10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, 2023


☐	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 001-36548

ATARA BIOTHERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		46-0920988
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

2380 Conejo Spectrum Street, Suite 200 Thousand Oaks, CA		91320
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (805) 623-4211

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


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share	ATRA	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 outstanding shares of the Registrant’s Common Stock as of May 1, 2023 was 97,972,246 shares.

ATARA BIOTHERAPEUTICS, INC.

INDEX


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets	6

	Condensed Consolidated Statements of Operations and Comprehensive Loss	7

	Condensed Consolidated Statements of Changes in Stockholders’ Equity	8

	Condensed Consolidated Statements of Cash Flows	9

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4.	Controls and Procedures	34

PART II.	OTHER INFORMATION	35

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	35
Item 6.	Exhibits	78

	Signatures	79

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which represent our intent, belief or current expectations, involve risks and uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “predict,” “plan,” “expect” or the negative or plural of these words or similar expressions. The forward-looking statements include, but are not limited to, statements about:

•

our expectations regarding the timing of initiating clinical studies, opening client sites, enrolling clinical studies and reporting results of clinical studies for our programs;

•

the likelihood and timing of regulatory submissions or related approvals for our product candidates, including the initiation, completion and expectations about the timing of approvals for a biologics license application (BLA) for tab-cel® for patients with Epstein-Barr virus with post-transplant lymphoproliferative disease (EBV+ PTLD);

•

the potential indications for our product and product candidates;

•

commercialization of Ebvallo™ in the European Union (EU) and our Commercialization Agreement with Pierre Fabre Medicament, including potential milestone and royalty payments under the agreement;

•

our Purchase and Sale Agreement and related transactions with HCR Molag Fund, L.P.;

•

our Commercial Manufacturing Services Agreement with Charles River Laboratories, Inc. (CRL) and other agreements we may enter into with CRL;

•

our Master Services and Supply Agreement and related transactions with FUJIFILM Diosynth Biotechnologies California, Inc.;

•

our expectations regarding the potential commercial market opportunities, market size and the size of the patient populations for our product and product candidates;

•

estimates of our expenses, capital requirements and need for additional financing;

•

our expectation regarding the length of time that our existing capital resources will be sufficient to enable us to fund our planned operations, including our going concern assessment;

•

our ability to enter into favorable commercialization arrangements with third parties to commercialize our product and product candidates;

•

our ability to develop, acquire and advance product candidates into, and successfully complete, clinical studies;

•

the initiation, timing, costs, progress and results of future preclinical studies and clinical studies and our research and development programs;

•

our ability to enter into and maintain contracts with clinical research organizations, manufacturing organizations and other vendors for clinical and preclinical studies, supplies and other services;

•

the scope of protection we are able to obtain and maintain for the intellectual property rights covering our product and product candidates;

•

our financial performance;

•

developments and projections relating to our competitors and our industry;

•

our ability to have our product and product candidates manufactured for our clinical studies or for commercial sale, including at commercially reasonable values;

•

the impact of public health emergencies, such as COVID-19, to our business and operations, as well as the businesses and operations of third parties on which we rely;

•

our ability to attract and retain qualified personnel and to our business, operations and financial condition; and

•

timing and costs related to the qualification of our contract manufacturing organizations’ (CMO) manufacturing facilities for commercial production.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, including, without limitation, risks and uncertainties associated with the costly and time-consuming pharmaceutical product development process and the uncertainty of clinical success; the sufficiency of our cash resources and need for additional capital; and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this report in greater detail under the heading “1A. Risk Factors” and elsewhere in this report. You should not rely upon forward-looking statements as predictions of future events. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risks and uncertainties.

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, “Atara,” “Atara Biotherapeutics,” “Company,” “we,” “our,” and “us” means Atara Biotherapeutics, Inc. and, where appropriate, its subsidiaries.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties that may have a material adverse effect on our business, financial condition or results of operations. These risks are more fully described under the heading “1A. Risk Factors” and elsewhere in this report and include, among others:

•

we have incurred substantial losses since our inception and anticipate that we will continue to incur substantial losses for the foreseeable future;

•

we have earned limited commercialization revenues to date, and we may never achieve profitability;

•

we are generally early in our development efforts and have only a small number of product candidates in clinical development, and all of our other product candidates are still in preclinical development. If we or our collaborators are unable to successfully develop, manufacture and commercialize our product or product candidates or experience significant delays in doing so, our business may be materially harmed;

•

we will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or manufacturing efforts;

•

our future success depends on our ability to retain our executive officers and to attract, retain and motivate qualified personnel;

•

the results of preclinical studies or earlier clinical studies are not necessarily predictive of future results, and our existing product candidates in clinical studies, and any other product candidates we advance into clinical studies may not have favorable results in later clinical studies or receive regulatory approval;

•

clinical drug development involves a lengthy and expensive process with an uncertain outcome;

•

our T-cell immunotherapy product and product candidates and our next-generation CAR T programs represent new therapeutic approaches that could result in heightened regulatory scrutiny, delays in clinical development or our inability to achieve regulatory approval, commercialization or payor coverage of our product candidates;

•

there can be no assurance that we will achieve all of the anticipated benefits of the Fujifilm Transaction and we could face unanticipated challenges;

•

the market opportunities for our product and product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small;

•

we may not be able to obtain or maintain orphan drug exclusivity for our product candidates;

•

we have been affected by and could be adversely affected in the future by the effects of health epidemics and pandemics, including the ongoing COVID-19 pandemic, which could materially and adversely affect our business and operations in the future, as well as the businesses and operations of third parties on which we rely;

•

if we are unable to obtain and maintain sufficient intellectual property protection for our product candidates, or if the scope of the intellectual property protection is not sufficiently broad, our ability to commercialize our product candidates successfully and to compete effectively may be adversely affected;

•

our principal stockholders own a significant percentage of our stock and will be able to exert control or significant influence over matters subject to stockholder approval;

•

our 2022 workforce reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business; and

•

maintaining clinical and commercial timelines is dependent on our end-to-end supply chain network to support manufacturing; if we experience problems with our third party suppliers or CMOs, development and/or commercialization of our product and product candidates may be adversely affected.

Atara Biotherapeutics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except per share amounts)


	March 31,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	48,741		$	92,942
Short-term investments		156,666			149,877
Restricted cash		146			146
Accounts receivable		397			40,221
Inventories		5,340			1,586
Other current assets		12,892			10,308
Total current assets		224,182			295,080
Property and equipment, net		5,852			6,300
Operating lease assets		65,143			68,022
Other assets		6,906			7,018
Total assets	$	302,083		$	376,420

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	5,068		$	6,871
Accrued compensation		8,913			17,659
Accrued research and development expenses		23,766			24,992
Deferred revenue		9,924			8,000
Other current liabilities		20,205			21,394
Total current liabilities		67,876			78,916
Deferred revenue - long-term		78,041			77,000
Operating lease liabilities - long-term		54,918			58,064
Liability related to the sale of future revenues - long-term		31,111			30,236
Other long-term liabilities		5,177			5,564
Total liabilities		237,123			249,780

Commitments and contingencies (Note 8)

Stockholders’ equity:
Common stock—$0.0001 par value, 500,000 shares authorized as of March 31, 2023 and December 31, 2022; 96,538 and 95,927 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively		10			10
Additional paid-in capital		1,833,982			1,821,721
Accumulated other comprehensive (loss) income		(1,237	)		(2,067	)
Accumulated deficit		(1,767,795	)		(1,693,024	)
Total stockholders’ equity		64,960			126,640
Total liabilities and stockholders’ equity	$	302,083		$	376,420

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except per share amounts)


	Three Months Ended March 31,
	2023			2022
Commercialization revenue	$	884		$	—
License and collaboration revenue		342			7,314
Total revenue		1,226			7,314
Costs and operating expenses:
Cost of commercialization revenue		216			—
Research and development expenses		62,156			74,963
General and administrative expenses		13,872			20,571
Total costs and operating expenses		76,244			95,534
Loss from operations		(75,018	)		(88,220	)
Other income (expense), net:
Interest income		1,802			228
Interest expense		(1,336	)		(4	)
Other income (expense), net		(197	)		(109	)
Total other income (expense), net		269			115
Loss before provision for income taxes		(74,749	)		(88,105	)
Provision for income taxes		22			—
Net loss	$	(74,771	)	$	(88,105	)
Other comprehensive gain (loss):
Unrealized gain (loss) on available-for-sale securities		830			(1,524	)
Comprehensive loss	$	(73,941	)	$	(89,629	)

Basic and diluted loss per common share	$	(0.72	)	$	(0.87	)

Basic and diluted weighted-average shares outstanding		103,969			100,726

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(In thousands)


								Accumulated
	Common				Additional			Other						Total
	Stock				Paid-in			Comprehensive			Accumulated			Stockholders’
For the Three Months Ended March 31, 2023	Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance as of January 1, 2023		95,927	$	10	$	1,821,721		$	(2,067	)	$	(1,693,024	)	$	126,640
Issuance of common stock through ATM facilities, net of commissions and offering costs of $97		148		—		590			—			—			590
RSU settlements, net of shares withheld		463		—		(93	)		—			—			(93	)
Issuance of common stock pursuant to employee stock awards		—		—		—			—			—			—
Stock-based compensation expense		—		—		11,764			—			—			11,764
Net loss		—		—		—			—			(74,771	)		(74,771	)
Unrealized gain (loss) on available-for-sale securities		—		—		—			830			—			830
Balance as of March 31, 2023		96,538	$	10	$	1,833,982		$	(1,237	)	$	(1,767,795	)	$	64,960


								Accumulated
	Common				Additional			Other						Total
	Stock				Paid-in			Comprehensive			Accumulated			Stockholders’
For the Three Months Ended March 31, 2022	Shares		Amount		Capital			Income (Loss)			Deficit			Equity
Balance as of January 1, 2022		91,671	$	9	$	1,744,695		$	(368	)	$	(1,464,722	)	$	279,614
Issuance of common stock through ATM facilities, net of commissions and offering costs of $419		1,320		—		20,516			—			—			20,516
RSU settlements, net of shares withheld		405		—		(616	)		—			—			(616	)
Issuance of common stock pursuant to employee stock awards		10		—		96			—			—			96
Stock-based compensation expense		—		—		14,335			—			—			14,335
Net loss		—		—		—			—			(88,105	)		(88,105	)
Unrealized gain (loss) on available-for-sale securities		—		—		—			(1,524	)		—			(1,524	)
Balance as of March 31, 2022		93,406	$	9	$	1,779,026		$	(1,892	)	$	(1,552,827	)	$	224,316

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2023			2022
Operating activities
Net loss	$	(74,771	)	$	(88,105	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		11,764			14,335
Depreciation and amortization expense		1,214			1,591
Accretion of liability related to sale of future revenues		1,204			—
Amortization (accretion) of investment premiums (discounts)		(351	)		498
Non-cash operating lease expense		2,879			627
Other non-cash items, net		80			7
Changes in operating assets and liabilities:
Accounts receivable		39,824			318
Inventories		(3,754	)		—
Prepaid expenses and other current assets		(2,584	)		609
Other assets		(156	)		51
Accounts payable		(1,886	)		(4,588	)
Accrued compensation		(8,746	)		(8,769	)
Accrued research and development expenses		(1,226	)		539
Other current liabilities		(609	)		(570	)
Deferred revenue		2,965			(525	)
Operating lease liabilities		(4,174	)		(645	)
Other long-term liabilities		(102	)		98
Net cash used in operating activities		(38,429	)		(84,529	)
Investing activities
Purchases of short-term investments		(67,903	)		(26,427	)
Proceeds from maturities and sales of short-term investments		62,295			89,247
Purchases of property and equipment		(399	)		(2,605	)
Net cash (used in) provided by investing activities		(6,007	)		60,215
Financing activities
Proceeds from issuance of common stock through ATM facilities, net		640			20,539
Proceeds from employee stock awards		—			96
Taxes paid related to net share settlement of restricted stock units		(93	)		(616	)
Principal payments on finance lease obligations		(312	)		(64	)
Other financing activities, net		—			(104	)
Net cash provided by financing activities		235			19,851
Decrease in cash, cash equivalents and restricted cash		(44,201	)		(4,463	)
Cash, cash equivalents and restricted cash at beginning of period		93,088			107,478
Cash, cash equivalents and restricted cash at end of period	$	48,887		$	103,015
Non-cash investing and financing activities
Property and equipment purchases included in accounts payable and other accrued liabilities	$	194		$	1,188
Accrued costs related to ATM facility	$	73		$	23
Supplemental cash flow disclosure
Cash paid for interest	$	112		$	5
Cash paid for income taxes	$	1		$	14

See accompanying notes to the condensed consolidated financial statements.

Atara Biotherapeutics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Description of Business

Atara Biotherapeutics, Inc. (Atara, we, our or the Company) was incorporated in August 2012 in Delaware. Atara is a leader in T-cell immunotherapy, leveraging its novel allogeneic Epstein-Barr Virus (EBV) T-cell platform to develop transformative therapies for patients with cancer and autoimmune disease.

We have several T-cell immunotherapies in clinical development and are progressing multiple next-generation allogeneic chimeric antigen receptor T-cell (CAR T) programs. Our most advanced T-cell immunotherapy program, tab-cel® (tabelecleucel), has received marketing authorization approval by the European Commission (EC) for commercial sale and use in the European Union (EU) under the proprietary name Ebvallo™ and is currently in Phase 3 development in the US. In October 2021, we entered into a commercialization agreement (Pierre Fabre Commercialization Agreement) with Pierre Fabre Medicament (Pierre Fabre), as amended in September 2022, pursuant to which we granted to Pierre Fabre an exclusive, field-limited license to commercialize and distribute tab-cel in Europe and select emerging markets in the Middle East, Africa, Eastern Europe and Central Asia (the Territory), following regulatory approval. We retain full rights to tab-cel in other major markets, including North America, Asia Pacific and Latin America. See Note 5 for further information.

We have licensed rights to T-cell product candidates from Memorial Sloan Kettering Cancer Center (MSK), rights related to our next-generation CAR T programs from MSK and from H. Lee Moffitt Cancer Center (Moffitt), and rights to know-how and technology from the Council of the Queensland Institute of Medical Research (QIMR Berghofer). See Note 8 for further information.

In January 2022, we entered into an asset purchase agreement with FUJIFILM Diosynth Biotechnologies California, Inc. (FDB) and, for certain limited purposes, FUJIFILM Holdings America Corporation, to sell all of the Company’s right, title and interest in and to certain assets related to the Atara T-Cell Operations and Manufacturing facility (ATOM Facility) located in Thousand Oaks, California for $100 million in cash, subject to potential post-closing adjustments pursuant to the asset purchase agreement (the Fujifilm Transaction). The closing of the Fujifilm Transaction occurred on April 4, 2022, at which time 136 of our ATOM Facility employees transitioned to FDB as part of the transaction. We also entered into a Master Services and Supply Agreement and related Statements of Work with FDB (collectively, the Fujifilm MSA) which became effective upon the closing and could extend for up to ten years. Pursuant to the Fujifilm MSA, FDB will supply us with specified quantities of our cell therapy product candidates and any products approved by regulatory authorities, manufactured in accordance with cGMP standards. See Note 8 for further information.

Certain prior year amounts, which are not material, have been reclassified to conform to current year presentation in the Condensed Consolidated Statements of Operations and Comprehensive Loss, Condensed Consolidated Statements of Cash Flows and Notes to Condensed Consolidated Financial Statements.

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements include the accounts of Atara and its wholly owned subsidiaries and have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These unaudited interim condensed consolidated financial statements should therefore be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 8, 2023. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the Company’s condensed consolidated financial statements. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year or any other future period. The condensed consolidated balance sheet as of December 31, 2022 has been derived from audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete consolidated financial statements.

Liquidity and Going Concern

We have incurred significant operating losses since inception and have relied primarily on public and private equity financings and receipts from license and collaboration agreements to fund our operations. As we continue to incur losses, our transition to profitability will depend on the successful development, approval and commercialization of product candidates and on the achievement of sufficient revenues to support our cost structure. We may never achieve sustained operating cash inflows or profitability. We expect that existing cash, cash equivalents and short-term investments as of March 31, 2023, will not be sufficient to fund our planned operations for at least the next twelve months from the date of issuance of these condensed consolidated financial statements. These conditions raise substantial doubt about our ability to continue as a going concern for at least 12 months after the date these condensed consolidated financial statements are issued. The interim condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure additional capital, potentially through a combination of public or private security offerings; use of our existing 2021 ATM Facility, under which we have $55.2 million of our common stock remaining and available for sale; and/or strategic transactions, including, but not limited to, seeking a commercialization partner for tab-cel in the U.S. We may also need to raise additional funding as required based on the status of our development programs and our projected cash flows. Although we have been successful in raising capital in the past, and expect to continue to raise capital as required, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, or identify and enter into any strategic transactions that will provide the capital that we will require. If we are unable to obtain sufficient funding on acceptable terms, we could be forced to delay, limit, reduce or terminate preclinical studies, clinical studies or other development activities for one or more of our product candidates, which could have a material adverse effect on our business, results of operations, and financial condition. Accordingly, we have concluded that substantial doubt exists with respect to our ability to continue as a going concern for at least 12 months after the issuance of the accompanying condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying notes. Significant estimates relied upon in preparing these financial statements include estimates related to revenue recognition, accrued research and development expenses, stock-based compensation expense, income taxes and the liability related to the sale of future revenues. Actual results could differ materially from those estimates.

Recent Accounting Pronouncements

We consider the applicability and impact of any recent Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB). Based on our assessment, the ASUs were determined to be either not applicable or are expected to have minimal impact on our condensed consolidated financial statements.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing net loss by the weighted-average number of shares of common stock and pre-funded warrants outstanding during the period, without consideration of common share equivalents. Diluted net loss per common share is computed by dividing net loss by the weighted-average number of shares of common stock, pre-funded warrants and common share equivalents outstanding for the period. The pre-funded warrants are included in the computation of basic and diluted net loss per common share as the exercise price is negligible and the pre-funded warrants are fully vested and exercisable. Common share equivalents are only included in the calculation of diluted net loss per common share when their effect is dilutive.

Potential dilutive securities, which include unvested restricted stock units (RSUs), unvested performance-based RSUs and performance-based options to purchase common stock for which established performance criteria have been achieved as of the end of the respective periods, vested and unvested options to purchase common stock and shares to be issued under our employee stock purchase plan (ESPP), have been excluded from the computation of diluted net loss per common share as the effect is antidilutive. Therefore, the denominator used to calculate both basic and diluted net loss per common share is the same in all periods presented.

The following table represents the potential common shares issuable pursuant to outstanding securities as of the dates listed that were excluded from the computation of diluted net loss per common share, as their inclusion would have an antidilutive effect:



	As of March 31,
	2023		2022
Unvested RSUs		10,565,596		7,932,532
Vested and unvested options		13,441,909		10,857,620
ESPP share purchase rights		472,184		220,029
Total		24,479,689		19,010,181

Financial Instruments

Our financial assets are measured at fair value on a recurring basis using the following hierarchy to prioritize valuation inputs, in accordance with applicable U.S. GAAP:

Level 1: Quoted prices in active markets for identical assets or liabilities that we have the ability to access

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data such as quoted prices, interest rates and yield curves

Level 3: Inputs that are unobservable data points that are not corroborated by market data

We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels of certain securities within the fair value hierarchy. We recognize transfers into and out of levels within the fair value hierarchy in the period in which the actual event or change in circumstances that caused the transfer occurs. There have been no transfers between Level 1, Level 2 and Level 3 in any periods presented.

Financial assets and liabilities are considered Level 2 when their fair values are determined using inputs that are observable in the market or can be derived principally from or corroborated by observable market data such as pricing for similar securities, recently executed transactions, cash flow models with yield curves, and benchmark securities. In addition, Level 2 financial instruments are valued using comparisons to like-kind financial instruments and models that use readily observable market data as their basis. U.S. Treasury, government agency and corporate debt obligations, commercial paper and asset-backed securities are valued primarily using market prices of comparable securities, bid/ask quotes, interest rate yields and prepayment spreads and are included in Level 2.

Financial assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. We have no Level 3 financial assets or liabilities.

The following tables summarize the estimated fair value and related valuation input hierarchy of our available-for-sale securities as of each period end:

Total

Total

Total

Total

Amortized

Unrealized

Unrealized

Estimated

As of March 31, 2023:

Input Level

Cost

Gain

Loss

Fair Value

(in thousands)

Money market funds

Level 1

38,355

—

—

38,355