TABLE OF CONTENTS

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expense during the reporting period. Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to the fair value of stock options and the warrant issued, accruals such as research and development costs, and recoverability of the Company’s net deferred tax assets and related valuation allowance. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.

Operating LeaseRight-of-Use Asset and Lease Liabilities

Foreign Currency

On January 1, 2019, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU)No. 2016-02,Leases (Topic 842) on a modified retrospective basis and did not restate comparative periods as permitted under the transition guidance. The functional currencyCompany elected the package of practical expedients as permitted, which carries forward the Company’s foreign subsidiaries is the U.S. Dollar. Transactions denominated in currencies other than the functional currency are recorded at prevailing exchange rates during the period. At the end of each reporting period, monetary assets and liabilities are remeasuredassessments prior to the functional currency using exchange rates in effect at the balance sheet date.date of initial application with respect to lease classifications, initial direct costs as well as whether an existing contract contains a lease. The Company also elected to account for lease andNon-monetarynon-lease assets and liabilities are recorded at historical exchange rates. Gains and losses related to remeasurement are recorded in other income in the condensed consolidated statements of operations. The net foreign exchange transaction gains (losses) included in other income in the accompanying condensed consolidated statements of operations was insignificant for the three months ended March 31, 2018 and 2017.

Cash and Cash Equivalentscomponents separately under transition relief available.

The Company considers all highly liquid investmentsrecognizes operating leases with an original maturity of three months or less from the date of purchase to be cash equivalents. Cashterms greater than one year asright-of-use (ROU) assets and cash equivalents consist primarily of funds invested in readily available checking and savings accounts and highly liquid investments in money market funds.

Restricted Cash

Restricted cash, which consists of funds invested in a money market fund, represents collateral for a corporate credit card facility. Restricted cash at December 31, 2017 also included security deposits required for a facility lease that expired in February 2018.

Concentrations of Credit Risk

Financial instruments that subject the Company to significant concentrations of credit risk consist of cash, cash equivalents and restricted cash. All of the Company’s cash, cash equivalents and restricted cash are held at financial institutions in the United States and Canada that management believes to be of high credit quality. Deposits held in the United States and Canada with these financial institutions exceed federally insured limits.

The primary focus of the Company’s investment strategy is to preserve capital and meet liquidity requirements. The Company’s investment policy addresses the level of credit exposure by limiting the concentration in any one corporate issuer and establishing a minimum allowable credit rating.

Comprehensive Loss

The Company had no components of comprehensive loss other than net loss for all periods presented.

Fair Value of Financial Instruments

The Company’s cash and cash equivalents, restricted cash, other current assets, accounts payable, and accrued liabilities approximate their fair value at March 31, 2018 and December 31, 2017, due to their short duration.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines the fair value ofon its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation. Depreciation on property and equipment, excluding leasehold improvements, is computed using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Depreciation begins at the time the asset is placed in service. Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciation are removed from the condensed consolidated balance sheet using the portfolio approach. Lease liabilities and ROU assets are recorded based on the resulting gain or loss is reflectedpresent value of future lease payments over the contractual terms of the operating leases. The Company utilized its incremental borrowing rate from information available as at the date of initial adoption in determining the condensed consolidated statementpresent value of operations. Leasehold improvementsthe future lease payments. The lease liabilities and ROU asset are amortized over the term of the lease with operating lease expenses being recognized on a straight-line basis over the shorterlease terms. Please seeNote 6, Leases below for further disclosures associated with the impact of the estimated useful lives of the assets or the remaining lease term.

Other Assets

Other assets consist primarily of restricted cash pledged as collateral for a corporate credit card facility, and long-term prepaid rent and refundable deposits on office leases.

Research and Development Costs

Research and development costs are expensed as incurred. The Company accounts fornon-refundable advance payments for goods and services that will be used in future research and development activities as expenses when the goods have been received or when the service has been performed rather than when the payment is made. Depending on the timing of payments to service providers of research and development costs, the Company recognizes prepaid expenses or accrued expenses related to these costs. These prepaid or accrued expenses are based on management’s estimates of the work performed under service agreements and milestones achieved. In the event that a clinical trial is terminated early, the Company records an accrual for the estimated remaining costs to complete the trial in the period of termination.

Upfront payments made in connection with license agreements are expensed as research and developments costs, as the assets acquired do not have alterative future use. Contingent milestone payment obligations due to third parties under license agreements are expensed when the milestones are considered probable of occurring.

Research and development costs include fees incurred in connection with license agreements, compensation and other related costs for employees engaged in research and development, costs associated with research and preclinical studies, clinical trials, regulatory activities, manufacturing activities to support clinical activities, fees paid to external service providers that conduct certain research and development, clinical, and manufacturing activities on behalf of the Company and an allocation of overhead expenses.new standard.

Stock-Based Compensation

The Company accounts for stock-based payments at fair value, which is measured using the Black-Scholes option-pricing model. For stock-based awards that vest subject to the satisfaction of a service requirement, the fair value measurement date for employee stock-based compensation awards is the date of grant and the expense is recognized on a straight-line basis over the vesting period.

For stock-based awards that vest subject to the satisfaction of a service requirement and a performance component, the fair value measurement date is the date of grant and is recognized over the requisite service period as achievement of the performance objective becomes probable.

Stock-based compensation arrangements withnon-employees are recognized at the grant date and remeasured to fair value at each reporting period. The expense is recognized over the vesting period, which is generally the service period.

Income Taxes

The Company uses the asset and liability method of accountingaccounts for income taxes. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Management makes an assessment of the likelihood that the resulting deferred tax assets will be realized. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. Due to the Company’s historical operating performance and the recorded cumulative net losses in prior fiscal periods, the net U.S. deferred tax assets have been offset by a full valuation allowance.forfeitures as they occur.

The Company recognizes uncertain income tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Changes in recognition or measurement are reflected in the period in which judgment occurs. The Company recognizes interest and penalties related to the underpayment of income taxes as a component of provision for income taxes.

Segment Information

Operating segments are components of an enterprise for which separate financial information is available and is evaluated regularly by the Company’s chief operating decision maker in deciding how to allocate resources and assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer.

The Company’s Chief Executive Officer views the Company’s operations and manages its business in one operating segment, which is the business of researching, developing and commercializing therapies for the treatment of patients with cancer. Accordingly, the Company has a single reporting segment.

Recent Accounting Pronouncements Not Yet Effective

In February 2016, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU)No. 2016-02,Leases (Topic 842). The amendments in this update require that organizations recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. This ASU is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company will adopt the new standard effectiveOn January 1, 2019, the Company adopted FASB ASUNo. 2018-07,Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the guidance for share-based payments issued for goods and expects its operating leases, as disclosed in Note 6 “Commitmentsservices for employees and Contingencies”, to be subject tononemployees. The adoption of this new accounting guidance did not have a material impact on the new standard. The Company willrecognize right-of-use assets and operating lease liabilities on itsCompany’s condensed consolidated balance sheets upon adoption, which will increase its total assets and liabilities.financial statements.

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period without consideration for common stock equivalents. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, stock options and the warrant for common stock are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive. As

The following shares of March 31, 2018 and March 31, 2017, 10,202,831 and 7,615,052 outstanding options to purchase common stock respectively,equivalents were excluded from the calculation of diluted net loss per share for the periods presented because including them would have been antidilutive.antidilutive:

The Company measures and reports its cash equivalents and restricted cash at fair value. The following table sets forth the fair value of the Company’s financial assets measured on a recurring basis by level within the fair value hierarchy:

Money market funds and restricted money market funds are measured at fair value on a recurring basis using quoted prices and are classified as a Level 1 input.

There were no transfers between Levels 1, 2 or 3 during the three months ended March 31, 2018.2019.

Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

In November 2016, the FASB issued new guidance ASUNo. 2016-18,Statement of Cash Flows (Topic 230): Restricted Cash, which requires thebeginning-of-period andend-of-period totals on the statement of cash flows to include restricted cash and restricted cash equivalents, as well as disclosure of how the statement of cash flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet. The company adopted the guidance effective January 1, 2018 retrospectively to all periods presented. As a result, the condensed consolidated statement of cash flows no longer presents transfers to or from restricted cash.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

Property and Equipment, net

Property and equipment, net consists of the following:

Depreciation related to the Company’s property and equipment was $21,000 and $29,000 for the three months ended March 31, 2019 and 2018, respectively.

Accrued and Other Liabilities

Accrued and other liabilities consist of the following:

In June 2017, the Company entered into an operating lease agreement to lease the office space in Vancouver, Canada commencing March 1, 2018. The lease expires on February 28, 2023 and can be extended for an additional term of 5 years.

In January 2016, the Company entered into an operating lease agreement to lease office space near San Francisco, California. The operating lease agreement expires on April 30, 2019. In September 2017, the Company entered into a sublease agreement to sublet the premises to a third party until April 30, 2019.

On January 1, 2019, with the adoption of ASU2016-02, the Company recognized operating leaseright-of-use asset of $0.8 million and operating lease liabilities of $0.7 million for these leases.

The components of lease expense and related cash flows for the three months ended March 31, 2019 were as follows:

The total rent expense was $0.1 million for the three months ended March 31, 20182018.

As of March 31, 2019, the weighted average remaining lease term and 2017,discount rate for the operating leases are 3.9 years and 6.5%, respectively.

Accrued Liabilities

AccruedAs of March 31, 2019, maturities of lease liabilities consist ofdue under the following:lease agreements are as follows:

In addition to base rent, these leases require payment ofnon-lease andnon-component costs. These costs are not included.

On August 21, 2018, the Company entered into a Loan and Security Agreement (Loan Agreement) with Silicon Valley Bank (SVB), pursuant to which the Company may obtain a loan of aggregate principal amount of up to $15.0 million (Term Loans), which becomes available in three tranches, each of an aggregate principal amount of up to $5.0 million. Contemporaneously with executing the Loan Agreement, the Company drew down the first $5.0 million tranche. The second and third $5.0 million tranches may be drawn only upon the achievement of certain development milestones. Borrowings under the Loan Agreement bear interest at the greater of (i) 6.0% or (ii) a floating per annum rate 1.0% above the prime rate (for an interest rate of 6.50% at March 31, 2019), with interest only due and payable monthly, until March 1, 2020, at which time interest and principal will be due and payable monthly in equal monthly payments; are subject to a final payment fee equal to 6.75% of the aggregate principal amount.

The Company may prepay all, but not less than all, of the loaned amounts subject to a prepayment fee. The Loan Agreement is secured by substantially all of the Company’s personal property, except for its intellectual property and requires the Company to maintain the lesser of $10 million or 80% of its cash and cash equivalents with SVB. The Loan Agreement contains customary covenants and customary events of default. The occurrence of an event of default could result in an increase to the applicable interest rate of 5.0%, and the consequent obligation for the Company to repay all amounts outstanding under the Loan Agreement.

In connection with the Loan Agreement, the Company issued a warrant to SVB to purchase 73,529 of the Company’s common stock at a price per share of $1.87. The warrant was immediately exercisable, will expire on August 21, 2028, contains a cashless exercise provision and is classified as equity. If the Company is to draw the second or third tranche available under the Loan Agreement, the Company will grant an additional amount of common stock issuable upon exercise of the warrant based upon the principal amount advanced. In no event will the number of common stock issuable pursuant to the exercise of the warrant exceed 220,588 in aggregate.

The fair value of the warrant and the debt issuance costs were recorded as debt discounts and together with the final payment fee are being amortized using the effective interest rate method over the term of the loan. As of March 31, 2019, the effective interest rate on the initial tranche of the loan was 9.89% and the unamortized debt discount was $0.1 million. Amortization of the debt discount and accrual of final payment was $0.1 million for the three months ended March 31, 2019.

Scheduled payments due under the Loan Agreement, excluding the final payment fee of $0.3 million and interest payments, are as follows:

During the three months ended March 31, 2019, the Company recognized $0.1 million of interest expense related to the Loan Agreement. The Company did not incur interest expense for the three months ended March 31, 2018.

Asset Purchase Agreement

In August 2018, the Company entered into an asset purchase agreement with Gilead Sciences, Inc. (Gilead) whereby the Company acquired worldwide rights to the pharmaceutical product momelotinib, an investigational inhibitor of Janus kinase, together with all related intellectual property rights and certain other related assets. The Company paid Gilead an upfront payment of $3.0 million in August 2018. The Company will be required to pay Gilead milestone payments of up to an aggregate of $195.0 million upon the achievement of certain development, regulatory and commercial milestones events, including a milestone payment of $5.0 million upon the dosing of the first patient in a registrational clinical trial. These milestones will be accrued once they are considered probable of occurring. In addition, the Company is required to pay Gileadmid-teen to high twenty percent tiered royalties based upon net sales.

License Agreements

In September 2016, the Company entered into an exclusive license agreement with CRT Pioneer Fund LP (CPF) for worldwide rights,know-how and materials to develop SRA737, a small molecule inhibitor targeting Chk1, a promising therapeutic target to treat cancer. Pursuant to the agreement, the Company made aone-time upfront payment of $7.0 million to CPF in October 2016 and paid $2.0 million to CPF in January 2017 for the successful transfer of two ongoing Phase I clinical trials. The expense related to these payments was included in research and development for the year ended December 31, 2016. Additional milestone payments of up to an aggregate of $319.5 million may become payable to CPF upon the achievement of certain developmental, regulatory and commercial milestones, and will be accrued once they are considered probable of occurring. In addition, the Company is required to pay CPF, on aproduct-by-product andcountry-by-country basis, tiered high single-digit to low double-digit royalties on the net sales of any product successfully developed.

In May 2016, the Company entered into an exclusive license agreement (Carna License Agreement) with Carna Biosciences, Inc. (Carna) for worldwide rights to develop and commercialize SRA141, a small molecule kinase inhibitor targeting Cdc7. In exchange for this exclusive right, the Company paid Carna an upfront payment of $0.9 million in June 2016. The Company will be required to pay Carna milestone payments of up to an aggregate of $270.0 million upon achievement of certain developmental, regulatory and commercial milestone events, whichincluding a milestone payment of $4.0 million upon dosing of the first patient in the first Phase 1 clinical trial for SRA141. These milestones will be accrued once they are considered probable of occurring. As of March 31, 2018,2019, the Company had not recorded any milestone payments to Carna. In addition, the Company is required to pay Carna tiered single-digit royalties on net sales of product candidates (as defined under the Carna License Agreement).

Determination of Fair Value

The estimated grant-date fair values of all of the Company’s stock-based awards were calculated using the Black-Scholes option pricing model, based on assumptions as follows:

Equity Incentive Plans

2018 Equity Inducement Plan

In September 2018, the Company’s Compensation Committee approved the 2018 Equity Inducement Plan (2018 Plan). The number of shares available for awards under the 2018 Plan was set to 1,500,000. The exercise price of each stock-based award issued under the 2018 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2015 Plan

The 2015 Equity Incentive Plan (2015 Plan) became effective on July 14, 2015. As of March 31, 2018, 8,621,8532019, 11,617,575 shares were reserved for issuance under the 2015 Plan. The number of shares reserved for issuance under the 2015 Plan will increase automatically on January 1 of each calendar year 2016 through 2025 by the number of shares equal to 4% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The Company’s Board of Directors or Compensation Committee may reduce the amount of the increase in any particular year. The exercise price of each stock-based award issued under the 2015 Plan is required to be no less than the fair value of the Company’s capital stock. The vesting and exercise provisions of options or restricted awards granted are determined individually with each grant. Stock options have a10-year life and expire if not exercised within that period or if not exercised within three months of cessation of employment with the Company or such longer period of time as specified in the option agreement.

2008 Plan

The Company granted options under the 2008 Stock Plan (2008 Plan) until July 2015 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2008 Plan. The 2008 Plan provided for the granting of Incentive Stock Options (ISO), nonqualified stock options and stock purchase rights. In connection with the Board of Director’s approval of the 2015 Plan, all remaining shares available for future award under the 2008 Plan were transferred to the 2015 Plan, and the 2008 Plan was terminated.

A summary of activity under the 2008 Plan, 2015 Plan and 20152018 Plan and related information is as follows:

The weighted-average grant date fair values of options granted during the three months ended March 31, 2019 and 2018 was $1.47 and 2017 was $1.76 and $1.12 per share, respectively. The aggregate intrinsic value of options exercised was $0.1 million for the three months ended March 31, 20182019 and 2017.2018. The total grant date fair value of options vested for the three months ended March 31, 2019 and 2018 and 2017 was $1.7$2.7 million and $2.2$1.7 million, respectively.

As of March 31, 2018,2019, total unrecognized stock-based compensation related to unvested stock options was $12.6$10.8 million. These costs are expected to be recognized over a remaining weighted-average period of 2.42.7 years as of March 31, 2018.2019.

2015 Employee Stock Purchase Plan

The Company adopted the 2015 Employee Stock Purchase Plan (ESPP) and initially reserved 700,000 shares of common stock as of its effective date of July 15, 2015. The number of shares initially reserved for issuance under the ESPP will increase automatically on January 1 for nine years from the first offering date by the number of shares equal to 1% of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31. The aggregate number of shares issued over the term of the 2015 Employee Stock Purchase Plan will not exceed 3,400,000 shares of common stock.

Under the ESPP, participants are offered the option to purchase shares of the Company’s common stock at a 15% discount during a series of discrete offering periods, subject to any plan limitations. The ESPP will not become effective until such time as the Compensation Committee determines in the future, and as of March 31, 2018,2019, the initial offering periods had not commenced. As of March 31, 2018,2019, no shares of common stock have been issued to employees participating in the ESPP and 700,000 shares were available for issuance under the ESPP.

The Company did not record a provision for U.S. federal income taxes for the three months ended March 31, 20182019 because it expects to generate a loss for the year ended December 31, 2018.2019. The net income tax expensebenefit of $43,000 and $34,000$0.1 million for the three months ended March 31, 20182019 primarily represented income tax benefit resulting from foreign research and 2017, respectively,development tax credits. Income tax expense of $43,000 for the three months ended March 31, 2018 represented foreign taxes. The Company’s net U.S. deferred tax assets continue to be offset by a full valuation allowance.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act significantly revises U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate from 35% to 21%, changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017 and eliminating or reducing certain income tax deductions.

We areOur pipeline also advancingincludes SRA141, a potent, selective, orally bioavailable small molecule inhibitor of cell division cycle 7 kinase (Cdc7). Cdc7During the first quarter of 2019, we reported preclinical data in a late-breaking poster presented at the AACR Annual Meeting 2019, highlighting a potentially novel mechanism of cytotoxicity for SRA141 that is a key regulatordistinct from other agents. This differentiated mechanism of action, in which SRA141 alters DNA replication dynamics and is involveddelays cell cycle progression, could support a unique spectrum of clinical opportunities for SRA141 as both monotherapy and in combination with other agents. We successfully completed the DDR network, making itIND filing process with the FDA for SRA141 in 2018 and have prepared for a compelling emerging target forpotential Phase 1/2 trial with this drug candidate in patients with advanced colorectal cancer. We are currently evaluating the potential treatmentoptimal timing to commence our first clinical trial with SRA141 within the context of a broad range of tumor types. SRA141 is currently undergoing preclinical research in preparation for an Investigational New Drug Application (IND) submission to the U.S. Food and Drug Administration (FDA) expected in the second half of 2018.our recently expanded portfolio.

We retain the global commercialization rights to bothmomelotinib, SRA737 and SRA141.

Since inception, we have devoted substantially all of our resources to research and development activities, including the clinical development of our current product candidates, momelotinib, SRA737 and SRA141, and our former lead product candidate PNT2258, and providingto provide general and administrative support for these operations. We have never generated revenue and have incurred significant net losses since inception. Our net losses were $11.5$13.0 million and $11.1$11.5 million for the three months ended March 31, 20182019 and 2017,2018, respectively. As of March 31, 2018,2019, we had an accumulated deficit of $635.6$690.4 million. We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

On March 6, 2018, we completed an underwritten public offering of an aggregate of 21,850,000 shares of common stock at a price to the public of $2.25 per share. The aggregate net proceeds received by us from the offering were $46.0 million, net of underwriting discounts and commissions and offering expenses of $3.2 million.

We have funded our operations to date primarily from the issuance and sale of our common stock through public offerings, and our convertible and redeemable convertible preferred stock in private financings and, to a lesser extent, through debt financings and exercises of our preferred stock warrants. As of March 31, 2018,2019, we had cash and cash equivalents of $133.8$90.9 million.

Components of Statements of Operations

Operating Expenses

Research and Development

Research and development expenses consist primarily of the following:

We did not record a provision for U.S. federal income taxes for the three months ended March 31, 20182019 because we expect to generate a loss for the year ended December 31, 2018.2019. Our tax expensebenefit relates to research and development tax credits in Canada and our income tax provision relates to income taxes in Canada and Australia. Our net U.S. deferred tax assets continue to be offset by a full valuation allowance.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (Tax Act). The Tax Act significantly revises U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate from 35% to 21%, changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017 and eliminating or reducing certain income tax deductions.

The effects of changes in tax laws are required to be recognized in the period in which the legislation is enacted. However, due to the complexity and significance of the Tax Act’s provisions, the Financial Accounting Standards Board (FASB) issued FASB Accounting Standards Update (ASU)No. 2018-06,Income Taxes (Topic 740)pursuant tothe SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), which allows companies to record the tax effects of the Tax Act on a provisional basis based on a reasonable estimate, and then, if necessary, subsequently adjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment.

In connection with our initial analysis of the Tax Act, we recorded a decrease to our net deferred tax assets of $7.2 million for the period ended December 31, 2017, to account for the rate reduction. This did not have an impact on the financial statements since our U.S. deferred tax assets are fully offset by a valuation allowance. However, given the significant complexity of the Tax Act, these estimates may be adjusted during the measurement period.

Results of Operations

Three Months Ended March 31, 20182019 Compared to Three Months Ended March 31, 20172018

Research and Development

Research and development expenses increased $0.3$1.8 million, from $8.0 million for the three months ended March 31, 2017, to $8.3 million for the three months ended March 31, 2018.2018 to $10.1 million for the three months ended March 31, 2019. The increase was primarily due to an increase of $1.7 million in clinical trial costs related to momelotinib and SRA737, and a $1.7$1.3 million increase in clinical trialpersonnel-related and overhead costs for the three months ended March 31, 2018.2019. These increased costs were partially offset by a $0.9$0.8 million decrease in third party manufacturing costs related to SRA737 and SRA141, and a $0.5$0.4 million decrease in research and preclinical and other support costs.costs for the three months ended March 31, 2019.

General and Administrative

General and administrative expenses increased $0.3 million, from $3.1 million for the three months ended March 31, 2017 toremained consistent at $3.4 million for the three months ended March 31, 2018. The increase was primarily attributable to an increase in personnel-related costs2019 and professional fees2018.

Other Income, net

Other income, net of $0.3 million for the three months ended March 31, 2019 primarily comprised of interest income, partially offset by interest expense on the SVB loan. Other income, net of $0.3 million for the three months ended March 31, 2018 primarily consisted of interest income.

Provision for (benefit from) income taxes, net

Net benefit from income taxes was $0.1 million for the three months ended March 31, 2019, compared to provision for income taxes of $43,000 for the three months ended March 31, 2018. The net benefit from income taxes during the three months ended March 31, 2019 primarily represented benefit from foreign research and development tax credits.

Liquidity and Capital Resources

Capital Resources

Since our inception, we have never generated revenue and have incurred significant net losses. We have funded our operations to date primarily from the issuance and sale of our common stock through public offerings, and our convertible and redeemable convertible preferred stock in private financings and, to a lesser extent, through debt financings and exercises of our preferred stock warrants. Our net losses for the three months ended March 31, 2019 and 2018 and 2017 were $11.5$13.0 million and $11.1$11.5 million, respectively. As of March 31, 2018,2019, we had an accumulated deficit of $635.6$690.4 million. Our principal sources of liquidity as of March 31, 20182019 were cash and cash equivalents of $133.8$90.9 million.

On March 6, 2018, we completed an underwritten public offering of an aggregate of 21,850,000 shares of common stock at a price to the public of $2.25 per share. The aggregate net proceeds received by us from the offering were $46.0 million, net of underwriting discounts and commissions and offering expenses of $3.2 million.

Cash Flows from Operating Activities

For the three months ended March 31, 2019, cash used in operating activities of $15.6 million was attributable to a net loss of $13.0 million and a net change of $4.3 million in our net operating assets and liabilities, partially offset by $1.7 million innon-cash charges. Thenon-cash charges consisted primarily of $1.7 million in stock-based compensation. The change in net operating assets and liabilities was primarily attributable to a decrease in our accounts payable, accrued and other liabilities and operating lease liabilities of $3.3 million and an increase in prepaid expenses and other assets of $1.0 million.

For the three months ended March 31, 2018, cash used in operating activities of $12.6 million was attributable to a net loss of $11.5 million, partially offset by $1.6 millioninnon-cash charges and a net change of $2.7 million in our net operating assets and liabilities.Thenon-cash charges charges consisted primarily of $1.5 million in stock-based compensation. The change in net operating assets and liabilities was primarily attributable to a decrease in our accounts payable and accrued and other liabilities of $1.9 million and an increase in prepaid expenses and other assets of $0.8 million.

For the three months ended March 31, 2017, cash used in operating activities of $11.4 million was attributable to a net loss of $11.1 million, partially offset by $1.6 million innon-cash charges and a net change of $1.9 million in our net operating assets and liabilities. Thenon-cash charges consisted primarily of $1.5 million in stock-based compensation. The change in net operating assets and liabilities was primarily attributable to a $2.0 million payment to CRT Pioneer Fund (CPF) pursuant to our license agreement with CPF upon the successful transfer of the SRA737 clinical trials to us.

Cash Flows from Investing Activities

For the three months ended March 31, 2019, cash used in investing activities was attributable to the purchase of property and equipment. There were no investing activities for the three months ended March 31, 2018. For the three months ended March 31, 2017, cash used in investing activities of $0.1 million was primarily attributable to the purchase of property and equipment.

Cash Flows from Financing Activities

For the three months ended March 31, 2019, cash provided by financing activities of $0.4 million consisted of net proceeds received from the exercise of options to purchase common stock.

For the three months ended March 31, 2018, and 2017, cash provided by financing activities of $46.1 million and $27.4 million, respectively, was primarily attributable to net proceeds received from the sale and issuance of our common stock upon ourfollow-on offerings.

Off-Balance Sheet Arrangements

We do not currently engage inoff-balance sheet financing arrangements. In addition, we do not have any interest in entities referred to as variable interest entities, which includes special purpose entities and other structure finance entities.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

We believe that the assumptions and estimates associated with research and development expenses and stock-based compensation have the most significant impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in Management’s Discussion and Analysis of Financial Condition and Operations included in our Annual Report on Form10-K for the year ended December 31, 2017.2018.

We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities and foreign currency risk.

Interest Rate Sensitivity

We had cash and cash equivalents of $133.8$90.9 million as of March 31, 2018,2019, which consisted primarily of bank deposits and money market funds. Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our condensed consolidated financial condition or results of operations. We do not believe that our cash or cash equivalents have significant risk of default or illiquidity.

In addition, we had an outstanding balance of $5.0 million under our Loan Agreement as of March 31, 2019. Borrowings under the Loan Agreement bear interest at the greater of 6% or a floating per annum rate of 1.0% above the prime rate (for an interest rate of 6.50% at March 31, 2019). The effect of a hypothetical 10% change in interest rates would not have a material impact on our operating loss.

Foreign Currency Risk

Our condensed consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. A substantial majority of our expenses are denominated in U.S. Dollars, with the remainder in Canadian Dollars, British Pounds and Australian Dollars. Our condensed consolidated results of operations and cash flow are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk or other derivative instruments. The effect of a hypothetical 10% change in foreign currency exchanges rates applicable to our business would not have a material impact on our operating loss.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules13a-15(e) and15d-15(e) under the Exchange Act, as amended) as of the end of the period covered by this Quarterly Report on Form10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, 20182019 to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’sSecurity and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosures.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule13a-15(d) and15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 20182019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors set forth in our Annual Report on FormForm 10-K for the year ended December 31, 2017.2018.

Use of Proceeds

On July 15, 2015, our Registration Statement on FormS-1 (FileNo. 333-204921) relating to the IPO of our common stock was declared effective by the SEC. Pursuant to such Registration Statement, we sold an aggregate of 9,315,000 shares of our common stock at a price of $17.00 per share for aggregate cash proceeds of approximately $143.6 million, net of underwriting discounts and commissions and offering costs.

In June 2016, we halted investment in PNT2258, our former lead product candidate, based on our review of the interim results from a Phase 2 trial of PNT2258. Accordingly, we nowWe intend to use the remaining net proceeds from our IPO to advance the development of product candidates momelotinib, SRA737 and SRA141, acquire orin-license additional product candidates and technologies and for other general corporate purposes.

Not applicable.

Not applicable.

None.

The exhibits filed or furnished as part of this Quarterly Report on Form10-Q are set forth below. Where so indicated, by footnote, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated.