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Table of Contents

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 September 30, 2019

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 001-37687

EDITAS MEDICINE, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

46-4097528
(I.R.S. Employer
Identification No.)

11 Hurley Street
Cambridge, Massachusetts
(Address of principal executive offices)

02141
(Zip Code)

(617401-9000

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

EDIT

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 

The number of shares of Common Stock outstanding as of November 1, 2019 was 51,302,885.

Table of Contents

Editas Medicine, Inc.

TABLE OF CONTENTS

    

    

Page

PART I. FINANCIAL INFORMATION

3

Item 1.

Financial Statements (unaudited)

3

Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018

3

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018

4

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2019 and 2018

5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2019 and 2018

6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018

8

Notes to Condensed Consolidated Financial Statements

9

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

34

PART II. OTHER INFORMATION

35

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 5.

Other Information

88

Item 6.

Exhibits

90

Signatures

91

2

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements.

Editas Medicine, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

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

    

September 30, 

    

December 31, 

2019

2018

ASSETS

Current assets:

Cash and cash equivalents

$

104,772

$

134,776

Marketable securities

227,844

234,179

Accounts receivable

 

311

 

30

Prepaid expenses and other current assets

 

6,284

 

5,791

Total current assets

 

339,211

 

374,776

Property and equipment, net

 

10,075

 

40,232

Right-of-use asset

17,681

Restricted cash and other non-current assets

 

5,392

 

5,378

Total assets

$

372,359

$

420,386

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

6,624

$

5,327

Accrued expenses

 

8,138

 

12,813

Deferred revenue, current

46,019

15,712

Operating lease liability

4,448

Other current liabilities

 

1,558

 

2,048

Total current liabilities

 

66,787

 

35,900

Operating lease liability, net of current portion

13,202

Deferred revenue, net of current portion

82,379

115,614

Construction financing lease obligation, net of current portion

 

 

32,417

Other non-current liabilities

 

1

 

293

Total liabilities

162,369

184,224

Commitments and contingencies (see note 7)

Stockholders’ equity

Preferred stock, $0.0001 par value per share: 5,000,000 shares authorized; no shares issued or outstanding

 

 

Common stock, $0.0001 par value per share: 195,000,000 shares authorized; 51,528,020 and 49,028,907 shares issued, and 51,076,198 and 48,758,951 shares outstanding at September 30, 2019 and December 31, 2018, respectively

 

5

 

5

Additional paid-in capital

 

721,397

 

652,464

Accumulated other comprehensive income (loss)

39

(29)

Accumulated deficit

 

(511,451)

 

(416,278)

Total stockholders’ equity

209,990

236,162

Total liabilities and stockholders’ equity

$

372,359

$

420,386

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

3

Table of Contents

Editas Medicine, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

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

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2019

2018

2019

2018

Collaboration and other research and development revenues

$

3,848

$

14,519

$

8,247

$

25,818

Operating expenses:

Research and development

 

22,702

 

17,443

 

62,109

 

71,460

General and administrative

 

15,734

 

13,334

 

47,638

 

41,832

Total operating expenses

 

38,436

 

30,777

 

109,747

 

113,292

Operating loss

 

(34,588)

 

(16,258)

 

(101,500)

 

(87,474)

Other income, net:

Other (expense) income, net

 

(33)

 

(4)

 

(144)

 

332

Interest income, net

1,680

1,024

5,668

2,243

Total other income, net

 

1,647

 

1,020

 

5,524

 

2,575

Net loss

$

(32,941)

$

(15,238)

$

(95,976)

$

(84,899)

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

$

(0.66)

$

(0.32)

$

(1.95)

$

(1.81)

Weighted-average common shares outstanding, basic and diluted

 

49,820,455

 

47,414,271

 

49,246,684

 

46,791,322

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

4

Table of Contents

Editas Medicine, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(amounts in thousands)

Three Months Ended

Nine Months Ended

September 30, 

September 30, 

2019

2018

2019

2018

Net loss

$

(32,941)

$

(15,238)

$

(95,976)

$

(84,899)

Other comprehensive (loss) income:

Unrealized (loss) gain on marketable debt securities

 

(6)

 

(83)

 

68

 

(6)

Comprehensive loss

$

(32,947)

$

(15,321)

$

(95,908)

$

(84,905)

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

5

Table of Contents

Editas Medicine, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(amounts in thousands, except share data)

    

    

Accumulated

    

    

Additional

Other

Other

Total

Common Stock

Paid-In

Comprehensive

Accumulated

Stockholders’

Shares

    

Amount

Capital

(Loss) Income

Deficit

Equity

Balance at December 31, 2018

48,758,951

$

5

$

652,464

$

(29)

$

(416,278)

$

236,162

Cumulative effect adjustment for adoption of new accounting guidance

803

803

Exercise of stock options

146,171

1,533

1,533

Vesting of restricted common stock awards

18,000

Stock-based compensation expense

7,855

7,855

Unrealized gain on marketable securities

58

58

Net loss

(29,249)

(29,249)

Balance at March 31, 2019

48,923,122

$

5

$

661,852

$

29

$

(444,724)

$

217,162

Exercise of stock options

277,259

2,894

2,894

Vesting of restricted common stock units and awards

24,486

Purchase of common stock under benefit plan

16,226

283

283

Stock-based compensation expenses

6,493

6,493

Unrealized gain on marketable securities

16

16

Net loss

(33,786)

(33,786)

Balance at June 30, 2019

49,241,093

$

5

$

671,522

$

45

$

(478,510)

$

193,062

Exercise of stock options

78,804

1,329

1,329

Vesting of restricted common stock units and awards

34,566

Stock-based compensation expenses

6,559

6,559

Issuance of common stock from public offering, net of issuance costs of $0.1 million

1,721,735

41,987

41,987

Unrealized loss on marketable securities

(6)

(6)

Net loss

(32,941)

(32,941)

Balance at September 30, 2019

51,076,198

$

5

$

721,397

$

39

$

(511,451)

$

209,990

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

6

Table of Contents

Editas Medicine, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(amounts in thousands, except share data)

    

    

Accumulated

    

    

Additional

Other

Other

Total

Common Stock

Paid-In

Comprehensive

Accumulated

Stockholders’

Shares

    

Amount

Capital

(Loss) Income

Deficit

Equity

Balance at December 31, 2017

44,507,960

$

4

$

514,002

$

(76)

$

(305,850)

$

208,080

Cumulative effect adjustment for adoption of new accounting guidance

(474)

(474)

Issuance of common stock from public offering, net of issuance costs of $0.1 million

1,429,205

48,493

48,493

Issuance of common stock for repayment of notes payable

305,909

9,530

9,530

Issuance of common stock for asset purchase agreement

56,099

1,942

1,942

Exercise of stock options

305,408

4,328

4,328

Vesting of restricted common stock

107,114

Stock-based compensation expense

6,530

6,530

Unrealized gain on marketable securities

24

24

Net loss

(30,939)

(30,939)

Balance at March 31, 2018

46,711,695

$

4

$

584,825

$

(52)

$

(337,263)

$

247,514

Issuance of common stock for repayment of notes payable

330,617

1

12,500

12,501

Exercise of stock options

192,687

2,597

2,597

Vesting of restricted common stock

103,481

Purchase of common stock under benefit plan

14,273

362

362

Stock-based compensation expense

7,026

7,026

Unrealized gain on marketable securities

53

53

Net loss

(38,723)

(38,723)

Balance at June 30, 2018

47,352,753

$

5

$

607,310

$

1

$

(375,986)

$

231,330

Exercise of stock options

132,856

1,739

1,739

Vesting of restricted common stock

18,000

Stock-based compensation expense

6,699

6,699

Unrealized (loss) on marketable securities

(83)

(83)

Net loss

(15,238)

(15,238)

Balance at September 30, 2018

47,503,609

$

5

$

615,748

$

(82)

$

(391,224)

$

224,447

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

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Editas Medicine, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(amounts in thousands)

Nine Months Ended

September 30, 

    

2019

    

2018

Cash flow from operating activities

Net loss

$

(95,976)

$

(84,899)

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

Stock-based compensation expense

 

20,907

 

20,251

Depreciation

 

2,048

 

2,374

Non-cash research and development expense

 

 

14,442

Non-cash investment in equity securities

(3,667)

Other non-cash items, net

 

(2,427)

 

(2,129)

Changes in operating assets and liabilities:

 

 

Accounts receivable

(281)

636

Prepaid expenses and other current assets

263

(2,349)

Right-of-use asset

1,780

Other non-current assets

(14)

(92)

Accounts payable

1,005

1,667

Accrued expenses

 

(4,491)

 

2,344

Deferred revenue

 

(2,928)

 

4,388

Operating lease liability

(2,107)

Other current and non-current liabilities

528

Net cash used in operating activities

 

(81,693)

 

(47,034)

Cash flow from investing activities

Purchases of property and equipment

 

(4,476)

(3,339)

Proceeds from the sale of equipment

36

18

Purchases of marketable securities

(305,126)

(351,162)

Proceeds from maturities of marketable securities

314,000

310,000

Net cash provided by (used in) investing activities

 

4,434

 

(44,483)

Cash flow from financing activities

Proceeds from offering of common stock, net of issuance costs

41,216

48,471

Proceeds from exercise of stock options

5,756

8,376

Issuances of common stock under benefit plans

283

362

Payments on construction financing lease obligation

(621)

Net cash provided by financing activities

 

47,255

 

56,588

Net decrease in cash and cash equivalents

 

(30,004)

(34,929)

Cash, cash equivalents and restricted cash, beginning of period

 

136,395

148,249

Cash, cash equivalents and restricted cash, end of period

$

106,391

$

113,320

Supplemental disclosure of cash and non-cash activities:

Fixed asset additions included in accounts payable and accrued expenses

$

772

$

676

Receivable of proceeds from offering of common stock

756

Cash paid in connection with operating lease liabilities

4,604

Right-of-use assets obtained in exchange of operating lease obligations

19,461

Reclassification of liability for common stock subject to repurchase

4

Issuance of common stock for settlement of success payments (see note 7)

9,530

Issuance of common stock for asset acquisition

1,942

Issuance of common stock for settlement of notes payable (see note 7)

12,500

Adjustment to deferred revenue for revenue adoption

474

Offering costs included in accounts payable and accrued expenses

15

22


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

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Editas Medicine, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Nature of Business

Editas Medicine, Inc. (the “Company”) is a leading, clinical stage genome editing company dedicated to developing potentially transformative genomic medicines to treat a broad range of serious diseases. The Company was incorporated in the state of Delaware in September 2013. Its principal offices are in Cambridge, Massachusetts.

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital. The Company has primarily financed its operations through various equity financings, payments received under a research collaboration with Juno Therapeutics, Inc., a Celgene company that is a wholly-owned subsidiary of Celgene Corporation (“Juno Therapeutics”), and payments received under a strategic alliance and option agreement with Allergan Pharmaceuticals International Limited (“Allergan”).

The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and ability to transition from pilot-scale manufacturing to large-scale production of products.

Liquidity

As of September 30, 2019, the Company has raised an aggregate of $370.4 million in net proceeds through the sale of shares of its common stock in public offerings. In March 2018, the Company entered into a sales agreement with Cowen and Company, LLC (“Cowen”), under which the Company from time to time can issue and sell shares of its common stock through Cowen in at-the-market offerings for aggregate gross sales proceeds of $150.0 million (the “March 2018 ATM Program”). Beginning in August 2019 and through the date of filing this Quarterly Report on Form 10-Q, the Company sold an aggregate of 1,727,555 shares of its common stock pursuant to the March 2018 ATM Program, of which 1,721,735 shares were sold during the three months ended September 30, 2019, at a weighted-average price of $25.15 per share for gross proceeds of $43.6 million under the March 2018 ATM Program. The Company paid Cowen a 3% cash commission on the gross sales price per share of its common stock sold under the March 2018 ATM Program. As of the three months ended September 30, 2019, the Company received net proceeds of $42.1 million, of which $0.8 million was recorded as a receivable in other current assets in the condensed consolidated balance sheet. As of the date of this Quarterly Report on Form 10-Q, the Company has an ability to raise an additional $106.4 million in aggregate gross sales proceeds under the March 2018 ATM Program.

The Company has incurred annual net operating losses in every year since its inception. The Company expects that its existing cash, cash equivalents and marketable securities at September 30, 2019 and anticipated interest income will enable it to fund its operating expenses and capital expenditure requirements for at least 24 months following the date of this Quarterly Report on Form 10-Q. The Company had an accumulated deficit of $511.5 million at September 30, 2019 and will require substantial additional capital to fund its operations. The Company has never generated any product revenue. There can be no assurance that the Company will be able to obtain additional debt or equity financing or generate product revenue or revenues from collaborative partners, on terms acceptable to the Company, on a timely basis or at all. The failure of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations, and financial condition.

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2. Summary of Significant Accounting Policies

Unaudited Interim Financial Information

The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the “Annual Report”).

The unaudited condensed consolidated financial statements include the accounts of Editas Medicine, Inc. and its wholly owned subsidiary, Editas Securities Corporation. All intercompany transactions and balances of the subsidiary have been eliminated in consolidation. In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The three months ended September 30, 2019 and 2018 are referred to as the third quarter of 2019 and 2018, respectively. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, “Summary of significant accounting policies,” to the consolidated financial statements included in the Annual Report. There have been no material changes to the significant accounting policies previously disclosed in the Annual Report other than as noted below.

Recent Accounting Pronouncements –Adopted

Leases

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASC 842”), which amends a number of aspects of lease accounting and requires entities to recognize right-of-use assets and operating lease liabilities on the balance sheet.

At the inception of an arrangement the Company determines whether the arrangement contains a lease. If a lease is identified in an arrangement, the Company recognizes a right-of-use asset and liability on its balance sheet and determines whether the lease should be classified as a finance or operating lease. The Company does not recognize assets or liabilities for leases with lease terms of less than 12 months. Lease payments for short-term leases are recorded to operating expense on a straight-line basis over the lease term and variable lease payments are recorded in the period in which the obligation for those payments is incurred.

A lease qualifies as a finance lease if any of the following criteria are met at the inception of the lease: (i) there is a transfer of ownership of the leased asset to the Company by the end of the lease term, (ii) the Company holds an option to purchase the leased asset that it is reasonably certain to exercise, (iii) the lease term is for a major part of the remaining economic life of the leased asset, (iv) the present value of the sum of lease payments equals or exceeds substantially all of the fair value of the leased asset, and (v) the nature of the leased asset is specialized to the point that it is expected to provide the lessor no alternative use at the end of the lease term. All other leases are recorded as operating leases.

Finance and operating lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term using the discount rate implicit in the lease. If the rate is not readily determinable, the Company utilizes its incremental borrowing rate at the lease commencement date. Operating lease assets are further adjusted for prepaid or accrued lease payments. Operating lease payments are expensed using the

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straight-line method as an operating expense over the lease term. Finance lease assets are amortized to depreciation expense using the straight-line method over the shorter of the useful life of the related asset or the lease term. Finance lease payments are bifurcated into (i) a portion that is recorded as imputed interest expense and (ii) a portion that reduces the finance liability associated with the lease.

The Company does not separate lease and non-lease components when determining which lease payments to include in the calculation of its lease assets and liabilities. Variable lease payments are expensed as incurred. If a lease includes an option to extend or terminate the lease, the Company reflects the option in the lease term if it is reasonably certain it will exercise the option.

The Company elected the modified-retrospective transition method, pursuant to which the Company recognized a cumulative-effect adjustment of $0.8 million to the opening balance of accumulated deficit on January 1, 2019 associated with de-recognizing the net asset balance recorded in property and equipment, net and the offsetting construction financing lease liability related to the Company’s headquarters which was previously accounted for under the built-to-suit guidance in Accounting Standards Codification (“ASC”) 840, Leases (“ASC 840”). This resulted in a reversal of $32.6 million from total assets and $33.4 million from total liabilities. All prior period balances are presented in accordance with ASC 840. As of January 1, 2019, the Company recorded a right-of-use asset of $19.5 million and lease liability of $19.7 million associated with the adoption of ASC 842. In addition, the Company elected to adopt the package of three practical expedients for leases that commenced prior to January 1, 2019, allowing it not to reassess (i) whether any expired or existing contracts contain leases, (ii) the lease classification for any expired or existing leases and (iii) the initial indirect costs for any existing leases. The Company did not elect the hindsight practical expedient which allows the Company to reassess the lease term as it was not relevant to the Company’s leases.

Stock-Based Compensation Expense

Effective January 1, 2019, the Company adopted ASU No. 2018-07, Compensation – Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), which simplified the accounting for share-based payments to non-employees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The new guidance expands the scope of ASC 718, Compensation – Stock Compensation (“ASC 718”), which supersedes the guidance in ASC 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). In accordance with the new guidance, the Company accounts for share-based payments to non-employees by recognizing stock-based compensation expense equal to the grant date fair value of the share-based payment ratably over the requisite service period. The Company estimates the grant date fair value for each stock option using the Black-Scholes option-pricing model. For restricted stock awards and restricted stock unit awards, the Company estimates the value of each award using intrinsic value, which is based on the value of the underlying common stock less any purchase price. On the date of adoption, the Company estimated the fair value for all unvested non-employee stock options and restricted shares. The unvested stock-based compensation will be recorded over the remaining requisite service period.

Recent Accounting Pronouncements – Issued But Not Yet Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies certain disclosure requirements on fair value measurements. The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty are required to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are required to be applied retrospectively to all periods presented upon their effective date. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years. The Company does not anticipate a material impact to disclosures as a result of the adoption of ASU 2018-13.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard requires that a financial asset or a group of financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. Under current GAAP, a company only considered past events and current conditions in measuring an incurred loss. Under ASU 2016-13, the information that a company must consider is broadened in developing an expected credit

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loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. The new guidance will be effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. The guidance is applied using a modified retrospective, or prospective approach, depending on a specific amendment. The Company does not anticipate a material impact on its consolidated financial statements as a result of the adoption of ASU 2016-13.

3. Cash Equivalents, Marketable Securities and Equity Securities

Cash equivalents, marketable securities and equity securities consisted of the following at September 30, 2019 (in thousands):

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

September 30, 2019

Cost

Gains

Losses

Value

Cash equivalents and marketable securities:

Money market funds

$

104,772

$

$

$

104,772

U.S. Treasuries

83,564

23

83,587

Government agency securities

144,241

16

144,257

Equity securities included in other non-current assets:

Corporate equity securities

3,667

3,667

Total

$

336,244

$

39

$

$

336,283

Cash equivalents, marketable securities and equity securities consisted of the following at December 31, 2018 (in thousands):

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

December 31, 2018

Cost

Gains

Losses

Value

Cash equivalents and marketable securities:

Money market funds

$

130,049

$

$

$

130,049

U.S. Treasuries

208,754

(24)

208,730

Government agency securities

29,940

(5)

29,935

Equity securities included in other non-current assets:

Corporate equity securities

3,667

3,667

Total

$

372,410

$

$

(29)

$

372,381

At September 30, 2019, the Company held five securities that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position for less than 12 months at September 30, 2019 was $51.9 million, and there were no securities held by the Company in an unrealized loss position for more than 12 months. Pursuant to the adoption of ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, the Company records changes in the fair value of its investments in corporate equity securities to “Other (expense) income, net” in the Company’s condensed consolidated statements of operations. The Company records unrealized gains (losses) on available-for-sale debt securities as a component of accumulated other comprehensive income (loss) until such gains and losses are realized.

As of September 30, 2019, the Company did not intend to sell, and was not more likely than not required to sell, the debt securities in an unrealized loss position before recovery of their amortized cost bases. Furthermore, the Company has determined that there were no material changes in the credit risk of the debt securities. As a result, the Company determined it did not hold any marketable securities with any other-than-temporary impairment as of September 30, 2019.

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There were no realized gains or losses on available-for-sale securities during the nine months ended September 30, 2019 or 2018.

4. Fair Value Measurements

Assets measured at fair value on a recurring basis as of September 30, 2019 were as follows (in thousands):

    

    

Quoted Prices

    

Significant

    

in Active

Other

Significant

Markets for

Observable

Unobservable

September 30, 

Identical Assets

Inputs

Inputs

Financial Assets

2019

(Level 1)

(Level 2)

(Level 3)

Cash equivalents:

Money market funds

$

104,772

$

104,772

$

$

Marketable securities:

U.S. Treasuries

83,587

83,587

Government agency securities

144,257

144,257

Restricted cash and other non-current assets:

Corporate equity securities

3,667

3,667

Money market funds

1,619

1,619

Total financial assets

$

337,902

$

334,235

$

3,667

$

Assets measured at fair value on a recurring basis as of December 31, 2018 were as follows (in thousands):

    

    

Quoted Prices

    

Significant

    

in Active

Other

Significant

Markets for

Observable

Unobservable

December 31, 

Identical Assets

Inputs

Inputs

Financial Assets

2018

(Level 1)

(Level 2)

(Level 3)

Cash equivalents:

Money market funds

$

130,049

$

130,049

$

$

U.S. Treasuries

4,487

4,487

Marketable securities:

U.S. Treasuries

204,243

204,243

Government agency securities

29,935

29,935

Restricted cash and other non-current assets:

Corporate equity securities

3,667

3,667

Money market funds

1,619

1,619

Total financial assets

$

374,000

$

370,333

$

3,667

$

There were no transfers between fair value measurement levels during the nine months ended September 30, 2019.

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5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

As of

September 30, 

December 31, 

    

2019

    

2018

Employee related expenses

$

4,134

$

5,201

Intellectual property and patent related fees

1,645

1,939

Process and platform development expenses

1,171

1,044

Professional service expenses

853

475

Other expenses

335

 

404

Sublicensing expenses

3,750

Total accrued expenses

$

8,138

$

12,813

6. Property and Equipment, net

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