 

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

 

6


 

 

Catalyst Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

Operating Activities

 

 

 

 

 

 

 

 

Net loss

 

$

(42,366

)

 

$

(21,301

)

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

2,009

 

 

 

1,639

 

Depreciation and amortization

 

 

90

 

 

 

51

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

1,342

 

 

 

13,012

 

Prepaid and other assets

 

 

(2,338

)

 

 

2,267

 

Accounts payable

 

 

(4,091

)

 

 

(2,780

)

Accrued compensation and other accrued liabilities

 

 

663

 

 

 

1,825

 

Operating lease liability and right-of-use asset

 

 

157

 

 

 

31

 

Deferred revenue

 

 

55

 

 

 

(14,670

)

Net cash flows used in operating activities

 

 

(44,479

)

 

 

(19,926

)

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Proceeds from maturities of short-term investments

 

 

38,632

 

 

 

50,493

 

Purchase of short-term investments

 

 

 

 

 

(47,081

)

Purchases of property and equipment

 

 

(347

)

 

 

(33

)

Net cash flows provided by investing activities

 

 

38,285

 

 

 

3,379

 

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Issuance of common stock for public offering, net of issuance costs

 

 

49,250

 

 

 

60,112

 

Issuance of common stock from stock grants and option exercises

 

 

205

 

 

 

339

 

Net cash flow provided by financing activities

 

 

49,455

 

 

 

60,451

 

Net increase in cash and cash equivalents

 

 

43,261

 

 

 

43,904

 

Cash and cash equivalents at beginning of the period

 

 

30,360

 

 

 

15,369

 

Cash and cash equivalents at end of the period

 

$

73,621

 

 

$

59,273

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for operating lease liabilities

 

$

1,850

 

 

$

 

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

 

 

7


 

 

Catalyst Biosciences, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

1.

Nature of Operations and Liquidity

Catalyst Biosciences, Inc. and its subsidiary (the “Company” or “Catalyst”) is a fully integrated research and clinical development biopharmaceutical company with expertise in protease engineering, discovery, translational research, clinical development, and manufacturing. The Company is focused on advancing its protease product candidates in the fields of hemostasis and complement regulation. The Company is located in South San Francisco, California and operates in one segment.

The Company had a net loss of $42.4 million for the six months ended June 30, 2021 and an accumulated deficit of $357.1 million as of June 30, 2021. The Company expects to continue to incur losses for the next several years. As of June 30, 2021, the Company had $86.5 million of cash, cash equivalents and short-term investments. Its primary uses of cash are to fund operating expenses, including research and development expenditures and general and administrative expenditures. Based on the current status of its research and development plans, the Company believes that its existing cash, cash equivalents and short-term investments as of June 30, 2021 will be sufficient to fund its cash requirements for at least the next 12 months from the date of the filing of this quarterly report. If, at any time, the Company’s prospects for financing its research and development programs decline, the Company may decide to reduce research and development expenses by delaying, discontinuing or reducing its funding of one or more of its research or development programs. Alternatively, the Company might raise funds through strategic collaborations, public or private financings or other arrangements. Such funding, if needed, may not be available on favorable terms, or at all.  

2.

Summary of Significant Accounting Policies

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and following the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the Company’s financial information. These interim results and cash flows for any interim period are not necessarily indicative of the results to be expected for the year ending December 31, 2021, or for any other future annual or interim period.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the consolidated financial statements filed with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“Annual Report”).

Accounting Pronouncements Recently Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in ASU 2019-12 are intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted ASU 2019-12 as of January 1, 2021, on a prospective transition basis. The adoption of ASU 2019-12 did not have a material impact on the Company’s condensed consolidated financial statements.

New Accounting Pronouncements Recently Issued But Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about an entity's expected credit losses on financial instruments and other commitments to extend credit at each reporting date. To achieve this objective, the amendments in this update replace the incurred loss impairment methodology currently used today with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to develop credit loss estimates. Subsequent to issuing ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, for the purpose of clarifying certain aspects of ASU 2016-13. In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief, to provide entities with more flexibility in applying the fair value option on adoption of the credit impairment standard.

8


Catalyst Biosciences, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

ASU 2018-19 and ASU 2019-05 have the same effective date and transition requirements as ASU 2016-13. ASU 2016-13 will be effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, using a modified retrospective approach. Early adoption is permitted. The Company plans to adopt ASU 2016-13 and related updates as of January 1, 2023. The Company will assess the impact of adoption of this standard on its consolidated financial statements.

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): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in ASU No. 2021-04 provide guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU No. 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. The Company plans to adopt ASU 2021-04 and related updates on January 1, 2022. The Company is currently evaluating the impact of adopting this ASU on its condensed consolidated financial statements.

Research and Development Expenses

Research and development costs are expensed as incurred. Nonrefundable advance payments for goods or services used in research and development are initially deferred and capitalized in prepaid and other current assets. The capitalized amounts are then expensed as the related goods are delivered or services are performed, or until it is no longer expected that the goods or services will be delivered. Research and development costs consist of payroll and other personnel-related expenses, laboratory supplies and reagents, contract research and development services, materials, and consulting costs, as well as allocations of facilities and other overhead costs. Under the Company’s collaboration agreement with Biogen, certain specific expenditures are reimbursed by third parties. The Company recorded $1.1 million and $1.7 million during the three months ended June 30, 2021 and 2020, respectively, and $2.6 million and $3.2 million during the six months ended June 30, 2021 and 2020, respectively, of research and development expense as cost of collaboration revenue related to the collaboration agreement with Biogen signed in December 2019.

Stock-Based Compensation

The Company measures the cost of employee, non-employee and director services received in exchange for an award of equity instruments based on the fair value of the award on the date of grant and recognizes the related expense over the period during which the employee, non-employee or director is required to provide service in exchange for the award on a straight-line basis. The estimated fair value of equity awards that contain performance conditions is expensed over the term of the award once the Company has determined that it is probable that performance conditions will be satisfied.

The Company uses the Black-Scholes option-pricing valuation model to estimate the grant-date fair value of stock-based awards. The determination of fair value for stock-based awards on the date of grant using an option-pricing model requires management to make certain assumptions regarding a number of variables. The Company elected to account for forfeitures when they occur. As such, the Company recognizes stock-based compensation expense, over their requisite service period, based on the vesting provisions of the individual grants.

3.

Fair Value Measurements

For a description of the fair value hierarchy and the Company’s fair value methodology, see “Part II - Item 8 - Financial Statements and Supplementary Data - Note 3 – Summary of Significant Accounting Policies” in the Company’s Annual Report. There were no significant changes in these methodologies during the six months ended June 30, 2021.

9


Catalyst Biosciences, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

There were no transfers in or out of Level 1 or 2 during the periods presented. The following tables present the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 (in thousands):

 

 

 

June 30, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds(1)

 

$

73,621

 

 

$

 

 

$

 

 

$

73,621

 

U.S. government agency securities(2)

 

 

7,779

 

 

 

 

 

 

 

 

 

7,779

 

Federal agency securities(2)

 

 

 

 

 

5,123

 

 

 

 

 

 

5,123

 

Total financial assets

 

$

81,400

 

 

$

5,123

 

 

$

 

 

$

86,523

 

 

(1)

Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets.

(2)

Included in short-term investments on the accompanying condensed consolidated balance sheets and classified as available-for-sale debt securities.

 

 

 

December 31, 2020

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Financial assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds(1)

 

$

30,360

 

 

$

 

 

$

 

 

$

30,360

 

U.S. government agency securities(2)

 

 

37,837

 

 

 

 

 

 

 

 

 

37,837

 

Federal agency securities(2)

 

 

 

 

 

13,700

 

 

 

 

 

 

13,700

 

Total financial assets

 

$

68,197

 

 

$

13,700

 

 

$

 

 

$

81,897

 

 

(1)

Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets.

(2)

Included in short-term investments on the accompanying condensed consolidated balance sheets and classified as available-for-sale debt securities. $2.5 million of U.S. government agency securities as of December 31, 2020 are included in long-term investments on the accompanying condensed consolidated balance sheets due to the maturity being more than 12 months.

4.

Financial Instruments

Cash equivalents and investments (debt securities) which are classified as available-for-sale securities, consisted of the following (in thousands):

 

June 30, 2021

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

Losses

 

 

Estimated

Fair

Value

 

Money market funds (cash equivalents)

 

$

73,621

 

 

$

 

 

$

 

 

$

73,621

 

U.S. government agency securities

 

 

7,778

 

 

 

1

 

 

 

 

 

 

7,779

 

Federal agency securities

 

 

5,122

 

 

 

1

 

 

 

 

 

 

5,123

 

Total financial assets

 

$

86,521

 

 

$

2

 

 

$

 

 

$

86,523

 

Classified as:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

$

73,621

 

Short-term investments