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10-Q
SERES THERAPEUTICS, INC. filed this Form 10-Q on 05/09/2018
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mcrb-10q_20180331.htm

 

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, 2018

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: 001-37465

 

 

Seres Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

27-4326290

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

200 Sidney Street - 4th Floor

Cambridge, MA

 

02139

(Address of principal executive offices)

 

(Zip Code)

(617) 945-9626

(Registrant’s telephone number, including area code)

 

 

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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

 

  (Do not check if a small reporting company)

  

Small 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 May 3, 2018, the registrant had 40,652,668 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 


Seres Therapeutics, Inc.

INDEX

 

 

 

Page

 

 

 

PART I – FINANCIAL INFORMATION

 

 

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

4

Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017

 

4

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2018 and 2017

 

5

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017

 

6

Notes to Condensed Consolidated Financial Statements

 

7

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

 

20

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

29

Item 4. Controls and Procedures

 

29

 

 

 

PART II – OTHER INFORMATION

 

30

Item 1. Legal Proceedings

 

30

Item 1A. Risk Factors

 

30

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

 

60

Item 3. Defaults Upon Senior Securities

 

60

Item 4. Mine Safety Disclosures

 

60

Item 5. Other Information

 

60

Item 6. Exhibits

 

61

 

 

 

SIGNATURES

 

62

 

 

2


FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under the sections in this Quarterly Report titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These forward looking statements are subject to numerous risks, including, without limitation, the following:

 

our status as a clinical-stage company and our expectation to incur losses in the future;

 

our future capital needs and our need to raise additional funds;

 

our ability to build a pipeline of product candidates and develop and commercialize drugs;

 

our unproven approach to therapeutic intervention;

 

our ability to enroll patients in clinical trials, timely and successfully complete those trials and receive necessary regulatory approvals;

 

our ability to establish our own manufacturing facilities and to receive or manufacture sufficient quantities of our product candidates;

 

our ability to protect and enforce our intellectual property rights;

 

federal, state, and foreign regulatory requirements, including FDA regulation of our product candidates;

 

our ability to obtain and retain key executives and attract and retain qualified personnel; and

 

our ability to successfully manage our growth.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

 

 

3


PART I – FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (unaudited)

SERES THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2018

 

 

2017

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

47,194

 

 

$

36,088

 

Investments

 

 

75,000

 

 

 

113,895

 

Prepaid expenses and other current assets

 

 

4,260

 

 

 

5,095

 

Total current assets

 

 

126,454

 

 

 

155,078

 

Property and equipment, net

 

 

31,466

 

 

 

32,931

 

Restricted cash

 

 

1,513

 

 

 

1,513

 

Total assets

 

$

159,433

 

 

$

189,522

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,418

 

 

$

7,033

 

Accrued expenses and other current liabilities

 

 

11,873

 

 

 

12,513

 

Deferred revenue - related party

 

 

17,859

 

 

 

12,079

 

Total current liabilities

 

 

35,150

 

 

 

31,625

 

Lease incentive obligation, net of current portion

 

 

8,554

 

 

 

8,989

 

Deferred rent

 

 

2,234

 

 

 

2,233

 

Deferred revenue, net of current portion - related party

 

 

102,333

 

 

 

84,847

 

Other long-term liabilities

 

 

1,129

 

 

 

1,129

 

Total liabilities

 

 

149,400

 

 

 

128,823

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized at March 31, 2018 and

   December 31, 2017; no shares issued and outstanding at March 31, 2018 and December

   31, 2017

 

 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized at March 31, 2018

   and December 31, 2017; 40,652,668 and 40,571,015 shares issued and

   outstanding at March 31, 2018 and December 31, 2017, respectively

 

 

40

 

 

 

40

 

Additional paid-in capital

 

 

328,446

 

 

 

324,376

 

Accumulated other comprehensive loss

 

 

(106

)

 

 

(146

)

Accumulated deficit

 

 

(318,347

)

 

 

(263,571

)

Total stockholders’ equity

 

 

10,033

 

 

 

60,699

 

Total liabilities and stockholders’ equity

 

$

159,433

 

 

$

189,522

 

 

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

 

 

4


SERES THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited, in thousands, except share and per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

Revenue:

 

 

 

 

 

 

 

 

Collaboration revenue - related party

 

$

3,766

 

 

$

3,015

 

Grant revenue

 

 

205

 

 

 

 

Total revenue

 

 

3,971

 

 

 

3,015

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development expenses

 

 

23,460

 

 

 

20,143

 

General and administrative expenses

 

 

8,777

 

 

 

8,762

 

Total operating expenses

 

 

32,237

 

 

 

28,905

 

Loss from operations

 

 

(28,266

)

 

 

(25,890

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

347

 

 

 

416

 

Total other income (expense), net

 

 

347

 

 

 

416

 

Net loss

 

$

(27,919

)

 

$

(25,474

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.69

)

 

$

(0.63

)

Weighted average common shares outstanding, basic and diluted

 

 

40,628,434

 

 

 

40,368,536

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments, net of tax of $0

 

$

40

 

 

$

(2

)

Total other comprehensive income (loss)

 

 

40

 

 

 

(2

)

Comprehensive loss

 

$

(27,879

)

 

$

(25,476

)

 

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

 

 

 

5


SERES THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(27,919

)

 

$

(25,474

)

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

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

4,236

 

 

 

4,279

 

Depreciation and amortization expense

 

 

1,941

 

 

 

1,730

 

Non-cash interest expense

 

 

 

 

 

3

 

Accretion of discount on investments

 

 

(50

)

 

 

(59

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

835

 

 

 

(62

)

Deferred revenue

 

 

(3,592

)

 

 

(3,015

)

Accounts payable

 

 

(1,426

)

 

 

(1,916

)

Accrued expenses and other current liabilities

 

 

(788

)

 

 

(1,135

)

Net cash used in operating activities

 

 

(26,763

)

 

 

(25,649

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(953

)

 

 

(2,247

)

Purchases of investments

 

 

(5,270

)

 

 

(22,513

)

Sales and maturities of investments

 

 

44,257

 

 

 

37,751

 

Net cash provided by investing activities

 

 

38,034

 

 

 

12,991

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options and common stock warrants

 

 

32

 

 

 

19

 

Payments of employee tax obligations related to vesting of restricted stock units

 

 

(197

)

 

 

 

Net cash (used in) provided by financing activities

 

 

(165

)

 

 

19

 

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

 

 

11,106

 

 

 

(12,639

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

37,601

 

 

 

55,939

 

Cash, cash equivalents and restricted cash at end of period

 

$

48,707

 

 

$

43,300

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Property and equipment purchases included in accounts payable and accrued expenses

 

$

393

 

 

$

349

 

 

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

 

 

6


SERES THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

(Unaudited)

 

 

1.

Nature of the Business and Basis of Presentation

Seres Therapeutics, Inc. (the “Company”) was incorporated under the laws of the State of Delaware in October 2010 under the name Newco LS21, Inc. In October 2011, the Company changed its name to Seres Health, Inc., and in May 2015, the Company changed its name to Seres Therapeutics, Inc. The Company is a microbiome therapeutics platform company developing a novel class of biological drugs, which are designed to restore health by repairing the function of a dysbiotic microbiome. The Company’s lead product candidate, SER-109, is designed to prevent further recurrences of Clostridium difficile infection (“CDI”), a debilitating infection of the colon, and, if approved by the U.S. Food and Drug Administration (“FDA”), could be a first-in-field oral microbiome drug. The Company’s second product candidate, SER-287, is being developed to treat inflammatory bowel disease (“IBD”) including ulcerative colitis (“UC”).  The Company is also developing SER-401, a microbiome therapeutic candidate for use with checkpoint inhibitors (“CPI’s”) in patients with solid tumors. In addition, using its microbiome therapeutics platform, the Company is developing product candidates to treat diseases where the microbiome is implicated, including SER-262, a rationally designed product candidate, to prevent an initial recurrence of primary CDI, SER-301, a rationally designed IBD product candidate, and SER-155, a rationally designed product candidate to prevent infections and improve gastrointestinal barrier function (including the consequences of graft versus host disease) in patients following allogeneic hematopoietic stem cell transplants or solid organ transplants. The Company is also using its microbiome therapeutics platform to conduct research on various indications, including: infectious diseases, metabolic diseases, and inflammatory and immune diseases, including immuno-oncology.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with government regulations and the need to obtain additional financing. Product candidates currently under development will require significant additional research and development efforts, including extensive pre-clinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance-reporting capabilities.

The Company’s product candidates are in development. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any products developed will obtain necessary government regulatory approval or that any approved products will be commercially viable. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees and consultants.

The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Company has experienced negative cash flows and had an accumulated deficit of $318,347 and $263,571 as of March 31, 2018 and December 31, 2017, respectively. For the three months ended March 31, 2018, the Company incurred a loss of $27,919 and used $26,763 of cash in operations.  The Company expects that its operating losses and negative cash flows will continue for the foreseeable future. The Company expects that its cash, cash equivalents and investments at March 31, 2018 of $122,194 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from issuance of the financial statements. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations.

The Company is eligible to receive contingent milestone payments under its license and collaboration agreement with Nestec Ltd. (“NHS”), an affiliate of Nestlé Health Science US Holdings, Inc., a significant stockholder of the Company, if certain development milestones are achieved. However, these milestones are uncertain and there is no assurance that the Company will receive any of them.  Until such time, if ever, as the Company can generate substantial product revenue, the Company will finance its cash needs through a combination of public or private equity offerings, debt financings, governmental funding, collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties. The Company may not be able to obtain funding on acceptable terms, or at all. If the Company is unable to raise additional funds as and when needed, it would have a negative impact on the Company’s financial condition, which may require the Company to delay, reduce or eliminate certain research and development activities and reduce or eliminate discretionary operating expenses, which could constrain the Company’s ability to pursue its business strategies.

7


Unaudited Interim Financial Information

The accompanying unaudited consolidated financial statements as of March 31, 2018 and for the three months ended March 31, 2018 have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2017 included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on March 8, 2018.

The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements. The condensed consolidated balance sheet at December 31, 2017 was derived from audited annual financial statements, but does not contain all of the footnote disclosures from the annual financial statements. In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments which are necessary for a fair statement of the Company’s financial position as of March 31, 2018 and consolidated results of operations for the three months ended March 31, 2018 and its cash flows for the three months ended March 31, 2018 and 2017. Such adjustments are of a normal and recurring nature. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2018.

 

 

2.

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in preparation of the condensed consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2017, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K. There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2018 except for the adoption of the new revenue standard discussed in Note 8, Collaboration Revenue.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, the accrual of research and development expenses and the valuation of stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s estimates.

Net Loss per Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted average number of common shares outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock options and warrants and unvested restricted stock.

The restricted stock units granted by the Company entitle the holder of such awards to dividends declared or paid by the board of directors, regardless of whether such awards are unvested, as if such shares were outstanding common shares at the time of the dividend. However, the unvested restricted stock awards are not entitled to share in the residual net assets (deficit) of the Company. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

8


The following potential common shares, presented based on amounts outstanding at each period end, were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

 

 

 

Three Months Ended

March 31,

 

 

 

2018

 

 

2017

 

Stock options to purchase common stock

 

 

7,498,791

 

 

 

6,251,352

 

Unvested restricted stock units

 

 

302,665

 

 

 

405,200

 

 

 

 

7,801,456

 

 

 

6,656,552

 

 

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies how a company identifies promised goods or services and clarifies whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients related to disclosures of remaining performance obligations, as well as other amendments to guidance on collectability, non-cash consideration and the presentation of sales and other similar taxes collected from customers. In December 2016 the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, which amends certain narrow aspects of the guidance issued in ASU 2014-09 including guidance related to the disclosure of remaining performance obligations and prior-period performance obligations, as well as other amendments to the guidance on loan guarantee fees, contract costs, refund liabilities, advertising costs and the clarification of certain examples.  ASU 2016-08, ASU 2016-10 and ASU 2016-12 have the same effective dates and transition requirements as ASU 2014-09, all of which collectively are herein referred to as “ASC 606.” The Company has adopted this standard as of the required effective date of January 1, 2018. using the modified retrospective transition method.  See Note 8, “Collaboration Revenue,” for discussion of the impact of adoption of this standard.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), (“ASU 2016-02”), which establishes principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing and uncertainty of cash flows arising from a lease. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842), or ASU 2018-01, which adds two practical expedients to the new lease guidance. ASU 2018-1 is effective for the Company for annual periods beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The Company is currently in the process of evaluating the impact of the guidance on its consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments. This standard addresses specific cash flow issues with the objective of reducing existing diversity in practice in how certain cash receipts and cash payments are presented in the statement of cash flows. The standard was effective for the Company on January 1, 2018.  The Company adopted this standard as of the required effective date of January 1, 2018. The adoption of this standard did not have any impact on the Company’s financial statements.

9


In November 2016, the FASB issued ASU 2016-18, Restricted Cash.  The new standard requires restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. The new standard was effective for the Company on January 1, 2018. The Company adopted the new standard as of the required effective date of January 1, 2018 and will reflect the adoption retrospectively to all periods presented. The Company’s statements of cash flows includes restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on such statements. A reconciliation of the cash, cash equivalents, and restricted cash reported within the balance sheet that sum to the total of the same amounts shown in the statement of cash flows is as follows:

 

 

 

March 31,

 

 

December 31,

 

 

March 31,

 

 

December 31,

 

 

 

2018

 

 

2017

 

 

2017

 

 

2016

 

Cash and cash equivalents

 

$

47,194

 

 

$

36,088

 

 

$

41,899

 

 

$

54,539

 

Restricted cash

 

 

1,513

 

 

 

1,513

 

 

 

1,401

 

 

 

1,400

 

Total cash, cash equivalents and restricted cash as shown in the statement of cash flows

 

$

48,707

 

 

$

37,601

 

 

$

43,300

 

 

$

55,939

 

 

 

3.Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

 

Level 1—Quoted prices in active markets for identical assets or liabilities.

 

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

 

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents and investments are carried at fair value, determined according to the fair value hierarchy described above. The Company’s investments in certificates of deposit are carried at amortized cost, which approximates fair value. Certain cash equivalents or investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The carrying values of the Company’s accounts payable and accrued expenses approximate their fair value due to the short-term nature of these liabilities.

The following table presents information about the Company’s assets as of March 31, 2018 and December 31, 2017 that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (note there were no liabilities measured at fair value on a recurring basis in either of the periods presented):

 

 

 

Fair Value Measurements as of March 31, 2018 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Not Subject to Leveling (1)

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

$

 

 

$

750

 

 

$

 

 

$

39,061

 

 

$

39,811

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Paper

 

$

 

 

$

7,707

 

 

$

 

 

$

 

 

$

7,707

 

Certificates of Deposit

 

 

 

 

 

6,570

 

 

 

 

 

 

 

 

 

6,570

 

Corporate Bonds

 

 

 

 

 

37,799

 

 

 

 

 

 

 

 

 

37,799

 

Government Securities

 

 

 

 

 

10,476

 

 

 

 

 

 

 

 

 

10,476

 

Treasury Bonds

 

 

 

 

 

12,448

 

 

 

 

 

 

 

 

 

12,448

 

 

 

$

 

 

$

75,750

 

 

$

 

 

$

39,061

 

 

$

114,811

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Certain cash equivalents and investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

 

10


 

 

 

Fair Value Measurements as of December 31, 2017 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Not Subject to Leveling (1)

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

$

 

 

$

 

 

$

 

 

$

25,964

 

 

$

25,964

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Paper

 

$

 

 

$

6,198

 

 

$

 

 

$

 

 

$

6,198

 

Certificates of Deposit

 

 

 

 

 

8,916

 

 

 

 

 

 

 

 

 

 

 

8,916

 

Corporate Bonds

 

 

 

 

 

58,865

 

 

 

 

 

 

 

 

 

58,865

 

Government Securities

 

 

 

 

 

22,954

 

 

 

 

 

 

 

 

 

22,954

 

Treasury Bonds

 

 

 

 

 

16,962

 

 

 

 

 

 

 

 

 

16,962

 

 

 

$

 

 

$

113,895

 

 

$

 

 

$

25,964

 

 

$

139,859

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Certain cash equivalents and investments that are valued using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy.

 

 

As of March 31, 2018, the Company’s cash equivalents, which were invested in money market funds and corporate bonds with original maturities of less than 90 days from the date of purchase, were valued based on Level 2 inputs.

 

As of December 31, 2017, the Company’s cash equivalents consisted of money market funds and corporate bonds with original maturities of less than 90 days from the date of purchase and were valued based on Level 2 inputs.

 

The fair value of the Company’s investments, which consisted of commercial paper, certificates of deposit, corporate bonds, government securities and treasury bonds as of March 31, 2018 and December 31, 2017 were determined using Level 2 inputs. During the three months ended March 31, 2018 there were no transfers between Level 1, Level 2 and Level 3.

 

4.

Investments

As of March 31, 2018 and December 31, 2017, the fair value of available-for-sale investments by type of security was as follows:

 

 

 

March 31, 2018

 

 

 

Amortized

Cost

 

 

Gross

Unrealized Gain

 

 

Gross

Unrealized Loss

 

 

Fair

Value

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Paper

 

$

7,707

 

 

$

 

 

$

 

 

$

7,707

 

Certificates of Deposit

 

 

6,570

 

 

 

 

 

 

 

 

 

6,570

 

Corporate Bonds

 

 

37,849

 

 

 

 

 

 

(50

)

 

 

37,799

 

Government Securities

 

 

10,498

 

 

 

 

 

 

(22

)

 

 

10,476

 

Treasury Bonds

 

 

12,480

 

 

 

 

 

 

(32

)

 

 

12,448

 

 

 

$

75,104

 

 

$

 

 

$

(104

)

 

$

75,000

 

 

 

 

December 31, 2017

 

 

 

Amortized

Cost

 

 

Gross

Unrealized Gain

 

 

Gross

Unrealized Loss

 

 

Fair

Value

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial Paper

 

$

6,198

 

 

$

 

 

$

 

 

$

6,198

 

Certificates of Deposit

 

 

8,916

 

 

 

 

 

 

 

 

 

8,916

 

Corporate Bonds

 

 

58,937

 

 

 

 

 

 

(72

)

 

 

58,865

 

Government Securities

 

 

22,997

 

 

 

 

 

 

(43

)

 

 

22,954

 

Treasury Bonds

 

 

16,992

 

 

 

 

 

 

(30

)

 

 

16,962

 

 

 

$

114,040

 

 

$

 

 

$

(145

)

 

$

113,895

 

 

Investments with original maturities of less than 90 days are included in cash and cash equivalents on the consolidated balance sheets and are not included in the table above. Investments with maturities of less than 12 months are considered current and those investments with maturities greater than 12 months are considered non-current.

11


All investments with unrealized losses at March 31, 2018 have been in a loss position for less than 12 months or the loss is not material and temporary in nature. The Company does not intend to sell the investments that are in an unrealized loss position before recovery of their amortized cost basis.

 

 

5.

Property and Equipment, Net

Property and equipment, net consisted of the following:

 

 

 

March 31,

2018

 

 

December 31,

2017

 

Laboratory equipment

 

$

13,489

 

 

$

13,181

 

Computer equipment

 

 

2,852

 

 

 

2,832

 

Furniture and office equipment

 

 

1,033

 

 

 

1,033

 

Leasehold improvements

 

 

27,977

 

 

 

27,963

 

Construction in progress

 

 

495

 

 

 

361

 

 

 

 

45,846

 

 

 

45,370

 

Less: Accumulated depreciation and amortization

 

 

(14,380

)

 

 

(12,439

)

 

 

$

31,466

 

 

$

32,931

 

 

Depreciation and amortization expense was $1,941 and $1,730 for the three months ended March 31, 2018 and 2017, respectively.

 

 

6.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

 

 

 

March 31,

2018

 

 

December 31,

2017

 

Development and manufacturing costs

 

$

6,494

 

 

$

3,910

 

Payroll and payroll-related costs

 

 

2,033

 

 

 

4,962

 

Professional fees

 

 

330

 

 

 

344

 

Facility and other

 

 

3,016

 

 

 

3,297

 

 

 

$

11,873

 

 

$

12,513

 

 

 

7.

Stockholders’ Equity Common Stock

Stock Options

The following table summarizes the Company’s stock option activity since December 31, 2017:

 

 

 

Number of

Shares

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Remaining

Contractual

Term

 

 

Aggregate

Intrinsic

Value

 

 

 

 

 

 

 

 

 

 

 

(in years)

 

 

 

 

 

Outstanding as of December 31, 2017

 

 

6,125,692

 

 

$

13.00

 

 

 

7.70

 

 

$

15,808

 

Granted

 

 

1,511,276

 

 

 

10.38

 

 

 

 

 

 

 

 

 

Exercised

 

 

(48,053

)

 

 

0.66

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(90,124

)

 

 

17.60

 

 

 

 

 

 

 

 

 

Outstanding as of March 31, 2018

 

 

7,498,791

 

 

$

12.50

 

 

 

7.93

 

 

$

9,989

 

Options vested and expected to vest as of March 31, 2018

 

 

7,498,791

 

 

$

12.50

 

 

 

7.93

 

 

$

9,989

 

Options exercisable as of March 31, 2018

 

 

3,767,312

 

 

$

11.45

 

 

 

6.90

 

 

$

9,897

 

 

The weighted average grant-date fair value of stock options granted during the three months ended March 31, 2018 and 2017 was $7.02 and $6.93 per share, respectively.

12


Restricted Stock Units

The Company has granted restricted stock units with time-based vesting conditions.  The table below summarizes the Company’s restricted stock unit activity for the three months ended March 31, 2018:

 

 

 

Number

of Shares

 

 

Weighted

Average Grant

Date Fair Value

 

Unvested restricted stock units as of December 31, 2017

 

 

356,778

 

 

$

10.01

 

Granted

 

 

 

 

$

 

Forfeited

 

 

(2,613

)

 

$

9.98

 

Vested

 

 

(51,500

)

 

$

9.78

 

Unvested restricted stock units as of March 31, 2018

 

 

302,665

 

 

$

10.02

 

 

Stock-based Compensation Expense

The Company recorded stock-based compensation expense related to stock options and restricted stock units in the following expense categories of its condensed consolidated statements of operations and comprehensive loss:

 

 

 

Three Months Ended

March 31,

 

 

 

2018

 

 

2017

 

Research and development expenses

 

$

1,928

 

 

$

1,873

 

General and administrative expenses

 

 

2,308

 

 

 

2,406

 

 

 

$

4,236

 

 

$

4,279

 

 

 

Employee Stock Purchase Plan

 

The Company’s Employee Stock Purchase Plan (“ESPP”) provides that eligible employees may contribute up to 15% of their eligible earnings toward the semi-annual purchase of the Company' common stock. The ESPP is qualified under Section 423 of the Internal Revenue Code. The employee's purchase price is derived from a formula based on the closing price of the common stock on the first day of the offering period versus the closing price on the date of purchase (or, if not a trading day, on the immediately preceding trading day).  The offering period under the ESPP has a duration of six months, and the purchase price with respect to each offering period beginning on or after such date is, until otherwise amended, equal to 85% of the lesser of (i) the fair market value of the Company's common stock at the commencement of the applicable six-month offering period or (ii) the fair market value of the Company's common stock on the purchase date. The Company estimates the fair value of common stock under the ESPP using a Black-Scholes valuation model. The fair value was estimated on the date of grant using the Black-Scholes option valuation model and the straight-line attribution approach with the following weighted-average assumptions: risk-free interest rate (1.89%); expected term (0.5 years); expected volatility (65.5%); and an expected dividend yield (0%).  The Company recorded an immaterial amount of stock-based compensation expense under the ESPP for the three months ended March 31, 2018.

The total number of available ESPP shares is increased annually, beginning in 2016 and ending in 2025. The ESPP allows for share replenishment equal to the lesser of (i) 400,000 shares and (ii) 1% of the number of shares of the Company’s common stock outstanding on the last day of the preceding calendar year, or an amount determined by the Company’s Board of Directors. As of March 31, 2018, a total of 1.6 million shares were reserved and available for issuance under the ESPP.

 

8.

Collaboration Revenue

Adoption of ASC Topic 606, Revenue from Contracts with Customers

The Company adopted ASC 606 on January 1, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605, Revenue Recognition (ASC 605), which is also referred to herein as "legacy GAAP" or the "previous guidance". The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company's services and will provide financial statement readers with enhanced disclosures.

13


Financial Statement Impact of Adopting ASC 606

The cumulative effect of applying the new guidance to all contracts with customers that were not completed as of January 1, 2018, was recorded as an adjustment to accumulated deficit as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2018:

 

 

 

As Reported at

 

 

Adjustments Due to

 

 

Balance at

 

 

 

December 31, 2017

 

 

ASC 606

 

 

January 1, 2018

 

Deferred revenue - related party

 

 

12,079

 

 

 

5,339

 

 

 

17,418

 

Deferred revenue, net of current portion - related party

 

 

84,847

 

 

 

21,518

 

 

 

106,365

 

Accumulated deficit

 

 

(263,571

)

 

 

(26,857

)

 

 

(290,428

)

 

Collaboration Revenue

The adoption of ASC 606 changed the pattern and timing of revenue recognition under the Company’s license and collaboration agreement with NHS. Under ASC 605, the upfront fee of $120,000 received by the Company in the first quarter of 2016 was deferred and recognized on a straight-line basis over the estimated performance period of 10 years. In addition, the Company recognized revenue associated with substantive development milestones not considered probable at the inception of the license and collaboration agreement with NHS in their entirety in the period in which the milestone was achieved, in accordance with FASB ASC Topic 605-28, Revenue Recognition-Milestone Method.

Under ASC 606, the Company recognizes revenue using the cost-to-cost method which best depicts the transfer of control to the customer. Under the cost-to-cost method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the identified performance obligation. Under this method, revenue will be recorded as a percentage of the estimated transaction price based on the extent of progress towards completion. The estimate of the Company’s measure of progress and estimate of transaction price will be updated at each reporting date, as a change in estimate, and will require judgement. The amount of consideration allocated to satisfied performance obligations, based on the Company’s measure of progress will be recognized immediately on a cumulative catch-up basis, resulting in an adjustment to revenue in the period of change. The amount related to the unsatisfied portion will be recognized as that portion is satisfied over time.  In addition, substantive development milestones, which were previously recognized in the period when the milestone was achieved, will be recognized over the remaining performance period under ASC 606. As the adoption method does not result in a recast of the prior year consolidated financial statements, ASC 606 requires the Company to provide additional disclosures during the year of adoption of the amount by which each financial statement line item is affected by adoption of the new standard and explanations of the reasons for significant changes.

We do not assess whether a contract has a significant financing component if the expectation at contract inception is 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. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial. At March 31, 2018, we have not capitalized any costs to obtain any of our contracts.

Income Taxes

The adoption of ASC 606 resulted in an increase to deferred revenue, which in turn generated an additional deferred tax asset that increased the Company’s net deferred tax asset position. As the Company fully reserves its net deferred tax assets, the impact was offset by the valuation allowance.

Impact of New Revenue Guidance on Financial Statement Line Items

The following table compares the reported condensed consolidated balance sheet, statement of operations and cash flows, as of and for the three months ended March 31, 2018, to the pro-forma amounts had the previous guidance (ASC 605) been in effect:

 

 

 

As of March 31, 2018

 

 

 

As Reported under

ASC 606

 

 

Pro forma as if accounted for under ASC 605

 

Deferred revenue - related party

 

 

17,859

 

 

 

12,097

 

Deferred revenue, net of current portion - related party

 

 

102,333

 

 

 

81,945

 

Accumulated deficit

 

 

(318,347

)

 

 

(292,197

)

14


 

Total reported liabilities were $26,150 greater as reported under ASC 606 than would have been reported under ASC 605 as of March 31, 2018. This change consists of a $20,388 increase in deferred revenue, net of current portion, related party, and a $5,762 increase in deferred revenue - related parties.  

 

 

 

Three Months Ended March 31, 2018

 

 

 

As Reported under

ASC 606

 

 

Pro forma as if accounted for under ASC 605

 

Collaboration revenue - related party

 

$

3,766

 

 

$

3,059

 

Loss from operations

 

 

(28,266

)

 

 

(28,973

)

Net loss

 

$

(27,919

)

 

$

(28,626

)

Net loss per share attributable to common stockholders,

   basic and diluted

 

$

(0.69

)

 

$

(0.70

)

 

Collaboration revenue – related party increased by approximately $707 as reported under ASC 606 when compared to what would have been reported under ASC 605 for the three months ended March 31, 2018.

 

 

 

Three Months Ended March 31, 2018

 

 

 

As Reported under

ASC 606

 

 

Pro forma as if accounted for under ASC 605

 

Net loss

 

$

(27,919

)

 

$

(28,626

)

Deferred revenue

 

 

(3,592

)

 

 

(2,885

)

 

The adoption of ASC 606 resulted in a $707 decrease in net loss for the period, due to a corresponding increase in revenue. This was offset by an increase of $707 in the change in deferred revenue for the quarter.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Collaboration Revenue

The Company currently generates its revenue through a collaboration and license agreement for the development and commercialization of product candidates. The collaboration and license agreement is within the scope of ASC 606.

In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under the agreements, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligation(s); and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.  As part of the accounting for an arrangement that contains multiple performance obligations, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract.  The Company uses key assumptions to determine the stand-alone selling price, which may include market conditions, reimbursement rates for personnel costs, development timelines and probabilities of regulatory success.

Licenses of intellectual property:   If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.  For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined

15


performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.  The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition.

Milestone Payments:  At the inception of each arrangement that includes developmental and regulatory milestone payments, the Company evaluates whether the achievement of each milestone specifically relates to the Company’s efforts to satisfy a performance obligation or transfer a distinct good or service within a performance obligation. If the achievement of a milestone is considered a direct result of the Company’s efforts to satisfy a performance obligation or transfer a distinct good or service and the receipt of the payment is based upon the achievement of the milestone, the associate milestone value is allocated to that distinct good or service and revenue is recognized in the period in which the milestone is achieved. If the milestone payment is not specifically related to the Company’s effort to satisfy a performance obligation or transfer a distinct good or service, the Company evaluates the milestone to determine whether the milestone is considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price to be allocated.  At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall allocation.  Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period of adjustment.

Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).  

Transaction Price Allocated to Future Performance Obligations

Remaining performance obligations represents the transaction price of contracts for which work has not been performed (or has been partially performed) and excludes unexercised contract options.  As of March 31, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligation was approximately $151,000.

Contract Balances from Contracts with Customers

The following table presents changes in the Company’s contract assets and contract liabilities during the three months ended March 31, 2018 and 2017 (in thousands):

 

 

 

Balance as of January 1, 2018

 

 

Additions

 

 

Deductions

 

 

Balance as of

March 31, 2018

 

Three months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract assets

 

 

510

 

 

 

175

 

 

 

(510

)

 

 

175

 

Contract liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred revenue

 

 

123,783

 

 

 

175

 

 

 

(3,766

)

 

 

120,192

 

 

 

 

Balance as of January 1, 2017

 

 

Additions

 

 

Deductions

 

 

Balance as of

March 31, 2017

 

Three months ended March 31, 2017