What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-16 · 73 added, 56 removed, 232 unchanged (36% of the section changed)

12 unchanged sentences

Anti-tumor activity for bezuclastinib was observed in both single agent and combination settings, including in combination with sunitinib, an approved treatment option for GIST patients.

Clinical data from this trial have been presented at several scientific conferences, including most recently by Cogent at the 2020 annual CTOS meeting, and previously by Plexxikon Inc.

(“Plexxikon”), a member of the Daiichi Sankyo Group, at the 2018 annual American Society of Clinical Oncology (“ASCO”) meeting and the 2017 annual Connective Tissue Oncology Society (“CTOS”) meeting.

Clinical data from this trial have been published in the Journal of American Medical Association (“JAMA”) and have been presented at several scientific conferences, including most recently by Cogent at the 2020 annual Connective Tissue Oncology Society (“CTOS”) meeting, and previously by Plexxikon Inc.

(“Plexxikon”), a member of the Daiichi Sankyo Group, at the 2018 annual American Society of Clinical Oncology (“ASCO”) meeting and the 2017 annual CTOS meeting.

Within the group of 15 heavily pre-treated GIST patients who received the combination of bezuclastinib and sunitinib, and who had not received prior treatment with bezuclastinib, the confirmed objective response rate (“ORR”) was twenty percent, including two partial responses and one complete response, while the estimated median progression free survival (“mPFS”) for this group was twelve months.

Four subjects continued to receive bezuclastinib via individual patient INDs beyond the conclusion of the trial.

Based on these results, we are planning an FDA interaction to explore further clinical development of bezuclastinib in GIST patients.

Food and Drug Administration (“FDA”) has granted orphan drug designation to bezuclastinib for the treatment of GIST.

Enrollment in a randomized clinical trial evaluating the safety, tolerability, and efficacy of bezuclastinib in combination with sunitinib in imatinib-resistance GIST patients is expected to begin in the second half of 2021.

In October 2021, we presented preclinical data in a virtual poster at the 2021 AACR-NCI-EORTC Virtual International Conference on Molecular Targets and Cancer Therapeutics that identified bezuclastinib as a differentiated KIT inhibitor with unique selectivity to KIT D816V and minimal evidence of brain penetration.

Based on these results and recent positive interactions with the U.S.

Food and Drug Administration (“FDA”), we remain on track and expect to initiate a randomized clinical trial, known as PEAK, evaluating the safety, tolerability, and efficacy of bezuclastinib in combination with sunitinib in imatinib-resistant GIST patients in the second half of 2021.

The FDA has granted orphan drug designation to bezuclastinib for the treatment of GIST.

In addition to continuing the development of bezuclastinib in GIST patients, we are pursuing development of the compound in patients living with Advanced Systemic Mastocytosis (“AdvSM”) and Non-Advanced Systemic Mastocytosis (“Non-AdvSM”).

4 unchanged sentences

Bezuclastinib was specifically designed to selectively inhibit KIT mutations on exon 17, including KIT D816V, and we have expanded the clinical development program to include clinical trials in SM patients.

The FDA has cleared our Investigational New Drug (“IND”) submission for a Phase 2 trial in patients with AdvSM, now known as APEX, which was initiated in the second quarter of 2021.

The FDA has cleared our Investigational New Drug (“IND”) submission for a Phase 2 trial in patients with AdvSM, known as APEX, which was initiated in the second quarter of 2021.

We expect to report preliminary data from patients treated in the APEX trial in the first half of 2022.

Following recent positive interactions with FDA, we remain on track and expect to initiate a clinical trial in Non-AdvSM patients, known as SUMMIT, in the second half of 2021.

Following recent positive interactions with FDA, we have initiated a clinical trial in Non-AdvSM patients, known as SUMMIT, in the fourth quarter of 2021.

By monitoring relevant biomarkers of disease activity, including levels of serum tryptase, we expect to rapidly assess bezuclastinib activity in SM patients.

In November 2021, through a partnership with Serán Biosciences, we announced the development of an updated formulation of bezuclastinib.

This formulation is expected to reduce the number of daily tablets, improving the overall patient experience.

The updated formulation will be used in the PEAK trial.

Worldwide rights to develop and commercialize bezuclastinib, as well as an additional selective KIT inhibitor, CGT0206, are exclusively licensed from Plexxikon.

3 unchanged sentences

Since our inception in 2014, we have focused significant efforts and financial resources on establishing and protecting our intellectual property portfolio, conducting research and development of our product candidates, manufacturing drug product material for use in preclinical studies and clinical trials, staffing our company, and raising capital.

We do not have any products approved for

sale and have not generated any revenue from product sales.

We do not have any products approved for sale and have not generated any revenue from product sales.

To date, we have funded our operations primarily with proceeds from the sales of preferred stock, our public offerings of our common stock and private placements.

On July 6, 2020, we issued a contingent value right (“CVR”), which was distributed to stockholders of record as of the close of business on July 6, 2020, and prior to the issuance of any shares to acquire Kiq or sold to the PIPE investors.

In November 2020, in partial settlement of the CVR obligation, we issued 707,938 shares of common stock.

6 unchanged sentences

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates.

Our net losses were $28.3 million for the six months ended June 30, 2021 compared to net losses of $13.5 million for the six months ended June 30, 2020.

As of June 30, 2021, we had an accumulated deficit of $227.0 million.

Our net losses were $47.4 million for the nine months ended September 30, 2021 compared to net losses of $63.5 million for the nine months ended September 30, 2020.

As of September 30, 2021, we had an accumulated deficit of $246.1 million.

We expect to continue to incur significant expenses and operating losses for at least the next several years.

We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

continue additional clinical trials for our product candidates;

initiate and increase enrollment for our existing and planned clinical trials for our product candidates;

continue to discover and develop additional product candidates, including through the creation of our research team in Boulder, CO;

14 unchanged sentences

Even if we are able to generate product sales, we may not become profitable.

If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of June 30, 2021, we had cash and cash equivalents of $218.1 million.

As of September 30, 2021, we had cash and cash equivalents of $202.9 million.

Based on our current plans, we expect that our current cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into 2024.

78 unchanged sentences

Results of Operations

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

The following table summarizes our results of operations for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

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

The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

(in thousands)

3 unchanged sentences

General and administrative

Acquired in-process research and development

Total operating expenses

2 unchanged sentences

Interest income

Gain on disposal of long-lived assets

Change in fair value of CVR liability

1 unchanged sentence

Collaboration Revenue

No collaboration revenue was recognized during the three months ended June 30, 2021.

Collaboration revenue recognized during the three months ended June 30, 2020 was $0.5 million related to our legacy assets.

No collaboration revenue was recognized during the three months ended September 30, 2021.

Collaboration revenue recognized during the three months ended September 30, 2020 was $0.3 million related to our legacy assets.

All performance obligations were completed and all remaining revenue was recognized in 2020.

Research and Development Expenses

Research and development expenses were $12.4 million for the three months ended June 30, 2021, compared to $5.1 million for the three months ended June 30, 2020.

The increase in research and development expense during the three months ended June 30, 2021 compared to the three months ended June 30, 2020 is driven by the development of bezuclastinib .

Increases in headcount also resulted in increased salary and benefit costs.

Research and development expenses were $14.8 million for the three months ended September 30, 2021, compared to $5.0 million for the three months ended September 30, 2020.

The increase in research and development expense during the three months ended September 30, 2021 compared to the three months ended September 30, 2020 is driven by the manufacture and development of bezuclastinib, as well as higher personnel costs driven by an increase in headcount.

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2021 were $4.9 million, compared to $2.8 million for the three months ended June 30, 2020.

The increase in general and administrative expenses was primarily due to increases in headcount, resulting in increased salary and benefit costs.

General and administrative expenses for the three months ended September 30, 2021 were $5.0 million, compared to $5.6 million for the three months ended September 30, 2020.

The decrease in general and administrative expenses was primarily due to higher professional and consultant fees in the prior year based on the completion of various business transactions occurring during the three-months ended September 30, 2020.

Acquired In-process Research and Development (“IPR&D”)

No acquired IPR&D was expensed during the three months ended September 30, 2021.

During the three months ended September 30, 2020, we expensed acquired IPR&D, with an estimated fair value of $46.9 million, including $2.1 million of associated transaction costs, in connection with the Kiq Acquisition.

Interest Income

Interest income for the three months ended June 30, 2021 and June 30, 2020 was $0.1 million, respectively.

Interest income for the three months ended September 30, 2021 and September 30, 2020 was $0.1 million, respectively.

The impact of higher average invested balances in the current year was offset by lower interest rates in the current year compared to the prior period.

Other income, net was $0.6 million in the three months ended June 30, 2021, compared to $0.1 million for the three months ended June 30, 2020.

Gain on disposal of long-lived assets

No disposals of long-lived assets occurred in the three months ended September 30, 2021.

During the three months ended September 30, 2020, we recorded a gain on disposal of long-lived assets of $7.5 million, representing the net proceeds of the sale of BOXR Platform assets as well as the proceeds from the sale of other long-lived assets.

Other income, net was $0.6 million in the three months ended September 30, 2021, compared to $0.2 million for the three months ended September 30, 2020.

Other income represents sublease income resulting from the sublease of a portion of our leased office space.

Change in Fair Value of CVR Liability

There was no change in fair value of CVR liability for the three months ended June 30, 2021 as any settlement of the remaining liability will be a cash settlement.

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

The following table summarizes our results of operations for the six months ended June 30, 2021 and 2020 :

Six Months Ended June 30,

There was no change in fair value of CVR liability for the three months ended September 30, 2021 as any settlement of the remaining liability will be a cash settlement.

Comparison of the Nine Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

(in thousands)

3 unchanged sentences

General and administrative

Acquired in-process research and development

Total operating expenses

2 unchanged sentences

Interest income

Gain on disposal of long-lived assets

Change in fair value of CVR liability

1 unchanged sentence

Collaboration Revenue

No collaboration revenue was recognized during the six months ended June 30, 2021.

Collaboration revenue recognized during the six months ended June 30, 2020 was $7.6 million related to our legacy assets.

No collaboration revenue was recognized during the nine months ended September 30, 2021.

Collaboration revenue recognized during the nine months ended September 30, 2020 was $7.9 million related to our legacy assets.

All performance obligations were completed and all remaining revenue was recognized in 2020.

Research and Development Expenses

Research and development expenses were $20.6 million for the six months ended June 30, 2021, compared to $14.6 million for the six months ended June 30, 2020.

The increase in research and development expense during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 is driven by increased costs associated with the development of bezuclastinib .

Increases in headcount also resulted in increased salary and benefit costs.

Research and development expenses were $35.4 million for the nine months ended September 30, 2021, compared to $19.6 million for the nine months ended September 30, 2020.

The increase in research and development expense during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 is driven by increased costs associated with the manufacture and development of bezuclastinib, as well as higher personnel costs driven by an increase in headcount.

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2021 were $9.5 million, compared to $6.5 million for the six months ended June 30, 2020.

The increase in general and administrative expenses was primarily due to increases in headcount, resulting in increased salary and benefit costs.

General and administrative expenses for the nine months ended September 30, 2021 were $14.5 million, compared to $12.1 million for the nine months ended September 30, 2020.

The increase in general and administrative expenses was primarily due to higher personnel costs driven by an increase in headcount.

Acquired In-process Research and Development (“IPR&D”)

No acquired IPR&D was expensed during the nine months ended September 30, 2021.

During the nine months ended September 30, 2020, we expensed acquired IPR&D, with an estimated fair value of $46.9 million, including $2.1 million of associated transaction costs, in connection with the Kiq Acquisition.

Interest Income

Interest income for the six months ended June 30, 2021 was $0.2 million, compared to $0.1 million for the six months ended June 30, 2020.

Interest income for the nine months ended September 30, 2021 was $0.4 million, compared to $0.1 million for the nine months ended September 30, 2020.

The impact of higher average invested balances in the current year was partially offset by lower interest rates in the current year compared to the prior period.

Other income, net was $1.2 million in the six months ended June 30, 2021, compared to $0.1 million for the six months ended June 30, 2020.

Gain on disposal of long-lived assets

No disposals of long-lived assets occurred in the nine months ended September 30, 2021.

During the nine months ended September 30, 2020, we recorded a gain on disposal of long-lived assets of $7.5 million, representing the net proceeds of the sale of BOXR Platform assets as well as the proceeds from the sale of other long-lived assets.

Other income, net was $1.8 million in the nine months ended September 30, 2021, compared to $0.2 million for the nine months ended September 30, 2020.

Other income represents sublease income resulting from the sublease of a portion of our leased office space.

Change in Fair Value of CVR Liability

The change in fair value of CVR liability for the six months ended June 30, 2021, represents the remeasurement of the CVR liability as a result of changes in our stock price prior to issuance of the common stock issued in partial settlement of the CVR.

L iquidity and Capital Resources

The change in fair value of CVR liability for the nine months ended September 30, 2021, represents the remeasurement of the CVR liability as a result of changes in our stock price prior to issuance of the common stock issued in partial settlement of the CVR.

Liquidity and Capital Resources

We have incurred certain costs related to the COVID-19 outbreak as a result of taking necessary precautions for essential personnel to operate safely both in person as well as remotely.

10 unchanged sentences

On December 4, 2020, we completed an underwritten public offering of 11,794,872 shares of our common stock at a public offering price of $9.75 per share (including the exercise in full by the underwriters of their 30-day option to purchase up to 1,538,461 additional shares of common stock), or net proceeds from the offering of $107.7 million, after deducting the underwriting discounts and commissions and offering expenses.

As of June 30, 2021, we had cash and cash equivalents of $218.1 million, which we believe will be sufficient to fund our operating expenses and capital expenditure requirements into 2024.

As of September 30, 2021, we had cash and cash equivalents of $202.9 million, which we believe will be sufficient to fund our operating expenses and capital expenditure requirements into 2024.

The following table summarizes our sources and uses of cash for each of the periods presented:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

Cash used in operating activities

Cash used in investing activities

Cash provided by (used in) financing activities

Net decrease in cash, cash equivalents and

Net cash (used in) provided by investing activities

Net cash (used in) provided by financing activities

Net increase (decrease) in cash, cash equivalents and

restricted cash

Operating Activities

During the six months ended June 30, 2021, operating activities used $23.9 million of cash, primarily resulting from our net loss of $28.3 million, partially offset by net cash provided by changes in our operating assets and liabilities of $0.3 million and by net noncash charges of $4.1 million.

Net cash provided by changes in our operating assets and liabilities for the six months ended June 30, 2021 consisted primarily of a $2.9 million increase in accounts payable and accrued expenses and other current liabilities, and a $0.9 million decrease in the right-of-use asset, partially offset by a $0.5 million increase in prepaid expenses and other current assets, a $2.0 million increase in other assets and a $1.0 million decrease in the operating lease liability.

During the six months ended June 30, 2020, operating activities used $16.2 million of cash, primarily resulting from our net loss of $13.5 million and from net cash used in changes in our operating assets and liabilities of $4.1 million, partially offset by net noncash charges of $1.4 million.

Net cash used in changes in our operating assets and liabilities for the six months ended June 30, 2020 consisted primarily of a $4.1 million decrease in accounts payable and accrued expenses and other current liabilities, a $1.0 million decrease in deferred revenue and a $1.4 million increase in prepaid expenses and other current assets, partially offset by $2.0 million decrease in accounts receivable and a $0.4 million decrease in other assets.

During the nine months ended September 30, 2021, operating activities used $38.0 million of cash, primarily resulting from our net loss of $47.4 million, partially offset by net cash provided by changes in our operating assets and liabilities of $1.8 million and by net noncash charges of $7.6 million.

Net cash provided by changes in our operating assets and liabilities for the nine months ended September 30, 2021 consisted primarily of a $5.9 million increase in accounts payable and accrued expenses and other current liabilities, and a $1.3 million decrease in the right-of-use asset, partially offset by a $1.9 million increase in prepaid expenses and other current assets, a $2.0 million increase in other assets and a $1.5 million decrease in the operating lease liability.

During the nine months ended September 30, 2020, operating activities used $26.5 million of cash, primarily resulting from our net loss of $63.5 million and net cash used by changes in our operating assets and liabilities of $5.9 million, partially offset by net non-cash charges of $42.9 million.

Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2020 consisted primarily of a $4.1 million decrease in accounts payable and accrued expenses and other current liabilities, a $1.3 million decrease in deferred revenue, a $0.4 million decrease in operating lease liabilities, and a $2.8 million increase in prepaid expenses and other current assets, partially offset by a $2.0 million decrease in accounts receivable, a $0.2 million decrease in the right-of-use asset and a $0.4 million decrease in other assets.

Investing Activities

During the six months ended June 30, 2021, net cash used in investing activities was $0.1 million, consisting of purchases of property and equipment.

There were no investing activities for the six months ended June 30, 2020.

During the nine months ended September 30, 2021, net cash used in investing activities was $1.3 million, consisting of purchases of property and lab equipment.

During the nine months ended September 30, 2020, net cash provided by investing activities of $8.4 million consisted of $8.1 million in proceeds from the disposal of BOXR Platform assets as well as $0.3 million in proceeds from the sale of other property and equipment.

Financing Activities

During the six months ended June 30, 2021, net cash used by financing activities was $0.1 million, which consisted of partial settlement of the CVR obligation.

During the six months ended June 30, 2020, net cash provided by financing activities was $0.1 million, which consisted of the proceeds from the issuance of common stock upon stock option exercises and from the issuance of common stock under the Employee Stock Purchase Plan.

During the nine months ended September 30, 2021, net cash used in financing activities was $0.1 million, which consisted of the proceeds from the issuance of common stock upon stock option exercises and from the issuance of common stock under the Employee Stock Purchase Plan.

During the nine months ended September 30, 2020, net cash used in financing activities was $110.1 million which consisted of the proceeds from the issuance of Series A Preferred Stock and common stock, from the issuance of common stock upon stock option exercises and from the issuance of common stock under the Employee Stock Purchase Plan.

Funding Requirements

14 unchanged sentences

the impact of COVID-19 on the operations of key governmental agencies, such as the FDA, which may delay the development of our current product candidates or any future product candidates.

Based on our current plans, we believe that our existing cash and cash equivalents of $218.1 million as of June 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into 2024.

Based on our current plans, we believe that our existing cash and cash equivalents of $202.9 million as of September 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into 2024.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

23 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis