AKAO 2017 Annual Report

121 The following table provides a summary of changes in the estimated fair value of the Company’s liabilities measured at estimated fair value using significant Level 3 inputs for the years ended December 31, 2017, 2016 and 2015 (in thousands): Estimated Fair Value of Derivative Liability Estimated Fair Value of Warrant Liability Balance of Level 3 Liabilities at December 31, 2014 ............................... $ — $ — Estimated fair value of derivative liability issued................................ 356 — Change in estimated fair value of derivative liability .......................... 19 — Balance of Level 3 Liabilities at December 31, 2015 ............................... 375 — Estimated fair value of warrants issued ............................................... — 2,579 Change in estimated fair value of warrant liability.............................. — 19,632 Reclassification of warrant liability to additional paid-in-capital upon exercise of warrants .................................................................... — (8,337) Change in estimated fair value of derivative liability .......................... 227 — Balance of Level 3 Liabilities at December 31, 2016 ............................... 602 13,874 Change in estimated fair value of warrant liability.............................. — (2,012) Reclassification of warrant liability to additional paid-in-capital upon exercise of warrants .................................................................... — (2,088) Change in estimated fair value of derivative liability .......................... 84 — Balance of Level 3 Liabilities at December 31, 2017 ............................... $ 686 $ 9,774 Warrants outstanding as of December 31, 2017 have a weighted-average exercise price of $3.78. 4. Balance Sheet Components Prepaids and other current assets Prepaids and other current assets consisted of the following (in thousands): December 31, 2017 December 31, 2016 Deferred research and development costs ........................................................ $ 4,317 $ 660 Prepaid expenses .............................................................................................. 1,755 1,390 Other current assets .......................................................................................... 295 139 $ 6,367 $ 2,189 Property and Equipment, net Property and equipment, net consisted of the following (in thousands): December 31, 2017 2016 Office equipment.............................................................................................. $ 863 $ 644 Laboratory equipment ...................................................................................... 6,663 4,038 Leasehold improvements.................................................................................. 9,355 1,072 Construction-in-progress .................................................................................. 1,040 1,896 Property and equipment, gross ......................................................................... 17,921 7,650 Less: accumulated depreciation ....................................................................... (3,111) (4,389) Property and equipment, net............................................................................. $ 14,810 $ 3,261 Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was $1.3 million, $0.4 million and $0.4 million, respectively.