The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our Condensed Consolidated
Financial Statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q and our audited consolidated financial statements and
related notes for the year ended December 31, 2021 included in our Annual Report
on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on
March 17, 2022. Some of the statements contained in this discussion and analysis
or set forth elsewhere in this Quarterly Report on Form 10-Q, including
information with respect to our plans and strategy for our business, constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," "might," "plan," "potential," "predict," "project,"
"should," "target," "would," and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
these identifying words. We have based these forward-looking statements on our
current expectations and projections about future events. The following
information and any forward-looking statements should be considered in light of
factors discussed elsewhere in this Quarterly Report on Form 10-Q, particularly
including those risks identified in Part II-Item 1A "Risk Factors" and our other
filings with the SEC.
Our actual results and timing of certain events may differ materially from the
results discussed, projected, anticipated, or indicated in any forward-looking
statements. We caution you that forward-looking statements are not guarantees of
future performance and that our actual results of operations, financial
condition and liquidity, and the development of the industry in which we operate
may differ materially from the forward-looking statements contained in this
Quarterly Report on Form 10-Q. Statements made herein are as of the date of the
filing of this Quarterly Report on Form 10-Q with the SEC and should not be
relied upon as of any subsequent date. Even if our results of operations,
financial condition and liquidity, and the development of the industry in which
we operate are consistent with the forward-looking statements contained in this
Quarterly Report on Form 10-Q, they may not be predictive of results or
developments in future periods. We disclaim any obligation, except as
specifically required by law and the rules of the SEC, to publicly update or
revise any such statements to reflect any change in our expectations or in
events, conditions or circumstances on which any such statements may be based,
or that may affect the likelihood that actual results will differ from those set
forth in the forward-looking statements.
We caution readers not to place undue reliance on any forward-looking statements
made by us, which speak only as of the date they are made.
Overview
We are a clinical-stage biopharmaceutical company focused on the development and
commercialization of the investigational therapy Haduvio (oral nalbuphine ER)
for the treatment of chronic cough in adults with idiopathic pulmonary fibrosis,
or IPF, and other chronic cough indications, and for the treatment of prurigo
nodularis.
Chronic Cough. In September 2022, we announced positive data from the full set
of subjects in our Phase 2 clinical trial of Haduvio for the treatment of
chronic cough in adults with IPF, which we refer to as the Phase 2 CANAL trial.
The Phase 2 CANAL trial was a randomized, double-blind, placebo controlled,
two-treatment, two-period, crossover study that was designed to evaluate the
efficacy, safety, tolerability and dosing of Haduvio for chronic cough in adults
with IPF that we conducted at multiple sites in the United Kingdom. In total, we
enrolled 38 subjects in the study. In the full subject data set, Haduvio
demonstrated statistically significant results for the primary efficacy endpoint
of daytime cough frequency reduction (p<0.0001) and for key secondary endpoints
on patient and clinician reported outcomes. The trial results comparing subjects
randomized to Haduvio or placebo showed that:
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• On the primary efficacy endpoint, Haduvio subjects had a 75.1% reduction
in daytime cough frequency at end of treatment period vs. study baseline
compared to placebo subjects who had a 22.6% reduction, a 52.5%
placebo-adjusted change (p<0.0001);
• Haduvio subjects had a 76.1% reduction in 24-hour cough frequency at end
of treatment period vs. study baseline compared to placebo subjects who
had a 25.3% reduction, a 50.8% placebo-adjusted change (p<0.0001);
• In a post-hoc analysis, 97% of Haduvio subjects had at least a 30%
reduction in 24-hour cough frequency compared to 35% of placebo
subjects, signifying a clinically meaningful reduction in cough
(p<0.0001);
• Subjects on Haduvio experienced a statistically significant improvement
as measured by their patient reported outcomes compared to placebo over
the 3-week treatment period in the EXACT2: Cough Frequency Score
(p=0.001) and Cough Severity Numerical Rating Scale (p=0.0001); and
• Based on the Clinical Global Impression of Change rating measuring
clinicians' view of change since the start of the trial, 62% of Haduvio
subjects improved vs. baseline compared to 19% of placebo subjects
(p=0.01).
The safety results of the trial were generally consistent with the known safety
profile of Haduvio from previous trials in other patient populations. There were
two serious adverse events reported during the trial, neither of which was
considered by the investigator to be treatment related. Adverse events most
commonly observed during the trial were nausea, fatigue, constipation,
dizziness, somnolence, vomiting, headache, anxiety and depression.
We are in discussions with the U.S. Food and Drug Administration, or FDA,
regarding the design of the next clinical trials of Haduvio for the treatment of
chronic cough in adult patients with IPF. We expect the objectives for the next
trials will be to determine the minimally effective dose in this patient
population as well as the safety in this specific patient population. Subject to
alignment with the FDA, we aim to initiate these trials in the first half of
2023. We also plan to develop Haduvio for additional chronic cough indications,
which we expect will commence initially with a Phase 2 clinical trial of Haduvio
for the treatment of refractory chronic cough, which we anticipate commencing in
2023. We will need to submit an IND for Haduvio before proceeding with our
planned trials for chronic cough in adults with IPF.
Prurigo Nodularis. In June 2022, we reported positive results in our Phase 2b/3
clinical trial of Haduvio in prurigo nodularis, which we refer to as the Phase
2b/3 PRISM trial. The Phase 2b/3 PRISM trial was a randomized, double-blind,
placebo controlled, two-arm treatment study that was designed to evaluate the
safety and efficacy of Haduvio in patients in the United States and Europe. In
the Phase 2b/3 PRISM trial, Haduvio demonstrated statistically significant
results on the primary and all three key secondary endpoints. The trial results
comparing subjects randomized to Haduvio (n=168) or placebo (n=176) showed that:
• 25% of Haduvio subjects evaluated at week 14 met the primary endpoint of
a 4-point reduction in the Worst Itch Numerical Rating Scale, or WI-NRS,
from baseline compared to 14% of placebo subjects (p=0.0157);
• Haduvio subjects experienced significantly greater improvements in
ItchyQoL vs. placebo (p=0.0002) at week 14, which was statistically
significant across each of the three domains (symptoms, functional
limitations, and emotions). ItchyQoL is used to measure how pruritus
impacts a subject's quality of life;
• 55% of Haduvio subjects had at least a 1-category improvement in the
5-point scale in their Prurigo Activity Scale (PAS) (pruriginous lesions
with excoriations), vs. 38% on placebo (p=0.006) as evaluated at week
14; and
• Haduvio subjects experienced significantly greater improvements in
PROMIS sleep disturbance short form 8a vs. placebo (p=0.0002) at week
14, which was statistically significant as early as week 6.
The safety results of the trial were generally consistent with the known safety
profile of Haduvio from previous trials. During the double-blind titration
period (weeks 1-2), treatment-emergent adverse events, or TEAEs, were more
common in the Haduvio-treated subjects (66.1%) vs. placebo-treated subjects
(31.3%). During the 12-week fixed-dose period, the occurrence of TEAEs were
generally similar between Haduvio and placebo groups (48% Haduvio, 45% placebo).
Discontinuations during the 14 weeks of the trial were 36.9% in Haduvio-treated
subjects vs. 19.3% in placebo-treated subjects. During the 14-week double-blind
portion of the Phase 2b/3 PRISM trial, eight subjects on Haduvio and six
subjects on placebo experienced at least one treatment emergent serious adverse
event, or SAE. None of the SAEs were considered by the investigator to be
treatment-related. Adverse events most commonly observed with Haduvio were
nausea, dizziness, headache, and constipation.
We are continuing to conduct the open-label extension portion of the Phase 2b/3
PRISM trial, which we expect to complete in the first quarter of 2023. We expect
that we will need to conduct an additional Phase 3 clinical trial to support the
submission of a new drug application, or NDA, to the FDA, a marketing
authorization application, or MAA, to the European Medicines Agency, or EMA, and
an MAA to the Medicines and Healthcare Products Regulatory Agency in the United
Kingdom, or MHRA, for Haduvio for the treatment of prurigo nodularis, and plan
to request an end of Phase 2 meeting with the FDA in the first quarter of 2023.
Following discussions with the FDA and other regulatory authorities, we plan to
determine next steps with respect to our prurigo nodularis program, including
with respect to the timing and conduct of a Phase 3 clinical trial. We will need
to obtain additional funding prior to commencing any Phase 3 clinical trial.
Since commencing operations in 2011, we have devoted substantially all of our
efforts and financial resources to the clinical development of Haduvio. We have
not generated any revenue from product sales and, as a result, we have never
been profitable and have incurred net losses in each year since commencement of
our operations. As of September 30, 2022, we had an accumulated
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deficit of $204.6 million, primarily as a result of research and development and
general and administrative expenses. We do not expect to generate product
revenue unless and until we obtain marketing approval for and commercialize
Haduvio for the treatment of chronic cough in adults with IPF or other chronic
cough indications or for the treatment of prurigo nodularis and we can provide
no assurance that we will ever generate significant revenue or profits.
In May 2019, we issued and sold 5,500,000 shares of common stock in our initial
public offering, or the IPO, and 1,500,000 shares of common stock in a
concurrent private placement, in each case at an offering price of $10.00 per
share, for combined net proceeds of $62.1 million after deducting aggregate
underwriting discounts and commissions and private placement agent fees of $4.9
million and other offering expenses of $3.0 million. Upon the closing of the
IPO, our preferred stock then outstanding converted into an aggregate of
10,381,234 shares of common stock.
In June 2020, we entered into a sales agreement with SVB Leerink LLC, or SVB
Leerink, which we refer to as the ATM Sales Agreement, under which we may issue
and sell shares of common stock, from time to time, having an aggregate offering
price of up to $12.0 million. In May 2022, we amended the ATM Sales Agreement
with SVB Leerink to increase the maximum aggregate offering price of common
stock that we may issue and sell from time to time under the ATM Sales Agreement
by $50.0 million, from $12.0 million to up to $62.0 million. Sales of common
stock under the ATM Sales Agreement may be made by any method that is deemed an
"at-the-market" offering as defined in Rule 415(a)(4) under the Securities Act
of 1933, as amended. We are not obligated to make any sales of our common stock
under the ATM Sales Agreement. We began making sales pursuant to the ATM Sales
Agreement in July 2020, and as of September 30, 2022, we had issued and sold an
aggregate of 3,583,394 shares of common stock for gross proceeds of $11.0
million, before deducting estimated commissions and allocated fees of $0.8
million.
In August 2020, we entered into a loan and security agreement, or the SVB Loan
Agreement, with Silicon Valley Bank, or SVB, pursuant to which SVB provided a
term loan, or the SVB Term Loan, to us in the original principal amount of $14.0
million. On the first business day of each month commencing on March 1, 2022, we
are required to repay the SVB Term Loan in 24 consecutive installments of
principal plus monthly payments of accrued interest. All outstanding principal
and accrued and unpaid interest under the SVB Term Loan and all other
outstanding obligations with respect to the SVB Term Loan are due and payable in
full on February 1, 2024. The SVB Loan Agreement permits voluntary prepayment of
all, but not less than all, of the SVB Term Loan, subject to a prepayment
premium. In July 2021 and April 2022, we entered into amendments to the SVB Loan
Agreement with SVB, which we refer to as the Loan Amendments, that modified the
conditions under which we would be required to cash collateralize the
outstanding amounts owed to them under the SVB Loan Agreement. For further
discussion of the SVB Term Loan and the Loan Amendments, see "-Liquidity and
Capital Resources".
On October 5, 2021 and October 18, 2021, we issued and sold in two private
placements, or the October 2021 Private Placements, in the aggregate (i)
4,225,053 shares of our common stock and accompanying warrants to purchase an
aggregate of 8,450,106 shares of our common stock, and (ii) pre-funded warrants
to purchase up to an aggregate of 4,926,069 shares of our common stock and
accompanying warrants to purchase an aggregate of 9,852,138 shares of our common
stock. Each share of our common stock and accompanying common stock warrants
were sold together at a combined price of $1.62, and each pre-funded warrant and
accompanying common stock warrants were sold together at a combined price of
$1.619, for gross proceeds of approximately $14.8 million. Each pre-funded
warrant had an exercise price of $0.001 per share, became exercisable
immediately upon issuance and continued to be exercisable until exercised in
full. Of the accompanying common stock warrants, we issued warrants to purchase
an aggregate of 9,151,122 shares that are to expire in April 2025 and warrants
to purchase an aggregate of 9,151,122 shares that are to expire in October 2028.
The accompanying common stock warrants have an exercise price of $1.37 per share
and became exercisable immediately upon issuance. As of November 10, 2022,
1,851,852 of the warrants to purchase shares of common stock that are to expire
in April 2025 and 7,851,852 of the warrants to purchase shares of common stock
that are to expire in October 2028 remained outstanding.
On April 11, 2022, we issued and sold in a private placement, or the April 2022
Private Placement, (i) an aggregate of 4,580,526 shares of our common stock, and
(ii) pre-funded warrants to purchase up to an aggregate of 24,379,673 shares of
our common stock. Each share of our common stock was sold at a price of $1.90,
and each pre-funded warrant was sold at a price of $1.899 per warrant share, for
gross proceeds of approximately $55.0 million. Each pre-funded warrant has an
exercise price of $0.001 per share, is exercisable immediately and will be
exercisable until the pre-funded warrant is exercised in full.
On September 27, 2022, we issued and sold 14,252,670 shares of our common stock
and, in lieu of common stock to certain investors, pre-funded warrants to
purchase 14,247,330 shares of common stock in a public offering, or the
September 2022 Offering, at a public offering price of $1.93 per share of common
stock and $1.929 per pre-funded warrant pursuant to an underwriting agreement,
or the Underwriting Agreement, with SVB Securities LLC, Stifel, Nicolaus &
Company, Incorporated and Oppenheimer & Co. Inc., as representatives of the
several underwriters, or the Underwriters. Each pre-funded warrant has an
exercise price of $0.001 per share, is exercisable immediately and will be
exercisable until the pre-funded warrant is exercised in full. Under the terms
of the Underwriting Agreement, we agreed not to issue and sell additional shares
until after November 21, 2022 except in certain circumstances, including the
issuance and sale of additional shares pursuant to the Underwriting Agreement.
Under the terms of the Underwriting Agreement, we granted the Underwriters an
option, or the Option, exercisable for 30 days, to purchase up to an additional
4,275,000 shares of common stock, or the Additional Shares, at the public
offering price of $1.93 per share. The
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Underwriters partially exercised the Option to purchase 1,600,428 Additional
Shares, which shares were issued and sold on October 25, 2022. The September
2022 Offering, including the initial closing on September 27, 2022 and the
Option closing on October 25, 2022, resulted in aggregate gross proceeds to us
of approximately $58.1 million.
As of September 30, 2022, we had cash, cash equivalents and marketable
securities of $125.6 million. We believe that our existing cash, cash
equivalents and marketable securities will enable us to fund our operating
expenses and capital expenditure requirements for at least 12 months from the
date of issuance of the Condensed Consolidated Financial Statements included in
this Quarterly Report on Form 10-Q.
We expect to incur substantial expenditures in the foreseeable future as we
advance Haduvio through clinical development, the regulatory approval process
and, if approved, commercial launch activities. Specifically, in the near term,
we expect to incur substantial expenses relating to the next trials we plan to
conduct for Haduvio for the treatment of chronic cough in adults with IPF, our
planned Phase 2 clinical trial of Haduvio for the treatment of refractory
chronic cough, the ongoing open-label extension portion of our Phase 2b/3 PRISM
trial for prurigo nodularis, a human abuse liability, or HAL, study to further
characterize the abuse potential of oral nalbuphine.
We will need substantial additional funding to support our continuing operations
and pursue our growth strategy. Until such time as we can generate significant
revenue from sales of Haduvio, if ever, we expect to finance our operations
through the sale of equity, debt financings or other capital sources, including
potential collaborations with other companies or other strategic transactions.
Adequate funding may not be available to us on acceptable terms or at all. If we
fail to raise capital or enter into such agreements as and when needed, we may
have to significantly delay, scale back or discontinue the development and
commercialization of Haduvio for one or more indications or delay our efforts to
expand our product pipeline.
Impacts of the COVID-19 Pandemic
The COVID-19 pandemic and government measures taken in response thereto have had
a significant impact, both direct and indirect, on segments of the global
economy and have interrupted our clinical trial activities, disrupted our
business operations and have the potential to interrupt our supply chain. While
the current trajectory of the COVID-19 pandemic is uncertain, in the future we
may continue to experience adverse impacts on our clinical trial activities,
business operations, financial condition, and prospects as a result of the
future evolution of the virus, among other factors.
We experienced restrictions and delays at our clinical sites for both our Phase
2b/3 PRISM and Phase 2 CANAL trials. The COVID-19 pandemic or other outbreaks of
infectious disease may also adversely affect our ability to recruit and retain
principal investigators and site staff who, as healthcare providers, may have
heightened exposure to COVID-19, and may result in further disruptions to our
clinical trials due to prioritization of hospital and medical resources toward
the pandemic, restrictions on travel of patients and healthcare providers,
potential unwillingness of patients to enroll in trials at this time or the
inability of patients to comply with clinical trial protocols if quarantines
impede patient movement or interrupt healthcare services. The response to the
COVID-19 pandemic may also redirect resources of regulators in a way that could
adversely impact our ability to progress towards regulatory approvals and we may
face impediments to regulatory meetings and approvals relating to our clinical
trials due to measures intended to limit in-person interactions.
The COVID-19 pandemic may also affect employees of third-party contract research
organizations that we rely upon to carry out our clinical trials. The spread of
COVID-19 or another infectious disease could also negatively affect the
operations at our third-party suppliers, which could result in delays or
disruptions in the supply of drug product used in our clinical trials.
Components of Operating Results
Operating Expenses
Research and Development Expenses
For the periods presented, all of our research and development expenses consist
of expenses incurred in connection with the development of Haduvio. These
expenses include personnel-related costs, including stock-based compensation,
consulting costs, contract manufacturing costs and fees paid to contract
research organizations, or CROs, to conduct certain research and development
activities on our behalf. We do not allocate all of our costs by each indication
for which we are developing Haduvio, as a significant amount of our development
activities broadly support all indications. In addition, several of our
departments support our Haduvio drug candidate development program and we do not
identify internal costs for each potential indication.
We expect our research and development expenses to increase over the next few
years as we pursue our development program, pursue regulatory approval of
Haduvio in the U.S., Europe and other jurisdictions outside the U.S. and prepare
for a possible commercial launch of Haduvio. Predicting the timing or the cost
to conduct our Haduvio development program and prepare for a possible commercial
launch of Haduvio is difficult and delays may occur because of many factors
including factors outside of our control. For example, if the FDA or other
regulatory authorities were to require us to conduct clinical trials beyond
those that we currently anticipate or if we experience significant delays in
enrollment in any of our clinical trials, we could be required to expend
significant additional financial resources and time on our development program.
Furthermore, we are unable to predict when or if Haduvio will receive regulatory
approval in the U.S. or elsewhere with any certainty.
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General and Administrative Expenses
General and administrative expenses consist principally of personnel-related
costs, including stock-based compensation for personnel in executive, finance,
commercial and other administrative functions; professional fees for legal,
consulting and accounting services; as well as rent and other general operating
expenses not otherwise classified as research and development expenses.
We anticipate that our general and administrative expenses will increase as a
result of increased personnel costs, including stock-based compensation and
expanded infrastructure.
Other Expense, Net
Change in Fair Value of Term Loan Derivative Liability
In connection with the SVB Term Loan, prior to the Third Amendment (as defined
below) to the SVB Loan Agreement, upon the occurrence of the Phase 3 Event, as
described below, the interest rate on the SVB Term Loan would increase by 2.00%.
This contingent interest rate increase represented a free-standing financial
instrument. Accordingly, we accounted for the contingent interest rate increase
as a derivative under Accounting Standards Codification or ASC, 815, Derivatives
and Hedging and therefore, we recorded a term loan derivative liability for the
contingent interest rate increase at its fair value. We adjusted this liability
to fair value at each reporting date it remained outstanding. We recognized
changes in the fair value of this term loan derivative in our statements of
comprehensive loss as a component of other expense, net. See below as discussed
under "-Results of Operations-Operating Expenses-Other Expense, Net."
Interest Income, Net
Interest income consists of interest earned primarily on our cash, cash
equivalents and marketable securities as well as accretion of
discounts/amortization of premiums on purchases of marketable securities.
Interest Expense
In August 2020, we entered into the SVB Loan Agreement under which we borrowed
$14.0 million under the SVB Term Loan. In connection with the SVB Term Loan, we
recognize interest expense which includes amortization of deferred financing
charges, accretion of loan discount-financing costs, accrual of the final
payment fee, amortization of the term loan discount-interest and the stated
interest on the SVB Term Loan. Prior to the Third Amendment to the SVB Loan
Agreement, the SVB Term Loan bore interest at a floating rate per annum equal to
the greater of (A) the prime rate plus 1.00% and (B) 4.25%. If SVB received
evidence satisfactory to it that we had (i) received positive data for the Phase
2b/3 PRISM trial sufficient to advance Haduvio into a second Phase 3 clinical
trial for prurigo nodularis and (ii) raised sufficient financing to fund such
Phase 3 clinical trial and our operations, which we refer to together as the
Phase 3 Event, the interest rate under the SVB Term Loan would be adjusted to a
floating rate equal to the greater of (A) the prime rate plus 3.00% and (B)
6.25%.
On April 6, 2022, we entered into the Third Amendment to the SVB Loan Agreement,
or the Third Amendment. Under the Third Amendment, SVB agreed that amounts
outstanding under the SVB Loan Agreement would accrue interest at a floating per
annum rate equal to (i) the greater of (A) the prime rate plus 1.00% and (B)
4.25%, prior to raising $45.0 million in net proceeds from the sale of equity
securities, which we refer to as the 2022 Equity Event, and (ii) upon and after
the occurrence of the 2022 Equity Event, the greater of (A) the prime rate plus
3.00% and (B) 6.25%. The closing of the April 2022 Private Placement constituted
the 2022 Equity Event.
The SVB Term Loan required interest-only payments until March 2022. Commencing
on March 1, 2022, we are required to repay the SVB Term Loan in 24 consecutive
installments of principal plus monthly payments of accrued interest. All
outstanding principal and accrued and unpaid interest under the SVB Term Loan
and all other outstanding obligations with respect to the SVB Term Loan are due
and payable in full on February 1, 2024.
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Results of Operations
Comparison of the Three Months Ended September 30, 2022 and 2021
The following table summarizes our results of operations for the periods
indicated (in thousands):
Three Months Ended September 30,
2022 2021 Change
Operating expenses:
Research and development $ 5,769 $ 4,718 $ 1,051
General and administrative 2,636 2,229 407
Total operating expenses 8,405 6,947 1,458
Loss from operations (8,405 ) (6,947 ) (1,458 )
Other income (expense):
Change in fair value of term loan
derivative liability - (5 ) 5
Interest income, net 424 2 422
Interest expense (292 ) (303 ) 11
Total other income (expense), net 132 (306 ) 438
Loss before income taxes (8,273 ) (7,253 ) (1,020 )
Income tax benefit (expense) 7 (2 ) 9
Net loss $ (8,266 ) $ (7,255 ) $ (1,011 )
Operating Expenses
Research and Development Expenses
The following table summarizes our research and development expenses for the
periods indicated (in thousands):
Three Months Ended September 30,
2022 2021 Change
Clinical development expenses $ 4,126 $ 3,175 $ 951
Personnel and related expenses 851 1,018 (167 )
Consulting expenses and professional fees 550 377 173
Stock-based compensation expenses 198 91 107
Other research and development expenses 44 57 (13 )
Total research and development expenses $ 5,769 $ 4,718 $ 1,051
Research and development expenses for the three months ended September 30, 2022
increased to $5.8 million from $4.7 million for the corresponding period in
2021, primarily due to startup activities for our planned trials including
purchases of clinical trial supplies and increased costs associated with
increased activity in our Phase 2 CANAL trial as compared to the third quarter
of 2021, offset by a reduction in costs associated with decreased activity in
our Phase 2b/3 PRISM trial due to the completion of the blinded portion of the
trial in the second quarter of 2022.
General and Administrative Expenses
General and administrative expenses for the three months ended September 30,
2022 increased to $2.6 million from $2.2 million for the corresponding period in
2021, primarily due to higher legal fees associated with intellectual property
filings and increased market research costs.
Other Income (Expense), Net
Other income (expense), net for the three months ended September 30, 2022 was
$0.1 million compared to other expense, net of $0.3 million for the
corresponding period in 2021. The change was primarily due to an increase in
interest income of $0.4 million due to higher cash equivalent and marketable
securities balances and higher interest rate yields.
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Comparison of the Nine Months Ended September 30, 2022 and 2021
The following table summarizes our results of operations for the periods
indicated (in thousands):
Nine Months Ended September 30,
2022 2021 Change
Operating expenses:
Research and development $ 15,517 $ 16,805 $ (1,288 )
General and administrative 7,733 7,398 335
Total operating expenses 23,250 24,203 (953 )
Loss from operations (23,250 ) (24,203 ) 953
Other (expense) income:
Change in fair value of term loan derivative
liability (147 ) 29 (176 )
Other expense - (375 ) 375
Interest income, net 623 7 616
Interest expense (889 ) (893 ) 4
Total other expense, net (413 ) (1,232 ) 819
Loss before income taxes (23,663 ) (25,435 ) 1,772
Income tax benefit 16 15 1
Net loss $ (23,647 ) $ (25,420 ) $ 1,773
Operating Expenses
Research and Development Expenses
The following table summarizes our research and development expenses for the
periods indicated (in thousands):
Nine Months Ended September 30,
2022 2021 Change
Clinical development expenses $ 10,005 $ 11,223 $ (1,218 )
Personnel and related expenses 3,044 3,460 (416 )
Consulting expenses and professional fees 974 1,375 (401 )
Other research and development expenses 863 154 709
Stock-based compensation expenses 631 593 38
Total research and development expenses $ 15,517 $ 16,805 $ (1,288 )
Research and development expenses for the nine months ended September 30, 2022
decreased to $15.5 million from $16.8 million for the corresponding period in
2021, primarily due to decreased clinical trial recruitment and other activity
costs in our Phase 2b/3 PRISM trial due to the completion of the blinded portion
of the trial in the second quarter of 2022, decreased consulting expenses and
professional fees due to a reduction in our use of consulting services and the
non-recurrence of professional recruiting fees related to hirings in the prior
year period and decreased personnel-related expenses primarily due to severance
in the prior year period that did not recur. These decreases were partially
offset by an increase in startup activities for our planned trials including
purchases of clinical trial supplies.
General and Administrative Expenses
General and administrative expenses for the nine months ended September 30, 2022
increased to $7.7 million from $7.4 million for the corresponding period in
2021. The increase was primarily due to higher market research costs.
Other Expense, Net
Other expense, net for the nine months ended September 30, 2022 was $0.4 million
compared to $1.2 million for the corresponding period in 2021. The decrease in
expense was primarily due to an increase in interest income of $0.6 million due
to higher cash equivalent and marketable securities balances and higher interest
rate yields. The decrease was also due to the non-recurrence of a $0.4 million
expense from the prior year period related to the value of the shares of our
common stock that we issued to Lincoln Park as consideration for Lincoln Park's
commitment to purchase shares of our common stock under the LPC Purchase
Agreement. These decreases were partially offset by the increase of $0.2 million
attributable to expense being recognized for the change in fair value and
settlement of the term loan derivative liability.
Liquidity and Capital Resources
Since our inception, we have not generated any revenue and have incurred
significant operating losses and negative cash flows from our operations. Prior
to the completion of our IPO and concurrent private placement in May 2019, we
financed our operations
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primarily through private placements of our preferred stock and convertible
notes as well as borrowings under our prior term loan. From inception to our
IPO, we raised an aggregate of $102.2 million in gross proceeds from sales of
our preferred stock and convertible notes and borrowed $15.0 million under our
prior term loan.
In May 2019, we issued and sold 5,500,000 shares of common stock in our IPO and
1,500,000 shares of common stock in a concurrent private placement, in each case
at an offering price of $10.00 per share, for combined net proceeds of $62.1
million after deducting aggregate underwriting discounts and commissions and
private placement agent fees of $4.9 million and other offering expenses of $3.0
million.
In June 2020, we entered into the ATM Sales Agreement under which we may issue
and sell shares of common stock, from time to time, having an aggregate offering
price of up to $12.0 million. In May 2022, we amended the ATM Sales Agreement
with SVB Leerink LLC to increase the maximum aggregate offering price of common
stock that we may issue and sell from time to time under the ATM Sales Agreement
by $50.0 million, from $12.0 million to up to $62.0 million. Sales of common
stock under the ATM Sales Agreement may be made by any method that is deemed an
"at-the-market" offering as defined in Rule 415(a)(4) under the Securities Act
of 1933, as amended. We are not obligated to make any sales of our common stock
under the ATM Sales Agreement. We began making sales pursuant to the ATM Sales
Agreement in July 2020 and as of September 30, 2022 we had issued and sold an
aggregate of 3,583,394 shares of common stock for gross proceeds of $11.0
million, before deducting estimated commissions and allocated fees of $0.8
million. During the three and nine months ended September 30, 2022, we sold no
shares of common stock under the ATM Sales Agreement.
On June 18, 2021, we entered into the LPC Purchase Agreement with Lincoln Park
for an equity line financing. The LPC Purchase Agreement provides that, subject
to the terms and conditions set forth therein, we have the right, but not the
obligation, to sell to Lincoln Park and Lincoln Park is obligated to purchase up
to $15.0 million of shares of common stock, at our sole discretion, over a
24-month period commencing on July 23, 2021. We filed a registration statement
on Form S-1 covering the resale of shares of common stock that are issued to
Lincoln Park under the LPC Purchase Agreement, which was declared effective on
July 14, 2021. As part of the LPC Purchase Agreement, we issued 170,088 shares
of our common stock to Lincoln Park as consideration for its commitment to
purchase shares of our common stock under the LPC Purchase Agreement. Under the
terms of the October 2021 Private Placements, we agreed to not issue or sell
additional shares under the LPC Purchase Agreement on or prior to April 6, 2023.
SVB Loan Agreement
In August 2020, we entered into the SVB Loan Agreement with SVB, pursuant to
which SVB provided the SVB Term Loan in the original principal amount of $14.0
million. Prior to the Third Amendment, the SVB Term Loan bore interest at a
floating rate per annum equal to the greater of (A) the prime rate plus 1.00%
and (B) 4.25%. If SVB received evidence satisfactory to it that we had (i)
received positive data for the Phase 2b/3 PRISM trial, sufficient to advance
Haduvio into a second Phase 3 clinical trial for prurigo nodularis and (ii)
raised sufficient financing to fund such Phase 3 clinical trial and our
operations, the interest rate under the SVB Term Loan would have been adjusted
to a floating rate equal to the greater of (A) the prime rate plus 3.00% and (B)
6.25%. Commencing on March 1, 2022 and on the first business day of each month
thereafter, we are required to repay the SVB Term Loan in 24 consecutive
installments of principal plus monthly payments of accrued interest. All
outstanding principal and accrued and unpaid interest under the SVB Term Loan
and all other outstanding obligations with respect to the SVB Term Loan are due
and payable in full on February 1, 2024. The SVB Loan Agreement permits
voluntary prepayment of all, but not less than all, of the SVB Term Loan,
subject to a prepayment premium. Such prepayment premium would be 3.00% of the
principal amount of the SVB Term Loan if prepaid prior to the first anniversary
of the date on which we entered into the SVB Term Loan or the Effective Date,
2.00% of the principal amount of the SVB Term Loan if prepaid on or after the
first anniversary of the Effective Date, but prior to the second anniversary of
the Effective Date and 1.00% of the principal amount of the SVB Term Loan if
prepaid on or after the second anniversary of the Effective Date but prior to
February 1, 2024. Upon repayment in full of the SVB Term Loan, we will be
required to pay a final payment fee equal to $1.2 million. The SVB Term Loan and
related obligations under the SVB Loan Agreement are secured by substantially
all of our properties, rights and assets, except for our intellectual property
(which is subject to a negative pledge under the SVB Loan Agreement). The SVB
Loan Agreement contains customary representations, warranties, events of default
and covenants. The occurrence and continuation of an event of default could
cause interest to be charged at the rate that is otherwise applicable plus 5.00%
(unless SVB elects to impose a smaller increase) and would provide SVB with the
right to accelerate all obligations under the SVB Loan Agreement and exercise
remedies against us and the collateral securing the SVB Term Loan and other
obligations under the SVB Loan Agreement, including foreclosure against assets
securing the SVB Term Loan and other obligations under the SVB Loan Agreement,
including our cash.
On July 6, 2021, we and SVB entered into the First Amendment to the SVB Loan
Agreement, or the First Amendment. The First Amendment modified the conditions
under which we were required to cash collateralize outstanding amounts owed to
SVB under the SVB Loan Agreement. Under the First Amendment, if we failed to
receive positive data in our Phase 2b/3 PRISM trial or, prior to June 30, 2022,
failed to raise sufficient net proceeds from the sale of equity securities to
finance our planned second Phase 3 clinical trial of Haduvio for prurigo
nodularis and our ongoing operations, each of which we refer to as a Milestone
Condition, we would have been required to deposit unrestricted and unencumbered
cash equal to 100% of all outstanding amounts owed to SVB in a cash collateral
account with SVB, which could have been used by SVB to prepay the SVB Term Loan
at any time. In addition, the First Amendment provided that if we failed to
maintain at least $20.0 million in unrestricted and unencumbered cash in our
accounts
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with SVB, or the Minimum Required Cash, at any time prior to the satisfaction of
all the Milestone Conditions, we would also have been required to cash
collateralize all outstanding amounts owed to SVB under the SVB Loan Agreement.
We would also have been required to cash collateralize all outstanding amounts
owed to SVB under the SVB Loan Agreement if we did not raise at least $15.0
million in net proceeds from the sale of equity securities during the period
from June 1, 2021 through October 31, 2021. We satisfied this equity funding
condition through a combination of equity issuances under our ATM Sales
Agreement and the proceeds from the October 2021 Private Placements.
On April 6, 2022, we entered into the Third Amendment to the SVB Loan Agreement.
The Third Amendment principally modified the conditions under which we are
required to cash collateralize all outstanding amounts owed to SVB under the SVB
Loan Agreement. Under the terms of the Third Amendment, upon the closing of the
April 2022 Private Placement, our obligations to achieve the Milestone
Conditions and maintain the Minimum Required Cash terminated and the sole
remaining cash collateralization requirement under the SVB Loan Agreement was
the requirement that we receive positive final data by December 31, 2022 from
either our Phase 2b/3 PRISM trial of Haduvio for prurigo nodularis or our Phase
2 CANAL trial of Haduvio for the treatment of chronic cough in adults with IPF.
On August 3, 2022, SVB confirmed that the reported data from the Phase 2b/3
PRISM trial satisfied the requirement for positive data and that the cash
collateralization requirements of the SVB Loan Agreement were no longer in
effect.
In addition, the Third Amendment modified the interest rate on the principal
amount outstanding under the SVB Loan Agreement, as discussed above under
"-Components of Operating Results-Operating Expenses-Interest Expense."
Private Placements
On October 5, 2021 and October 18, 2021, we issued and sold in two private
placements (i) an aggregate of 4,225,053 shares of our common stock and
accompanying warrants to purchase an aggregate of 8,450,106 shares of our common
stock, and (ii) pre-funded warrants to purchase up to an aggregate of 4,926,069
shares of our common stock and accompanying warrants to purchase an aggregate of
9,852,138 shares of our common stock. Each share of our common stock and
accompanying common stock warrants were sold together at a combined price of
$1.62, and each pre-funded warrant and accompanying common stock warrants were
sold together at a combined price of $1.619, for gross proceeds of approximately
$14.8 million. Each pre-funded warrant had an exercise price of $0.001 per
share, became exercisable immediately upon issuance and was exercisable until
exercised in full. Of the accompanying common stock warrants, warrants to
purchase an aggregate of 9,151,122 shares will expire in April 2025 and warrants
to purchase an aggregate of 9,151,122 shares will expire in October 2028. The
accompanying common stock warrants have an exercise price of $1.37 per share and
became exercisable immediately upon issuance. As of November 10, 2022, 1,851,852
of the warrants to purchase shares of common stock that are to expire in April
2025 and 7,851,852 of the warrants to purchase shares of common stock that are
to expire in October 2028, remained outstanding.
On April 11, 2022, we issued and sold in the April 2022 Private Placement, (i)
an aggregate of 4,580,526 shares of our common stock, and (ii) pre-funded
warrants to purchase up to an aggregate of 24,379,673 shares of our common
stock. Each share of our common stock was sold at a price of $1.90, and each
pre-funded warrant was sold at a price of $1.899 per warrant share, for gross
proceeds of approximately $55.0 million. Each pre-funded warrant has an exercise
price of $0.001 per share, is exercisable immediately and will be exercisable
until the pre-funded warrant is exercised in full.
Public Offering
On September 27, 2022, we issued and sold in the September 2022 Offering
14,252,670 shares of our common stock and, in lieu of common stock to certain
investors, pre-funded warrants to purchase 14,247,330 shares of common stock at
a public offering price of $1.93 per share of common stock and $1.929 per
pre-funded warrant pursuant to the Underwriting Agreement. Each pre-funded
warrant has an exercise price of $0.001 per share, is exercisable immediately
and will be exercisable until the pre-funded warrant is exercised in full. Under
the terms of the Underwriting Agreement, we agreed not to issue and sell
additional shares until November 21, 2022 except in certain circumstances,
including the issuance and sale of additional shares pursuant to the
Underwriting Agreement. Under the terms of the Underwriting Agreement, we
granted the Underwriters an Option, exercisable for 30 days, to purchase up to
an additional 4,275,000 Additional Shares at the same price per share. The
initial closing of the September 2022 Offering occurred on September 27, 2022.
Subsequent to the initial closing, the Underwriters partially exercised the
Option to purchase 1,600,428 Additional Shares. The Option closing occurred on
October 25, 2022. The September 2022 Offering, including the initial closing on
September 27, 2022 and the Option closing on October 25, 2022, resulted in
aggregate gross proceeds to us of approximately $58.1 million.
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Cash Flows
The following table summarizes our cash flows for each of the periods presented
below (in thousands):
Nine Months Ended September 30,
2022 2021 Change
Net cash used in operating activities $ (21,844 ) $ (22,717 ) $ 873
Net cash used in investing activities
(59,067 ) - (59,067 )
Net cash provided by financing
activities 110,655 7,034 103,621
Net increase (decrease) in cash and
cash equivalents $ 29,744 $ (15,683 ) $ 45,427
Operating Activities
During the nine months ended September 30, 2022, operating activities used
$21.8 million of net cash, resulting from our net loss of $23.6 million and net
changes in our operating assets and liabilities of $0.4 million, offset by
non-cash charges of $2.2 million. The non-cash charges consisted primarily of
stock-based compensation expense of $1.8 million and $0.4 million of
accretion/accrual of term loan discounts and debt issuance costs, offset by $0.3
million of accretion of our available-for-sale marketable securities. Changes in
our operating assets and liabilities consisted of a $0.5 million decrease in
accounts payable and a $0.5 million increase in prepaid expenses and other
current assets, partially offset by a $0.6 million increase in accrued expenses
and other liabilities. The decrease in accounts payable was primarily due to the
timing of vendor invoices. The increase in prepaid expenses and other current
assets was primarily due to an increase in prepayments of our corporate
insurance policies as well as an increase in interest income receivable related
to our marketable securities. The increase in accrued expenses and other
liabilities was primarily due to increased accruals for research, development
and clinical trial work performed by our CROs and increased accruals for
consulting and professional fees partially offset by a decrease in accrued
compensation and benefits.
During the nine months ended September 30, 2021, operating activities used $22.7
million of net cash, resulting from our net loss of $25.4 million and net
changes in our operating assets and liabilities of $0.1 million, partially
offset by non-cash charges of $2.8 million. The non-cash charges consisted
primarily of stock-based compensation expense of $2.0 million, $0.4 million of
accretion/accrual of term loan discounts and debt issuance costs and $0.4
million of other expense associated with the value of the shares of our common
stock that we issued to Lincoln Park as consideration for Lincoln Park's
commitment to purchase shares of our common stock under the LPC Purchase
Agreement. Changes in our operating assets and liabilities consisted of a $0.2
million decrease in accrued expenses and other liabilities, a $0.1 million
increase in prepaid expenses and other current assets and a $0.2 million
increase in accounts payable. The decrease in accrued expenses and other
liabilities was primarily due to decreased accruals for research, development
and clinical trial work performed by our CROs and decreased accruals related to
non-income based taxes, partially offset by an increase in accrued consulting
and professional fees. The increase in prepaid expenses and other current assets
was primarily due to an increase in prepayments of our corporate insurance
policies. The increase in accounts payable was primarily due to the timing of
vendor invoices.
Investing Activities
During the nine months ended September 30, 2022, net cash used in investing
activities was $59.1 million, primarily related to purchases of and proceeds
from maturities of available-for-sale marketable securities. During the nine
months ended September 30, 2021, no cash was provided by or used in investing
activities.
Financing Activities
During the nine months ended September 30, 2022, net cash provided by financing
activities was $110.7 million, primarily consisting of net cash proceeds from
our April 2022 Private Placement and our September 2022 Offering of $103.0
million, cash proceeds of $11.8 million from the exercise of warrants and cash
proceeds from the exercise of stock options of $0.1 million, partially offset by
repayments of $4.1 million on the SVB Term Loan and payments of offering costs
of $0.2 million.
During the nine months ended September 30, 2021, net cash provided by financing
activities was $7.0 million, primarily consisting of gross cash proceeds of $7.7
million from sales of our common stock under the ATM Sales Agreement before
deducting estimated commissions and allocated fees of $0.6 million, partially
offset by payments of offering costs of $0.4 million and payments of financing
costs of $0.1 million associated with the First Amendment to the SVB Loan
Agreement.
Funding Requirements
We expect to incur substantial expenditures in the foreseeable future as we
advance Haduvio through clinical development, the regulatory approval process
and, if approved, commercial launch activities. Specifically, in the near term,
we expect to incur substantial expenses relating to:
• the next trials we plan to conduct for Haduvio for the treatment of chronic
cough in adults with IPF;
• our planned Phase 2 clinical trial of Haduvio for the treatment of
refractory chronic cough;
• our HAL study; and
• our ongoing open-label extension portion of our Phase 2b/3 PRISM trial in
patients with prurigo nodularis.
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Generally, regulatory authorities require two adequate and well-controlled
studies for approval. Furthermore, we expect to continue to incur additional
costs associated with operating as a public company, including significant
legal, accounting, investor relations and other expenses.
We will need substantial additional funding to support our continuing operations
and pursue our growth strategy. Until such time as we can generate significant
revenue from sales of Haduvio, if ever, we expect to finance our operations
through public or private equity offerings, debt financings, collaborations and
licensing arrangements or other sources to achieve our business objectives.
Adequate additional financing may not be available to us on acceptable terms or
at all. Our future funding requirements, both short-term and long-term, will
depend on many factors, including:
• the scope, progress, timing, costs and results of clinical trials of
Haduvio, including the next clinical trials for the treatment of cough in
adults with IPF, our planned Phase 2 clinical trial in refractory chronic
cough, and our ongoing open-label extension portion of our Phase 2b/3 PRISM
trial, as well as of any future product candidates;
• the number and characteristics of indications for which we seek to develop
Haduvio or any future product candidates and their respective development
requirements;
• the outcome, timing and costs of clinical and nonclinical trials and of
seeking regulatory approvals, including the costs of supportive clinical
studies such as our HAL study and a potential Thorough QT study;
• the costs associated with the manufacture of necessary quantities of
Haduvio or any future product candidate for clinical development in
connection with regulatory submissions;
• the costs of commercialization activities for Haduvio for the treatment of
chronic cough in adults with IPF or for any other chronic cough indications
or for the treatment of prurigo nodularis or for any future product
candidates that receive marketing approval, if any, including the costs and
timing of establishing product sales, marketing, distribution and
manufacturing capabilities;
• subject to receipt of marketing approvals, revenue, if any, received from
commercial sales of Haduvio for the treatment of chronic cough in adults
with IPF or for any other chronic cough indications or for the treatment of
prurigo nodularis or from any future product candidates;
• our ability to identify potential collaborators for Haduvio for the
treatment of prurigo nodularis or for the treatment of chronic cough in
adults with IPF or for any other chronic cough indications or for any
future product candidates and the terms and timing of any collaboration
agreement that we may establish for the development and any
commercialization of such product candidates;
• the extent to which we acquire or in-license rights to other potential
product candidates or technologies and the terms and timing of any such
acquisition or licensing arrangements;
• our potential obligation to make milestone payments to Endo, which would
become due upon the successful completion of the first Phase 3 clinical
trial of a licensed product candidate and the marketing approval of a
licensed product in the United States, as well as our potential obligations
to pay Endo mid-single digit royalties on the net sales of the product;
• our headcount growth and associated costs as we expand our research and
development activities and establish a commercial infrastructure;
• the costs of preparing, filing and prosecuting patent applications,
maintaining, expanding and protecting our intellectual property rights and
defending against intellectual property-related claims;
• the effect of competing technologies and market developments;
• our ability to establish and maintain healthcare coverage and adequate
reimbursement for our products;
• the costs of operating as a public company;
• our ability to continue as a going concern; and
• the impact of the COVID-19 pandemic on the scope, progress, timing, costs
and results of our ongoing and planned clinical trials of Haduvio.
We believe that our existing cash, cash equivalents and marketable securities,
including the gross proceeds we received in October 2022 from the sale of the
Additional Shares to the Underwriters upon the partial exercise of their Option
in the September 2022 Offering, will enable us to fund our operating expenses
and capital expenditure requirements into 2026, subject to agreement with the
FDA on the next clinical trials of Haduvio for the treatment of chronic cough in
adults with IPF. This does not consider the cost of any additional clinical
trial that we may determine to conduct for the treatment of prurigo nodularis.
We have based our estimates as to how long we expect we will be able to fund our
operations on assumptions that may prove to be wrong and we could use our
available capital resources sooner than we currently expect, in which case we
would be required to
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obtain additional financing and financing may not be available to us on
acceptable terms, on a timely basis or at all. Our failure to raise capital as
and when needed would have a negative impact on our financial condition and our
ability to pursue our business strategy.
We do not have any committed external source of funds. Accordingly, we will be
required to obtain further funding through public or private equity offerings,
debt financings, collaborations, licensing arrangements or other sources to
complete the clinical development and commercialization of Haduvio for the
treatment of chronic cough in adults with IPF or refractory chronic cough or for
the treatment of prurigo nodularis or any other indication. If we raise
additional funds by issuing equity securities, our stockholders may experience
dilution. Any debt financing into which we enter would result in fixed payment
obligations and may involve agreements that include grants of security interests
on our assets and restrictive covenants that limit our ability to take specific
actions, such as incurring additional debt, making capital expenditures,
granting liens over our assets, redeeming stock or declaring dividends, that
could adversely impact our ability to conduct our business. For example, in
connection with the SVB Term Loan, we granted a security interest on all of our
assets, excluding our intellectual property, agreed to a negative pledge on our
intellectual property, agreed to restrictive covenants including, subject to
certain exceptions, covenants that prohibit us from transferring all or any part
of our business or property, changing our business, liquidating or dissolving,
merging with or acquiring another entity, entering into a transaction that will
result in a change in control, incurring additional indebtedness, creating any
lien on our property, paying dividends or redeeming stock, making payments on
subordinated debt or entering into material transactions with affiliates and
agreed to cash collateralize the SVB Term Loan in certain circumstances. Future
debt securities or other financing arrangements could contain similar or more
restrictive negative covenants. In addition, securing financing could require a
substantial amount of time and attention from our management and may divert a
disproportionate amount of their attention away from day-to-day activities,
which may adversely affect our management's ability to oversee the development
of our product candidates. Any debt financing that we seek or additional equity
that we raise may contain terms that could adversely affect our common
stockholders.
If we are unable to raise sufficient capital as and when needed, we may be
required to delay, reduce or abandon our product development programs or
commercialization efforts. If we raise additional funds through collaborations
or marketing, distribution or licensing arrangements with third parties, we may
have to relinquish valuable rights to future revenue streams or product
candidates or grant licenses on terms that may not be favorable to us.
Critical Accounting Policies and Use of Estimates
Our Condensed Consolidated Financial Statements have been prepared in accordance
with U.S. generally accepted accounting principles. The preparation of these
Condensed 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 the Condensed
Consolidated Financial Statements, as well as the reported expenses incurred
during the reporting periods. Our estimates are based on our 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.
While our significant accounting policies are described in the Notes to our
financial statements, we believe that the critical accounting policies described
under the heading "Management's Discussion and Analysis of Financial Condition
and Results of Operations-Critical Accounting Policies and Use of Estimates" in
our Annual Report on Form 10-K for the year ended December 31, 2021 are the most
important to understanding and evaluating our reported financial results. During
the nine months ended September 30, 2022, there were no material changes to our
critical accounting policies.
Recently Adopted Accounting Pronouncements
There have been no new pronouncements adopted during the nine months ended
September 30, 2022, which could be expected to materially impact our Condensed
Consolidated Financial Statements.
Recently Issued Accounting Pronouncements
There have been no new pronouncements issued during the nine months ended
September 30, 2022 which could be expected to materially impact our Condensed
Consolidated Financial Statements.
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