Cogent Biosciences, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under the caption “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2021. Overview We are a biotechnology company focused on developing precision therapies for genetically defined diseases. Our approach is to design rational precision therapies that treat the underlying cause of disease and improve the lives of patients. Our most advanced program is bezuclastinib (also known as CGT9486), a selective tyrosine kinase inhibitor designed to potently inhibit the KIT D816V mutation as well as other mutations in KIT exon 17. In the vast majority of cases, KIT D816V is responsible for driving Systemic Mastocytosis (“SM”), a serious disease caused by unchecked proliferation of mast cells. Exon 17 mutations are also found in patients with advanced gastrointestinal stromal tumors (“GIST”), a type of cancer with strong dependence on oncogenic KIT signaling. Bezuclastinib is a highly selective and potent KIT inhibitor with the potential to provide a new treatment option for these patient populations. 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. Pipeline 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 14 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, 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. 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”). The vast majority of AdvSM and Non-AdvSM patients have a KIT D816V mutation. Patients with AdvSM have a significantly diminished lifespan with a median survival of less than 3.5 years. For patients with Non-AdvSM, there are no available approved therapies, and while their lifespan is not impacted by the disease, these patients suffer from a poor quality of life and new treatment options are badly needed. Emerging clinical data for other kinase inhibitors with activity against KIT D816V have shown that the disease is highly sensitive to inhibition of the target. 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. 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, 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. 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 15 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. 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 $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. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we: • 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, and build out our lab facility in Boulder, CO; • acquire or in-license other product candidates and technologies; • maintain, expand, and protect our intellectual property portfolio; • hire additional research, clinical, scientific, and commercial personnel; • establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • establish a sales, marketing, and distribution infrastructure to commercialize any products for which we may obtain regulatory approval; and • add operational, financial, and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing, and distribution. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back, or discontinue the development and commercialization of one or more of our product candidates. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. 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 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. The COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus, or COVID-19, as a pandemic, which has spread throughout the United States and worldwide. 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 16 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. Given the fluidity of the COVID-19 pandemic however, we do not yet know the full extent of the potential impact of COVID-19 on our business operations. The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic, outbreak, or other public health crisis and actions taken to contain or prevent the further spread, among others. Accordingly, we cannot predict with certainty the extent to which our business, financial condition and results of operations will be affected . We will continue to work diligently with our partners and stakeholders to continue advancing our product candidate under regulatory review as well as in our clinical studies to the extent safe to do so for patients, caregivers and healthcare practitioners, and ensuring the continuity of our manufacturing and supply chain. Components of Our Results of Operations Operating Expenses Research and Development Expenses 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 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”); • employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions; • laboratory supplies and animal care; • facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and • payments made under third-party licensing agreements. We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed. 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. We expect that our research and development expenses will increase substantially in connection with our planned clinical and preclinical development activities in the near term and in the future. At this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following: • the timing and progress of our preclinical and clinical development activities; • the number and scope of preclinical and clinical programs we decide to pursue; • the progress of the development efforts of parties with whom we have entered, or may enter, into collaboration arrangements; • our ability to maintain our current research and development programs and to establish new ones; 17 • our ability to establish new licensing or collaboration arrangements; • 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 FDA or any comparable foreign regulatory authority; • the receipt of regulatory approvals from applicable regulatory authorities; • the success in establishing and operating a manufacturing facility, or securing manufacturing supply through relationships with third parties; • our ability to obtain and maintain patents, trade secret protection, and regulatory exclusivity, both in the United States and internationally; • our ability to protect our rights in our intellectual property portfolio; • the commercialization of our product candidates, if and when approved; • the acceptance of our product candidates, if approved, by patients, the medical community, and third-party payors; • competition with other products; and • a continued acceptable safety profile of our therapies following approval. A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates. General and Administrative Expenses General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, and administrative functions. 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 a result of the costs associated with the expansion of operations to support our on-going discovery, preclinical and clinical activities. Other Income Interest Income Interest income consists of interest earned on our cash equivalents balances. Our interest income has not been significant due to low interest rates on invested balances. Other Income Other income consists of miscellaneous income and expense unrelated to our core operations, primarily income from subleasing a portion of our headquarters facilities. Change in Fair Value of the CVR liability This consists of changes in the fair value of the CVR liability. Income Taxes Since our inception, we have not recorded any current or deferred tax benefit for the net losses we have incurred in each year or for our research and development tax credits generated, as we believe, based upon the weight of available evidence, that it is more likely than not that our net operating loss carryforwards and tax credits will not be realized. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2021. We reevaluate the utilization of net operating loss carryforwards and tax credits at each reporting period. As of December 31, 2021, we had U.S. 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, 2021, $125.5 million is available to be carried forward indefinitely but 18 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 $ 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 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, 2022 2021 Change (in thousands) Operating expenses: Research and development 25,470 8,213 17,257 General and administrative 5,948 4,587 1,361 Total operating expenses 31,418 12,800 18,618 Loss from operations (31,418 ) (12,800 ) (18,618 ) Other income: Interest income 107 125 (18 ) Other income 677 604 73 Change in fair value of CVR liability — 343 (343 ) Total other income 784 1,072 (288 ) Net loss $ (30,634 ) $ (11,728 ) $ (18,906 ) Research and Development Expenses The following table summarizes our research and development expenses for the three months ended March 31, 2022 and 2021: Three Months Ended March 31, 2022 2021 Change (in thousands) Direct external research and development expenses: Bezuclastinib $ 13,460 $ 5,847 7,613 Preclinical research and discovery 2,369 — 2,369 Unallocated expenses: Personnel related (including stock-based compensation) 7,651 1,469 6,182 Laboratory supplies, facility related and other 1,990 897 1,093 Total research and development expenses $ 25,470 $ 8,213 $ 17,257 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. 19 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. Interest Income 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 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 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 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. Costs incurred include items like incremental payroll costs, consulting support, IT infrastructure and facilities related costs. The estimated impact of COVID-19 is currently unknown. The final impact may vary based on the duration of the current social and economic conditions. To the extent the COVID-19 pandemic continues, it may materially impact our financial condition, liquidity or results of operations in the future. We do not currently believe the accumulated costs will present a material impact to our financial liquidity or position. Since our inception, we have incurred significant operating losses. We have generated limited revenue to date from funding arrangements with our former collaboration partner. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. 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 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. 20 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. 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 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. Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Three Months Ended March 31, 2022 2021 (in thousands) Cash used in operating activities $ (28,334 ) $ (11,366 ) Cash used in investing activities (441 ) — Net cash (used in) provided by financing activities 138 (85 ) Net decrease in cash, cash equivalents and restricted cash $ (28,637 ) $ (11,451 ) Operating Activities 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 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. 21 Financing Activities 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 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: • the initiation, progress, timing, and completion of preclinical studies and clinical trials for our current and future potential product candidates, including the impact of COVID-19 on our ongoing and planned research and development efforts; • any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for additional information; • adverse results or delays in clinical trials; • our decision to initiate a clinical trial, not to initiate a clinical trial, or to terminate an existing clinical trial; • adverse regulatory decisions, including failure to receive regulatory approval of our product candidates; • changes in laws or regulations applicable to our products, including but not limited to clinical trial requirements for approvals; • adverse developments concerning our manufacturers; • our inability to obtain adequate product supply for any approved product or our inability to do so at acceptable prices; • our inability to establish collaborations, if desired or needed; • 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; • unanticipated serious safety concerns related to the use of our product candidates; and • 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 $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. The Company will require additional funding to complete the critical activities planned to support ongoing research and development programs. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures, or declaring dividends. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. 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. 22 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 We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report. Emerging Growth Company Status The Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies. 23 Item 3. Quantitative and Qualitative Disclosures about Market Risk. We are a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended, for this reporting period and are not required to provide the information required under this item.