What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-06 · 93 added, 64 removed, 114 unchanged (58% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The interim condensed consolidated financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2020 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S.

The condensed consolidated financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2020 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the U.S.

Securities and Exchange Commission on February 25, 2021 (2020 Annual Report).

4 unchanged sentences

We are a clinical-stage biotechnology company advancing a novel class of oral therapeutic candidates for the treatment of chronic hepatitis B virus (HBV) infection.

According to the World Health Organization (WHO), approximately 270 million people worldwide are chronically infected with HBV.

According to the World Health Organization, approximately 270 million people worldwide are chronically infected with HBV.

Our research and development programs are pursuing multiple drug candidates designed to inhibit the HBV replication cycle and block the generation of covalently closed circular DNA (cccDNA), with the aim of discovering and developing finite and curative therapies for patients with chronic HBV infection.

2 unchanged sentences

As further detailed below, those effects have been primarily limited to where and how our employees work in our labs and offices.

To date, our current and future planned clinical and nonclinical studies have not been subject to significant impact as a result of the COVID-19 pandemic.

To date, our current and future planned clinical and nonclinical studies have not been significantly impacted as a result of the COVID-19 pandemic.

As previously announced, in January 2021, we wound down our Microbiome program to prioritize and focus our resources on discovering and developing finite and curative therapies for chronic HBV infection.

10 unchanged sentences

SVR refers to sustained viral suppression (more than six months) of HBV DNA below the lower limit of quantification (LLOQ) and would be consistent with a successful finite treatment for chronic HBV infection.

In November 2020, it became clear that patients who stopped therapy in Study 211 had not achieved meaningful SVR rates, as 39 of 41 patients relapsed, meaning they had detectable HBV, and that dual combination therapy of VBR plus NrtIs is insufficient to cure chronic HBV infection.

It became clear that patients who stopped therapy in Study 211 had not achieved meaningful SVR rates, as all 41 patients ultimately relapsed, meaning they had detectable HBV, and that dual combination therapy of VBR plus NrtIs is insufficient to cure chronic HBV infection.

Based on these results, we terminated Study 211 in the fourth quarter of 2020.

We plan to present additional follow-up from Study 211 related to virologic response, safety and resistance following treatment discontinuation, at the European Association for the Study of the Liver’s (EASL) International Liver Congress TM in June 2021 (EASL 2021).

We presented additional follow-up from Study 211 related to virologic response, safety and resistance following treatment discontinuation, at the European Association for the Study of the Liver’s (EASL) International Liver Congress TM in June 2021 (EASL 2021).

Based on discussions with leading viral hepatitis experts, global regulatory discussions and feedback and, with respect to the China territory, discussions and agreement with our collaboration partner, BeiGene, Ltd.

we recently decided to not move forward with the global registrational studies for VBR as a chronic suppressive treatment (CST) with NrtI s .

(BeiGene), in

the first quarter of 2021, we decided to not move forward with global registrational studies for VBR as a chronic suppressive treatment (CST) with NrtI s .

The decision was made to focus on the greatest unmet medical need of patients, which lies predominantly in cure, rather than CST.

In connection with focusing our efforts with VBR moving forward in combination with NrtI s and additional mechanisms targeting finite and curative combination therapy , we terminated Study 205 in the first quarter of 2021.

In connection with focusing our efforts with VBR moving forward in combination with NrtIs and additional mechanisms targeting finite and curative combination therapy, we terminated Study 205 in the first quarter of 2021.

Study 205 had been initiated to evaluate treatment intensification with VBR in patients with chronic HBV infection who are only partially virologically suppressed on NrtI.

Our second-generation core inhibitor product candidate, ABI-H2158 (2158), was internally discovered and developed and is chemically distinct from VBR.

We reported the final data from dose-ranging cohorts of the Phase 1b portion of the Phase 1a/1b dose-ranging clinical study at EASL in August 2020.

Based on data from the Phase 1b dose-ranging study, we initiated a Phase 2 clinical study in June 2020 using a 300 mg daily dose of 2158.

This study is being conducted in approximately ten countries in Asia, North America and Europe.

We expect interim data from this study in the second half of 2021.

Based on data from a completed Phase 1b dose-ranging study, we initiated a Phase 2 clinical study in June 2020 using a 300 mg daily dose of 2158.

This study is being conducted in Asia, North America and Europe.

We expect interim data from this study in the second half of 2021, which will focus on safety and on-treatment changes in key viral biomarkers, including pre-genomic RNA and HBV e- and core related antigens.

While we will continue to monitor the situation closely, we do not currently expect our timelines for this study to be significantly impacted by the COVID-19 pandemic.

Our third core inhibitor product candidate, ABI-H3733 (3733), has completed Investigational New Drug (IND) enabling studies.

3733 has a novel chemical scaffold separate from both VBR and 2158.

We presented a preclinical profile of this candidate in the first quarter of 2019.

Like 2158, our third core inhibitor product candidate, ABI-H3733 (3733), was also internally discovered and developed.

The chemical scaffold of 3733 is novel and separate from both VBR and 2158.

In the first quarter of 2020, we initiated a Phase 1a clinical study to evaluate safety, tolerability and pharmacokinetics (PK) following single ascending dose and multiple ascending dose administration of 3733 in healthy subjects in New Zealand.

Conduct for the study was completed in the fourth quarter of 2020 and preliminary data indicate that 3733 was generally well-tolerated and had favorable PK.

We expect to present observations on the enhanced potency and target coverage for both antiviral inhibition and inhibition of cccDNA generation for our next generation core inhibitors 2158 and 3733 at EASL 2021.

We presented observations on the enhanced potency and target coverage for both antiviral inhibition and inhibition of cccDNA generation for our next generation core inhibitors 2158 and 3733 at EASL 2021.

Additional Product Candidates

In addition to our three clinical-stage product candidates, our research discovery team is actively focused on identifying and selecting a fourth core inhibitor candidate, which we anticipate in the first half of 2021.

Multi-Drug Combination Studies

We believe that core inhibitors and NrtIs will be central to finite and curative therapies for chronic HBV infection.

Therefore, as we continue to develop and advance our current and future core inhibitors through clinical studies, we have begun to conduct multi-drug combination studies in parallel that add additional drugs (or compounds) with non-overlapping mechanisms of action to the core inhibitor + NrtI antiviral backbone.

Specifically, we plan to only incorporate our current and future core inhibitors that have demonstrated they are well-tolerated and effective in clinical studies in dual combination with NrtI.

As the 300 mg daily dose of VBR has been observed to be well-tolerated in all studies conducted to date, with no serious adverse effects or dose-limiting toxicities identified and no pattern of treatment-emergent clinical or laboratory abnormalities observed, we are exploring the 300mg VBR + NrtI antiviral backbone in two triple combination studies.

We believe that the combination of a core inhibitor and NrtI will be central to finite and curative therapies for chronic HBV infection.

Therefore, as we continue to develop and advance our core inhibitors through clinical studies, we will conduct multi-drug combination studies that add additional drugs (or compounds) with non-overlapping mechanisms of action to the core inhibitor + NrtI antiviral backbone.

We currently have two on-going triple combination studies with our lead core inhibitor, VBR, which has been observed to be well-tolerated and have antiviral activity in combination with NrtI in completed Phase 2 studies.

Our first triple combination study is being conducted pursuant to a Clinical Trial Collaboration Agreement with Arbutus Biopharma Corporation (Arbutus Biopharma) and consists of a randomized, multi-center, open-label Phase 2 clinical study to explore the safety, PK and antiviral activity of the triple combination of VBR, NrtI and AB-729 (Arbutus Biopharma’s investigational RNAi candidate) compared to the dual combinations of VBR + NrtI and AB-729 + NrtI in virologically suppressed subjects.

1 unchanged sentence

Both studies initiated in the first quarter of 2021.

In addition to the above studies, we expect to pursue additional multi-drug combinations that include other or additional non-overlapping mechanisms of action to the core inhibitor + NrtI antiviral backbone.

In addition to the above studies, we expect to pursue additional multi-drug combinations that include our current and future core inhibitors as they advance in clinical development.

Beyond Core Inhibitors

In addition to the development and advancement of our core inhibitor portfolio and our current and future multi-drug combination studies, our research and development team is working on discovering and developing a potent fourth core inhibitor, cccDNA disruptors and small molecules targeting novel undisclosed targets to add to the core inhibitor + NrtI antiviral backbone to achieve finite and curative therapies.

In November 2020, we entered into an exclusive, two-year collaboration and option agreement with Door Pharmaceuticals (Door Pharma) focused on the development of a novel class of HBV inhibitors.

Door Pharma’s discovery platform targets functions of HBV core protein distinct from viral assembly and has the potential to interfere with viral nucleic acid, including intra-nuclear cccDNA.

Together with Door Pharma, we are working on identifying cccDNA disruptors, which will be aimed at inhibiting different intra-nuclear steps in the viral replication cycle that complement the activity of our core inhibitors.

In addition to the advancement of our core inhibitor portfolio and our conduct of multi-drug combination studies, our research team is developing cccDNA disruptors and small molecules targeting novel undisclosed targets to add to the core inhibitor + NrtI antiviral backbone to achieve finite and curative therapies.

In November 2020, we

entered into an exclusive, two-year collaboration and option agreement with Door Pharmaceuticals , LLC (Door Pharma) focused on the development of a novel class of HBV inhibitors.

Door Pharma’s discovery platform targets functions of HBV core protein distinct from viral assembly and ha s the potential to interfere with viral nucleic acid , including nuclear cccDNA.

Together with Door Pharma, we are working on identifying cccDNA disruptors, which will be aimed at inhibiting different steps in the viral replication cycle that complement the activity of our core inhibitors.

Under the terms of the agreement, Door Pharma will build upon its previous efforts to lead and conduct new discovery research, which we will fund.

In return for an up-front payment and success-based milestones and royalties, we received an exclusive option to license compounds arising from the collaboration and will be responsible for the continued development and commercialization of optioned compounds.

We currently have corporate and administrative offices and research laboratory space in South San Francisco, California and a small office in China.

Until the lease expires in June 2021, we also have administrative office and laboratory space in Groton, Connecticut that was used by our Microbiome program prior to the program being wound down.

We currently have corporate and administrative offices and research laboratory space in South San Francisco, California as well as a small office in China.

Since our inception, we have had no revenue from product sales and have funded our operations principally through debt financings prior to our initial public offering in 2010 and through equity financings and collaborations since then.

1 unchanged sentence

We have generated significant losses to date, and we expect to continue to generate losses as we develop our product candidates.

As of March 31, 2021, we had an accumulated deficit of $528.8 million.

As of June 30, 2021, we had an accumulated deficit of $552.4 million.

Because we do not generate revenue from any of our product candidates, our losses will continue as we further develop and seek regulatory approval for, and commercialize, our product candidates.

4 unchanged sentences

As a biotechnology company, we were exempt from such orders.

While California has begun reopening on a tiered county-by-county basis, with counties assigned to tiers based on positivity rate, adjusted case rate and a health equity metric, both the statewide and local orders remain in place.

Because of the exemptions described above, there has not been any significant interruption to date of essential activities at our offices, including work in our laboratories with proper protections and procedures in place.

On June 15, 2021, California reopened its economy, and all applicable local orders were also lifted on June 15, 2021.

On August 3, 2021, eight Bay Area counties, including where our headquarters is located, orders that require face coverings to be worn indoors became effective.

We do not expect this mandate to result in any significant interruption of the essential activities ongoing at our South San Francisco facility.

There has not been any significant interruption to date of essential activities at our offices, including work in our laboratories with proper protections and procedures in place.

While we have experienced some shipping delays or shortages of personal protective equipment (PPE) that are important to maintaining normal workflows in our laboratories, we have been able to continue our critical research activities through schedule shifts, use of PPE on-hand and reallocation of certain resources that allow our employees to practice “social distancing” and comply with applicable laws.

13 unchanged sentences

Results of Operations

Comparison of the Three Months Ended March 31, 2021 and 2020

Comparison of the Three Months Ended June 30, 2021 and 2020

Collaboration Revenue

The following table summarizes the period-over-period changes in our collaboration revenue (in thousands, except for percentages):

Three Months Ended March 31,

Three Months Ended June 30,

Collaboration revenue

Collaboration revenue for the three months ended March 31, 2020 includes the recognition of deferred revenue and reimbursements incurred under Research, Development, Collaboration and License Agreement (the Allergan Agreement) that we entered into with Allergan Pharmaceuticals Limited (Allergan).

Collaboration revenue for the three months ended June 30, 2020 includes the recognition of deferred revenue and reimbursements incurred under the Research, Development, Collaboration and License Agreement (the Allergan Agreement) that we entered into with Allergan Pharmaceuticals Limited (Allergan).

Following its acquisition of Allergan, AbbVie, Inc.

2 unchanged sentences

The following table summarizes the period-over-period changes in our research and development expenses (in thousands, except for percentages):

Three Months Ended March 31,

Three Months Ended June 30,

Program/Description

2 unchanged sentences

Total research and development expenses

Research and development expenses were $18.6 million for the three months ended March 31, 2021 compared to $23.0 million for the same period in 2020.

The decrease was due to a decrease of $8.2 million in research and development expenses related to the Microbiome program due to the wind-down of the Microbiome program and includes the reversal of $2.4 million of previously recognized stock-based compensation expense related to forfeited awards of terminated employees.

This decrease was partially offset by an increase of $3.7 million in research and development expenses related to the HBV program, which were primarily due to increases in clinical activities, chemistry and manufacturing control activities to support our clinical studies and increased salary and benefits due to additional employees.

Research and development expenses include $2.1 million in a net reversal of non-cash

stock-based compensation expense as a result of forfeited awards for the three months ended March 31, 2021 compared to $ 1.9 million of non-cash stock-based compensation expense for the same period in 2020 .

Research and development expenses were $16.7 million for the three months ended June 30, 2021 compared to $23.3 million for the same period in 2020.

The decrease was due to a decrease of $7.6 million related to the wind-down of the Microbiome program, partially offset by an increase of $1.0 million in research and development expenses related to the HBV program.

The increase in the HBV program expense was primarily due to increases in clinical activities, chemistry and manufacturing control activities to support our clinical studies and increased salary and benefits due to additional employees.

Research and development expenses include $0.7 million in non-cash stock-based compensation expense for the three months ended June 30, 2021 compared to $3.6 million for the same period in 2020.

The decrease in stock-based compensation is primarily due to a decrease in the grant date fair value of recent option grants as well as a decrease in headcount and outstanding awards resulting from the wind-down of the Microbiome program.

General and Administrative Expense

The following table summarizes the period-over-period changes in our general and administrative expenses (in thousands, except for percentages):

Three Months Ended March 31,

Three Months Ended June 30,

General and administrative expenses

General and administrative expense consists primarily of salaries, consulting fees and other related costs, professional fees for legal services, accounting and tax services, insurance and travel expenses, as well as stock-based compensation expense associated with equity awards to our employees, consultants, and directors.

General and administrative expenses were $8.7 million for both the three months ended March 31, 2021 and 2020.

General and administrative expenses include non-cash stock-based compensation expenses of $1.8 million for the three months ended March 31, 2021 and $3.0 million for the same period in 2020.

The decrease in stock-based compensation expense of $1.2 million was in part due to the reversal of $0.5 million of previously recognized expense related to forfeited awards from terminated employees as well as a decrease in the grant-date fair value of recent option grants.

This decrease in stock-based compensation expense was offset by increases of $0.2 million in salary and benefits and $0.2 million in recruitment expenses due to additional employees and $0.7 million in lease-related costs largely attributable to asset impairment and other charges in connection with restructurings.

General and administrative expenses were $6.9 million for the three months ended June 30, 2021 compared to $9.5 million for the same period in 2020.

General and administrative expenses include non-cash stock-based compensation expenses of $1.2 million for the three months ended June 30, 2021 and $3.5 million for the same period in 2020.

The decrease in stock-based compensation expense of $2.3 million was due to a decrease in the grant date fair value of recent option grants and a reversal of $0.6 million of previously recognized expense in the three months ended June 30, 2021 related to forfeited awards from terminated employees.

Additionally, for the three months ended June 30, 2020, we recognized $0.7 million as a cumulative catch-up adjustment of stock-based compensation expense for RSUs with performance-based vesting conditions granted to our chief executive officer for which the underlying performance condition was deemed probable.

We also experienced decreases in salary and benefits, particularly in accrued bonuses, mostly attributable to the resignation of our chief financial officer in June 2021 and decreases in recruitment expenses due to hiring fewer employees during the three months ended June 30, 2021 compared to the same period in 2020.

Comparison of the Six Months Ended June 30, 2021 and 2020

Collaboration Revenue

The following table summarizes the period-over-period changes in our collaboration revenue (in thousands, except for percentages):

Six Months Ended June 30,

Collaboration revenue

Collaboration revenue for the six months ended June 30, 2020 includes the recognition of deferred revenue and reimbursements incurred under the Allergan Agreement.

Following its acquisition of Allergan, AbbVie gave written notice of termination of the Allergan Agreement in June 2020 which became effective October 2020.

Research and Development Expense

The following table summarizes the period-over-period changes in our research and development expenses (in thousands, except for percentages):

Six Months Ended June 30,

Program/Description

HBV Cure program

Microbiome program

Total research and development expenses

Research and development expenses were $35.3 million for the six months ended June 30, 2021 compared to $46.4 million for the same period in 2020.

The decrease was due to a decrease of $15.8 million in research and development expenses related to the wind-down of the Microbiome program, including the reversal of $3.0 million of previously recognized stock-based compensation expense related to forfeited awards of terminated employees.

This decrease was partially offset by an increase of $4.7 million in research and development expenses related to the HBV program, which was primarily due to increases in clinical activities, chemistry and manufacturing control

activities to support our clinical studies and increased salary and benefits due to additional employees.

Research and development expenses include $ 1.3 million in a net reversal of non-cash stock-based compensation expense as a result of forfeited awards for the six months ended June 30, 2021 compared to $5.6 million of non-cash stock-based compensation expense for the same period in 2020 .

General and Administrative Expense

The following table summarizes the period-over-period changes in our general and administrative expenses (in thousands, except for percentages):

Six Months Ended June 30,

General and administrative expenses

General and administrative expenses were $15.6 million for the six months ended June 30, 2021 compared to $18.2 million for the same period in 2020.

General and administrative expenses include non-cash stock-based compensation expenses of $3.0 million for the six months ended June 30, 2021 and $6.5 million for the same period in 2020.

The decrease in stock-based compensation expense of $3.5 million was due to a decrease in the grant date fair value of recent option grants and a reversal of $0.9 million of previously recognized expense in the six months ended June 30, 2021 related to forfeited awards from terminated employees.

Additionally, for the three months ended June 30, 2020, we recognized $0.7 million as a cumulative catch-up adjustment of stock-based compensation expense for RSUs with performance-based vesting conditions granted to our chief executive officer which the underlying performance condition was deemed probable.

This decrease in stock-based compensation expense was partially offset by an increase in lease-related costs largely attributable to asset impairment and other charges in connection with restructurings.

Liquidity and Capital Resources

Sources of Liquidity

As a result of our significant research and development expenditures and the lack of any FDA-approved products to generate product sales revenue, we have not been profitable and have generated operating losses since we were incorporated in October 2005.

We have funded our operations through March 31, 2021 principally through equity financings, raising an aggregate of $586.0 million in net proceeds, and strategic collaborations, raising an aggregate of $90.0 million through upfront payments.

Cash Flows for the Three Months Ended March 31, 2021 and 2020

With the exception of the net income reported during the three months ended June 30, 2020 related to the recognition of deferred revenue from the termination of the collaboration agreement with AbbVie, we have not been profitable and have generated operating losses since we were incorporated in October 2005 as a result of our significant research and development expenditures and the lack of any FDA-approved products to generate product sales revenue.

We have funded our operations through June 30, 2021 principally through equity financings, raising an aggregate of $592.0 million in net proceeds, and strategic collaborations, raising an aggregate of $90.0 million through upfront payments.

Cash Flows for the Six Months Ended June 30, 2021 and 2020

The following table summarizes our cash flow activities (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Cash provided by (used in):

3 unchanged sentences

Net Cash from Operating Activities

Net cash used in operating activities was $33.3 million for the three months ended March 31, 2021.

This was primarily due to a $27.2 million net loss, $0.1 million of accretion of discount of marketable securities and a decrease of $8.8 million of operating assets and liabilities.

These decreases were partially offset by $1.1 million amortization of operating lease right-of-use (ROU) assets, $0.3 million net reversal of non-cash stock-based compensation recognized as a result of forfeited awards from terminated employees, $0.1 million depreciation and amortization expense and a $1.6 million loss on the sale of purchased leased equipment in connection with the wind-down of the Microbiome program.

Net cash used in operating activities was $25.2 million for the three months ended March 31, 2020.

This was primarily due to a $26.7 million net loss, $0.1 million accretion of discount of marketable securities and a decrease of $4.6 million of operating assets and liabilities, which were offset by $4.9 million non-cash stock-based

compensation expense, $ 1.2 million amortization of operating lease ROU assets and $ 0.1 million depreciation and amortization expense.

Net cash used in operating activities was $55.2 million for the six months ended June 30, 2021.

This was primarily due to a $50.8 million net loss and a decrease of $10.2 million of operating assets and liabilities.

These decreases were partially offset by $2.0 million of amortization of operating lease right-of-use (ROU) assets, $0.2 million accretion of discount of marketable securities, $1.7 million of non-cash stock-based compensation expense, $0.2 million of depreciation and amortization expense and a $1.6 million loss on the sale of purchased leased equipment in connection with the wind-down of the Microbiome program.

Net cash used in operating activities was $48.3 million for the six months ended June 30, 2020.

This was primarily due to a $19.4 million net loss, $0.1 million of amortization of discount of marketable securities and a decrease of $43.5 million of operating assets and liabilities, which includes the recognition of the remaining deferred revenue balance of $36.0 million as revenue during the six months ended June 30, 2020 in connection with AbbVie’s decision to terminate the Allergan Collaboration Agreement.

These decreases were partially offset by $12.1 million of non-cash stock-based compensation expense, $2.3 million of amortization of operating lease ROU assets and $0.2 million depreciation and amortization expense.

Net Cash from Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2021 was $18.0 million due to $66.5 million of redemptions of marketable securities and $3.0 million of sale of marketable securities, which were partially offset by the purchase of $49.2 million of marketable securities.

Additionally, the Company purchased leased equipment for $3.1 million that it sold for $0.9 million in connection with the wind-down of the Microbiome program.

Net cash provided by investing activities for the three months ended March 31, 2020 was $20.7 million due to $55.0 million of redemptions of marketable securities and $10.0 million of sale of marketable securities, which were partially offset by the purchase of $44.2 million of marketable securities and $0.1 million of property and equipment.

Net cash provided by investing activities for the six months ended June 30, 2021 was $14.9 million due to $99.0 million of redemptions of marketable securities and $3.0 million of sale of marketable securities, which were partially offset by the purchase of $84.8 million of marketable securities.

Additionally, we purchased leased equipment for $3.1 million that we sold for $0.9 million in connection with the wind-down of the Microbiome program.

Net cash provided by investing activities for the six months ended June 30, 2020 was $97.2 million due to $119.3 million of redemptions of marketable securities and $22.7 million of sale of marketable securities, which were partially offset by the purchase of $44.2 million of marketable securities and $0.5 million of property and equipment.

Net Cash from Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2021 was $34.1 million resulting from sale of 6.0 million shares of our common stock through “at-the-market” offerings, net of commissions and fees.

Net cash provided by financing activities for the three months ended March 31, 2020 was $0.1 million resulting from the exercise of stock options to purchase 16,834 shares of common stock.

Net cash provided by financing activities for the six months ended June 30, 2021 was $40.3 million resulting from the sale of 7.4 million shares of our common stock through “at-the-market” offerings, net of commissions and fees.

Net cash provided by financing activities for the six months ended June 30, 2020 was $1.1 million resulting from the exercise of stock options to purchase 91,713 shares of common stock and issuance of 42,266 shares of common stock under our ESPP.

Funding Requirements

2 unchanged sentences

We monitor our cash needs and the status of the capital markets on a continuous basis.

From time to time, we opportunistically raise capital and have done so numerous times since our initial public offering by issuing equity securities, most recently in March 2021.

From time to time, we opportunistically raise capital and have done so numerous times since our initial public offering by issuing equity securities, most recently in June 2021.

We expect to continue to raise capital when and as needed and at the time and in the manner most advantageous to us.

7 unchanged sentences

our ability to establish and maintain collaborations on favorable terms, if at all.

Identifying potential product candidates and conducting nonclinical testing and clinical studies is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or

results required to obtain marketing approval and achieve product sales.

In addition, our product candidates, if approved, may not achieve commercial success.

Our commercial revenues, if any, will be derived from sales of medicines that we do not expect to be commercially available for years, if at all.

Our commercial revenues, if any, will likely be derived from sales of medicines that we do not expect to be commercially available for years, if at all.

Accordingly, we will need to continue to rely on additional financings to achieve our business objectives.

8 unchanged sentences

Contractual Obligations

There were no material changes in our commitments under contractual obligations as disclosed in our 2020 Annual Report.

There were no material changes in our commitments under the contractual obligations disclosed in our 2020 Annual Report.

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis