What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-10 compared with 2021-11-10 · 113 added, 142 removed, 163 unchanged (61% of the section changed)

9 unchanged sentences

Bezuclastinib is a highly selective and potent KIT inhibitor with the potential to provide a new treatment option for these patient populations.

Bezuclastinib has been administered to more than 50 advanced solid tumor and GIST patients in a Phase 1/2 clinical trial, with the vast majority of those patients living with advanced GIST.

In addition to bezuclastinib, the Cogent Research Team is developing a portfolio of novel targeted therapies to help patients fighting serious, genetically driven diseases initially targeting FGFR2 and ErbB2.

Our current pipeline is below:

Bezuclastinib

Bezuclastinib has been studied in more than 50 advanced solid tumor and GIST patients in a Phase 1/2 clinical trial, with the vast majority of those patients living with advanced GIST.

GIST is a disease frequently driven by KIT mutations, and resistance to currently available therapeutics is frequently associated with the emergence of other KIT mutations.

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 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.

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 published in the Journal of American Medical Association 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 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 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.

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.

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, potent and selective KIT mutant inhibitor with unique selectivity for KIT D816V and minimal evidence of brain penetration that avoids targeting PDGFR isoforms.

In April 2022, additional preclinical data presented at the 2022 American Associated for Cancer Research annual meeting (“ AACR ”) demonstrate d that bezuclastinib potently inhibits A loop-mutations exquisitely selective against other closely related kinases , and differentiates bezuclastinib by its lack of brain penetration.

These data support that bezuclastinib inhibits KIT downstream signaling and may drive tumor regressions at clinically achievable doses.

We initiated PEAK, a randomized open-label, global Phase 3 clinical trial in the fourth quarter of 2021.

The PEAK study is designed to evaluate the safety, tolerability, and efficacy of bezuclastinib in combination with sunitinib compared to sunitinib alone in patients with locally advanced, unresectable or metastatic GIST who have received prior treatment with imatinib.

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

5 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, 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 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 the second quarter of 2021, we initiated APEX, a Phase 2 clinical study of bezuclastinib in patients with AdvSM.

APEX is an open-label, global, multicenter study evaluating the safety, efficacy, pharmacokinetic, and pharmacodynamic profiles of bezuclastinib.

We expect to report initial clinical data the European Hematology Association Annual Congress during the first half of 2022, including safety and tolerability data from patients across each dose cohort, as well as bezuclastinib’s impact on serum tryptase levels, a validated biomarker of mast cell activity.

In the fourth quarter of 2021, we initiated SUMMIT, a randomized, double-blind, placebo-controlled, global Phase 2 clinical trial.

The study is designed to evaluate the safety and efficacy of bezuclastinib in patients with moderate to severe Indolent Systemic Mastocytosis or Smoldering Systemic Mastocytosis.

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.

Under the terms of the license agreement, Plexxikon received an upfront payment and is eligible for additional development milestones and mid- to high- single-digit royalty payments.

This formulation is expected to reduce the number of daily tablets, improving the overall patient experience, and is initially being used in our PEAK study.

Worldwide rights to develop and commercialize bezuclastinib are exclusively licensed from Plexxikon.

Under the terms of the license agreement, Plexxikon received an upfront payment and is eligible for additional development milestones of up to $7.5 million upon the satisfaction of certain clinical milestones and up to $25.0 million upon the satisfaction of certain regulatory milestones.

In April 2022, as a result of our review of the progression of the Peak study and discussions with Plexxikon, the first clinical milestone was deemed to have been achieved, triggering a payment of $2.5 million to Plexxikon in Q2 2022.

Patents protecting bezuclastinib include composition of matter claims which have issued in the US and other key territories and provide exclusivity through 2033 and potentially beyond through patent term extensions.

In addition to bezuclastinib, our research team is developing a portfolio of novel targeted therapies to help patients fighting serious, genetically driven diseases.

Research programs

During the second quarter of 2021, we announced the formation of the Cogent Research Team, a highly experienced discovery and research group.

Based in Boulder, Colorado, the Cogent Research Team is focused on pioneering best-in-class, small molecule therapeutics to expand our pipeline and deliver novel precision therapies for patients living with unmet medical needs.

Our research team is building a pipeline of small molecule inhibitors, with our first efforts aimed toward targeting currently undrugged mutations in FGFR.

FGFR mutations are well-established oncogenic drivers in multiple diseases, but approved medicines fail to capture the full landscape of FGFR altered tumor types, with FGFR1-mediated hyperphosphatemia serving as the most common dose-limiting toxicity for pan-FGFR inhibitors.

Based on preclinical data presented at AACR in April 2022, our FGFR program has the potential to both spare

FGFR1 inhibition, avoiding related toxicity, as well as potently cover the relevant molecular brake and gatekeeper mutations associated with this target.

Additionally, we see an opportunity to provide a more robust molecular response compared to existing therapies.

We are advancing a potent, selective FGFR2 inhibitor program toward candidate selection later this year and expect to file this first internally developed Investigational New Drug application (IND) in the second half of 2023.

We are also advancing our novel, non-exon 20 ErbB2 mutant program , which is focused on actionable and underserved mutations in a variety of solid tumor indications .

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.

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 Bio LLC (“Kiq”) or sold to the Private Investment in Public Equity (“PIPE”) investors.

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

In February 2021, we issued an additional 212,428 shares of common stock and paid $0.1 million in partial settlement of the CVR obligation.

On July 9, 2020, we completed a PIPE with existing and new investors to raise gross proceeds of $104.4 million, or net proceeds of $98.9 million after deducting commissions and offering costs, in which the investors were issued shares of Series A Preferred Stock at a price of $880 per share or, $3.52 per share on an as-converted-to-common basis.

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.

This included the exercise in full by the underwriters of their 30-day option to purchase up to 1,538,461 additional shares of common stock.

The net proceeds from the offering, after deducting the underwriting discounts and commissions and estimated offering expenses, were approximately $107.7 million.

Since our inception, we have incurred significant operating losses.

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 $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.

Our net losses were $30.6 million for the three months ended March 31, 2022 compared to net losses of $11.7 million for the three months ended March 31, 2021.

As of March 31, 2022, we had an accumulated deficit of $301.6 million.

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

1 unchanged sentence

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;

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

acquire or in-license other product candidates and technologies;

13 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 red uce or terminate our operations.

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

As of March 31, 2022, we had cash and cash equivalents of $191.0 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.

2 unchanged sentences

We could be materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the recent outbreak of COVID-19 or variants thereof.

We continue to monitor the pandemic and have taken steps to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and actions taken by governmental and health authorities to address the COVID-19 pandemic.

The spread of COVID-19 has caused us to modify our business practices, including implementing a work-from-home policy for all employees who are able to perform their duties remotely and restricting all nonessential travel, and we expect to continue to take actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, the patients we serve and other business partners in light of COVID-19.

4 unchanged sentences

Components of Our Results of Operations

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future.

If our development efforts for our product candidates are successful and result in regulatory approval or additional license or collaboration agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from additional collaboration or license agreements that we may enter into with third parties.

We expect that our revenue for the next several years will be derived primarily from any collaborations that we may enter into in the future.

Operating Expenses

1 unchanged sentence

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

expenses incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants, contractors and contract research organizations (“CROs”);

expenses incurred in connection with the discovery, preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants, contractors and contract research organizations (“CROs”);

the cost of manufacturing drug products for use in our preclinical studies and clinical trials, including under agreements with third parties, such as consultants, contractors and contract manufacturing organizations (“CMOs”);

6 unchanged sentences

The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Our direct research and development expenses are tracked on a program-by-program basis and consist of costs, such as fees paid to consultants, contractors, CMOs, and CROs in connection with our preclinical and clinical development activities.

We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

Certain of our direct research and development expenses are tracked on a program-by-program basis and consist of costs, such as fees paid to consultants, contractors, CMOs, and CROs in connection with our discovery, preclinical and clinical development activities.

We do not allocate employee costs, costs associated with the manufacture of bezuclastinib, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple product development programs and, as such, are not separately classified.

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.

9 unchanged sentences

the future productivity of our research team in Boulder, CO and its ability to discover new product candidates and build our pipeline;

the successful completion of clinical trials with safety, tolerability, and efficacy profiles that are satisfactory to the U.S.

Food and Drug Administration (“FDA”) or any comparable foreign regulatory authority;

the successful completion of clinical trials with safety, tolerability, and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority;

the receipt of regulatory approvals from applicable regulatory authorities;

11 unchanged sentences

General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services.

We anticipate that our general and administrative expenses will increase in the future as of a result of the costs associated with the expansion of operations to support our on-going clinical and preclinical activities.

Other Income (Expense)

We anticipate that our general and administrative expenses will increase in the future as a result of the costs associated with the expansion of operations to support our on-going discovery, preclinical and clinical activities.

Interest Income

Interest income consists of interest earned on our cash equivalents balances.

Our interest income has not been significant due to low interest earned on invested balances.

Our interest income has not been significant due to low interest rates on invested balances.

Other income consists of miscellaneous income and expense unrelated to our core operations, primarily income from subleasing a portion of our headquarters facilities.

6 unchanged sentences

federal and state net operating loss carryforwards of $128.8 million and $47.1 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2035.

Of the federal net operating loss carryforwards at December 31, 2020, $59.9 million is available to be carried forward indefinitely but can only offset 80% of taxable income per year.

Of the federal net operating loss carryforwards at December 31, 2021, $125.5 million is available to be carried forward indefinitely but

can only offset 80% of taxable income per year.

As of December 31, 202 1 , we also had U.S.

federal and state research and development tax credit carryforwards of $0.6 million and $0.3 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2040 and 2035, respectively.

As a result of the shares issued in July 2020 related to the acquisition of Kiq and the sale of Series A convertible preferred stock, the Company has experienced a change in ownership, as defined by Section 382.

As a result of the ownership change, utilization of the federal and state net operating loss carryforwards and research and development tax credit carryforwards is subject to annual limitation under Section 382.

Under Section 382, the annual limitation is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required.

This limitation resulted in the expiration of federal and state net operating loss carryforwards before utilization of $26.9 million and $79.5 million, respectively, and federal and state research and development tax credit carryforwards before utilization of $6.6 million and $2.0 million, respectively.

We have written off these gross deferred tax attributes, which were previously fully reserved for, in 2020.

As of December 31, 2020, approximately $59.4 million and $3.9 million of federal and state net operating losses, respectively, as well as $14.2 million of future amortization for federal purposes are subject to the July 2020 limitation of $0.3 million per year.

A second ownership change occurred in December 2020 as a result of the underwritten public offering of common stock which resulted in a limitation of tax attributes generated from July 7, 2020 to December 1, 2020.

The December 1, 2020 ownership change is not expected to have a material impact to the Company’s net operating loss carryforwards or research and development tax credit carryforwards as these net operating losses and tax credit carryforwards may be utilized, subject to annual limitation, assuming sufficient taxable income is generated before expiration.

federal and state research and development tax credit carryforwards of $ 3.1 million and $0.

8 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2040 and 2035, respectively.

Utilization of the U.S.

federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to annual limitation under Section 382 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future.

These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income.

In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period.

We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.

Results of Operations

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,

Comparison of the Three Months Ended March 31, 2022 and 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(in thousands)

Collaboration revenue

Operating expenses:

1 unchanged sentence

General and administrative

Acquired in-process research and development

Total operating expenses

Loss from operations

Other income (expense):

Other income:

Interest income

Gain on disposal of long-lived assets

Change in fair value of CVR liability

Total other income (expense), net

Collaboration Revenue

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.

Total other income

Research and Development Expenses

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 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 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.

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 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,

The following table summarizes our research and development expenses for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

(in thousands)

Collaboration revenue

Operating expenses:

Research and development

General and administrative

Acquired in-process research and development

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Gain on disposal of long-lived assets

Change in fair value of CVR liability

Total other income (expense), net

Collaboration Revenue

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

Direct external research and development expenses:

Bezuclastinib

Preclinical research and discovery

Unallocated expenses:

Personnel related (including stock-based compensation)

Laboratory supplies, facility related and other

Total research and development expenses

Total research and development expense increased by $17.3 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 and the increase was driven by higher external research and development costs associated with the manufacture and development of bezuclastinib, including costs associated with the APEX, SUMMIT and PEAK, and the development of the research pipeline.

Additionally, there was an increase in unallocated expenses driven by higher personnel costs due to an increase in headcount and increased lab supplies and other facilities costs to support the build-out of the research team.

Gen eral and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2022 were $5.9 million, compared to $4.6 million for the three months ended March 31, 2021.

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 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.

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.

Interest income for the three months ended March 31, 2022 and March 31, 2021 was $0.1 million, respectively.

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

Other income, net was $0.7 million in the three months ended March 31, 2022, compared to $0.6 million for the three months ended March 31, 2021.

Other income represents sublease income recognized 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 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.

There was no change in fair value of the CVR liability for the three months ended March 31, 2022.

Any settlement of the remaining liability will be a cash settlement.

Liquidity and Capital Resources

9 unchanged sentences

We have historically funded our operations primarily through the public offering and private placement of our securities and consideration received from our collaborative agreements.

On July 9, 2020, we completed a PIPE and issued 118,638 Series A Preferred Stock to new and existing investors in exchange gross proceeds of $104.4 million, or net proceeds of $98.9 million, after deducting commissions and offering costs.

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 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.

On July 6, 2020, the Company completed its asset acquisition of Kiq Bio LLC (“Kiq”) (the “Kiq Acquisition”), in accordance with the terms of the Agreement and Plan of Merger (the “Merger Agreement”), signed and closed on July 6, 2020.

Under the terms of the Merger Agreement, at the closing of the Merger, the Company issued the securityholders of Kiq 1,558,975 shares of common stock and 44,687 shares of Series A Non-Voting Convertible Preferred Stock (“Series A Preferred Stock”) .

On July 9, 2020, the Company completed a Private Investment in Public Equity (“PIPE”) of 118,638 Series A Non-Voting Convertible Preferred Stock to new and existing investors in exchange for net proceeds of $98.9 million, after deducting commissions and offering costs.

Cumulatively, through March 31, 2022, 67,991 shares of Series A Preferred Stock, or 41.6% of the issued Series A Preferred Stock, have been converted into 16,997,750 shares of common stock.

The 95,334 shares of Series A Preferred Stock outstanding as of March 31, 2022 are convertible into 23,833,500 shares of common stock, for total common shares outstanding, on an as-converted basis, of 69,652,766.

On February 8, 2021, we filed a shelf registration statement on Form S-3 with the SEC.

The shelf registration statement allows us to sell from time-to-time up to $200.0 million of common stock, preferred stock, debt securities, warrants or units comprised of any combination of these securities, for our own account in one or more offerings.

The terms of any offering under the shelf registration statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

Additionally, on February 8, 2021, pursuant to the Form S-3, we entered into a Sales Agreement (the “ SVB Sales Agreement”) with SVB Leerink LLC (“SVB Leerink”), pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75.0 million through SVB Leerink as the sales agent.

Cumulatively, through March 31, 2022, 3,954,900 shares have been sold under the SVB Sales Agreement for net proceeds of approximately $38.0 million.

During the three months ended March 31, 2022, no shares have been sold under the SVB Sales Agreement.

On May 6, 2022, we filed a shelf registration statement on Form S-3 with the SEC.

The shelf registration statement allows us to sell from time-to-time up to $300 million of common stock, preferred stock, debt securities, warrants or units comprised of any combination of these securities, for our own account in one or more offerings.

Additionally, on May 6, 2022, pursuant to the Form S-3, we entered into a Sales Agreement (the “Sales Agreement”) with Guggenheim Securities, LLC (“Guggenheim Securities”), pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to $75 million through Guggenheim Securities as the sales agent.

On May 6, 2022, the Company filed an Amendment to its February 8, 2021 S-3 Registration Statement to terminate the effectiveness of the registration statement and to remove from registration all securities registered but not sold under the registration statement.

We terminated our existing SVB Sales Agreement, effective as of May 5, 2022.

We will not incur any termination penalties as a result of the termination of the SVB Sales Agreement.

No further sales will be made pursuant to the SVB Sales Agreement.

As of March 31, 2022, we had cash and cash equivalents of $191.0 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:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

Cash used in operating activities

Net cash (used in) provided by investing activities

Cash used in investing activities

Net cash (used in) provided by financing activities

Net increase (decrease) in cash, cash equivalents and

Net decrease in cash, cash equivalents and

restricted cash

Operating Activities

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.

During the three months ended March 31, 2022, operating activities used $28.3 million of cash, primarily resulting from our net loss of $30.6 million and changes in our operating assets and liabilities of $1.9 million, partially offset by net cash provided by net noncash charges of $4.2 million.

Net cash used in changes in our operating assets and liabilities for the three months ended March 31, 2022 consisted primarily of a $1.9 million increase in other assets, a $0.7 million increase in prepaid expenses and other current assets, and a $0.6 million decrease in the operating lease liability, partially offset by a $0.7 million increase in accounts payable and accrued expenses and other current liabilities and a $0.5 million decrease in the right-of-use asset.

During the three months ended March 31, 2021, operating activities used $11.4 million of cash, primarily resulting from our net loss of $11.7 million and from net cash used by changes in our operating assets and liabilities of $1.1 million, partially offset by net non-cash charges of $1.4 million.

Net cash used by changes in our operating assets and liabilities for the three months ended March 31, 2021 consisted primarily of a $2.4 million decrease in accounts payable and accrued expenses and other current liabilities, and a $0.5 million decrease in operating lease liabilities, partially offset by a $1.4 million decrease in prepaid expenses and other current assets and a $0.5 million decrease in the right-of-use asset.

Investing Activities

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.

During the three months ended March 31, 2022, net cash used in investing activities was $0.4 million, consisting of purchases of property and equipment.

There were no investing activities for the three months ended March 31, 2021.

Financing Activities

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.

During the three months ended March 31, 2022, net cash provided by financing activities was $0.1 million, which consisted of the proceeds from the issuance of common stock under the Employee Stock Purchase Plan and proceeds from the issuance of common stock upon stock option exercises.

During the three months ended March 31, 2021, net cash used by financing activities was $0.1 million which consisted of the partial settlement of the CVR obligation.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the clinical development of our product candidates and conduct preclinical activities.

We expect our expenses to increase in connection with our ongoing activities, particularly as we advance the clinical development of our current and any future product candidates and conduct additional research, development and preclinical activities.

The timing and amount of our operating expenditures will depend largely on:

9 unchanged sentences

our failure to commercialize our product candidates;

the cost and timing of completion of the build out of our new office and laboratory facility in Boulder, CO;

additions or departures of key scientific or management personnel;

1 unchanged sentence

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 $202.9 million as of September 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 $191.0 million as of March 31, 2022 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.

5 unchanged sentences

If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce, or terminate our research, product development, or future commercialization efforts, or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

Critical Accounting Policies and Significant Judgments and Estimates

Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures.

We believe that of our critical accounting policies described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K, the following involve the most judgment and complexity:

accrued research and development expenses;

stock-based compensation.

Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations.

If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected.

Critical Accounting Estimates

There have been no material changes in our critical accounting policies during the three months ended March 31, 2022, as compared to those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K.

Off-Balance Sheet Arrangements

8 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