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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 June 30, 2020 
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: 001-36065
  
ACCELERON PHARMA INC.
(Exact name of registrant as specified in its charter)
Delaware 2836 27-0072226
(State or other jurisdiction of
incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
128 Sidney Street
Cambridge, MA 02139
(617649-9200
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
  
 
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 per shareXLRNThe Nasdaq Global Market

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  x    No  o
 
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  o
 
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 filerx Accelerated filero
Non-accelerated filer
o 
 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.            o
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  x
 
As of July 31, 2020, there were 59,896,848 shares of the registrant’s Common Stock, par value $0.001 per share, outstanding.


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TABLE OF CONTENTS
  Page
 
 
 
 
 

2

Table of Contents
PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
Acceleron Pharma Inc. 
Condensed Consolidated Balance Sheets 
(amounts in thousands, except share and per share data)
(unaudited)
June 30, 2020December 31, 2019
Assets 
Current assets: 
Cash and cash equivalents$283,521  $237,677  
Collaboration receivables (all amounts are with a related party)39,752  8,547  
Prepaid expenses and other current assets19,388  10,000  
Short-term investments106,289  193,692  
Total current assets448,950  449,916  
Property and equipment, net7,671  6,812  
Operating lease - right of use asset, net21,116  23,908  
Other assets1,698  1,793  
Long-term investments  22,477  
Total assets$479,435  $504,906  
Liabilities and stockholders’ equity 
Current liabilities: 
Accounts payable$12,927  $2,295  
Accrued expenses17,966  24,895  
Operating lease liability - right of use6,467  6,183  
Total current liabilities37,360  33,373  
Operating lease liability - right of use, net of current portion16,940  20,201  
Warrants to purchase common stock3,516  1,856  
Total liabilities57,816  55,430  
Commitments and contingencies (Note 13)
Stockholders’ equity: 
Common stock, $0.001 par value: 175,000,000 shares authorized; 54,166,712 and 53,123,567 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
54  53  
Additional paid-in capital1,202,445  1,160,807  
Accumulated deficit(780,797) (711,407) 
Accumulated other comprehensive (loss) income(83) 23  
Total stockholders’ equity421,619  449,476  
Total liabilities and stockholders’ equity$479,435  $504,906  
 
See accompanying notes to these condensed consolidated financial statements.
3

Table of Contents
Acceleron Pharma Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(amounts in thousands, except per share data)
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Revenue:   
Collaboration revenue:   
Milestone$25,000  $25,000  $25,000  $25,000  
Cost-sharing, net3,678  2,666  6,502  5,447  
Royalty11,074    12,594    
Total revenue (all amounts are with a related party)39,752  27,666  44,096  30,447  
Costs and expenses:   
Research and development38,251  34,765  75,917  67,536  
Selling, general and administrative20,414  14,037  38,663  24,851  
Total costs and expenses58,665  48,802  114,580  92,387  
Loss from operations(18,913) (21,136) (70,484) (61,940) 
Other income, net466  3,230  1,113  6,003  
Loss before income taxes(18,447) (17,906) (69,371) (55,937) 
Income tax (provision) benefit(4) 44  (20) 24  
Net loss$(18,451) $(17,862) $(69,391) $(55,913) 
Other comprehensive (loss) income:
Net unrealized holding gains (losses) on short-term and long-term investments during the period, net of tax161  452  (106) 721  
Comprehensive loss$(18,290) $(17,410) $(69,497) $(55,192) 
Net loss per share- basic and diluted$(0.34) $(0.34) $(1.29) $(1.08) 
Weighted-average number of common shares used in computing net loss per share- basic and diluted53,860  52,689  53,610  51,912  
 
See accompanying notes to these condensed consolidated financial statements.
4

Table of Contents
Acceleron Pharma Inc. 
Condensed Consolidated Statements of Stockholders' Equity
(amounts in thousands, except share and per share data)
(unaudited)

Three and Six Months Ended June 30, 2020
 Common Stock
 Number of
Shares
$0.001 Par
Value
Additional
Paid-In Capital
Accumulated
Deficit
Comprehensive Income (Loss)Total
Stockholders'
Equity
Balance at December 31, 201953,123,567  $53  $1,160,807  $(711,407) $23  $449,476  
Stock-based compensation—  —  6,679  —  —  6,679  
Exercise of stock options295,757  —  8,485  —  —  8,485  
Vesting of restricted stock units, net of shares withheld for taxes77,949  —  (472) —  —  (472) 
Issuance of common stock related to ESPP22,647  —  860  —  —  860  
Unrealized loss on available-for-sale securities, net of tax—  —  —  —  (267) (267) 
Net loss—  —  —  (50,939) —  (50,939) 
Balance at March 31, 202053,519,920  53  1,176,359  (762,346) (244) 413,822  
Stock-based compensation—  —  7,140  —  —  7,140  
Exercise of stock options617,441  1  19,609  —  —  19,610  
Vesting of restricted stock units, net of shares withheld for taxes29,351  —  (663) —  —  (663) 
Unrealized gain on available-for-sale securities—  —  —  —  161  161  
Net loss—  —  —  (18,451) —  (18,451) 
Balance at June 30, 202054,166,712  $54  $1,202,445  $(780,797) (83) $421,619  


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Three and Six Months Ended June 30, 2019
 Common Stock
 Number of
Shares
$0.001 Par
Value
Additional
Paid-In Capital
Accumulated
Deficit
Comprehensive LossTotal
Stockholders'
Equity
Balance at December 31, 201846,260,747  $47  $879,099  $(586,549) $(560) $292,037  
Stock-based compensation—  —  6,992  —  —  6,992  
Issuance of common stock, net of expense $500
6,151,163  6  248,124  —  —  248,130  
Exercise of stock options35,919  —  766  —  —  766  
Vesting of restricted stock units, net of shares withheld for taxes75,028  —  (393) —  —  (393) 
Issuance of common stock related to ESPP19,661  —  788  —  —  788  
Unrealized gain on available-for-sale securities, net of tax—  —  —  —  268  268  
Net loss—  —  —  (38,053) —  (38,053) 
Balance at March 31, 201952,542,518  53  1,135,376  (624,602) (292) 510,535  
Stock-based compensation—  —  5,012  —  —  5,012  
Exercise of stock options64,174  —  1,760  —  —  1,760  
Vesting of restricted stock units, net of shares withheld for taxes146,162  —  —  —  —  —  
Unrealized gain on available-for-sale securities, net of tax—  —  —  —  452  452  
Net loss—  —  —  (17,862) —  (17,862) 
Balance at June 30, 201952,752,854  $53  $1,142,148  (642,464) $160  $499,897  

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Acceleron Pharma Inc. 
Condensed Consolidated Statements of Cash Flows
(amounts in thousands)
(unaudited)
 Six Months Ended June 30,
 20202019
Operating Activities 
Net loss$(69,391) $(55,913) 
Adjustments to reconcile net loss to net cash used in operating activities: 
Depreciation and amortization1,938  1,942  
Stock-based compensation13,819  12,004  
Other non-cash items1,563  404  
Changes in assets and liabilities: 
Prepaid expenses and other assets(9,293) (2,508) 
Collaboration receivables (all amounts are with a related party)(31,205) 1,592  
Non-cash lease expense2,792  2,502  
Accounts payable10,334  3,129  
Accrued expenses(6,998) (1,744) 
Operating lease obligations(2,977) (1,874) 
Other changes in operating assets and liabilities17  (42) 
Net cash used in operating activities(89,401) (40,508) 
Investing Activities 
Purchases of investments(58,539) (293,913) 
Proceeds from sales and maturities of investments168,385  104,201  
Purchases of property and equipment(2,420) (1,273) 
Net cash provided by (used in) investing activities107,426  (190,985) 
Financing Activities 
Proceeds from issuance of common stock from public offering, net of issuance costs  248,130  
Net proceeds from exercises and vesting of stock awards, ESPP contributions, and exercise of warrants to purchase common stock27,819  2,920  
Net cash provided by financing activities27,819  251,050  
Net increase in cash, cash equivalents and restricted cash45,844  19,557  
Cash, cash equivalents and restricted cash at beginning of period239,274  145,649  
Cash, cash equivalents and restricted cash at end of period$285,118  $165,206  
Supplemental Disclosure of Non-Cash Investing and Financing Activities: 
Purchase of property and equipment included in accounts payable and accrued expenses$352  $338  
Capitalized follow-on public offering costs included in accrued expenses$423  $  



See accompanying notes to these condensed consolidated financial statements.
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Acceleron Pharma Inc. 
Notes to Condensed Consolidated Financial Statements
(unaudited)
 
1. Nature of Business
Acceleron Pharma Inc. (Acceleron or the Company) is a Cambridge, Massachusetts-based biopharmaceutical company dedicated to the discovery, development, and commercialization of therapeutics to treat serious and rare diseases. The Company’s leadership in the understanding of TGF-beta biology and protein engineering generates innovative compounds that engage the body’s ability to regulate cellular growth and repair.
The Company is subject to risks common to companies in the biotechnology industry, including, but not limited to, the risk that the Company never achieves profitability or successfully commercializes its products, the need for substantial additional financing, the risk of relying on third parties, risks of clinical trial failures, dependence on key personnel, protection of proprietary technology, and compliance with government regulations.

2. Basis of Presentation
The accompanying interim condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (ASC) and Accounting Standards Update (ASU) of the Financial Accounting Standards Board (FASB). 
The accompanying interim condensed consolidated financial statements are unaudited and reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the financial statements. As of June 30, 2020, the Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, have not changed, and the unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements as of and for the year ended December 31, 2019. In the opinion of management, the accompanying interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of June 30, 2020, the results of its operations for the three and six months ended June 30, 2020 and 2019, and its cash flows for the six months ended June 30, 2020 and 2019. 
The accompanying interim condensed consolidated financial statements include the results of operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
The results for the three and six months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020, any other interim periods, or any future year or period. These interim financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2019, and the notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

3. 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 financial statements, and the reported amounts expensed during the reporting period.
Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these consolidated financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the consolidated financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. In preparing these consolidated financial statements, management used significant estimates in the following areas, among others: accrued and prepaid clinical
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expenses, contract manufacturing expense, stock-based compensation expense, revenue recognition and the recoverability of the Company's net deferred tax assets and related valuation allowance.

4. Segment Information
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. The Company’s chief operating decision maker is the chief executive officer. The Company and the chief executive officer view the Company’s operations and manage its business as one operating segment, which is the discovery, development, and commercialization of highly innovative therapeutics to treat serious and rare diseases.

5. Cash Equivalents and Short-term and Long-term Investments
The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks and amounts held in interest-bearing money market accounts. Cash equivalents are carried at cost, which approximates their fair value.
The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation at each balance sheet date. The Company has classified all of its marketable securities at June 30, 2020 as “available-for-sale” pursuant to ASC 320, Investments – Debt and Equity Securities. Investments not classified as cash equivalents are presented as either short-term or long-term investments based on both their maturities as well as the time period the Company intends to hold such securities.
The Company adjusts the cost of available-for-sale debt securities for amortization of premiums and accretion of discounts to maturity. The Company includes such amortization and accretion in interest income. The cost of securities sold is based on the specific identification method. The Company includes in interest income interest and dividends on securities classified as available-for-sale.
In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments-Credit Losses. The new standard requires an estimate of expected credit losses only when the fair value of an available-for-sale debt security is below its amortized cost basis, and credit losses are limited to the amount by which the security’s amortized cost basis exceeds its fair value. Credit-related impairment is recognized as an allowance for credit losses on the balance sheet with a corresponding adjustment to earnings.

The standard additionally requires an investor to determine whether a decline in the fair value below the amortized cost basis of an available-for-sale debt security is due to credit-related factors or noncredit-related factors. Any impairment that is not credit related is recognized in other comprehensive income, net of applicable taxes. The Company adopted ASU 2016-13 effective January 1, 2020, with no material impact on its consolidated financial statements and related disclosures.

The following is a summary of available-for-sale securities with unrealized losses as of June 30, 2020 (in thousands):
Less than 12 months
 Fair ValueUnrealized Losses
Corporate obligations21,330  (6) 
U.S. government agency securities49,984  (3) 
Total available-for sale securities in an unrealized loss position$71,314  $(9) 

There were no securities in an unrealized loss for greater than 12 months as of June 30, 2020. The unrealized losses on the Company's available-for-sale securities were caused by central bank and market interest rate decreases on securities purchased at a premium. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases. The Company did not record an allowance for credit losses as of June 30, 2020.
Prior to January 1, 2020, the Company reviewed marketable securities for other-than-temporary impairment whenever the fair value of a marketable security was less than the amortized cost and evidence indicated that a marketable security’s carrying amount was not recoverable within a reasonable period of time. Other-than-temporary impairments of investments were recognized in the consolidated statements of operations if the Company had experienced a credit loss, had the intent to sell the
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marketable security, or if it was more likely than not that the Company would be required to sell the marketable security before recovery of the amortized cost basis. Evidence considered in this assessment included reasons for the impairment, compliance with the Company’s investment policy, the severity and the duration of the impairment and changes in value subsequent to the end of the period.
The aggregate fair value of securities held by the Company in an unrealized loss position for less than twelve months as of December 31, 2019 was $35.8 million. The aggregate fair value of securities held by the Company in an unrealized loss position for more than twelve months as of December 31, 2019 was zero. The aggregate unrealized loss for those securities in an unrealized loss position for more than twelve months was zero. The Company determined it did not hold any investments with any other-than-temporary impairment as of December 31, 2019.
The following is a summary of cash, cash equivalents and available-for-sale securities as of June 30, 2020 and December 31, 2019 (in thousands):
 June 30, 2020
 Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Cash and cash equivalents due in 90 days or less$283,522  $  $(1) $283,521  
Available-for-sale securities:
Corporate obligations56,828  162  (6) 56,984  
U.S. Treasury securities49,026  33  (3) 49,056  
Certificates of deposit245  4    249  
Total available-for-sale securities$106,099  $199  $(9) $106,289  
Total cash, cash equivalents and available-for-sale securities$389,621  $199  $(10) $389,810  
 December 31, 2019
 Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Cash and cash equivalents due in 90 days or less$237,677  $  $  $237,677  
Available-for-sale securities:
Corporate obligations124,676  219  (15) 124,880  
U.S. Treasury securities78,230  98  (1) 78,327  
Certificates of deposit490  3    493  
Mortgage and other asset backed securities12,476  5  (12) 12,469  
Total available-for-sale securities$215,872  $325  $(28) $216,169  
Total cash, cash equivalents and available-for-sale securities$453,549  $325  $(28) $453,846  

6. Restricted Cash
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheet that sum to the total of the same such amounts shown in the statements of cash flows (in thousands):
 June 30,
 20202019
Cash and cash equivalents$283,521  $163,609  
Restricted cash1,597  1,597  
Total cash, cash equivalents and restricted cash shown in the statement of cash flows$285,118  $165,206  
As of June 30, 2020 and December 31, 2019, the Company maintained letters of credit totaling $1.6 million held in the form of certificates of deposit and money market funds as collateral for the Company's facility lease obligation and its credit cards.

7. Concentrations of Credit Risk and Off-Balance Sheet Risk
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The Company has no off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash, cash equivalents, restricted cash, short-term and long-term investments, and collaboration receivables. The Company maintains its cash and cash equivalent balances and short-term and long-term investments with financial institutions that management believes are creditworthy. Short-term and long-term investments consist of investment grade corporate obligations, treasury notes, asset backed securities, and certificates of deposit. The Company’s investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentrations of credit risk.
The Company routinely assesses the creditworthiness of its collaboration partner. The Company has not experienced any material losses related to receivables from individual customers and collaboration partners, or groups of customers. The Company does not require collateral. Due to these factors, no allowance for credit losses has been recorded for the Company's collaboration receivables as of June 30, 2020.

8. Fair Value Measurements
The following tables set forth the Company’s financial instruments carried at fair value using the lowest level of input that is significant to each financial instrument as of June 30, 2020 and December 31, 2019 (in thousands):
 June 30, 2020
 Quoted Prices
in Active Markets
for Identical Items
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets:    
Money market funds$232,582  $  $  $232,582  
Corporate obligations  60,982    60,982  
U.S. Treasury securities  64,054    64,054  
Certificates of deposit  249    249  
Total assets$232,582  $125,285  $  $357,867  
Liabilities:    
Warrants to purchase common stock$  $  $3,516  $3,516  
Total liabilities$  $  $3,516  $3,516  
 
 December 31, 2019
 Quoted Prices
in Active Markets
for Identical Items
(Level 1)
Significant other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets:    
Money market funds$193,867  $  $  $193,867  
Corporate obligations  138,369    138,369  
U.S. Treasury securities  83,819    83,819  
Certificates of deposit  493    493  
Mortgage and other asset backed securities  12,470    12,470  
Total assets$193,867  $235,151  $  $429,018  
Liabilities:    
Warrants to purchase common stock$  $  $1,856  $1,856  
Total liabilities$  $  $1,856  $1,856  
The money market funds noted above are included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. The Company recognizes transfers between levels of the fair value hierarchy as of the end of the
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reporting period. There were no transfers within the hierarchy during the six months ended June 30, 2020 or the year ended December 31, 2019.
Items measured at fair value on a recurring basis include short-term and long-term investments (Note 5), and warrants to purchase common stock (Note 12). During the periods presented, the Company has not changed the manner in which it values assets and liabilities that are measured at fair value using Level 3 inputs.
The following table sets forth a summary of changes in the fair value of the Company’s common stock warrant liabilities, which represent a recurring measurement that is classified within Level 3 of the fair value hierarchy, wherein fair value is estimated using significant unobservable inputs (in thousands):
 Six Months Ended June 30,
 20202019
Beginning balance$1,856  $1,491  
Change in fair value1,660  (102) 
Ending balance$3,516  $1,389  
The fair value of the warrants to purchase common stock on the date of issuance and on each re-measurement date for those warrants classified as liabilities was estimated using either the Monte Carlo simulation framework, which incorporates future financing events over the remaining life of the warrants to purchase common stock, or for certain re-measurement dates, due to the warrants being deeply in the money, the Black-Scholes option pricing model. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement. At each reporting period, the Company evaluates the best valuation methodology. At June 30, 2020, the Black-Scholes option pricing model was used.

9. Net Loss Per Share
The following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods indicated because their inclusion would have had an anti-dilutive effect (in thousands):
Three Months Ended 
 
June 30,
Six Months Ended 
 
June 30,
 2020201920202019
Outstanding stock options3,680  3,995  3,680  3,995  
Common stock warrants39  39  39  39  
Shares issuable under employee stock purchase plan13  13  13  13  
Outstanding restricted stock units (1)532  461  532  461  
 4,264  4,508  4,264  4,508  
(1)This balance is comprised of both the restricted stock units and performance-based restricted stock units described in Note 15.


10. Comprehensive Loss
Comprehensive loss is defined as the change in equity of a business enterprise during a period from transactions, other events, and circumstances from non-owner sources. Comprehensive loss consists of net loss and other comprehensive (loss) income, which includes certain changes in equity that are excluded from net loss. Comprehensive loss has been disclosed in the accompanying consolidated statements of operations and comprehensive loss. Accumulated other comprehensive (loss) income is presented separately on the consolidated balance sheets and consists entirely of unrealized holding gains and losses on investments as of June 30, 2020 and December 31, 2019.

11. Recent Accounting Pronouncements
Recently Adopted

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In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses. The new standard requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The standard limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which the carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. On January 1, 2020 the Company adopted ASU 2016-13. For discussion regarding the impact of this accounting pronouncement and its amendments, refer to Note 5 within the notes to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

In June 2018, the FASB issued ASU 2018-15, Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. This amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. On January 1, 2020, the Company adopted ASU 2018-15 on a prospective basis, with no material impact on its consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The ASU simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740, Income Taxes, related to the approach for allocating income tax expense or benefit for the year to continuing operations, discontinued operations, other comprehensive income, and other charges or credits recorded directly to shareholders’ equity; the methodology for calculating income taxes in an interim period; and the recognition of deferred tax liabilities for outside basis differences. On January 1, 2020, the Company early adopted ASU 2019-12 on a prospective basis, with no material impact on its consolidated financial statements and related disclosures.

12. Warrants
Below is a summary of the number of shares issuable upon exercise of outstanding warrants and the terms and accounting treatment for the outstanding warrants (in thousands, except per share data):
 Warrants as of   
   Weighted-
Average
Exercise
 Balance Sheet
Classification
 June 30, 2020December 31, 2019Price Per
Share
ExpirationJune 30, 2020December 31, 2019
Warrants to purchase common stock39  39  $5.88  July 9, 2020LiabilityLiability

All remaining outstanding warrants were automatically cashless exercised in full upon their expiration on July 9, 2020.

13. Commitments and Contingencies
Legal Proceedings
The Company, from time to time, may be party to litigation arising in the ordinary course of its business. The Company was not subject to any material legal proceedings during the three months ended June 30, 2020, and, to the best of its knowledge, no material legal proceedings are currently pending or threatened.
Other
The Company is also party to various agreements, principally relating to licensed technology, that require future payments relating to milestones not met at June 30, 2020 and December 31, 2019, or royalties on future sales of specified products. See Note 14 for discussion of these arrangements.