What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-10-29 compared with 2020-07-30 · 122 added, 91 removed, 197 unchanged (52% of the section changed)

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We have utilized adaptive clinical protocol designs that enable us to evaluate our agents in multiple dosing regimens and for a range of cancer types.

Since we began operations in November 2014, we have built a pipeline of multiple oncology programs and a COVID-19 program.

Three product candidates are now in international multicenter trials directed against a broad number of cancer indications and one of our product candidates is also being tested in a COVID-19 clinical trial.

Since we began operations in November 2014, we have built a pipeline of multiple oncology development programs and a coronavirus disease 2019 (“COVID-19”) development program.

Three product candidates are now in international multicenter clinical trials directed against a broad number of cancer indications and one of our product candidates is also being tested in a COVID-19 clinical trial.

We are developing small molecules that are designed to selectively inhibit the binding of immunosuppressive adenosine to either A2A receptors (ciforadenant, formerly CPI-444) or to A2B receptors.

Another small molecule inhibitor (CPI-818) is designed to block the function of ITK, a kinase protein inside T-cells that is crucial to T-cell activation and differentiation.

Another small molecule inhibitor that we are developing (CPI-818) is designed to block the function of ITK, a kinase protein inside T-cells that is crucial to T-cell activation and differentiation.

We also are developing injectable monoclonal antibodies.

One of these antibodies (CPI-006) is designed to block the production of adenosine by tumors by inhibiting the cell surface enzyme CD73.

This antibody is designed to have dual properties;

in addition to blocking production of immunosuppressive adenosine, the antibody is designed to stimulate various immune cells, which we believe may have potential for the treatment of COVID-19 patients.

Another antibody that is designed to bind to the chemokine receptor CXCR2 on myeloid cells to block the activity of immunosuppressive myeloid cells that infiltrate tumors is in preclinical development.

Our product candidates’ designed specificity has the potential to provide greater safety and facilitate their development either as monotherapies or in combination with other cancer therapies such as immune checkpoint inhibitors or chemotherapy.

This antibody is also designed to stimulate various immune cells, which we believe may have potential for the treatment of COVID-19 patients.

Another of our antibodies is designed to bind to the chemokine receptor CXCR2 on myeloid cells to block the activity of immunosuppressive myeloid cells that infiltrate tumors, and is in preclinical development.

Our product candidates are designed to exhibit a high degree of specificity, which has the potential to provide greater safety compared to other cancer therapies and may facilitate their development either as monotherapies or in combination with other cancer therapies such as immune checkpoint inhibitors or chemotherapy.

Ciforadenant (formerly CPI-444), is an oral, small molecule antagonist of the A2A receptor for adenosine and is currently being studied under a Phase 2 expansion protocol in combination with Genentech, Inc.’s cancer immunotherapy, Tecentriq ® (atezolizumab) for patients with either advanced, refractory renal cell cancer (“RCC”) or patients with refractory metastatic castration resistant prostate cancer (“mCRPC”).

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We believe the breadth and status of our pipeline demonstrates our management team’s expertise in understanding and developing oncology assets as well as in identifying product candidates that can be in-licensed and further developed internally to treat many types of cancer.

We hold worldwide rights to all of our product candidates.

We hold worldwide rights to all of our product candidates (other than in greater China).

To date, the majority of our efforts have been focused on the research, development and advancement of ciforadenant, CPI-006 and CPI-818, and we have not generated any revenue from product sales.

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We expect to continue to incur significant research and development and general and administrative expenses related to our operations.

Our net loss for the six months ended June 30, 2020 was $23.5 million.

As of June 30, 2020, we had an accumulated deficit of $240.7 million.

Our net loss for the nine months ended September 30, 2020 was $33.3 million.

As of September 30, 2020, we had an accumulated deficit of $250.5 million.

We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase as we continue our development of, seek regulatory approval for, and begin to commercialize ciforadenant, CPI-006 and CPI-818, and as we develop other product candidates.

Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

Since our inception and through June 30, 2020, we have funded our operations primarily through the sale and issuance of stock.

Since our inception and through September 30, 2020, we have funded our operations primarily through the sale and issuance of stock.

On March 22, 2016, our registration statement on Form S-1 (File No.

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Jefferies is entitled to compensation for its services equal to up to 3.0% of the gross proceeds of any shares of common stock sold through Jefferies under the Sales Agreement.

As of June 30, 2020, we had not sold any shares of our common stock pursuant to the Sales Agreement.

As of June 30, 2020, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $59.3 million.

As of September 30, 2020, we had not sold any shares of our common stock pursuant to the Sales Agreement.

In October 2020, we announced the formation and launch of Angel Pharmaceuticals Co., Ltd.

(“Angel Pharmaceuticals”), a new China based biopharmaceutical company with a mission to bring innovative quality medicines to Chinese patients for treatment of serious diseases including cancer, autoimmune diseases and infectious diseases.

We formed Angel Pharmaceuticals as a wholly-owned subsidiary and it launched with a post-money valuation of approximately $106.0 million, based on an approximate $41.0 million cash investment from a Chinese investor group that includes funds associated with Tigermed and Betta Pharmaceuticals, Hisun Pharmaceuticals and Zhejiang Puissance Capital, $6.6 million of such investments are subject to the satisfaction of certain customary conditions.

Such cash is not available for our use.

Contemporaneously with the financing, Angel Pharmaceuticals licensed the rights to develop and commercialize our three clinical-stage candidates – ciforadenant, CPI-006 and CPI-818 – in greater China and obtained global rights to our BTK inhibitor preclinical programs.

Under the collaboration, we will initially retain a 49.7% equity stake in Angel Pharmaceuticals and will be entitled to designate three individuals on Angel’s five-person Board of Directors.

As of September 30, 2020, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $51.4 million.

We do not expect our existing capital resources to be sufficient to enable us to fund the completion of all of our ongoing or planned clinical trials and remaining development program of any of ciforadenant, CPI-006 or CPI-818 through commercialization.

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If we raise additional capital through strategic collaboration agreements, we may have to relinquish valuable rights to our product candidates, including possible future revenue streams.

In addition, additional funding may not be available to us on acceptable terms or at all and any additional fundraising efforts may divert our management from its day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.

In addition, additional funding may not be available to us on

acceptable terms or at all and any additional fundraising efforts may divert our management from its day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.

Furthermore, even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital due to favorable market conditions or strategic considerations.

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COVID-19 Update

A novel strain of coronavirus (“COVID-19”) was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization.

COVID-19 was first identified in Wuhan, China in December 2019, and subsequently declared a pandemic by the World Health Organization.

COVID-19 has placed strains on the providers of healthcare services, including the healthcare institutions where we conduct our clinical trials.

These strains have resulted in institutions prohibiting the initiation of new clinical trials, enrollment in existing trials and restricting the on-site monitoring of clinical trials.

These strains have resulted in institutions prohibiting the initiation of new clinical trials, enrollment in existing clinical trials and restricting the on-site monitoring of clinical trials.

As our oncology clinical trial enrollment goals for 2020 were largely completed in our first quarter, we have not been significantly affected by any clinical trial enrollment restrictions.

Patients in our ongoing clinical trials have generally completed their scheduled visits and we have been able to collect the essential data from those visits.

Patients in our ongoing oncology clinical trials have generally completed their scheduled visits and we have been able to collect the essential data from those visits.

We also follow FDA guidance on clinical trial conduct during the COVID-19 pandemic, including the remote monitoring of clinical data.

We have not experienced any disruption in our supply chain of drug necessary to conduct our clinical trials and given our drug inventories, believe we will be able to supply the drug needs of our clinical trials in 2020.

However, while we had begun Investigational New Drug (“IND”)-enabling studies and scale-up manufacturing for CPI-182, our anti-CXCR2 antibody designed to block myeloid suppression, we paused this work in mid-March 2020 as a result of the COVID-19 pandemic.

We have not experienced any disruption in our supply chain of drug candidate necessary to conduct our clinical trials and believe we will be able to utilize our inventories to supply the drug needs of all of our clinical trials in 2020.

In alignment with public health guidance designed to slow the spread of COVID-19, as of mid-March 2020, we implemented a reduced onsite staffing model and transitioned to a remote work plan for all employees other than those providing essential services, such as our laboratory staff.

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We are further supporting all of our employees by leveraging virtual meeting technology and encouraging employees to follow local health authority guidance.

We may need to undertake additional actions that could impact our operations if required by applicable laws or regulations or if we determine to be in the best interests of our employees.

We may need to undertake additional actions that could impact our operations if required by applicable laws or regulations or if we determine such actions to be in the best interests of our employees.

Product Pipeline

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Ciforadenant Adenosine A2A Receptor Antagonist.

Our initial product candidate, ciforadenant, is an oral, small molecule antagonist of the A2A receptor for adenosine that we in-licensed from Vernalis (R&D) Limited (“Vernalis”) in February 2015.

Our initial product candidate, ciforadenant, is an oral, small molecule antagonist of the A2A receptor for adenosine that we in-licensed from Vernalis in February 2015.

In January 2016, we began enrolling patients in a large expansion cohort trial for ciforadenant.

This Phase 1/1b clinical trial is designed to examine safety, tolerability, biomarkers and preliminary efficacy of ciforadenant in several solid tumor types, both as a single agent and in combination with Genentech, Inc.’s cancer immunotherapy, Tecentriq, a fully humanized monoclonal antibody targeting PD-L1.

In November 2016, we

completed enrollment of 48 patients in the first step of the Phase 1/1b clinical trial, which was designed to determine the optimal dose of ciforadenant as both a single agent therapy and in combination with Tecentriq for use in the cohort expansion stage of the trial.

The expansion cohort portion of the trial enrolled patients with non-small cell lung cancer (“NSCLC”), RCC, melanoma (“MEL”), triple negative breast cancer (“TNBC”) and other cancers including colorectal cancer, prostate cancer, head and neck cancer and bladder cancer at leading medical centers in the U.S., Australia and Canada.

In November 2016, we completed enrollment of 48 patients in the first step of the Phase 1/1b clinical trial, which was designed to determine the optimal dose of ciforadenant as both a single agent therapy and in combination with Tecentriq for use in the cohort expansion stage of the clinical trial.

The expansion cohort portion of the clinical trial enrolled patients with non-small cell lung cancer (“NSCLC”), RCC, melanoma (“MEL”), triple negative breast cancer (“TNBC”) and other cancers including colorectal cancer, prostate cancer, head and neck cancer and bladder cancer at leading medical centers in the United States, Australia and Canada.

We have enrolled over 300 patients in this clinical trial to date.

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In December 2017, Genentech began enrolling patients in a Phase 1b/2 clinical trial that is evaluating ciforadenant in combination with Tecentriq in patients with NSCLC under an umbrella protocol known as Morpheus.

Enrollment in this trial has been completed and the patients are being followed.

In 2018, we amended our Phase 1/1b protocol to enroll patients in a Phase 1b/2 clinical trial with RCC who have failed therapies with both anti-PD-(L)1 antibodies and tyrosine kinase inhibitors (“TKI”).

Based on data observed in the Phase 1b/2 trial in 2019, we began enrolling patients with metastatic castration-resistant prostate cancer (“mCRPC”) in a Phase 2 expansion arm of our ongoing Phase 1/1b clinical trial with mCRPC who will receive the combination of ciforadenant with Tecentriq based on data from the Phase 1b/2 trial that showed activity in this disease.

As of June 2020, the key findings from our clinical trials of ciforadenant included:

Based on data observed in the Phase 1b/2 clinical trial in 2019, we began enrolling patients with metastatic castration-resistant prostate cancer (“mCRPC”) in a Phase 2 expansion arm of our ongoing Phase 1/1b clinical trial with mCRPC who will receive the combination of ciforadenant with Tecentriq based on data from the Phase 1b/2 clinical trial that showed activity in this disease.

As of August 2020, the key findings from our clinical trials of ciforadenant included:

● Ciforadenant has been well-tolerated at doses that achieved substantial receptor blockade;

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In 53 patients tested, the ORR was 26.7% in CD68 positive patients (4 of 15) and 3% in CD68 negative patients (1 of 38).

We expect to meet with the FDA to discuss the study design and plans for a ciforadenant pivotal study in advanced refractory RCC using the adenosine gene signature or CD68 as a biomarker.

We expect to meet with the FDA in December 2020 to discuss the study design and plans for a ciforadenant pivotal study in advanced refractory RCC using the adenosine gene signature as a biomarker.

The issued U.S.

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The composition of matter patent covering ciforadenant is expected to expire in the United States in July 2029, excluding any patent term extension that may be available.

We hold an exclusive, worldwide license under these patent rights and related know-how, including a limited right to grant sublicenses, for all fields of use, to develop, manufacture and commercialize products containing certain adenosine receptor antagonists, including ciforadenant.

We have also filed patent applications covering the use of ciforadenant in combination with other checkpoint inhibitors, and the use of various biomarkers to select and monitor patients receiving therapy.

CPI-006, Immunomodulatory Anti-CD73 Antibody and B-Cell Activator.

Our second clinical product candidate, CPI-006, is an anti-CD73 monoclonal antibody that is designed to inhibit the production of adenosine and has demonstrated immunomodulatory activity, which we in-licensed from The Scripps Research Institute (“Scripps”) in December 2014.

CPI-006 was developed into a humanized anti-CD73 monoclonal antibody from a mouse hybridoma clone expressing an anti-human CD73 antibody.

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CD73 is an ectonucleotidase often found on lymphocytes, tumors and other tissues and is believed to play an important role in tumor immune suppression by catalyzing the production of extracellular adenosine.

In preclinical in vitro studies, our humanized monoclonal anti-CD73 antibody has been shown to

inhibit the catalytic activity of CD73, resulting in the blocking of extracellular adenosine production by tumor cells, which we believe could stimulate or enhance immune response to tumors.

In preclinical in vitro studies, our humanized monoclonal anti-CD73 antibody has been shown to inhibit the catalytic activity of CD73, resulting in the blocking of extracellular adenosine production by tumor cells, which we believe could stimulate or enhance immune response to tumors.

In addition to its role in the production of adenosine, CD73 also functions as an immunomodulatory receptor present on B-cells, T-cells and certain myeloid cells.

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As of June 2020, we had completed enrollment in three dose escalation arms of the trial and continue to enroll in the triplet combination dose escalation arm.

Over 90 cancer patients had been treated with CPI-006 in the Phase 1/1b study, with dosing as high as 24 mg/kg every three weeks.

The key findings from this clinical trial included the observation that CPI-006 has been well-tolerated and evidence of B-cell activation and lymphocyte trafficking was observed in patients that received single doses as low as 1 mg/kg.

Over 90 cancer patients had been treated with CPI-006 in the Phase 1/1b clinical trial, with dosing as high as 24 mg/kg every three weeks.

The key findings from this clinical trial have included the observation that CPI-006 has been well-tolerated and evidence of B-cell activation and lymphocyte trafficking was observed in patients that received single doses as low as 1 mg/kg.

Treatment with CPI-006 has also been associated with increases in memory B-cells, the emergence of new B-cell clones and, in some patients, the production of novel anti-tumor antibodies.

We plan to present updated clinical data from the Phase 1/1b clinical trial later this year.

In June 2020, we initiated a Phase 1 study to investigate CPI-006 as a novel immunotherapy approach for patients with COVID-19 based on CPI-006’s potential immunomodulatory effects.

In clinical studies, administration of CPI-006 has led to increased levels of memory B-cells, which are the cells responsible for long-term immunity.

We believe that the similar production of antibodies and memory cells to pathogens such as severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), the virus that causes COVID-19, may provide immediate and long-term clinical benefits for patients including shortened recovery time and improved long-term protective immunity.

A recently enrolled patient with advanced metastatic non-small cell lung cancer (NSCLC) was diagnosed with concomitant COVID-19 by nasal swab polymerase chain reaction (PCR) testing at the time of initiating CPI-006 therapy for cancer.

The patient was in a very high-risk group for potential progression of her COVID-19 with risk factors including old age, receipt of prior immunosuppressive therapies for cancer and chronic obstructive pulmonary disease.

The patient remained asymptomatic from COVID-19 following treatment with CPI-006.

Serum antibody testing showed no anti-SARS-CoV-2 antibody at baseline and the development of high titers of anti-SARS-CoV-2 IgG and IgM of >1:100,000 and 1:3,200, respectively, within six weeks of treatment with CPI-006.

The patient’s PCR viral test converted to negative along with the rising titers of antibody.

The anti-SARS-CoV-2 antibody titers seen in this patient would be considered to be high as recovered patients with serum titers of 1:320 or higher are candidates to donate blood for COVID-19 convalescent plasma therapy.

Memory B cells in the blood of this patient also increased to 30% of total B cells, from 16% previously.

The open-label, Phase 1 study is expected to enroll up to 30 hospitalized COVID-19 patients with mild to moderate symptoms.

We plan to present updated clinical data from the Phase 1/1b clinical trial in late 2020.

CPI-006 COVID-19 Phase 1 Clinical Trial Update

In June 2020, we initiated a Phase 1 clinical trial to investigate CPI-006 as a novel immunotherapy approach for the treatment of patients with COVID-19 based on CPI-006’s potential immunomodulatory effects.

In prior clinical trials, administration of CPI-006 led to increased levels of memory B-cells, which are the cells responsible for long-term immunity.

We believe that the similar production of antibodies and memory cells to pathogens such as severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2), the virus that causes COVID-19, may provide clinical benefits for patients, including potentially shortened recovery time and improved protective immunity based on pre-clinical studies and early Phase 1 clinical results.

The open-label, Phase 1 clinical trial is expected to enroll up to 30 hospitalized COVID-19 patients with mild to moderate symptoms.

Patients will receive a single dose of CPI-006, with levels of 0.3, 1.0, 3.0 and 5.0 mg/kg, escalating in four cohorts as the study progresses.

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The study also will examine safety and other clinical endpoints, including time to resolution of symptoms and duration of hospitalization.

Data from this study should be available later this year.

The objective of the study is to evaluate whether CPI-006 has the potential to induce patients to produce an enhanced and more durable antibody response to SARS-CoV-2.

We believe that CPI-006 has the potential to eradicate or reduce the viral load in patients, leading to better clinical outcomes and the potential for long term immunity.

Since the announcement of the study and enrollment of the first cohort of five patients in early July, we have enrolled four out of five planned patients in the second cohort.

As of a cutoff date of July 30, 2020, no dose-limiting toxicities had been noted and early anti-SARS-CoV-2 antibody response data was encouraging with relatively high titers of IgG and IgM to both spike and receptor binding domain (RBD) viral proteins observed.

In the first two patients receiving the lowest dose of CPI-006 and tested at an early Day 7 time point, IgG titers to spike protein were > 1:25,000 and > 1:50,000.

One of these patients has also completed Day 14 testing, which showed the titers to viral spike protein and RBD had increased to > 1:100,000.

Significant levels of IgM antibodies were also detected.

The Company expects to report 28-day follow up results from the study later this year.

If the study meets its objectives, we intend to engage in discussions with the FDA to initiate a broader, randomized study at a fixed dose of CPI-006 that could potentially be adapted into a pivotal study to support a regulatory submission for FDA approval.

We hold a non-exclusive, world-wide license for all fields of use under Scripps’ rights in a hybridoma clone expressing an anti-CD73 antibody, and to progeny, mutants or unmodified derivatives of such hybridoma and any antibodies expressed by such hybridoma.

In 2016, we filed a patent application covering the composition of matter of CPI-006.

In 2019, we filed patent applications covering the use of this CPI-006 for immunomodulation and enhancement of anti-tumor immunity.

We initially reported data from the Phase 1 clinical trial in September 2020.

On October 5, 2020, we announced updated data, which includes a longer, 56-day follow-up results from the first two cohorts (0.3 mg/kg and 1.0 mg/kg dose) and initial results from the third cohort (3.0 mg/kg).

In the 56-day follow-up, the results show a dose-response with higher and more prolonged titers in the 1.0 mg/kg cohort compared to the 0.3 mg/kg cohort.

In addition, the results show increased levels of memory B cells and memory T cells, and there are no reports of any drug-related safety issues in all 15 patients treated so far.

To-date, the first three cohorts of the study have been enrolled and the final cohort is currently enrolling patients.

This includes a new study site, El Centro Regional Medical Center in El Centro, CA, which is affiliated with the University of California, San Diego Health Care Network and serves Imperial and Riverside counties in southern California.

We continue to anticipate that we will complete the study and report results during the fourth quarter of 2020, including a presentation of data at the Society for Immunotherapy of Cancer (SITC) annual meeting in November.

Based on these data, and assuming the remainder of the data in the study supports it, we plan to initiate a pivotal, randomized, double blind study in hospitalized COVID-19 patients before year-end.

In the first three cohorts of the study, the median age of the patients was 63 years (range 26-76 years) and 12 of 15 patients were minorities at higher risk for COVID-19 disease complications (7 African American and 5 Latino).

All of the patients had comorbidities that increased their COVID-19 risk including diabetes, hypertension, obesity, chronic lung disease and/or cancer.

The median duration of symptoms prior to treatment with CPI-006 was five days (range 1-21 days).

The key highlights from these 15 patients, beyond the data already reported from the first 10 patients, include:

● 14 of 14 patients with pre-treatment serum samples available had low pre-treatment levels of anti-SARS-CoV-2 antibodies independent of the duration of their prior COVID-19 symptoms.

● IgG and IgM antibody titers against the SARS-CoV-2 trimeric spike and/or receptor binding domain (“RBD”) increased in all evaluable patients within 7 days of a single infusion of CPI-006.

As previously reported, one patient did not have a pre-treatment serum sample available but had a sample collected one day after receiving CPI-006 and this sample exhibited a high titer, which continued to increase as of September 28, 2020.

● In 11 of 11 patients with serum samples available to be tested, the combined IgG and IgM antibody responses continued to increase out to 28 days post treatment with CPI-006 as of September 28, 2020, in-line with the prior study data.

● In three of three patients tested, memory B cells, and memory CD4 and CD8 T effector memory cells, increased at 28 days post-treatment, and for one of such patients memory B cells increased from 1.8% to 7.9% of B cells at 56 days post-treatment.

● As of September 28, 2020, 14 of 15 patients were discharged from the hospital with clinical improvement after a median of 4.5 days.

One patient remains in the hospital with improvement of symptoms.

● There have been no drug-related toxicity or safety issues reported.

The 28-day and 56-day anti-SARS-CoV-2 antibody data for patients receiving 0.3 mg/kg (cohort 1) and 1.0 mg/kg (cohort 2) doses showed a dose-response with higher and more prolonged titers observed in the 1.0 mg/kg cohort compared to the 0.3 mg/kg cohort as reflected in the figures below.

In particular:

● IgG and IgM titers to trimeric spike and receptor binding domain (RBD) of SARS-CoV-2 were measured and compared to convalescent serum obtained from recovered COVID-19 patients.

● Geometric mean titers (and range) were evaluated and revealed robust response at 28 days for both cohorts with higher and more sustained levels at day 56 seen in the 1.0 mg cohort.

For example, day 56 IgG to spike protein titer was 49,519 as compated to 204,800 in patients receiving 0.3 and 1.0 mg/kg, respectively.

Day 56 titers to RBD were 37,286 as compared to 144,815 in patients receiving 0.3 and 1.0 mg/kg, respectively.

● Sustained and high IgM titers were also observed and exhibited a similar dose-response.

Anti-SARS-CoV-2 antibody response (IgG and IgM) to spike protein and RBD of SARS-CoV-2.

Patients receive 0.3 or 1.0 mg/kg single dose of CPI-006 and antibody titers measured at pre-treatment and at Days 28 and 56.

Data are shown as box and whisker plot with geometric mean and interquartile ranges

We believe the totality of the data from the Phase 1 clinical continues to support the potential of CPI-006 as a treatment for COVID-19.

CPI-006, when administered at very low doses, has demonstrated a boost in antibody responses to the SARS-CoV-2 virus.

The responses have been long-lived and the data reflects a clear dose response relationship with 1.0 mg/kg having produced higher and more prolonged titers than 0.3 mg/kg;

especially of IgM.

CPI-818, ITK Inhibitor.

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We believe highly selective inhibitors of this enzyme will facilitate induction of T-cell anti-tumor immunity and also may be useful in the treatment of T-cell lymphomas.

CPI-818 is orally bioavailable and has been shown to achieve cellular occupancy of the target in vivo in various animal models.

CPI-818 is orally bioavailable and has been

shown to achieve cellular occupancy of the target in vivo in various animal models.

Pre-clinical studies have demonstrated that CPI-818 was well-tolerated in vivo and resulted in inhibition of T-cell activation.

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Based on results from this portion of the study, including a confirmed complete response in one patient with peripheral T-cell lymphoma (PTCL) who previously failed chemotherapy and high dose chemotherapy with autologous bone marrow transplantation, we selected the optimum dose and began the next portion of the study with a focus on patients with PTCL and cutaneous T-cell lymphoma (CTCL).

We recently announced a second patient with PTCL who achieved a partial response.

Seven patients with PTCL have been treated on the trial.

We are continuing to enroll PTCL and cutaneous t-cell lymphoma (CTCL) patients in our trial.

We plan to present updated clinical data from the CPI-818 Phase 1/1b clinical trial at the American Society of Hematology (ASH) annual meeting in December 2020.

We have filed patent applications covering composition of matter and uses of our ITK inhibitors and hold exclusive worldwide rights for all indications.

We have filed patent applications covering composition of matter and uses of our ITK inhibitors and hold exclusive worldwide rights for all indications (other than in greater China).

CPI-182, Anti-CXCR2 Antibody designed to block Myeloid Suppression.

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Preclinical studies have demonstrated that this antibody blocked MDSCs and also may have reacted with CXCR2 present on certain cancers such as acute myeloid leukemia cells and other cancers.

We had begun Investigational New Drug (“IND”)-enabling studies and scale-up manufacturing for this product candidate but paused this work in mid-March 2020 as a result of COVID-19 pandemic.

We had begun IND-enabling studies and scale-up manufacturing for this product candidate but paused this work in mid-March 2020 as a result of the COVID-19 pandemic.

CPI-935, Adenosine A2B Receptor Antagonist.

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Our significant accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K.

There have been no material changes to our significant accounting policies during the six months ended June 30, 2020.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 2020.

Components of Results of Operations

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● enrollment of COVID-19 patients in our ongoing Phase 1 trial of CPI-006;

● initiate a pivotal clinical trial of CPI-006 in hospitalized COVID-19 patients;

● enrollment and completion of our Phase 1/1b clinical trial of CPI-818;

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The duration, costs and timing of clinical trials and development of product candidates will depend on a variety of factors, including many of which are beyond our control.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming, and the

successful development of our product candidates is uncertain.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time consuming, and the successful development of our product candidates is uncertain.

The risks and uncertainties associated with our research and development projects are discussed more fully in “Part II, Item 1A—Risk Factors.” As a result of these risks and uncertainties, we are unable to determine with any degree of certainty the duration and completion costs of our research and development projects or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Research and Development Expense

Research and development expenses for the three and six months ended June 30, 2020 and 2019 consisted of the following costs by program (specific program costs consist solely of external costs):

Research and development expenses for the three and nine months ended September 30, 2020 and 2019 consisted of the following costs by program (specific program costs consist solely of external costs):

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Six Months Ended

Nine Months Ended

September 30,

Ciforadenant (formerly CPI-444)

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Unallocated employee and overhead costs

For the three months ended June 30, 2020, the decrease in ciforadenant costs of $0.8 million as compared to the three months ended June 30, 2019, primarily consisted of a decrease of $0.5 million in clinical trial expenses, a decrease of $0.2 million in drug manufacturing costs and a decrease of $0.1 million in other outside services.

For the six months ended June 30, 2020, the decrease in ciforadenant costs of $1.0 million as compared to the six months ended June 30, 2019, primarily consisted of a decrease of $0.5 million in clinical trial expenses, a decrease of $0.3 million in drug manufacturing costs and a decrease of $0.2 million in other outside services.

For the three months ended June 30, 2020, the decrease in CPI-006 costs of $0.5 million as compared to the three months ended June 30, 2019, primarily consisted of a decrease of $1.7 million in drug manufacturing costs, partially offset by an increase of $1.1 million in clinical trial expenses and an increase of $0.1 million in other outside services.

For the six months ended June 30, 2020, the increase in CPI-006 costs of $1.1 million as compared to the six months ended June 30, 2019, primarily consisted of an increase of $2.5 million in clinical trial expenses and an increase of $0.2 million in other outside services, partially offset by a decrease of $1.6 million in drug manufacturing costs.

For the three months ended June 30, 2020, the decrease in CPI-818 costs of $0.7 million as compared to the three months ended June 30, 2019, primarily consisted of a decrease of $0.5 million in drug manufacturing costs and a decrease of $0.2 million in other outside services.

For the six months ended June 30, 2020, the decrease in CPI-818 costs of $1.6 million as compared to the six months ended June 30, 2019, primarily consisted of a decrease of $1.4 million in drug manufacturing costs and a decrease of $0.2 million in other outside services.

For the three months ended June 30, 2020, the decrease in other program costs of $0.1 million as compared to the three months ended June 30, 2019, primarily consisted of a decrease in outside services.

For the six months ended June 30, 2020, the increase in other program costs of $0.2 million as compared to the six months ended June 30, 2019, primarily consisted of an increase of $0.5 million in drug manufacturing costs, partially offset by a decrease of $0.3 million in outside services.

For the three months ended June 30, 2020, the decrease in unallocated costs of $0.7 million as compared to the three months ended June 30, 2019, primarily consisted of a decrease of $0.6 million in outside services and a decrease of $0.1 million in personnel and related costs.

For the six months ended June 30, 2020, the decrease in unallocated costs of $0.8 million as compared to the six months ended June 30, 2019, primarily consisted of a decrease of $0.9 million in outside services, partially offset by an increase of $0.1 million in personnel and related costs.

For the three months ended September 30, 2020, the decrease in ciforadenant costs of $0.1 million as compared to the three months ended September 30, 2019, primarily consisted of a decrease of $0.1 million in clinical trial expenses and a decrease of $0.1 million in other outside service costs, partially offset by an increase of $0.1 million in drug manufacturing costs.

For the nine months ended September 30, 2020, the decrease in ciforadenant costs of $1.1 million as compared to the nine months ended September 30, 2019, primarily consisted of a decrease of $0.7 million in clinical trial expenses, a decrease of $0.2 million in drug manufacturing costs and a decrease of $0.2 million in other outside services.

For the three months ended September 30, 2020, the negligible decrease in CPI-006 costs as compared to the three months ended September 30, 2019, primarily consisted of an increase of $0.1 million in outside services, offset by a decrease of $0.1 million in drug manufacturing costs.

For the nine months ended September 30, 2020, the increase in CPI-006 costs of $1.1 million as compared to the nine months ended September 30, 2019, primarily consisted of an increase of $2.4 million in clinical trial expenses and an increase of $0.3 million in other outside services, partially offset by a decrease of $1.6 million in drug manufacturing costs.

For the three months ended September 30, 2020, the decrease in CPI-818 costs of $1.2 million as compared to the three months ended September 30, 2019, primarily consisted of a decrease of $0.8 million in drug manufacturing costs and a decrease of $0.3 million in other outside services.

For the nine months ended September 30, 2020, the decrease in CPI-818 costs of $2.7 million as compared to the nine months ended September 30, 2019, primarily consisted of a decrease of $2.2 million in drug manufacturing costs and a decrease of $0.6 million in other outside services, partially offset by an increase of $0.1 million in clinical trial expenses.

For the three months ended September 30, 2020, the decrease in other program costs of $0.4 million as compared to the three months ended September 30, 2019, primarily consisted of a decrease of $0.3 million in outside services and a decrease of $0.1 million in drug manufacturing costs.

For the nine months ended September 30, 2020, the decrease in other program costs of $0.2 million as compared to the nine months ended September 30, 2019, primarily consisted of a decrease of $0.7 million in outside services, partially offset by an increase of $0.5 million in drug manufacturing costs.

For the three months ended September 30, 2020, the decrease in unallocated costs of $0.7 million as compared to the three months ended September 30, 2019, primarily consisted of a decrease of $0.5 million in personnel and related costs and a decrease of $0.2 million in other outside services.

For the nine months ended September 30, 2020, the decrease in unallocated costs of $1.5 million as compared to the nine months ended September 30, 2019, primarily consisted of a decrease of $1.1 million in outside services and a decrease of $0.4 million in personnel and related costs.

General and Administrative Expense

For the three months ended June 30, 2020, the negligible decrease in general and administrative expenses as compared to the three months ended June 30, 2019, primarily consisted of an increase of $0.4 million in professional service costs, offset by a $0.4 million decrease in stock-based compensation expense.

For the six months ended June 30, 2020, the increase of $0.2 million in general and administrative expenses as compared to the six months ended June 30, 2019, primarily consisted of an increase of $0.7 million in professional service costs, offset by a $0.4 million decrease in stock-based compensation expense and a decrease of $0.1 million in other personnel related costs.

For the three months ended September 30, 2020, the increase in general and administrative expenses of $0.7 million as compared to the three months ended September 30, 2019, primarily consisted of an increase of $1.0 million in professional service costs, partially offset by a $0.3 million decrease in stock-based compensation expense.

For the nine months ended September 30, 2020, the increase of $0.9 million in general and administrative expenses as compared to the nine months ended September 30, 2019, primarily consisted of an increase of $1.6 million in professional service costs and an increase of $0.2 million in personnel costs, partially offset by a decrease of $0.9 million in stock-based compensation expense.

Interest Income and Other Expense, net

For the three months ended June 30, 2020, the decrease in interest income and other expense, net of $0.5 million as compared to the three months ended June 30, 2019, primarily consisted of a decrease in interest income earned due to a decrease in cash equivalents and marketable securities and a decrease in interest rates.

For the six months ended June 30, 2020, the decrease in interest income and other expense, net of $0.8 million as compared to the six months ended June 30, 2019, primarily consisted of a decrease in interest income earned due to a decrease in cash equivalents and marketable securities and a decrease in interest rates.

For the three months ended September 30, 2020, the decrease in interest income and other expense, net of $0.5 million as compared to the three months ended September 30, 2019, primarily consisted of a decrease in interest income earned due to a decrease in cash equivalents and marketable securities and a decrease in interest rates.

For the nine months ended September 30, 2020, the decrease in interest income and other expense, net of $1.3 million as compared to the nine months ended September 30, 2019, primarily consisted of a decrease in interest income earned due to a decrease in cash equivalents and marketable securities and a decrease in interest rates.

Liquidity and Capital Resources

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $59.3 million, and an accumulated deficit of $240.7 million, compared to cash and cash equivalents and marketable securities of $78.0 million and an accumulated deficit of $217.1 million as of December 31, 2019.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $51.4 million, and an accumulated deficit of $250.5 million, compared to cash and cash equivalents and marketable securities of $78.0 million and an accumulated deficit of $217.1 million as of December 31, 2019.

We have financed our operations primarily through private placements of convertible preferred stock and the sale of common stock.

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In March 2020, we entered into the Sales Agreement with Jefferies to sell shares of our common stock, from time to time, with aggregate gross sales proceeds of up to $50,000,000, through an at-the-market equity offering program under which Jefferies will act as its sales agent.

As of June 30, 2020, we had received no proceeds from the sale of shares of common stock pursuant to the Sales Agreement.

We believe our current cash, cash equivalents and marketable securities will be sufficient to fund our planned expenditures and meet our obligations through at least the next twelve months from the issuance of our financial statements as of and for the three and six months ended June 30, 2020.

As of September 30, 2020, we had received no proceeds from the sale of shares of common stock pursuant to the Sales Agreement.

The amounts and timing of our actual expenditures depend on numerous factors, including:

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The sale of additional equity would result in dilution to our stockholders.

The incurrence of debt financing would result in debt service obligations and the governing documents would likely include operating and financing covenants that would restrict our operations.

The incurrence of debt financing would result in debt service

obligations and the governing documents would likely include operating and financing covenants that would restrict our operations.

In addition, sufficient additional funding may not be available on acceptable terms, or at all.

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The following table summarizes our cash flows for the periods indicated (in thousands):

Nine Months Ended

September 30,

Net cash provided by (used in):

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Cash Flows from Operating Activities

Cash used in operating activities during the six months ended June 30, 2020 was $18.8 million, which primarily consisted of a net loss of $23.5 million, adjusted by non-cash charges of $3.5 million, primarily consisting of $3.2 million of stock compensation expense, and an increase of $1.2 million in accounts payable and accrued and other current liabilities.

Cash used in operating activities during the six months ended June 30, 2019 was $18.2 million, which primarily consisted of a net loss of $24.6 million, adjusted by non-cash charges of $3.9 million, primarily consisting of $3.9 million of stock compensation expense, and an increase of $2.9 million in accounts payable and accrued and other current liabilities, partially offset by an increase in current assets of $0.3 million.

Cash used in operating activities during the nine months ended September 30, 2020 was $26.6 million, which primarily consisted of a net loss of $33.3 million, adjusted by non-cash charges of $5.0 million, primarily consisting of $4.5 million of stock compensation expense, an increase of $1.6 million in accounts payable and accrued and other current liabilities, and a decrease in prepaid and other current assets of $0.2 million.

Cash used in operating activities during the nine months ended September 30, 2019 was $28.8 million, which primarily consisted of a net loss of $35.6 million, adjusted by non-cash charges of $5.6 million, primarily consisting of stock compensation expense, and an increase of $1.8 million in accounts payable and accrued and other current liabilities, partially offset by an increase in prepaid and other current assets of $0.4 million.

Cash Flows from Investing Activities

During the six months ended June 30, 2020, cash provided in investing activities was $34.4 million, which consisted of proceeds from maturities of marketable securities of $63.1 million and proceeds from sales of marketable securities of $1.0 million, partially offset by purchases of marketable securities of $29.7 million.

During the six months ended June 30, 2019, cash provided in investing activities was $9.2 million, which consisted of proceeds from maturities of marketable securities of $73.7 million, partially offset by purchases of marketable securities of $64.5 million.

During the nine months ended September 30, 2020, cash provided in investing activities was $44.3 million, which consisted of proceeds from maturities of marketable securities of $78.8 million and proceeds from sales of marketable securities of $1.0 million, partially offset by purchases of marketable securities of $35.5 million.

During the nine months ended September 30, 2019, cash used in investing activities was $1.3 million, which consisted of purchases of marketable securities of $114.9 million, partially offset by proceeds from maturities of marketable securities of $113.6 million.

Cash Flows from Financing Activities

During the six months ended June 30, 2020, cash provided by financing activities was negligible.

During the six months ended June 30, 2019, cash provided by financing activities was negligible.

During the nine months ended September 30, 2020, cash provided by financing activities was $0.1 million, which consisted of proceeds from the exercise of stock options.

During the nine months ended September 30, 2019, cash provided by financing activities was negligible.

Off-Balance Sheet Arrangements

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Contractual Obligations

There have been no material changes outside the ordinary course of our business to our contractual obligations during the six months ended June 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K.

There have been no material changes outside the ordinary course of our business to our contractual obligations during the nine months ended September 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K.

JOBS Act Accounting Election

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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