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SEC Filings

S-1
VITAE PHARMACEUTICALS, INC filed this Form S-1 on 08/12/2014
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Table of Contents


Vitae Pharmaceuticals, Inc.

Notes to the Financial Statements (Continued)

For the Years Ended December 31, 2013 and 2012

5. Fair Value Measurements (Continued)


 
  Fair Value Measurements as of December 31, 2012 Using  
 
  Level 1   Level 2   Level 3   Balance as of
December 31,
2012
 

Assets

                         

Money market funds

  $ 6,130,621   $   $   $ 6,130,621  

Cash-restricted, CD

    450,000             450,000  

Marketable securities, available-for-sale

        17,152,932         17,152,932  
                   

Total assets

  $ 6,580,621   $ 17,152,932   $   $ 23,733,553  
                   
                   

Liabilities

                         

Preferred stock warrant liability

  $   $   $ 720,375   $ 720,375  
                   

Total liabilities

  $   $   $ 720,375   $ 720,375  
                   
                   

        Preferred stock warrants are exercisable by the holder for shares of the Company's Series C and Series D preferred stock. The fair value of the warrants on the date of issuance and on each re-measurement date of those warrants classified as liabilities is estimated using the Black-Scholes option pricing model using the following assumptions: contractual life according to the remaining terms of the warrants, no dividend yield, weighted average risk-free interest rate of 2.68% and 1.34%, fair value of the underlying instrument of $0.71 and $0.94, and weighted average volatility of 83% and 87% at December 31, 2013 and 2012, respectively. For this liability, the Company developed its own assumptions that do not have observable inputs or available market data to support the fair value. This method of valuation involves using inputs such as the fair value of the Company's various classes of preferred stock, stock price volatility, the contractual term of the warrants, risk free interest rates and dividend yields. Due to the nature of these inputs, the valuation of the warrants is considered a Level 3 measurement. The Company accounts for its convertible preferred stock warrants as liabilities in accordance with the guidance for accounting for certain financial instruments with characteristics of both liabilities and equity as the warrants entitle the holder to purchase preferred stock that is considered contingently redeemable. The warrant liability is recorded on its own line item on the Company's Balance Sheets. The warrant liability is marked-to-market each reporting period with the change in fair value recorded in the Statement of Operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liability to be reclassified as an equity instrument.

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