What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-13 compared with 2020-08-13 · 76 added, 84 removed, 140 unchanged (53% of the section changed)

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The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q, the consolidated financial statements and accompanying notes thereto for the fiscal year ended December 31, 2019 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission, or SEC, on March 26, 2020 (2019 Annual Report).

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended or the Exchange Act.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended or the Exchange Act.

Such forward-looking statements, which represent our intent, belief or current expectations, involve risks and uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements.

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Except as required by law we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect actual outcomes.

We are a biotherapeutics company engaged in the discovery and development of innovative medicines based on novel immunological pathways.

We are a biotherapeutics company engaged in the discovery and development of innovative medicines based on novel biological pathways.

We have concentrated our research and development efforts on a newly discovered area of biology, the extracellular functionality and signaling pathways of tRNA synthetases.

Built on more than a decade of foundational science on extracellular tRNA synthetase biology and its effect on immune responses, we have built a global intellectual property estate directed to a potential pipeline of protein compositions derived from 20 tRNA synthetase genes and their extracellular targets, such as neuropilin-2 (NRP2).

Our primary focus is on ATYR1923, a clinical stage product candidate which downregulates immune responses by binding to the NRP2 receptor and i s in development for the treatment of inflammatory lung diseases .

ATYR1923, a fusion protein comprised of the immuno-modulatory domain of histidyl tRNA synthetase (HARS) fused to the fragment cystallizable (FC) region of a human antibody, is a selective mo dulator of NRP2 that downregulates the innate and adaptive immune response in inflammatory disease states.

Our primary focus is on ATYR1923, a clinical stage product candidate which downregulates immune responses by binding to the NRP2 receptor and is in development for the treatment of severe inflammatory lung diseases.

ATYR1923, a fusion protein comprised of the immuno-modulatory domain of histidyl tRNA synthetase (HARS) fused to the fragment cystallizable (FC) region of a human antibody, is a selective modulator of NRP2 that downregulates the innate and adaptive immune response in inflammatory disease states.

We began developing ATYR1923 as a potential therapeutic for patients with interstitial lung diseases (ILDs), a group of immune-mediated disorders that cause progressive fibrosis of the lung tissue.

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The inflammatory lung injury related to COVID-19 may be similar to that of interstitial lung diseases.

By targeting aberrant immune responses, we believe that ATYR1923’s mechanism of action has substantial overlap with this disease pathology and are currently enrolling a Phase 2 clinical trial in COVID-19 patients with severe respiratory complications.

Our Phase 2 clinical trial is a randomized, double blind, placebo-controlled study with ATYR1923 in 30 confirmed COVID-19 positive patients at up to 10 centers in the United States.

Subject to successful clinical trial site initiation and patient enrollment, we expect data from this Phase 2 clinical trial in COVID-19 patients in the fourth quarter of this year.

By targeting aberrant immune responses, we believe that ATYR1923’s mechanism of action has substantial overlap with this disease pathology.

Our Phase 2 clinical trial is a randomized, double blind, placebo-controlled study of ATYR1923 in hospitalized COVID-19 patients with severe respiratory complications who do not require mechanical ventilation.

The trial is designed to evaluate the preliminary safety and efficacy of ATYR1923 as compared to placebo through the assessment of key clinical outcome measures.

In October 2020, we completed enrollment in the Phase 2 clinical trial with a total of 32 patients exceeding the target enrollment of 30 patients.

We expect to report topline data from this trial at the turn of the calendar year.

In January 2020, we entered into a license with Kyorin Pharmaceutical Co., Ltd.

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Under the terms of the Kyorin Agreement, Kyorin will fund all research, development, regulatory, marketing and commercialization activities in Japan.

In September 2020, Kyorin began dosing of its Phase 1 trial of ATYR1923 (known as KRP-R120 in Japan).

The Phase 1 trial, which is being conducted and funded by Kyorin, is a placebo-controlled study to evaluate the safety, pharmacokinetics and immunogenicity of ATYR1923 in 32 healthy Japanese male volunteers.

Assuming successful completion of the study, Kyorin would then be able to initiate patient trials in ILDs in Japan.

In conjunction with our clinical development of ATYR1923, we have in parallel been advancing our discovery pipeline of NRP2 antibodies and tRNA synthetases.

NRP2 is a receptor that plays a key role in lymphatic development and in regulating inflammatory responses.

In many forms of cancer, high NRP2 expression is associated with worse outcomes.

In November 2020, we declared an IND candidate in oncology from our NRP2 antibody program, ATYR2810.

We intend to evaluate this fully humanized monoclonal antibody for the potential treatment of certain aggressive tumors where NRP2 is implicated.

NRP2 expression is associated with worsened patient outcomes in many cancers.

NRP2 is also a receptor that plays a key role in lymphatic development and in regulating inflammatory responses.

NRP2 can interact with multiple ligands and coreceptors to influence their functional roles.

We are actively investigating NRP2 receptor biology, both internally and in collaboration with key academic thought leaders, to identify new product candidates for a variety of disease settings, including cancer, inflammation, and lymphangiogenesis.

We continue to actively investigate NRP2 receptor biology, both internally and in collaboration with key academic thought leaders, to identify new product candidates for a variety of disease settings, including cancer, inflammation, and lymphangiogenesis.

In March 2020, our subsidiary, Pangu BioPharma Limited (Pangu BioPharma), together with the Hong Kong University of Science and Technology (HKUST) was awarded a grant of approximately $750,000 to build a high-throughput platform for the development of bi-specific antibodies.

The two-year project is being funded by the Hong Kong government’s Innovation and Technology Commission under the Partnership Research Program (PRP).

The PRP aims to support research and development projects undertaken by companies in collaboration with local universities and public research institutions.

The grant will fund approximately 50% of the total estimated project cost, with our company contributing the remaining 50%.

The research grant agreement between Pangu BioPharma, HKUST and the Government of the Hong Kong Special Administration was effective April 1, 2020.

The PRP aims to support research and development projects

undertaken by companies in collaboration with local universities and public research institutions.

The grant will fund approximately 50% of the total estimated project cost, with our company contributing the remain ing 50%.

Our continued research of tRNA synthetases is being conducted through both industry and academic collaborations.

In March 2019, we entered into a research collaboration and option agreement, as amended, with CSL Behring (CSL) for the development of product candidates derived from up to four tRNA synthetases from our preclinical pipeline.

Under the terms of the collaboration, CSL is obligated to fund all research and development activities and will pay a total of $4.25 million per synthetase program ($17.0 million if all four synthetase programs advance) in option fees based on achievement of research milestones and CSL’s determination to continue development.

The impact o f the COVID-19 pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets aroun d the world.

In November 2020, we announced the identification of receptor targets for two tRNA synthetases from our pipeline.

The receptor targets may have utility in the development of new therapeutics to treat cancer and fibrosis.

Human tRNA synthetases play a role in extracellular responses in certain disease states, including cellular stress and tissue homeostasis.

Identifying target receptors for an extracellular tRNA synthetase helps inform discovery and development activities by providing additional focus towards relevant disease pathways and potential therapeutic applications.

The discovery work was completed as part of a research collaboration with CSL Behring (CSL), a global biotherapeutics leader specializing in immunology, hematology and other rare and serious medical conditions.

The impact of the COVID-19 pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

Impacts to our business have included the delay in enrollment of our Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis and the discontinuation of some patients in that trial, temporary closures of portions of our facilities and those of our licensees and collaborators, disruptions or restrictions on our employee's ability to travel and delays in certain research and development activities.

Other p otential impacts to our business include, but are not limited to disruptions to or delays in other clinical trials, third-party manufacturing supply and other operations, the potential diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, interruptions or delays in the operations of the FDA or other regulatory authorities, and our ability to raise capital and conduct business development activities.

Other potential impacts to our business include, but are not limited to disruptions to or delays in other clinical trials, third-party manufacturing supply and other operations, the potential diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, interruptions or delays in the operations of the FDA or other regulatory authorities, and our ability to raise capital and conduct business development activities.

Financial Operations Overview

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was incorporated in the State of Delaware in September 2005.

The condensed consolidated financial statements include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma Limited as of June 30, 2020.

The condensed consolidated financial statements include our accounts and our 98% majority-owned subsidiary in Hong Kong, Pangu BioPharma Limited as of September 30, 2020.

All intercompany transactions and balances are eliminated in consolidation.

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Either party may terminate the Kyorin Agreement in the event that the other party breaches the agreement and fails to cure the breach, becomes insolvent or challenges certain of the intellectual property rights licensed under the agreement .

For the six months ended June 30, 2020, we recognized $8.0 million as license revenue under the Kyorin Agreement.

For the nine months ended September 30, 2020, we recognized $8.0 million as license revenue under the Kyorin Agreement.

In March 2019, we entered into a research collaboration and option agreement with CSL for the development of product candidates derived from up to four tRNA synthetases from our preclinical pipeline (CSL Agreement).

Under the terms of the CSL Agreement, CSL will fund all research and development activities related to the development of the applicable product candidates for the duration of the CSL Agreement.

CSL reimburses us for all research and development activities.

The research and development activities will be performed in six phases by both parties.

The first phase totaling $0.6 million was funded in May 2019 and future phases will be funded on a quarterly basis.

In June 2020, the CSL Agreement was amended to extend the work on the first phase of the research program through September 30, 2020.

As a result of the extension, CSL is obligated to provide $0.2 million of additional funding for research and development activities.

In addition, CSL will pay a total of up to $4.25 million per synthetase program ($17.0 million if all four synthetase programs advance) in option fees based on achievement of research milestones and CSL’s determination to continue development.

As of June 30, 2020, no research milestones had been met.

We will grant CSL an option to negotiate licenses for worldwide rights to each IND candidate that emerges from the CSL Agreement.

Specific license terms will be negotiated during an exclusivity period following the exercise of each program option.

CSL has the right to terminate the research collaboration and option agreement in its entirety or with respect to one or more synthetases upon 45 days’ notice.

Either party has the right to terminate the agreement upon material breach of obligation or insolvency of the other party.

For the six months ended June 30, 2020, we recognized $0.3 million as license revenue under the CSL Agreement.

For the nine months ended September 30, 2020, we recognized $0.4 million as license revenue under the CSL Agreement.

Research and Development Expenses

To date, our research and development expenses have related primarily to the development of, and clinical trials for, our product candidates, and to research efforts targeting the potential therapeutic application of other tRNA synthetase-based immuno-modulators (including funding of our former research collaboration with The Scripps Research Institute) and, more recently research efforts related to NRP2 biology.

To date, our research and development expenses have related primarily to the development of, and clinical trials for, our product candidates, and to research efforts targeting the potential therapeutic application of other tRNA synthetase-based immuno-modulators and, more recently research efforts related to NRP2 biology.

These expenses consist primarily of:

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Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to us in our critical accounting estimates.

We discuss our accounting policies and assumptions that involve a higher degree of judgment and complexity within Note 2 to our audited consolidated financial statements in our 2019 Annual Report.

There have been no material changes to our critical accounting policies and estimates as disclosed in our 2019 Annual Report other than noted above.

We discuss our accounting policies and assumptions that involve a higher degre e of judgment and complexity within Note 2 to our audited consolidated financial statements in our 2019 Annual Report.

There have been no material changes to our critical accounting policies and estimates as disclosed in our 2019 Annual Report other than n oted above.

Results of Operations

Comparison of the Three Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019 (in thousands):

Three Months Ended June 30,

Comparison of the Three Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30,

Research and development expenses

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Other expense, net

Revenues for the three months ended June 30, 2020 consisted of $0.1 million of license revenue under the Kyorin Agreement and $0.1 million license revenue under the CSL Agreement.

Revenues for the three months ended June 30, 2019 consisted $0.1 million license revenue under the CSL Agreement.

Revenues for the three months ended September 30, 2020 and 2019 were $0.1 million and $0.2 million, respectively, consisting of license revenues.

Research and development expenses.

Research and development expenses were $4.4 million and $3.3 million for the three months ended June 30, 2020 and 2019, respectively.

Research and development expenses were $4.6 million and $3.8 million for the three months ended September 30, 2020 and 2019, respectively.

The increase of $0.8 million was due primarily to the progression of our ATYR1923 Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis and our ATYR1923 Phase 2 clinical trial in COVID-19 patients with severe respiratory complications.

General and administrative expenses.

General and administrative expenses were $2.1 million and $2.4 million for the three months ended June 30, 2020 and 2019, respectively.

The decrease of $0.3 million was due primarily to a $0.2 million decrease in professional fees and a $0.1 million decrease in taxes and licenses offset by a $0.1 million increase in insurance costs.

General and administrative expenses were $2.0 million and $1.9 million for the three months ended September 30, 2020 and 2019, respectively.

The increase of $0.2 million was due primarily to an increase in insurance costs.

Other expense, net.

Other expense, net was $0.1 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively.

The $0.1 million decrease was primarily a result of lower balances on our Term Loans which we started paying down in June 2018.

Comparison of the Six Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019 (in thousands):

Six Months Ended June 30,

Other expense, net was $0.1 million for each of the three months ended September 30, 2020 and 2019.

The decrease was primarily a result of lower balances on our Term Loans which we started paying down in June 2018.

Comparison of the Nine Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended September 30,

Research and development expenses

General and administrative expenses

Other income (expense), net

Revenues for the six months ended June 30, 2020 consisted of $ 8.0 million from license revenue under the Kyorin Agreement and $ 0.3 million from license revenue under the CSL Agreement.

Revenues for the six months ended June 30, 2019 consisted of $0.1 million from license revenue under the CSL Agreement.

Other expense, net

Revenues were $8.4 million and $0.3 million for the nine months ended September 30, 2020 and 2019, respectively.

The increase of $8.1 million was due primarily to $8.0 million from license revenue under the Kyorin Agreement.

Research and development expenses.

Research and development expenses were $8.0 million and $6.7 million for the six months ended June 30, 2020 and 2019, respectively.

Research and development expenses were $12.6 million and $10.5 million for the nine months ended September 30, 2020 and 2019, respectively.

The increase of 2.1 million was due primarily to the progression of our ATYR1923 Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis and our ATYR1923 Phase 2 clinical trial in COVID-19 patients with severe respiratory complications.

General and administrative expenses.

General and administrative expenses were $4.7 million and $5.0 million for the six months ended June 30, 2020 and 2019, respectively.

The decrease of $0.2 million was due primarily to a $0.2 million decrease in professional fees and $0.1 million decrease in taxes and licenses offset by a $0.1 million increase in employee associated costs.

General and administrative expenses were consistent between the periods at $6.8 million for each of the nine months ended September 30, 2020 and 2019.

Other expense, net.

Other expense, net was $0.2 million and $0.5 million for the six months ended June 30, 2020 and 2019, respectively.

Other expense, net was $0.3 million and $0.6 million for the nine months ended September 30, 2020 and 2019, respectively.

The $0.3 million decrease was primarily a result of lower balances on our Term Loans which we started paying down in June 2018.

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Other than the net income generated in the three months ended March 31, 2020, we have incurred losses and negative cash flows from operations since our inception.

As of June 30, 2020, we had an accumulated deficit of $327.0 million and we expect to continue to incur net losses for the foreseeable future.

We believe that our existing cash, cash equivalents and available-for-sale investments, of $41.4 million as of June 30, 2020 will be sufficient to meet our anticipated cash requirements for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.

As of September 30, 2020, we had an accumulated deficit of $333.6 million and we expect to continue to incur net losses for the foreseeable future.

We believe that our existing cash, cash equivalents and available-for-sale investments, of $36.1 million as of September 30, 2020 will be sufficient to meet our anticipated cash requirements for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.

Sources of Liquidity

From our inception through June 30, 2020, we have financed our operations primarily through the sale of equity securities and convertible debt and through venture debt and term loans.

Debt Financing

We have a Loan Agreement with our Lenders for the Term Loans.

Under the Loan Agreement, we are obligated to make interest-only payments through June 1, 2018, followed by consecutive equal monthly payments of principal and interest in arrears through the maturity date of November 18, 2020.

Accordingly, we started paying the principal balance of the Term Loans in June 2018.

The Term Loans bear interest at the prime rate, as reported in The Wall Street Journal on the last date of the month preceding the month in which interest will accrue, plus 4.10%.

A final payment equal to 8.75% of the funded amounts is payable when the Term Loans become due or upon the prepayment of the respective outstanding balance.

We have the option to prepay the outstanding balance of the Term Loans in full, subject to a prepayment fee ranging from 1.0% to 3.0% depending upon when the prepayment occurs, including any non-usage fees.

We intend to retire the outstanding amounts due under our Loan Agreement at the maturity date in November 2020.

In connection with the first tranche, we issued warrants to each of the Lenders to purchase an aggregate of 3,415 shares of our common stock with an exercise price of $43.93 per share.

In connection with the second tranche, we issued warrants to each of the Lenders to purchase an aggregate of 1,489 shares of our common stock with an exercise price of $50.37 per share.

In connection with the third tranche, we issued warrants to each of the Lenders to purchase an aggregate of 1,443 shares of our common stock with an exercise price of $51.98 per share.

The warrants are immediately exercisable and have a maximum contractual term of seven years.

From our inception through September 30, 2020, we have financed our operations primarily through the sale of equity securities and convertible debt and through venture debt and term loans.

Equity Securities

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Wainwright & Co., LLC (Wainwright) with respect to an at-the-market offering program (ATM Offering Program) under which we may offer and sell shares of our common stock having an aggregate offering price of up to $10.0 million.

In November 2020, we entered into an amendment to our sales agreement with Wainwright to increase the amount of the ATM Offering Program from $10.0 million to $20.0 million.

Wainwright is entitled to a commission at a fixed rate equal to 3% of the gross proceeds.

Under the ATM Offering Program, during 2019, we sold an aggregate of 611,687 shares of common stock at an average price of $5.43 per share for gross proceeds of $3.3 million.

During the six months ended June 30, 2020, we sold an aggregate of 23,148 shares of common stock at an average price of $4.49 per share for gross proceeds of $0.1 million under the ATM Offering Program.

During the nine months ended September 30, 2020, we sold an aggregate of 630,685 shares of common stock at an average price of $4.00 per share for gross proceeds of $2.5 million under the ATM Offering Program.

In February 2020, we completed an underwritten follow-on public offering of 4,235,294 shares of our common stock at a price to the public of $4.25 per share.

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The total gross proceeds from the underwritten follow-on public offering, including the underwriters’ option to purchase additional shares, was approximately $20.7 million, before deducting underwriting discounts, commissions and offering expenses payable by us.

We anticipate using the net proceeds from the offering for general corporate purposes, including clinical trial expenses, research and de velopment expenses, manufacturing expenses, and general administrative expenses .

We anticipate using the net proceeds from the offering for general corporate purposes, including clinical trial expenses, research and development expenses, manufacturing expenses, and general administrative expenses.

Additionally, in September 2020 , we entered into a common stock purchase agreement (Purchase Agreement) with Aspire Capital Fund, LLC (Aspire Capital), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $20.0 million of shares of our common stock at our request from time to time during the 30 month term of the Purchase Agreement.

Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement with Aspire Capital, in which we agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act, registering the sale of the shares of our common stock that have been and may be issued to Aspire Capital under the Purchase Agreement.

As of September 30, 2020, we had not sold any shares of common stock to Aspire Capital under this Purchase Agreement.

Debt Financing

We have a Loan Agreement with our Lenders for the Term Loans which were fully repaid on November 3, 2020, including the final payment equal to 8.75% of the funded amounts.

The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by (used in):

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Operating activities.

Net cash used in operating activities was $4.3 million and $10.8 million for the six months ended June 30, 2020 and 2019, respectively.

Net cash used in operating activities for the six months ended June 30, 2020 was primarily related to our net loss of $4.7 million, adjusted for non-cash stock-based compensation expense of $0.8 million and net cash outflows from the changes in our operating assets and liabilities of $1.4 million.

Net cash used in operating activities for the six months ended June 30, 2018 was primarily related to our net loss of $12.0 million, adjusted for non-cash stock-based compensation expense of $1.1 million and net cash outflows from the changes in our operating assets and liabilities of $0.8 million.

Net cash used in operating activities was $9.9 million and $15.1 million for the nine months ended September 30, 2020 and 2019, respectively.

Net cash used in operating activities for the nine months ended September 30, 2020 was primarily related to our n et loss of $11.3 million, adjusted for non-cash stock-based compensation expense of $1.1 million and net cash outflows from the changes in our operating assets and liabilities of $1.1 million.

Net cash used in operating activities for the nine months ended September 30, 2019 was primarily related to our net loss of $17.6 million, adjusted for non-cash stock-based compensation expense of $1.4 million and net cash outflows from the changes in our operating assets and liabilities of $0.1 million.

Investing activities.

Net cash provided by (used in) investing activities for the six months ended June 30, 2020 and 2019 was $2.0 million and ($1.1) million, respectively.

The fluctuation in net cash provided by or used in investing activities resulted primarily from the timing differences in investment purchases, sales and maturities, and the fluctuation of our portfolio mix between cash equivalents and short-term investment holdings.

Net cash provided by investing activities for the nine months ended September 30, 2020 and 2019 was $3.7 million and $6.1 million, respectively.

The fluctuation in net cash provided by investing activities resulted primarily from the timing differences in investment purchases, sales and maturities, and the fluctuation of our portfolio mix between cash equivalents and short-term investment holdings.

The average term to maturity in our investment portfolio is less than one year.

Financing activities.

Net cash provided by financing activities for the six months ended June 30, 2020 consisted primarily of $18.8 million in proceeds from the issuance of common stock through an underwritten follow-on public offering in February 2020, net of offering costs, offset by a $4.0 million repayment on our Term Loans.

Net cash provided by financing activities for the six months ended June 30, 2019 consisted of $4.9 million in proceeds from the issuance of common stock through a registered direct offering, net of offering costs and $2.5 million in proceeds from the issuance of common stock through ATM Offering Programs, net of offering costs, offset by a $4.0 million repayment on our Term Loans.

Net cash provided by financing activities for the nine months ended September 30, 2020 consisted primarily of $18.8 million in proceeds from the issuance of common stock through an underwritten follow-on public offering in February 2020, net of offering costs and $2.4 million in proceeds from the issuance of common stock through the ATM Offering Program, net of offering costs, offset by a $6.0 million repayment on our Term Loans.

Net cash provided by financing activities for the nine months ended September 30, 2019 consisted of $4.9 million in proceeds from the issuance of common stock through a registered direct offering, net of offering costs and $4.4 million proceeds from issuance of common stock through the ATM Offering Program, offset by a $6.0 million repayment on our Term Loans.

Funding Requirements

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If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, our other technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us.

The incurrence of additional indebtedness would increase our fixed payment obligations and may require us to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

The incurrence of additional indebtedness would increase our fixed payment obligations and may require us to agree

to certain restrictive covenants, such as limitations on our ability to incur addition al debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

We may be unable to raise additional funds on acceptable terms or at all.

As a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

As a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced extreme volatility and disruptions, includ ing severely diminished liquidity and credit availability, declines in co nsumer confidence, declines i n economic growth, increases in unemployment rates and uncertainty about economic stability.

If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive.

If we are unable to raise additional funds, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

If we are unable to raise additional funds, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwis e prefer to develop and market such product candidates ourselves.

Contractual Obligations and Commitments

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These contracts generally provide for termination after a notice period, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.

Our contractual obligations have not materially changed outside the ordinary course of our business during the six months ended June 30, 2020, as compared to those disclosed in our 2019 Annual Report.

Our contractual obligations have not materially changed outside the ordinary course of our business during the nine months ended September 30, 2020, as compared to those disclosed in our 2019 Annual Report.

We have a Loan Agreement with our Lenders for the Term Loans which were fully repaid on November 3, 2020, including the final payment equal to 8.75% of the funded amounts.

Recent Accounting Pronouncements

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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