Chemomab Therapeutics Ltd. 10-K

Item 5. Market for Registrant’s ADSs, Related Stockholder Matters and Issuer Purchases of Equity Securities The ADSs, representing our ordinary shares, have been trading on Nasdaq under the symbol “ANCN” since February 12, 2019. Prior to that date, there was no public trading market for the ADSs. Our ordinary shares were traded on the Tel Aviv Stock Exchange (“TASE”) until June 2019, under the symbol “ANCN”. As of February 18, 2020, there were seven holders of record of our ordinary shares. Item 6. Selected Financial Data Not applicable. 68 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis, particularly with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should read “Risk Factors” in Item 1A of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview We are a preclinical biotechnology company committed to discovering and developing new cancer therapies designed to target the products of mutated genes that are drivers of human malignancies. Throughout most of 2019, we ran a Phase 2 study, designated Codex, evaluating inodiftagene vixtepasmid in patients with BCG-unresponsive NMIBC. However, in November 2019, after a thorough evaluation of data, we determined there was a low probability of surpassing the pre-defined futility threshold at the planned interim analysis of the study, and announced the discontinuation of the study and of active clinical development of inodiftagene vixtepasmid. On September 13, 2019, we entered into a Collaboration and License Agreement (the “License Agreement”) with ADT Pharmaceuticals, LLV (“ADT”), pursuant to which we acquired the rights to two small molecule developmental programs targeting oncogenic pathways, focused on pan-mutant RAS inhibitors (our “pan-RAS-inhibitor program”) and inhibitors of PDE10 and the β-catenin pathway, respectively. Under the License Agreement, we are primarily responsible for the research, development, manufacturing, regulatory and commercial activities with respect to the compounds conveyed and contemplated thereunder. Our operations are focused on the successful development, regulatory approval and commercialization of products derived from such compounds. For further information regarding our business and operations, see “Item 1. Business.” Our corporate structure consists of a parent company, Anchiano Therapeutics Ltd. (formerly BioCancell Ltd.), incorporated in Israel, which wholly owns a subsidiary, Anchiano Therapeutics Israel Ltd. (formerly BioCanCell Therapeutics Israel Ltd.), incorporated in Israel, which itself wholly owns a subsidiary, Anchiano Therapeutics, Inc. (formerly BioCanCell USA, Inc.), incorporated in Delaware. We currently maintain offices in Cambridge, MA. License Agreements In September 2019, we publicly announced that we had entered into the License Agreement with ADT. Pursuant to the terms and conditions set forth in the License Agreement, we mutually agreed to use commercially reasonable efforts to conduct research and development activities of novel small-molecule inhibitors (RAS and PDE10/β-catenin). As part of the arrangement, we are primarily responsible for the research, development, manufacturing and regulatory activities and ADT will assist with the research activities as necessary in exchange for a quarterly fee. In connection with the License Agreement, ADT also granted us exclusive rights to research, develop, manufacture and commercialize the aforementioned compounds relating to patents owned by ADT and any products containing such compounds worldwide. In consideration for the rights granted under the License Agreement, we paid ADT a $3 million upfront fee in 2019, and agreed to pay to ADT (i) a fee upon transfer of the know-how and intellectual property rights to us; and (ii) additional payments, including milestone and royalty payments. We have the ability to terminate the License Agreement at any time in its entirety or on a compound-by-compound basis after providing 90 days written notice to ADT. Since there is no alternative future use for the upfront fee, we accounted for it as a research and development expense. In April 2020, we notified Yissum Technology Transfer Company of the Hebrew University Ltd. (“Yissum”) that as a result of our previous decision to discontinue clinical development of inodiftagene, we will cease payments to maintain intellectual property ("IP") we licensed from Yissum under the licensing and development agreement between the parties. In August 2020 we agreed with Yissum on termination of the licensing and development agreement, we destroyed or returned all IP documentation to Yissum and we and Yissum mutually waived, released and discharged each other from all claims of any type. Recent Events On July 2, 2020, our Chief Executive Officer Dr. Frank Haluska sent a letter to the Chairman of our board of directors outlining Dr. Haluska’s belief that events had occurred that were sufficient to trigger his ability to resign for “Good Reason” under his employment agreement. Our board of directors informed Dr. Haluska that it disagreed with the letter’s assertions regarding “Good Reason” and treated the letter as a constructive resignation effective as of July 2, 2020. On July 12, 2020, Dr. Frank Haluska tendered his written resignation from our board of directors, effective immediately. Dr. Haluska referenced the matters articulated in his letter of July 2, 2020, and the Company’s response and actions following receipt of the letter as the basis for his resignation from the Board. It is our position, based on our legal counsel, that the CEO resigned without Good Reason, is not entitled to severance, and we will contest any and all claims for severance. Prior to the appointment of Mr. Neil Cohen as CEO in October 2020 (see below) our board of directors handled all matters related to CEO duties. 69 In light of business circumstances, and in order to conserve cash and preserve optionality while alternatives are being identified and assessed, we made a decision during July 2020 to undertake reductions in headcount and other cost saving measures. These included plans to temporarily reduce its internal and external research and development work on the Company’s pan-RAS-inhibitor program until there is greater clarity regarding Anchiano’s ability to fund the program. We continue to undertake actions for the promotion of the program and its assets and towards strengthening the protection of all related intellectual property. We also engaged Oppenheimer & Co. to act as our financial advisor to review strategic alternatives focused on maximizing shareholder value. This has resulted in the contemplated merger with Chemomab On October 20, 2020, we appointed Mr. Neil Cohen as Chief Executive Officer of Anchiano. Mr. Cohen continues to serve as a member of our board of directors. The Company also appointed Andrew Fine to serve as our Chief Financial Officer. Mr. Fine previously served as our Interim Chief Financial Officer pursuant to a subcontracting agreement. On December 14, 2020 we entered into an Agreement and Plan of Merger with Chemomab, an Israeli limited company and a clinical-stage biotech company focusing on the discovery and development of innovative therapeutics for fibrosis-related diseases with high unmet need, which included the proposed Merger of CMB Acquisition Ltd., a wholly owned subsidiary of ours, with Chemomab as the surviving company, subject to shareholder approval. At the effective time of the Merger, we anticipate that each share of Chemomab common stock outstanding immediately prior to the effective time of the Merger will be converted into the right to receive approximately 1,028.99 shares of Anchiano common stock, subject to adjustment to account for a reverse split of Anchiano common stock at a reverse split ratio to be determined by Anchiano’s board of directors, subject to shareholder approval, and to be implemented prior to the consummation of the Merger. Immediately following the merger, and prior to any private investment as part of the merger, the former Chemomab security holders will own approximately 90% of the aggregate number of shares of Anchiano common stock and the security holders of Anchiano as of immediately prior to the Merger will own approximately 10% of the aggregate number of shares of Anchiano common stock on a fully diluted basis. 70 Components of Operating Results Revenues To date, we have not generated any revenue. We do not expect to receive any revenue unless and until we obtain regulatory approval and commercialize a future product candidate, or until we receive revenue from a collaboration such as a co-development or out-licensing agreement. There can be no assurance that we will receive such regulatory approvals, and if a future product candidate is approved, that we will be successful in commercializing it. Research and Development Expenses Research and development activities are our primary focus, despite our strategic decision during 2020 to temporarily reduce development of the Company’s RAS program and to institute various cost savings measures to preserve liquid resources. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We do not believe that it is possible at this time to accurately project total expenses required for us to reach commercialization of our product candidates. Due to the inherently unpredictable nature of preclinical and clinical development, we are unable to estimate with certainty the costs we will incur and the timelines that will be required in the continued development and approval of our product candidates. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. In addition, we cannot forecast which product candidates may be subject to future collaborations, if and when such arrangements will be entered into, if at all, and to what degree such arrangements would affect our development plans and capital requirements. Should our strategic merger initiatives not come to fruition we expect our research and development expenses to increase over the next several years as our clinical programs progress and as we seek to initiate clinical trials of additional product candidates. We also expect to incur increased research and development expenses as we selectively identify and develop additional product candidates. Research and development expenses include the following: · employee-related expenses, such as salaries and share-based compensation; · expenses relating to outsourced and contracted services, such as CROs, external laboratories and consulting, research and advisory services; · supply, development and manufacturing costs relating to clinical trial materials; · expenses incurred in operating our laboratories and small-scale equipment; · preclinical study expenses and related developmental costs; and · costs associated with regulatory compliance. We recognize research and development expenses as we incur them. General and Administrative Expenses General and administrative expenses consist primarily of personnel costs, including share-based compensation related to directors and employees, facility costs, patent application and maintenance expenses, and external professional service costs, including legal, accounting, audit, finance, business development, investor relations and human resource services, and other consulting fees. 71 Finance Expenses, Net Finance expenses, net, consisted primarily of finance expenses recorded due to revaluation of investor warrants at fair value during a period where these could not be classified within equity (for more details, see Note 6c in “Item 8. Financial Statements and Supplementary Data” below), offset by interest income. Restructuring Expenses We have recognized restructuring provisions for the direct expenditures arising from restructuring initiatives, where the plans are sufficiently detailed and where appropriate communication to those affected has been made To this end, we have recorded restructuring expenses comprised principally of contract termination costs and employee severance and associated termination costs related to the reduction of our workforce. One-time termination benefits are expensed at the date the employees are notified, unless the employees must provide future services beyond a minimum retention period, in which case the benefits are expensed ratably over the future service periods. A provision for contract termination costs, in which a contract is terminated or the entity will continue to incur costs under a contract for its remaining term without economic benefit (an onerous contract), is recognized only when the contract is terminated or when the entity permanently ceases using the rights granted under the contract. Income Taxes We have yet to generate taxable income in Israel. We have historically incurred operating losses resulting in carry forward tax losses totaling approximately $117 million as of December 31, 2020. We anticipate that we will continue to generate tax losses for the foreseeable future and that we will be able to carry forward these tax losses indefinitely to future taxable years. Accordingly, we do not expect to pay taxes in Israel until we have taxable income after the full utilization of our carry forward tax losses. We have provided a full valuation allowance with respect to the deferred tax assets related to these carry forward losses. Results of Operations Below is a summary of our results of operations for the periods indicated: Year ended December 31, 2020 2019 Operating Expenses: Research and development $ 3,783 $ 13,303 General and administrative 7,180 6,245 Restructuring expense 749 3,350 Total operating expenses 11,712 22,898 Finance (income) expense,net (103 ) 4,226 Net loss and comprehensive loss $ 11,609 $ 27,124 Loss per share basic and diluted $ 0.31 $ 0.79 Weighted average number of shares outstanding used in computation of basic and diluted loss per share in thousands 37,099 34,446 Our results of operations have varied in the past and can be expected to vary in the future due to numerous factors. We believe that period-to-period comparisons of our operating results are not necessarily meaningful and should not be relied upon as indications of future performance. 72 Year ended December 31, 2020 Compared to the Year Ended December 31, 2019 Research and development expenses Research and development expenses decreased by approximately $9.5 million, 72%, to approximately $3.8 million for the year ended December 31, 2020 compared to approximately $13.3 million for the year ended December 31, 2019. The decrease resulted primarily from the restructuring decisions made in July 2020 and the related decision to temporarily reduce our research activities on the RAS programs and sever our research and development employees while continuing to undertake all necessary actions for the maintenance of the program, its assets and all related intellectual property and licenses.. General and administrative expenses General and administrative expenses increased by approximately $1.0 million, or 16%, to approximately $7.2 million for the year ended December 31, 2020 compared to approximately $6.2 million for the year ended December 31, 2019. The increase was primarily due to increases in professional fees, insurance and manpower expenses, offset by a decrease in share-based payment. Restructuring expenses Restructuring expenses decreased by approximately $2.6 million, or 78%, to approximately $0.7 million for the year ended December 31, 2020 compared to approximately $3.4 million for the year ended December 31, 2019 In November 2019, we decided to discontinue our Phase 2 Codex study in patients with BCG-unresponsive NMIBC. In connection with this decision, we are required to make certain payments under contracts with CROs and with other manufactures of the drug in order to terminate the contracts and close the trials. Moreover the restructuring plan included a reduction in the workforce of seven employees. Separately, in January 2020 our board of directors approved management’s recommendation to close our office and laboratories located in Israel. The closure resulted in the termination of employment of the Company’s remaining Israeli employees. In July 2020, we made the strategic decision to temporarily reduce development of our RAS program and to institute various cost savings measures to preserve liquid resources. At the same time, we continued to actively pursue the maintenance of our Licensing Agreement with ADT and protection of our intellectual property assets. The cost saving activities included contract termination with outsourced contractors working on clinical activities and to whom we are required to make certain payments to terminate the contracts. Financing expense, net Financing expense, net decreased by approximately $4.3 million, or 102%, to reflect financing income of approximately $0.1 million for the year ended December 31, 2020 compared to a financing expense of approximately $4.2 million for the year ended December 31, 2019. Financing income for the year ended December 31, 2020 was primarily interest income, foreign currency exchange rate gains. The financing costs in 2019 were primarily due to revaluation of investor warrants at fair value during a period where these could not be classified within shareholders’ equity, due to the following circumstances: On initial measurement, the warrants together with their price protections were classified as equity instruments that are not subsequently measured at fair value, and thus we allocated the proceeds according to the relative fair value of the instruments. However, we changed our functional currency from NIS to USD as of January 1, 2019. Due to this change from this date, the exercise price of the warrants was no longer denominated in our functional currency and the warrants were therefore not considered indexed to our own stock according to ASC 815-40 and no longer met all the criteria to be classified within equity. Therefore, the warrants were reclassified as a liability at their fair value as of January 1, 2019, and any difference was accounted for as an adjustment to equity. Upon our Nasdaq initial public offering of February 14, 2019, the warrants’ exercise price currency was changed to USD. As a result, the warrants were reclassified within equity. Consequently, the warrants were measured at fair value from January 1, 2019 until February 14, 2019, with resulting finance expenses of $4.6 million, until they were reclassified within equity. 73 Income tax Income tax remained at $0 million for the year ended December 31, 2020 as for the year ended December 31, 2019. Prior to 2019 our U.S. subsidiary provided us with general and clinical trial management services. For these services, our US subsidiary was compensated on a cost-plus basis, and recorded income taxes accordingly. In 2019, following our acquisition of the programs from ADT, our U.S. subsidiary ceased to provide us with general clinical trial management services and expenses related to the ADT programs are not part of the cost-plus compensation and accordingly our US subsidiary does not have taxable income for the current year. Cash Flows The table below shows a summary of our cash flow activities for the periods indicated: Year ended December 31, Increase/(decrease) 2020 2019 $ % (in thousands) Net cash used in operating activities $ (12,712 ) $ (16,458 ) $ (3,746 ) -23 % Net cash provided by (used in) investing activities 102 (95 ) (197 ) -207 % Net cash provided by financing activities 297 26,621 (26,324 ) -99 % Net increase (decrease) in cash, cash equivalents and restricted cash $ (12,313 ) $ 10,068 $ (22,381 ) -222 % Operating activities Net cash used in operating activities decreased by approximately $3.7 million, to approximately $12.7 million for the year ended December 31, 2020 compared to approximately $16.5 million for the year ended December 31, 2019. This decrease is primarily due to the decrease in clinical trial expenses, manufacturing expenses, manpower expenses and as offset by restructuring expenses. Investing activities Net cash used in investing activities decreased by approximately $0.2 million, to reflect approximately $0.1 million of net cash provided by investing activities for the year ended December 31, 2020 compared to $0.1 million of net cash used in investing activities for the year ended December 31, 2019. This decrease was primarily due to the sale of laboratory equipment from our now closed facility in Israel, partially offset by purchases of fixed assets. Financing activities Net cash provided by financing activities decreased by approximately $26.3 million, to approximately $0.3 million for the year ended December 31, 2020 compared to $26.6 million for the year ended December 31, 2019. The net cash provided by financing activities for the year ended December 31, 2020 reflects an adjustment of share issuance expenses that were expensed in 2019 in relation to our initial public offering in the first quarter of 2019. We had no other financing activities in 2020. Effects of Currency Fluctuation Currency fluctuations could affect us through increased or decreased costs, mainly for goods and services acquired outside of the United States. Currency fluctuations have not had a material effect on our results of operations during the years ended December 31, 2020 or 2019. Off-Balance Sheet Arrangements We have not entered into any transactions with unconsolidated entities as to which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that would expose us to material continuing risks, contingent liabilities or any other obligation under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support. 74 Critical Accounting Policies The discussion and analysis of our financial condition and results of operations is based on our financial statements, which we prepared in accordance with U.S. GAAP. Comparative figures, which were previously presented and publicly reported in accordance with IFRS as issued by the International Accounting Standards Board, have been adjusted as necessary to be compliant with our policies under U.S. GAAP. The preparation of our 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 during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail throughout this section. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Financial Derivatives We evaluate all financial instruments issued in connection with its equity offerings when determining the proper accounting treatment for such instruments in our financial statements. We consider a number of generally accepted accounting principles under U.S. GAAP to determine such treatment and evaluates the features of the instrument to determine the appropriate accounting treatment. We utilize the Probability Weighted Expected Return Method (PWERM), Option Pricing Model (OM) or other appropriate methods to determine the fair value of its derivative financial instruments such as the warrant liability. For financial instruments indexed to and potentially settled in our shares that are determined to be classified as liabilities on the consolidated balance sheet, changes in fair value are recorded as a gain or loss in our consolidated statement of operations with the corresponding amount recorded as an adjustment to the liability on its consolidated balance sheet. Accrued Expenses As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees payable to clinical research organizations and investigative sites in connection with clinical trials, vendors in connection with preclinical development activities, vendors related to product manufacturing, development, and distribution of clinical materials; and professional service fees for consulting and related services. We base our expense accruals related to clinical trials on our estimates of the services received and efforts expended pursuant to our contract arrangements. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows and expense recognition. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly. Our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in our reporting changes in estimates in any particular period. 75 Recently-Issued Accounting Pronouncements Certain recently-issued accounting pronouncements are discussed in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report. Liquidity and Capital Resources Following several fundraising rounds in prior years, in June 2018, we completed a $22.9 million fundraising round from investors in the United States and Israel, as well as existing shareholders, led by Shavit Capital Funds. In consideration for the investment, we issued 5,960,787 ordinary shares (constituting approximately 38% of our issued and outstanding share capital after completion of the transaction) at a price per share of approximately $3.842, as well as warrants to acquire additional shares equal to 80% of the shares issued, at an exercise price per share of NIS 16.20 (approximately $4.32). The warrants are exercisable for five years and may be exercised on a cashless basis. In addition, we granted the investors price protection rights (to shares and warrants) in the event of a future share issuance where the price does not increase by at least approximately 42.86% over the price per share in the fundraising (or is less than the adjusted price per share, if the price has already been adjusted). In February 2019, we raised $30.5 million in our Nasdaq initial public offering, allocating 2,652,174 ADSs, each representing five ordinary shares. In accordance with price protection rights granted in 2018 and activated in the offering, we allocated an additional 8,262,800 ordinary shares (equivalent to 1,652,560 ADSs) to rights holders and adjusted their warrants to be exercisable for an additional 6,207,330 ordinary shares (equivalent to 1,241,466 ADSs). As shown in the accompanying consolidated financial statements, we have incurred losses and cash flow deficits from operations since inception, resulting in an accumulated deficit at December 31, 2020 of approximately $117 million. We have financed operations to date primarily through public and private placements of equity securities. We anticipate that we will continue to incur net losses for the foreseeable future. We believe that our existing cash and cash equivalents will only be sufficient to fund our projected cash needs until the completion of the contemplated merger with Chemomab during the first half of 2021. Accordingly, these factors, among others, raise substantial doubt about our ability to continue as a going concern. To meet future capital needs, and should the contemplated merger with Chemomab not be completed, we would need to raise additional capital through equity or debt financing or other strategic transactions. However, any such financing may not be on favorable terms or even available to us. Our failure to obtain sufficient funds on commercially acceptable terms when needed would have a material adverse effect on our business, results of operations and financial condition. The forecast of cash resources is forward-looking information that involves risks and uncertainties, and the actual amount of our expenses could vary materially and adversely as a result of a number of factors. We have based our estimates on assumptions that may prove to be wrong, and our expenses could prove to be significantly higher than we currently anticipate. Current Outlook We estimate that our current cash resources will allow us to complete the contemplated merger with Chemomab during the first half of 2021, meaning that should the merger not be completed further fundraising will be required in order to identify and pursue alternative strategic partnerships or complete the research and development of our product candidates. Should the contemplated merger not be completed we would expect to satisfy our future cash needs through capital raising from the public, private investors and institutional investors, such as through the public offering of ordinary shares that we completed in February 2019. We may also engage with a partner in order to share the costs associated with the development and manufacturing of our product candidates or seek to enter an out-licensing agreement. Developing drugs, conducting preclinical and clinical trials, obtaining commercial manufacturing capabilities and commercializing products is expensive and we will need to raise substantial additional funds to achieve our strategic objectives. We will require significant additional financing in the future to fund our operations, including if and when we progress into clinical trials of our product candidates, obtain regulatory approval for one or more of our product candidates, obtain commercial manufacturing capabilities and commercialize one or more of our product candidates. Our future capital requirements will depend on many factors, including, but not limited to: 76 · the progress and costs of our preclinical and clinical trials and other research and development activities; · the scope, prioritization and number of our preclinical and clinical trials and other research and development programs; · the amount of revenues and contributions we receive under future licensing, collaboration, development and commercialization arrangements with respect to our product candidates; · the costs of development and expansion of our operational infrastructure; · the costs and timing of obtaining regulatory approval for one or more of our product candidates; · our ability, or that of our collaborators, to achieve development milestones, marketing approval and other events or developments under potential future licensing agreements; · the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; · the costs and timing of securing manufacturing arrangements for clinical or commercial production; · the costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities ourselves; · the costs of acquiring or undertaking development and commercialization efforts for any future products, product candidates or technology; · the magnitude of our general and administrative expenses; and · any additional costs that we may incur under future in- and out-licensing arrangements relating to one or more of our product candidates. Until we can generate significant recurring revenues, and should the contemplated merger not be completed, we would expect to satisfy our future cash needs through capital raising or by out-licensing and/or co-developing applications of one or more of our product candidates. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one or more of our product candidates and make necessary change to our operations to reduce the level of our expenditures in line with available resources. We are a development-stage company and it is not possible for us to predict with any degree of accuracy the outcome of our research and development efforts. As such, it is not possible for us to predict with any degree of accuracy any significant trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our net loss, liquidity or capital resources, or that would cause financial information to not necessarily be indicative of future operating results or financial condition. However, to the extent possible, certain trends, uncertainties, demands, commitments and events are described in this item. Item 8. Financial Statements and Supplementary Data See the Index to Consolidated Financial Statements on Page F-1 attached hereto. 77 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.