Table of Contents
on sale that we incurred in connection with the disposition of this business, are presented as discontinued operations in the accompanying consolidated financial statements.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements,
which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of our consolidated financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our consolidated financial statements, as well as the
reported revenues and expenses during the reported periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors
that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different assumptions or conditions.
our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report, we believe that
the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our consolidated financial statements and understanding and evaluating
our reported financial results.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development expenses are comprised of costs incurred in
performing research and development activities, including salaries, employee stock-based compensation and benefits, stock-based compensation expense related to restricted common stock grants and stock
warrant issuances to consultants assisting us in the research and development of our product candidates, third-party license fees, and external costs of outside vendors engaged to conduct preclinical
development activities and trials.
and milestone payments made to third parties who perform research and development services on our behalf are expensed as services are rendered or when they no longer have
alternative future use. Costs incurred in obtaining technology licenses are charged to research and development expense as acquired in-process research and development if the technology licensed has
not reached technological feasibility and has no alternative future use.
We account for stock-based compensation awards in accordance with FASB ASC Topic 718, CompensationStock Compensation, or
ASC 718. ASC 718 requires all stock-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Our stock-based
compensation awards have historically consisted of stock options and shares of restricted stock. In addition, certain other equity transactions involving our directors and executive officers have had
a compensatory element, which we also account for as stock-based awards.
stock-based awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards to employees with only service-based vesting
conditions is recognized on a straight-line basis over the requisite service vesting portion of the award as if the award was, in substance, multiple awards, or the Graded Vesting Attribution Method,
based on the estimated grant date fair value for each separately vesting tranche. Compensation expense related to awards to non-employees with only service-based vesting conditions is recognized based