−Removed: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
−Removed: Our common stock trades on The Nasdaq Global Select Market under the symbol “CABA”.
+Added: Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities.
+Added: Our common stock trades on The Nasdaq Global Select Market under the symbol “CABA”.
Trading of our common stock commenced on October 25, 2019, in connection with our initial public offering, or IPO.
6 unchanged sentences
We currently intend to retain all available funds and any future earnings, if any, to fund the development and growth of our business.
−Removed: We do not expect to pay any cash dividends in the foreseeable future.
+Added: We do not expect to pay any cash dividends in
+Added: the foreseeable future.
Any future determination to pay dividends will be made at the discretion of our board of directors and will depend on various factors, including applicable laws, our results of operations, financial condition, future prospects, then applicable contractual restrictions and any other factors deemed relevant by our board of directors.
5 unchanged sentences
Recent Sales of Unregistered Securities
−Removed: Not applicable.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations.
+Added: You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K, or this Annual Report.
+Added: Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.
+Added: As a result of many factors, including those factors set forth in the section entitled “Risk Factors,”
+Added: our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
+Added: You should carefully read the section entitled “Risk Factors”
+Added: to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.
+Added: Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”
+Added: We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
+Added: We are a clinical-stage biotechnology company focused on the discovery and development of engineered T cell therapies that have the potential to provide a deep and durable, perhaps curative, treatment for patients with autoimmune diseases.
+Added: The Cabaletta Approach to B cell Ablation, or our CABA platform, encompasses two strategies –
+Added: chimeric antigen receptor T cells for autoimmunity, or CARTA, and our proprietary chimeric autoantibody receptor T cells, or CAART.
+Added: We believe these two strategies, which comprise our CABA platform, have the potential to be applied across a broad range of autoimmune diseases.
+Added: The initiation or maintenance of many autoimmune diseases involves B lymphocytes, also called B cells, which create a type of protein called an antibody, which bind to pathogens, such as bacteria or viruses, or to foreign substances, such as toxins, to neutralize them.
+Added: Additional B cell effects include releasing cytokines, presenting antigens to T cells, and co-stimulating other immune cells to eliminate the foreign pathogens or substances.
+Added: When these B cell functions become misdirected to the healthy tissues or cells in the body, they can contribute to the initiation or maintenance of an autoimmune disease.
+Added: Current treatment options for these autoimmune diseases are generally limited to corticosteroids and generalized immunosuppressants that offer only temporary disease suppression, may require chronic dosing, in-hospital administration, and are associated with potentially severe side effects.
+Added: Optimal therapy would either reset the immune system or selectively eliminate only the disease-causing B cells, while sparing the normal protective B cells.
+Added: Our CABA platform encompasses two strategies that seek to address both of these potentially curative approaches for patients with autoimmune diseases.
+Added: The CARTA strategy is designed to achieve transient depletion of all B cells following a single treatment by using T cells engineered to express an antibody fragment that recognizes a B cell receptor expressed on the surface of all B cells, which is designed to allow for the complete elimination of B cells that contribute to disease with subsequent repopulation by healthy naïve B cells, offering the potential for durable and complete clinical responses through an immune system reset without the need for chronic immunosuppression in patients with autoimmune diseases.
+Added: The CAART strategy is designed to selectively engage and eliminate only the pathogenic B cells responsible for driving disease by using T cells engineered to express disease specific targeting domains which are designed to mimic the antigen that is the subject of attack in an autoimmune disease.
+Added: Our CAARs differ from chimeric antigen receptors, or CARs, in the use of the autoantigen rather than an antibody fragment, which enables the CAAR T cells to serve as a “decoy”
+Added: for specific autoreactive B cell receptors expressed on the surface of B cells, causing the pathogenic B cells to engage with the CAAR T cells, mistaking them for a target antigen, and resulting in their elimination.
+Added: We believe our CABA platform has potential applicability across dozens of autoimmune diseases that we have identified, evaluated and prioritized.
+Added: Academic clinical data published in Nature Medicine in September 2022 demonstrated that a CD19-CAR T cell therapy with a 4-1BB co-stimulatory domain following standard doses of lymphodepletion with fludarabine and cyclophosphamide induced clinical remission in 5 out of 5 patients with moderate to severe, refractory systemic lupus erythematosus, SLE, with up to 17 months of follow up in the first treated patient (Mackensen, Andreas, et al.
+Added: "Anti-CD19 CAR T cell therapy for refractory systemic lupus erythematosus." Nature Medicine (2022):
+Added: Grade 1 cytokine release syndrome, or CRS, was observed in 3 out of 5 patients, and there was no observation of neurotoxicity of any grade.
+Added: New naïve B cells repopulated within 2-5 months of CAR T infusion in all patients, with no evidence of recurrence of disease or autoantibodies following repopulation.
+Added: In summary, the data suggest the potential to reset the immune system in these patients.
+Added: Extending the observation of the potential of 4-1BB containing CD19-CAR T beyond SLE, in February 2023, a clinical case report was published in Lancet Rheumatology which reported that the same 4-1BB containing CD19-CAR T cell therapy was administered at the same dose following a similar preconditioning regimen with fludarabine and cyclophosphamide to a patient with anti-synthetase syndrome, which is a form of myositis (Müller, Fabian, et al.
+Added: “CD19-targeted CAR T cells in refractory antisynthetase syndrome.”
+Added: The Lancet (2023)).
+Added: This patient experienced rapid, durable and profound decreases in muscle inflammation, improvement in muscle function and reduction of autoantibody titers as early as
+Added: three months after therapy and lasting for at least six months following therapy with reconstitution of the B cell population occurring within the follow-up period.
+Added: Grade 1 CRS and no immune effector cell-associated neurotoxicity, or ICANS, were reported.
+Added: CABA-201 was designed for use in autoimmune patients to closely replicate the design of the academic product that has produced the clinical data reported above.
+Added: The fully human CD19 binder in CABA-201, which was exclusively licensed from Nanjing IASO Biotherapeutics Co., Ltd., or IASO, was designed through screening of 100 billion antibody fragments to be a fully human equivalent of the murine FMC63 CD19 binder that was used in the Nature Medicine and Lancet Rheumatology papers referenced above.
+Added: T cells expressing a 4-1BB-containing CAR with our fully human binder have been demonstrated to possess similar biologic activity in vitro and in vivo when compared to T cells expressing a 4-1BB-containing CAR utilizing the murine FMC63 CD19 binder employed in the academic studies.
+Added: (Dai, Zhenyu, et al.
+Added: “Development and functional characterization of novel fully human anti‐CD19 chimeric antigen receptors for T‐cell therapy.”
+Added: Journal of Cellular Physiology 236.8 (2021):
+Added: The fully human binder has been clinically evaluated in a dual-CD19xCD22 CAR T candidate under development for B cell leukemia and lymphoma in an investigator-initiated trial in China, and IASO has reported a tolerability profile that we believe is favorable for development in autoimmune diseases.
+Added: We believe CABA-201 may have the potential to transform treatment of autoimmune diseases with high unmet need through a potential immune system reset given the similarity of the overall design to the construct used in the Nature Medicine and Lancet Rheumatology studies specifically the similarities in the targeting domain as well as the use of the same 4-1BB costimulatory domain.
+Added: Subject to the FDA review, we expect a potential IND clearance of CABA-201 in the first half of 2023.
+Added: In addition to a product candidate that we believe is specifically designed for use in autoimmune patients, we have established an exclusive translational research partnership with Dr.
+Added: Georg Schett, who is a pioneer and global leader in the application of CD19-targeting cell therapies in autoimmunity and the senior author on the Nature Medicine and Lancet Rheumatology papers cited above.
+Added: The collaboration is designed to allow Dr.
+Added: Schett to share his patient samples with us in order for us to generate translational data on his patients, which will be combined with real time clinical data to generate insights and a deeper understanding of the immunologic mechanisms of response from ongoing and continued clinical studies in multiple autoimmune diseases.
+Added: With the addition of CABA-201 to our cell therapy pipeline as the lead product in our CARTA strategy, informed by confidential clinical and translational insights from this scientific collaboration, we believe we can potentially address a broad range of autoimmune diseases in which B cells have a role initiating or maintaining disease.
+Added: Within the CAART strategy, our initial therapeutic focus is on mucosal pemphigus vulgaris, or mPV, a chronic, autoimmune blistering skin disease that affects the mucous membranes.
+Added: mPV is caused by autoantibodies against the cell adhesion protein desmoglein 3, or DSG3.
+Added: Despite a current standard of care that includes corticosteroids and adjunctive immunosuppressive agents, pemphigus vulgaris, or PV, remains associated with frequent recurrences as well as substantial morbidity and mortality.
+Added: Our lead product candidate, DSG3-CAART, is being evaluated for the treatment of mPV, a subtype of PV that affects the epithelium of the mucous membranes.
+Added: mPV is caused by autoantibodies against DSG3.
+Added: In January 2020, the United States Food and Drug Administration, or FDA, granted orphan drug designation to DSG3-CAART for the treatment of PV.
+Added: In May 2020, DSG3-CAART received fast track designation from the FDA for improving healing of mucosal blisters in patients with mPV.
+Added: DSG3-CAART is currently being evaluated in the DesCAARTes TM trial, which is currently enrolling patients.
+Added: As recently presented at the 31st European Academy of Dermatology and Venereology (EADV) Congress in September 2022 and at the 29th European Society of Gene and Cell Therapy (ESGCT) Congress in October 2022, when administered as a monotherapy without combination therapy, we observed no dose-limiting toxicities through cohort A5, at up to a 7.5 billion DSG3-CAART cell dose.
+Added: Though no clear trends in antibody levels or disease activity reduction were observed through cohort A5, one subject in cohort A4 had no disease activity by three months post-infusion while reducing steroid usage during that period, an antibody titer that dropped more than 20% by three months post-infusion, and was the only patient in the first four cohorts that had detectable DSG3-CAART persistence at the three month time point following initial DSG3-CAART infusion.
+Added: Based on the data observed from these cohorts, we announced that the combination sub-study, incorporating a pre-treatment combination regimen with IVIG and cyclophosphamide, would be prioritized to follow cohort A5.
+Added: We anticipate reporting one month safety and persistence data from the combination sub-study in the first half of 2023, and six month clinical data from the combination sub-study by the first half of 2024.
+Added: Our second clinical product candidate, MuSK-CAART, is designed to treat a subset of patients with myasthenia gravis, or MG.
+Added: MG is an autoimmune disease induced by autoantibodies targeting the neuromuscular junction, or NMJ, which can lead to life-threatening muscle weakness.
+Added: Our product candidate targets autoreactive B cells that differentiate into antibody secreting cells that produce autoantibodies against a transmembrane protein, muscle-specific kinase, or MuSK, and is being developed for the treatment of MuSK MG.
+Added: In the fourth quarter of 2021, we submitted an Investigational New Drug, or IND, application for the first-in-human studies of MuSK-CAART to the FDA, which became effective in January 2022.
+Added: In February 2022, MuSK-CAART received fast track designation from the FDA for improving activities of daily living and muscle strength in patients with MuSK antibody-positive myasthenia gravis.
+Added: In June 2022, we received a no objection letter from Health Canada, allowing us to initiate clinical trial activities in Canada.
+Added: In October 2022, MuSK-CAART received orphan drug designation for the treatment of MuSK MG.
+Added: We initiated the
+Added: MusCAARTes trial in November 2022.
+Added: We anticipate reporting six month clinical data from the combination cohort by the first half of 2024.
+Added: Our CAART pipeline also includes product candidates currently in discovery-stage or preclinical development for the treatment of mucocutaneous PV, or mcPV and PLA2R-associated membranous nephropathy, or PLA2R MN, in addition to two undisclosed targets.
+Added: DSG3/1-CAART, is being developed for mcPV, which affects both mucosal and skin surfaces and is caused by autoantibodies against DSG3 and desmoglein 1, or DSG1.
+Added: PLA2R-CAART is being developed to treat patients with PLA2R-assoicated membranous nephropathy, an autoimmune disease that is typically caused by production of autoantibodies directed to phospholipase A2 receptor (PLA2R), a single-pass transmembrane protein expressed in the glomerulus of the kidney.
+Added: We were incorporated in April 2017 and started principal operations in August 2018.
+Added: Our operations to date have been financed primarily by net proceeds of $86.4 million from the sale of convertible notes and convertible preferred stock and net proceeds of $71.0 million from the sale of common stock in our initial public offering, or IPO, in October 2019.
+Added: In 2021, we raised $49.7 million, with net proceeds of $48.3 million, in “at-the-market”
+Added: offerings, pursuant to a Sales Agreement, or the Sales Agreement, with Cowen and Company, LLC, or the Sales Agent, which provides for the offering, issuance and sale of up to an aggregate amount of $75.0 million of our common stock.
+Added: In December 2022, we raised $35.0 million, with net proceeds of $32.6 million from the sale of our common stock and pre-funded warrants to purchase shares of our common stock.
+Added: As of December 31, 2022, we had $106.5 million in cash and cash equivalents and investments.
+Added: IASO Agreement
+Added: On October 7, 2022, we entered into an Exclusive License Agreement (the IASO Agreement) with IASO.
+Added: Pursuant to the IASO Agreement, we received an exclusive, worldwide license under certain IASO intellectual property to use a novel clinical-stage anti-CD19 binder to develop, manufacture, commercialize and otherwise exploit T cell products directed to CD19 for the purpose of diagnosis, prevention or treatment of any autoimmune or alloimmune indications in humans.
+Added: IASO has the right of first negotiation if we desire to grant a third party an exclusive license to develop, manufacture, commercialize or otherwise exploit the licensed products in the Greater China region.
+Added: Pursuant to the IASO Agreement, we and IASO have agreed, subject to certain exceptions, to refrain from engaging in certain competitive activities with respect to certain programs.
+Added: As partial consideration for the exclusive license, IASO received an upfront payment of $2.5 million.
+Added: IASO is also eligible to receive up to mid double digit millions in milestone payments based upon the achievement of specified pre-clinical, development and regulatory milestones, and up to an additional low triple digit millions in milestone payments based upon achievement of specified sales milestones, for a total consideration, inclusive of the upfront payment, of up to $162 million, along with tiered mid-single digit royalties on future net sales for licensed products that may result from the IASO Agreement.
+Added: We also may sublicense through multiple tiers the rights granted to it by IASO under the IASO Agreement at any time, however, we must pay IASO a low double-digit percentage of any revenue obtained from sublicenses or options to third parties, subject to certain customary exclusions.
+Added: The IASO Agreement will continue on a country-by-country, licensed product-by-licensed product basis until the expiration of the royalty term as identified in the IASO Agreement, unless earlier terminated.
+Added: We and IASO may terminate the IASO Agreement for a material, uncured breach or insolvency of the other party.
+Added: We may also terminate the IASO Agreement at will upon advance written notice and in the event IASO rejects the IASO Agreement due to bankruptcy-related matters.
+Added: IASO may also terminate the IASO Agreement if we fail to achieve certain specified diligence milestones in a timely manner and/or if we commence any patent challenges with respect to the patents and patent applications relating to the licensed sequence, in each case upon advance written notice .
+Added: Oxford Biomedica
+Added: In December 2021, we entered into a Licence and Supply agreement, or LSA, with Oxford Biomedica (UK) Limited wherein the LSA grants us a non-exclusive license to Oxford’s LentiVector® platform for its application in our DSG3-CAART program and puts in place a multi-year vector supply agreement.
+Added: Under the terms of the agreement, we were required to pay Oxford an upfront fee, as well as costs associated with initial vector manufacturing activities for a total cost of up to approximately $4.0 million.
+Added: Oxford is eligible to receive regulatory and sales milestones in the low tens of millions and royalties in the low single digits on net sales of products that incorporate the Oxford technology.
+Added: We can terminate the agreement at will upon advance written notice and subject to certain manufacturing slot cancellation fees.
+Added: WuXi Manufacturing Agreement
+Added: In January 2021, we entered into a Development and Manufacturing Services Agreement (WuXi Agreement) with WuXi Advanced Therapies, Inc.
+Added: (WuXi) to serve as the Company’s cell processing manufacturing partner for the MuSK-CAART Phase 1
+Added: clinical trial, or MusCAARTes TM trial.
+Added: The WuXi Agreement will expire the later of January 2024, or upon completion of WuXi’s services related to the MusCAARTes TM trial.
+Added: The Company has the right to terminate the WuXi Agreement for convenience or other reasons specified in the WuXi Agreement upon prior written notice.
+Added: If the Company terminates the WuXi Agreement, it will be obligated to pay an early termination fee of up to $1,500.
+Added: Amended and Restated License Agreement with the Trustees of the University of Pennsylvania and the Children’s Hospital of Philadelphia
+Added: In August 2018, we entered into a license agreement with Penn, which was amended and restated in July 2019 to include the Children’s Hospital of Philadelphia, or CHOP, collectively, the Institutions, and collectively with such amendment, as amended in May 2020 and October 2021, the License Agreement, pursuant to which we obtained (a) a non-exclusive, non-sublicensable, worldwide research license to make, have made and use products in two subfields of use, (b) effective as of October 2018, an exclusive, worldwide, royalty-bearing license, with the right to sublicense, under certain of the Institutions’
+Added: intellectual property to make, use, sell, offer for sale and import products in the same two subfields of use, and (c) effective as of October 2018, a non-exclusive, worldwide, royalty-bearing license, with limited rights to sublicense, under certain of Penn’s know-how to make, have made, use, sell, offer for sale, import and have imported products in the same two subfields of use.
+Added: Our rights are subject to the rights of the U.S.
+Added: government and certain rights retained by the Institutions.
+Added: Unless earlier terminated, the License Agreement expires on the expiration or abandonment or other termination of the last valid claim in Penn’s intellectual property licensed by us.
+Added: We may terminate the License Agreement at any time for convenience upon 60 days written notice.
+Added: In the event of an uncured, material breach, Penn may terminate the License Agreement upon 60 days written notice.
+Added: Sponsored Research Agreements
+Added: We have sponsored research agreements, or SRAs, with Penn for the laboratories of Drs.
+Added: Payne and Milone, who are also our scientific co-founders and members of our scientific advisory board.
+Added: In May 2020, the agreement with Dr.
+Added: Payne, or the Payne SRA, was expanded to include CAAR design and optimization efforts in three additional B cell-mediated autoimmune diseases.
+Added: In August 2020, the Payne SRA was further amended to extend the term of the original research plan.
+Added: In April 2021 and October 2021, the Milone SRA was amended to extend the term of the original research plan through November 2022.
+Added: In December 2021, we further amended the Payne SRA to extend the term through December 2024 and expand the workplan to include additional correlative studies related to the DesCAARTes TM trial.
+Added: In December 2022, we signed a budget amendment to the Payne SRA.
+Added: The total estimated cost of the agreements is $12.6 million, which satisfies the $2.0 million annual obligation under the License Agreement.
+Added: As of December 31, 2022, the activities under these agreements have been completed and the full cost has been incurred.
+Added: Master Translational Research Services Agreement
+Added: In October 2018, we entered into a Master Translational Services Agreement with Penn, or the Services Agreement, pursuant to which Penn agreed to perform certain services related to the research and development of the technology licensed to us under the License Agreement, as well as certain clinical, regulatory and manufacturing services.
+Added: The Services Agreement will expire on the later of (i) October 19, 2021 or (ii) completion of the services for which we have engaged Penn under the Services Agreement.
+Added: Either party may terminate this agreement with or without cause upon a certain number of days’
+Added: prior written notice.
+Added: The services encompassed by the Services Agreement are performed by different organizations at Penn pursuant to certain addenda to the Services Agreement, including the Center for Advanced Retinal and Ocular Therapeutics, or CAROT, Addendum, as amended in May 2020, and the CVPF Addendum.
+Added: Components of Operating Results
+Added: To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sales of products for several years, if at all.
+Added: If our development efforts for our current or future product candidates are successful and result in marketing approval, we may generate revenue in the future from product sales.
+Added: We cannot predict if, when or to what extent we will generate revenue from the commercialization and sale of our product candidates.
+Added: We may never succeed in obtaining regulatory approval for any of our product candidates.
+Added: We may also in the future enter into license or collaboration agreements for our product candidates or intellectual property, and we may generate revenue in the future from payments as a result of such license or collaboration agreements.
+Added: Operating Expenses
+Added: Research and Development
+Added: Our research and development expenses include:
+Added: personnel costs, which include salaries, benefits and stock-based compensation expense;
+Added: expenses incurred under agreements with consultants and third-party contract organizations that conduct research and development activities on our behalf;
+Added: costs related to sponsored research service agreements;
+Added: costs related to production of preclinical and clinical materials, including fees paid to contract manufacturers;
+Added: licensing fees for intellectual property and know-how;
+Added: laboratory and vendor expenses related to the execution of preclinical studies and ongoing and planned clinical trials;
+Added: laboratory supplies and equipment used for internal research and development activities and related depreciation expense.
+Added: We have not reported program costs since inception because historically we have not tracked or recorded our research and development expenses on a preclinical program-by-program basis.
+Added: We use our personnel and infrastructure resources across the breadth of our research and development activities, which are directed toward identifying and developing product candidates.
+Added: We expense all research and development costs in the periods in which they are incurred.
+Added: Costs for certain research and development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and third-party service providers.
+Added: We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates, including investments in manufacturing, as our programs advance and we conduct clinical trials.
+Added: The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain.
+Added: As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates.
+Added: Because of the numerous risks and uncertainties associated with product development, we cannot determine with certainty the duration and completion costs of the current or future preclinical studies and clinical trials or if, when, or to what extent we will generate revenues from the commercialization and sale of our product candidates.
+Added: We may never succeed in achieving regulatory approval for our product candidates.
+Added: The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:
+Added: successful completion of preclinical studies and IND-enabling studies;
+Added: development of chemistry, manufacturing and controls, or CMC, processes and procedures for purposes of IND applications;
+Added: successful patient enrollment in, and the initiation and completion of, clinical trials;
+Added: the impact of any business interruptions to our operations, including the timing and enrollment of patients in our ongoing and planned clinical trials, or to those of our clinical sites, manufacturers, suppliers, or other vendors resulting from the COVID-19 pandemic or similar public health crisis;
+Added: receipt of regulatory approvals from applicable regulatory authorities;
+Added: establishing commercial manufacturing capabilities or arrangements with third-party manufacturers;
+Added: obtaining and maintaining patent and trade secret protection and non-patent exclusivity;
+Added: launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others;
+Added: acceptance of our product candidates, if and when approved, by patients, the medical community and third-party payors;
+Added: effectively competing with other therapies and treatment options;
+Added: a continued acceptable safety and efficacy profile following approval;
+Added: enforcing and defending intellectual property and proprietary rights and claims;
+Added: achieving desirable medicinal properties for the intended indications.
+Added: We may never succeed in achieving regulatory approval for any of our product candidates.
+Added: We may obtain unexpected results from our preclinical studies and clinical trials.
+Added: We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others.
+Added: A change in the outcome of any of these factors could mean a significant change in the costs and timing associated with the development of our current and future preclinical and clinical product candidates.
+Added: For example, if the FDA or another regulatory authority, were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development, or if we experience significant delays in execution of or enrollment in any of our preclinical studies or clinical trials, we could be required to expend significant additional financial resources and time on the completion of preclinical and clinical development.
+Added: We expect our research and development expenses to increase for the foreseeable future as we continue the development of product candidates.
+Added: General and Administrative Expenses
+Added: Our general and administrative expenses consist primarily of personnel costs, costs related to maintenance and filing of intellectual property, depreciation expense and other expenses for outside professional services, including legal, human resources, audit and accounting services.
+Added: Personnel costs consist of salaries, benefits and stock-based compensation expense.
+Added: We expect our general and administrative expenses to increase over the next several years to support our continued research and development activities, manufacturing activities, increased costs of operating as a public company and the potential commercialization of our product candidates.
+Added: We anticipate our general and administrative costs will increase with respect to the hiring of additional personnel, developing commercial infrastructure, fees to outside consultants, lawyers and accountants, and increased costs associated with being a public company such as expenses related to services associated with maintaining compliance with Nasdaq listing rules and SEC requirements, insurance and investor relations costs.
+Added: Other income consists of interest earned on our cash equivalents, amortization of bond discount or premium and investment gains and losses realized during the period.
+Added: Results of Operations for the years ended December 31, 2022 and 2021
+Added: The following sets forth our results of operations:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Statements of Operations Data:
+Added: Operating expenses:
+Added: Research and development
+Added: General and administrative
+Added: Total operating expenses
+Added: Loss from operations
+Added: Other income:
+Added: Interest income
+Added: Research and Development Expenses
+Added: Research and development expenses were $39.3 million for the year ended December 31, 2022 as compared to $32.5 million for the year ended December 31, 2021.
+Added: The table below summarizes our research and development expenses:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Sponsored research activities
+Added: License of intellectual property
+Added: Manufacturing of preclinical and clinical supplies
+Added: Clinical trials
+Added: Development services
+Added: Specific changes in our research and development expenses year over year include a:
+Added: $3.2 million increase in personnel costs primarily driven by an increase in headcount to support overall growth, including an increase of $0.6 million in stock-based compensation expense;
+Added: $2.7 million increase in licensing fees primarily due to the $2.5 million upfront payment made pursuant to the IASO Agreement;
+Added: $1.6 million increase in clinical trial costs for the DesCAARTes TM trial, including outsourced costs and investigator payments to clinical trial sites, and start-up costs for the MusCAARTes TM trial;
+Added: partially offset by
+Added: $1.3 million decrease in manufacturing costs primarily due to timing of vector manufacturing activities.
+Added: General and Administrative Expenses
+Added: General and administrative expenses were $14.8 million for the year ended December 31, 2022 as compared to $13.8 million for the year ended December 31, 2021.
+Added: The increase of $1.0 million in our general and administrative expenses year over year includes:
+Added: $1.3 million of additional personnel costs primarily due to increased headcount in the current year, including an increase of $0.5 million in stock-based compensation expense;
+Added: $0.5 million higher administrative costs, including legal, information technology and other administrative costs;
+Added: partially offset by
+Added: $0.8 million lower director and officer insurance costs.
+Added: Interest income has increased $1.1 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021, as a result of increasing interest rates.
+Added: Liquidity and Capital Resources
+Added: Since our inception in April 2017 through December 31, 2020, our operations were financed by proceeds of $86.4 million from the sale of convertible notes and our convertible preferred stock and proceeds of $71.0 million from the sale of common stock in our initial public offering.
+Added: In 2021, we raised $49.7 million, with net proceeds of $48.3 million, in “at-the-market”
+Added: offerings, pursuant to our Sales Agreement which provides for the offering, issuance and sale of up to an aggregate amount of $75.0 million of our common stock.
+Added: In December 2022, we raised $35.0 million, with net proceeds of $32.6 million from the sale of our common stock and pre-funded warrants to purchase our common stock.
+Added: As of December 31, 2022, we had $106.5 million in cash and cash equivalents and investments.
+Added: Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation.
+Added: We have incurred losses since our inception and, as of December 31, 2022, we had an accumulated deficit of $165.6 million.
+Added: Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures.
+Added: Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding prepaid expenses and other current assets, accounts payable and accrued expenses.
+Added: Any product candidates we may develop may never achieve commercialization and we anticipate that we will continue to incur losses for the foreseeable future.
+Added: We expect that our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase.
+Added: As a result, until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements.
+Added: Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research, manufacturing and development services, costs relating to the build-out of our headquarters, laboratories and manufacturing facility, license payments or milestone obligations that may arise, laboratory and related supplies, clinical costs, manufacturing costs, legal and other regulatory expenses and general overhead costs.
+Added: Based upon our current operating plan, we believe that our existing cash, cash equivalents and investments as of December 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2025.
+Added: We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.
+Added: We will continue to require additional financing to advance our current product candidates through clinical development, to develop, acquire or in-license other potential product candidates and to fund operations for the foreseeable future.
+Added: We will continue to seek funds through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements.
+Added: However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.
+Added: If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’
+Added: If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
+Added: Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.
+Added: If we are unable to raise capital, we will need to delay, reduce or terminate planned activities to reduce costs.
+Added: At-The-Market Offering Sales Agreement
+Added: On November 10, 2020, we filed a registration statement on Form S-3 (File No.
+Added: 333-250006) with the SEC, which was declared effective on November 18, 2020, or the Shelf Registration Statement, in relation to the registration of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof for the purposes of selling, from time to time, our common stock, debt securities or other equity securities in one or more offerings.
+Added: We also simultaneously entered into a Sales Agreement with Cowen and Company, LLC, to provide for the offering, issuance and sale of up to an aggregate amount of $75.0 million of our common stock from time to time in “at-the-market”
+Added: offerings, or the ATM Program, under the Shelf Registration Statement and subject to the limitations thereof.
+Added: We will pay to the Sales Agent cash commissions of 3.0 percent of the aggregate gross proceeds of sales of common stock under the Sales Agreement.
+Added: In 2021, we sold 4,792,562 shares pursuant to the ATM Program for net proceeds of $48.3 million, after deducting commissions of $1.4 million.
+Added: No shares were sold pursuant to the ATM Program in 2022.
+Added: December 2022 Financing
+Added: In December 2022, we issued 126,815 shares of our common stock at a price of $5.52 per share and to certain investors in lieu of common stock, pre-funded warrants to purchase 6,213,776 shares of our common stock at a price of $5.51999 per pre-funded warrant.
+Added: The purchase price per share of each pre-funded warrant represents the per share offering price for the common stock, minus the $0.00001 per share exercise price of such pre-funded warrant.
+Added: Aggregate net proceeds were $32.6 million after deducting underwriting discounts and commissions and offering expenses of $2.4 million.
+Added: As of December 31, 2022, 271,739 pre-funded warrants had been exercised.
+Added: An additional 1,811,594 pre-funded warrants were exercised subsequent to December 31, 2022.
+Added: Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements.
+Added: Our future funding requirements will depend on many factors, including, but not limited to:
+Added: the scope, progress, results and costs of researching, developing and manufacturing our lead product candidates or any future product candidates, and conducting preclinical studies and clinical trials;
+Added: the timing of, and the costs involved in, obtaining regulatory approvals or clearances for our lead product candidates or any future product candidates;
+Added: the impact of any business interruptions to our operations or to those of our clinical sites, manufacturers, suppliers, or other vendors resulting from the COVID-19 pandemic or similar public health crisis;
+Added: the number and characteristics of any additional product candidates we develop or acquire;
+Added: the timing of any cash milestone payments if we successfully achieve certain predetermined milestones;
+Added: the cost of manufacturing our lead product candidate or any future product candidates and any products we successfully commercialize, including costs associated with building-out our manufacturing capabilities;
+Added: our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such agreements that we may enter into;
+Added: the expenses needed to attract and retain skilled personnel;
+Added: the costs associated with being a public company;
+Added: the timing, receipt and amount of sales of any future approved or cleared products, if any.
+Added: Further, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development activities.
+Added: We currently have no credit facility or committed sources of capital.
+Added: Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated product development programs.
+Added: The following table summarizes our cash flows for the periods indicated:
+Added: Year Ended December 31,
+Added: (in thousands)
+Added: Net cash provided by (used in):
+Added: Operating activities
+Added: Investing activities
+Added: Financing activities
+Added: Net (decrease) increase in cash and cash equivalents
+Added: Operating Activities
+Added: During the year ended December 31, 2022, cash used in operating activities of $46.4 million was attributable to our net loss of $53.0 million and net change of $4.3 million in our net operating assets and liabilities, partially offset by non-cash charges of $10.9 million for stock-based compensation charges, amortization of premium on investments and depreciation.
+Added: During the year ended December 31, 2021, cash used in operating activities of $34.1 million was attributable to our net loss of $46.3 million, offset by the net change of $5.6 million in our net operating assets and liabilities and non-cash charges of $6.6 million for stock-based compensation charges, amortization of premium on investments and depreciation.
+Added: Investing Activities
+Added: During the year ended December 31, 2022, cash used in investing activities of $27.2 million was attributable to $49.8 million of purchases of investments and $2.5 million of purchases of property and equipment, partially offset by $25.0 million of proceeds from maturities of investments.
+Added: During the year ended December 31, 2021, cash provided in investing activities of $6.0 million was attributable to proceeds of $7.2 million from maturities of investments, partially offset by $1.2 million of purchases of property and equipment.
+Added: Financing Activities
+Added: During the year ended December 31, 2022, cash provided by financing activities of $33.0 million was from $32.9 million in sales of common stock and pre-funded warrants to purchase common stock, net of issuance costs paid and $0.1 million from stock option exercises and purchases of shares under the 2019 Employee Stock Purchase Plan.
+Added: During the year ended December 31, 2021, cash provided by financing activities of $48.9 million was from $48.3 million in sales of common stock, net of issuance costs and $0.6 million from stock option exercises and purchases of shares under the 2019 Employee Stock Purchase Plan.
+Added: Contractual Obligations and Commitments
+Added: We lease our headquarters office space under a non-cancelable operating lease agreement.
+Added: The lease term commenced in May 2019 and was amended in February 2022 for an additional 35 months, through June 30, 2025.
+Added: We also lease lab space that can be terminated with 90 days' notice.
+Added: We expect to utilize this space through June 30, 2025.
+Added: See Note 8 of the financial statements for additional detail on our leases.
+Added: Total undiscounted aggregate future operating lease obligations under all of our operating leases as of December 31, 2022 are $5.1 million.
+Added: We have no material contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to the financial statements .
+Added: Our commitments include:
+Added: IASO Exclusive License Agreement.
+Added: As partial consideration for the exclusive license, IASO received an upfront payment of $2.5 million.
+Added: IASO is also eligible to receive up to mid double digit millions in milestone payments based upon the achievement of specified pre-clinical, development and regulatory milestones, and up to an additional low triple digit millions in milestone payments based upon achievement of specified sales milestones, for a total consideration, inclusive of the upfront payment, of up to $162 million, along with tiered mid-single digit royalties on future net sales for licensed products that may result from the IASO Agreement.
+Added: We also may sublicense through multiple tiers the rights granted to it by IASO under the IASO Agreement at any time, however, we must pay IASO a low double-digit percentage of any revenue obtained from sublicenses or options to third parties, subject to certain customary exclusions.
+Added: The IASO Agreement will continue on a country-by-country, licensed product-by-licensed product basis until the expiration of the royalty term as identified in the IASO Agreement, unless earlier terminated.
+Added: Licence and Supply Agreement.
+Added: Under the terms of the agreement, we were required to pay Oxford an upfront fee, as well as costs associated with initial vector manufacturing activities for a total cost of up to approximately $4.0 million.
+Added: Through December 31, 2022, we have paid Oxford $1.1 million.
+Added: Oxford is eligible to receive regulatory and sales milestones in the low tens of millions and royalties in the low single digits on net sales of products that incorporate the Oxford technology.
+Added: We can terminate the agreement at will upon advance written notice and subject to certain manufacturing slot cancellation fees.
+Added: Autolus Option and License Agreement.
+Added: In January 2023, we entered into an Option and License Agreement (Autolus Agreement) with Autolus Holdings (UK) Limited (Autolus), wherein the Autolus Agreement grants us a non-exclusive license to access Autolus' RQR8 technology in our CD19-CAR T cell therapy program, and subject to additional nominal option exercise fees, up to four additional targets.
+Added: Under the terms of the Autolus Agreement, we are required to pay Autolus an upfront license fee of $1.2 million, of which $0.8 million was paid in February 2023 and $0.1 million will be paid at the end of each calendar quarter in 2023.
+Added: Autolus is also eligible to receive regulatory milestones of up to $12 million for each licensed target, sales milestones of up to a total of $15 million and royalties in the low single digits on net sales of all products that incorporate the RQR8 technology.
+Added: The Autolus Agreement will continue on a country-by-country, licensed product-by-licensed product basis until the expiration of the royalty term as identified in the Autolus Agreement, unless earlier terminated.
+Added: We can terminate the Autolus Agreement at will upon advance written notice.
+Added: Each of Autolus and us may terminate the Agreement for a material, uncured breach or insolvency of the other party.
+Added: The Penn License Agreement.
+Added: Under the License Agreement, we are required to make milestone payments upon successful completion of certain development, regulatory and sales milestones on a product-by-product and geographical basis.
+Added: The payment obligations under the License Agreement are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and we will be required to make development milestone payments and royalty payments in connection with the sale of products developed under the License Agreement.
+Added: As of December 31, 2022, we are unable to estimate the timing or likelihood of achieving the milestones or making future product sales.
+Added: We were also obligated to pay $2.0 million annually for three years beginning August 2018 for funding to the laboratories of Drs.
+Added: Payne and Milone.
+Added: Under the License Agreement, we must use commercially reasonable efforts to develop and commercialize a product in each subfield.
+Added: During the term of the License Agreement until the first commercial sale of the first product, we are obligated to pay Penn a non-refundable, non-creditable annual license maintenance fee of $10,000.
+Added: We are required to pay certain milestone payments upon the achievement of specified clinical and commercial milestones.
+Added: Milestone payments are reduced by a certain percentage for the second product that achieves a milestone, by an additional percentage for the third product that achieves a milestone, and so on, for each subsequent product that achieves a milestone.
+Added: In the event that we are able to successfully develop and launch multiple products under the License Agreement, total milestone payments could be approximately $21.0 million.
+Added: Penn is also eligible to receive tiered royalties at percentage rates in the low single-digits, subject to an annual minimum royalty, on annual worldwide net sales of any products that are commercialized by us or our sublicensees that contain or incorporate, or are covered by, the intellectual property licensed by us.
+Added: To the extent we sublicense our license rights under the License Agreement, Penn would be eligible to receive tiered sublicense income at percentage rates in the mid-single to low double-digits.
+Added: We have also entered into a subscription and technology transfer agreement with Penn, pursuant to which we owed Penn an upfront subscription fee, which was paid in 2019, and a nominal non-refundable royalty on net sales of products, a portion of which will be credited toward milestone payments and royalties under this License Agreement.
+Added: Technology transfer activities would be at our cost and subject to agreement as to the technology to be transferred.
+Added: Sponsored Research Agreements.
+Added: The total estimated cost of the SRAs is $12.6 million, which satisfies the $2.0 million annual obligation under the Penn License Agreement.
+Added: As of December 31, 2022, the full cost has been incurred pursuant to these agreements.
+Added: Master Translational Research Services Agreement with Penn.
+Added: Under the Services Agreement, we have contracted for additional research and development services from various laboratories within Penn.
+Added: The Services Agreement will expire upon completion of the services for which we have engaged Penn under the Services Agreement.
+Added: In May 2020, the Company amended its Addendum with CAROT to expand access to vector manufacturing.
+Added: We may incur additional expenses up to $1.1 million through the remaining term of the CAROT Amended Addendum.
+Added: WuXi Manufacturing agreement .
+Added: We have the right to terminate the WuXi Agreement for convenience or other reasons specified in the WuXi Agreement upon prior written notice.
+Added: If we terminate the WuXi Agreement, we will be obligated to pay an early termination fee of up to $1.5 million.
+Added: Other Purchase Commitments.
+Added: In the normal course of business, we enter into various purchase commitments with third-party contract manufacturers for the manufacture and processing of our product candidates and related raw materials, contracts with contract research organizations for clinical trials and agreements with vendors for other services and products for operating purposes.
+Added: These agreements generally provide for termination or cancellation other than for costs already incurred.
+Added: Critical Accounting Policies and Significant Judgments and Estimates
+Added: Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles, or GAAP.
+Added: The preparation of these 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 financial statements, as well as the reported expenses incurred during the reporting periods.
+Added: 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.
+Added: Actual results may differ from these estimates under different assumptions or conditions.
+Added: We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
+Added: While our significant accounting policies are described in more detail in Note 2 to our financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
+Added: Research and Development Costs
+Added: We estimate costs of research and development activities conducted by service providers, which include the conduct of sponsored research, preclinical studies, contract manufacturing activities and clinical trial activities.
+Added: We record the estimated costs of research and development activities based upon the estimated amount of services provided and include these costs in the accrued and other current liabilities or prepaid expenses on the balance sheets and within research and development expense on the statements of operations.
+Added: We estimate these costs based on factors such as estimates of the work completed and budget provided and in accordance with agreements established with our collaboration partners and third-party service providers.
+Added: We make significant judgments and estimates in determining the accrued liabilities and prepaid expense balances in each reporting period.
+Added: As actual costs become known, we adjust our accrued liabilities or prepaid expenses.
+Added: We have not experienced any material differences between accrued costs and actual costs incurred since our inception.
+Added: Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to an impact on the costs to conduct clinical trials, labor costs we incur to attract and retain qualified personnel, and other operational costs.
+Added: Inflationary costs could adversely affect our business, financial condition and results of operations.
+Added: Emerging Growth Company Status
+Added: We are an emerging growth company, as defined in the JOBS Act.
+Added: Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
+Added: Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 for complying with new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
+Added: Section 107 of the JOBS Act provides that we can elect to opt out of the extended transition period at any time, which election is irrevocable.
+Added: We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.
+Added: As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
+Added: Subject to certain conditions, as an emerging growth company, we may rely on certain other exemptions and reduced reporting requirements, including without limitation (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements, known as the auditor discussion and analysis.
+Added: We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year in which we have total annual gross revenue of $1.235 billion or more;
+Added: (b) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering;
+Added: (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years;
+Added: or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
+Added: Recently Adopted Accounting Pronouncements
+Added: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize right of use assets and corresponding lease liabilities on the balance sheet for all leases (with the exception of short-term leases).
+Added: This update also requires lessees and lessors to disclose key information about their leasing transactions.
+Added: Topic 842 is effective for public companies for annual and interim periods beginning after December 15, 2018.
+Added: In June 2020, the FASB granted a one-year effective date delay for certain companies applying leases guidance to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
+Added: As permitted for emerging growth companies, we adopted Topic 842 under the private company transition guidance for the annual period ended December 31, 2022.
+Added: We adopted the standard effective January 1, 2022 using the modified retrospective approach to not restate comparative periods and recognized operating lease right-of-use assets and operating lease liabilities of $8.3 million and $8.3 million, respectively.
+Added: The adoption of Topic 842 did not result in a material impact to our statement of operations and comprehensive loss for the year ended December 31, 2022.
+Added: There was no impact to the financial statements for the prior periods presented due to the transition method elected.
+Added: We elected the package of practical expedients permitted under the transition guidance, which, among other things, allowed us to carry forward the historical lease classification.
+Added: Additionally, we elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes .
+Added: Quantitative and Qualitat ive Disclosures About Market Risk.
+Added: We are exposed to market risks in the ordinary course of our business.
+Added: These risks primarily include interest rate sensitivities.
+Added: We held cash and cash equivalents and investments of $106.5 million as of December 31, 2022.
+Added: We generally hold our cash in interest-bearing money market treasury fund accounts and our investments are available-for-sale debt securities, which are invested in U.S.
+Added: government securities.
+Added: Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S.
+Added: interest rates.
+Added: Due to the short-term maturities of our cash equivalents, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents.
+Added: Declines in interest rates, however, would reduce future investment income.
+Added: We do not have any foreign currency or derivative financial instruments.
+Added: Inflation generally affects us by increasing our cost of labor and program costs.
+Added: Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to an impact on the costs to conduct clinical trials, labor costs we incur to attract and retain qualified personnel, and other operational costs.
+Added: Inflationary costs could adversely affect our business, financial condition and results of operations.
+Added: Financial Statement s and Supplementary Data.
+Added: The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report.
+Added: An index of those financial statements is found in Item 15.
+Added: Changes in and Disagreements with Accou ntants on Accounting and Financial Disclosure.
+Added: There has been no change of accountants nor any disagreements with accountants on any matter of accounting principles or practices of financial disclosure required to be reported under this Item.
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