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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Report of Independent Registered Public Accounting Firm
+Added: Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )
Consolidated Financial Statements
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We have audited the accompanying consolidated balance sheets of Corvus Pharmaceuticals, Inc.
−Removed: (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.
+Added: and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
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Management’s plans in regard to this matter are described in Note 1.
+Added: Critical Audit Matters
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
+Added: statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
+Added: Clinical Trial Accruals
+Added: As described in Notes 2 and 7 to the consolidated financial statements, the Company recorded $4.0 million in clinical trial accruals as of December 31, 2021.
+Added: Management applies significant judgment in developing estimates for clinical trial accruals based on assumptions related to the vendors’ progress towards completion.
+Added: Management estimates the vendors’ progress towards completion using data such as clinical site activations, patient enrollment or information provided to the Company by its vendors regarding actual costs incurred.
+Added: Management determines accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or stage of completion, or the services completed.
+Added: The principal considerations for our determination that performing procedures relating to clinical trial accruals is a critical audit matter are (i) the significant judgment by management in estimating the clinical trial accruals and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to the vendors’ progress towards completion of clinical trials.
+Added: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
+Added: These procedures included, among others (i) testing management’s process for estimating the clinical trial accruals;
+Added: (ii) evaluating the appropriateness of the method used by management to develop the estimate;
+Added: (iii) testing the completeness and accuracy of data used to develop the estimate;
+Added: and (iv) evaluating the reasonableness of the significant assumption related to the vendors’ progress towards completion of clinical trials.
+Added: Evaluating management’s assumption related to the vendors’ progress towards completion of clinical trials involved (i) confirming patient visits on a test basis;
+Added: (ii) obtaining and examining contract terms on a test basis to evaluate the completeness and consistency of the costs in the contract with the costs used in developing the estimate;
+Added: and (iii) considering whether this assumption was consistent with evidence obtained in other areas of the audit.
/s/ PricewaterhouseCoopers LLP
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Marketable securities
+Added: Accounts receivable - related party
Prepaid and other current assets
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Additional paid-in capital
−Removed: Accumulated other comprehensive income
+Added: Accumulated other comprehensive (loss) income
Accumulated deficit
13 unchanged sentences
Gain on deconsolidation of Angel Pharmaceuticals
+Added: Sublease income - related party
Loss from equity method investment
3 unchanged sentences
Unrealized gain (loss) on marketable securities
+Added: Cumulative foreign currency translation adjustment
Comprehensive loss
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Balance at December 31, 2018
−Removed: Issuance of common stock upon follow-on public offering, net
−Removed: Common stock issued on exercise of stock options
−Removed: Vesting of restricted stock issued upon early exercise of stock options
−Removed: Stock-based compensation expense
−Removed: Unrealized gain on marketable securities
−Removed: Balance at December 31, 2018
Retirement of common stock in exchange for common stock warrant
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Balance at December 31, 2020
+Added: Issuance of common stock upon exercise of Exchange Warrants
+Added: Issuance of common stock upon follow-on public offering, net
+Added: Issuance of common stock in connection with at-the-market offering, net
+Added: Common stock issued on exercise of stock options
+Added: Stock-based compensation expense
+Added: Unrealized loss on marketable securities
+Added: Foreign currency translation adjustment
+Added: Balance at December 31, 2021
The accompanying notes are an integral part of these consolidated financial statements.
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Changes in operating assets and liabilities:
+Added: Accounts receivable - related party
Prepaid and other current assets
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Purchases of property and equipment
−Removed: Net cash provided by (used in) investing activities
+Added: Net cash provided by investing activities
Cash flows from financing activities
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The aggregate net proceeds received by the Company from the offering were approximately $ 64.9 million, net of underwriting discounts and commissions and offering expenses payable by the Company.
+Added: In February 2021, the Company completed a follow-on public offering in which the Company sold 9,783,660 shares of common stock at a price of $ 3.50 per share, which included 1,212,231 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.
+Added: The aggregate net proceeds received by the Company from the offering were approximately $ 32.0 million, net of underwriting discounts and commissions and offering expenses.
The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations.
−Removed: Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of CPI-006, CPI-818 and ciforadenant.
−Removed: The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of ciforadenant, CPI-006, and CPI-818, as well as product candidates under the Company’s other development programs.
−Removed: These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining regulatory approvals, manufacturing and supply, sales and marketing and general operations.
+Added: Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of mupadolimab (formerly CPI-006), CPI-818 and ciforadenant.
+Added: The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of mupadolimab, CPI-818 and ciforadenant, as well as product candidates under the Company’s other development programs.
+Added: These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining regulatory
+Added: approvals, manufacturing and supply, sales and marketing and general operations.
In addition, other unanticipated costs may arise.
−Removed: Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of CPI-006, CPI-818, and ciforadenant or any other product candidates.
−Removed: The Company does not expect its existing capital resources to be sufficient to enable it to fund the completion of its clinical trials and remaining
−Removed: development program of CPI-006, CPI-818 and ciforadenant through commercialization.
+Added: Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of mupadolimab, CPI-818, and ciforadenant or any other product candidates.
+Added: The Company does not expect its existing capital resources to be sufficient to enable it to fund the completion of its clinical trials and remaining development program of mupadolimab, CPI-818 and ciforadenant through commercialization.
In addition, its operating plan may change as a result of many factors.
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The current COVID-19 (coronavirus) pandemic, which is impacting worldwide economic activity, poses risks that the Company or its employees, contractors, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities.
−Removed: The extent to which COVID-19 impacts the Company’s business, including its clinical trials and financial condition, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
−Removed: As COVID-19 continues to spread around the globe, we will likely experience disruptions, including delays or difficulties in enrolling patients in our clinical trials, delays or difficulties in clinical site initiation, interruption of key clinical trial activities, delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials and delays in necessary interactions with local regulatory authorities.
+Added: The extent to which COVID-19 impacts the Company’s business, including its clinical trials and financial condition, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the impact of variants of the COVID-19 virus, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.
+Added: As COVID-19 continues to spread around the globe, including the spread of more contagious and virulent variants, we will likely experience disruptions, including delays or difficulties in enrolling patients in our clinical trials, delays or difficulties in clinical site initiation, interruption of key clinical trial activities, delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials and delays in necessary interactions with local regulatory authorities.
COVID-19 may also impact the Company’s ability to raise additional capital on a timely basis or at all, which could negatively impact short-term and long-term liquidity.
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On November 8, 2019, the Company entered into an exchange agreement (the “Exchange Agreement”) with an investor and its affiliates (the “Exchanging Stockholders”), pursuant to which the Company exchanged an aggregate of 1,458,000 shares of the Company’s common stock, par value $ 0.0001 per share, owned by the Exchanging Stockholders for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 1,458,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $ 0.0001 per share.
−Removed: The Exchange Warrants will expire ten years from the date of issuance.
−Removed: The Exchange Warrants are exercisable at any time prior to expiration except that the Exchange Warrants cannot be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would beneficially own more than 9.99 % of the Company’s common stock, subject to certain exceptions.
+Added: The Exchange Warrants were exercisable at any time prior to expiration except that the Exchange Warrants could not be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would have beneficially owned more than 9.99 % of the Company’s common stock, subject to certain exceptions.
In accordance with Accounting Standards Codification Topic 505, Equity, and Accounting Research Bulletin 43, the Company recorded the retirement of the common stock exchanged as a reduction of common shares outstanding and elected to record the excess over par value as a debit to additional paid-in-capital at the fair value of the Exchange Warrants on the issuance date.
−Removed: The Exchange Warrants are classified as equity in accordance with Accounting Standards Codification Topic 480, Distinguishing Liabilities from Equity, and Accounting Standards Codification Topic 815, Derivatives and Hedging, and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in capital and is not subject to remeasurement.
−Removed: The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants.
−Removed: As of December 31, 2020, none of the Exchange Warrants have been exercised.
+Added: The Exchange Warrants were classified as equity in accordance with Accounting Standards Codification Topic 480, Distinguishing Liabilities from Equity, and Accounting Standards Codification Topic 815, Derivatives and Hedging, and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in capital and is not subject to remeasurement.
+Added: The Company determined that the fair value of the Exchange Warrants was substantially
+Added: similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants.
+Added: During the year ended December 31, 2021, the Exchange Warrants were fully exercised, resulting in the issuance of 1,457,947 shares of common stock on a net exercise basis.
Summary of Significant Accounting Policies
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The Company’s functional and reporting currency is the U.S.
−Removed: dollar, except for its investment in its equity method investee which is the Chinese yuan.
+Added: dollar, except for its investment in its equity method investee which is the Chinese renminbi (RMB).
The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business.
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Actual results could differ from such estimates.
+Added: Foreign Currency Translation
+Added: Angel Pharmaceuticals Co., Ltd.’s (“Angel Pharmaceuticals”) functional currency is the Chinese renminbi (RMB).
+Added: Angel Pharmaceuticals’ consolidated financial statements are reported in RMB.
+Added: Financial information is translated from RMB to the U.S.
+Added: dollar (the reporting currency) for inclusion in our consolidated financial statements.
+Added: Income, expenses and cash flows are translated at average exchange rates prevailing during the fiscal period, assets and liabilities are translated at fiscal period-end exchange rates, and stockholders’ equity is held at historical rates.
+Added: Resulting translation adjustments are included as a component of accumulated other comprehensive income in stockholders' equity.
+Added: Out of Period Adjustment
+Added: In the three months ended June 30, 2021, the Company recorded a cumulative translation adjustment that affected the Company’s balance sheet at June 30, 2021 by increasing its investment in Angel Pharmaceuticals and accumulated other comprehensive income in the equity section of the balance sheet by $ 1.4 million.
+Added: $ 0.9 million of this amount was an out of period adjustment related to the year ended December 31, 2020.
+Added: The impact of the out of period adjustment in the quarter ended March 31, 2021 was to reduce the Company’s investment in Angel Pharmaceuticals and other comprehensive income by $ 83,000 .
+Added: The Company has concluded that the out of period adjustment is not material to the consolidated financial statements for the fiscal year ended December 31, 2020 or the interim financial statements for the quarter ended March 31, 2021.
Concentrations of Credit Risk and Other Risks and Uncertainties
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The Company’s marketable securities consist of investments in U.S.
−Removed: Treasury securities, U.S.
−Removed: government agency securities and corporate debt obligations, which can be subject to certain credit risks.
+Added: Treasury securities and U.S.
+Added: government agency securities, which can be subject to certain credit risks.
However, the Company mitigates the risks by investing in high-grade instruments, limiting its exposure to any one issuer, and monitoring the ongoing creditworthiness of the financial institutions and issuers.
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The carrying amount of the Company’s financial instruments, including cash equivalents, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities.
−Removed: Variable Interest Entities
−Removed: The Company determines at the inception of each arrangement whether an entity in which the Company holds an investment or in which the Company has other variable interests is considered a variable interest entity ("VIE").
−Removed: The Company consolidates VIEs when it is the primary beneficiary.
−Removed: The primary beneficiary of a VIE is the party that meets both of the following criteria:
−Removed: (1) has the power to make decisions that most significantly affect the economic performance of the VIE and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE.
−Removed: Periodically, the Company assesses whether any changes in the interest or relationship with the entity affect the determination of whether the entity is still a VIE and, if so, whether the Company is the primary beneficiary.
−Removed: If the Company is not the primary beneficiary in a VIE, the Company accounts for the investment or other variable interest in accordance with applicable GAAP.
Investments in Equity Securities
−Removed: Investments in equity securities over which the Company is able to exercise significant influence over the investee, but does not control the investee, and is not the primary beneficiary of the investee’s activities that are considered VIEs are accounted for using the equity method.
+Added: Investments in equity securities over which the Company is able to exercise significant influence over the investee, but does not control the investee, and is not the primary beneficiary of the investee’s activities that are considered Variable Interest Entities (“VIEs”) are accounted for using the equity method.
Adjustments are made to investments accounted for using the equity method for any earnings or losses incurred and are recorded in loss from operations.
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The Company regularly reviews the carrying value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.
−Removed: The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic
−Removed: significance of the assets to the Company’s business objectives.
+Added: The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives.
Should impairment exist, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the projected discounted future net cash flows arising from the asset.
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Clinical Trial Accruals
−Removed: Costs for preclinical studies and clinical trial activities are recognized based on an evaluation of the vendors’ progress towards completion of specific tasks, using data such as clinical site activations, patient enrollment or information provided to the Company by its vendors regarding their actual costs incurred.
+Added: Costs for preclinical studies and clinical trial activities are recognized based on an evaluation of the vendors’ progress towards completion of specific tasks.
+Added: The Company applies significant judgment in developing estimates for clinical trial accruals based on assumptions related to vendors’ progress towards completion.
+Added: In developing these estimates, management estimates vendors’ progress towards completion using data such as clinical site activations, patient enrollment or information provided to the Company by its vendors regarding their actual costs incurred.
Payments for these activities are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services are performed.
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The Company intends to maintain a valuation allowance until sufficient evidence exists to support its reversal.
−Removed: The Company recognizes benefits of uncertain tax positions if it is more likely than not such positions will be sustained upon examination based solely on their technical merits as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement.
+Added: The Company recognizes benefits of uncertain tax positions if it is more likely than not such positions will be sustained upon examination based solely on their technical merits as the largest amount of benefit that is more likely
+Added: than not to be realized upon the ultimate settlement.
The Company recognizes any material interest and penalties related to unrecognized tax benefits in income tax expense.
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Recent Accounting Pronouncements
−Removed: In February 2016, the FASB issued ASU No.
−Removed: 2016-02, Leases (Topic 842), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements.
−Removed: Topic 842 was subsequently amended by ASU No.
−Removed: 2018-01, Land Easement Practical Expedient for Transition to Topic 842;
−Removed: 2018-10, Codification Improvements to Topic 842, Leases;
−Removed: 2018-11, Targeted Improvements.
−Removed: The new standard establishes a right-of-use (ROU) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet.
−Removed: Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.
−Removed: The Company adopted the new standard on January 1, 2019 and chose to apply the provisions of ASC 842 as of the effective date with no restatement of prior periods.
−Removed: Additionally, the Company
−Removed: has elected the ‘ package of practical expedients ’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.
−Removed: The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements;
−Removed: the latter is not applicable to the Company.
−Removed: The Company determines if an arrangement is a lease at inception and accounts for lease and non-lease components separately.
−Removed: The Company has elected not to apply the recognition requirements of Topic 842 for leases with a term of 12 months or less.
−Removed: Upon adoption of ASU 2016-02, the Company recognized an operating lease, right-of-use asset of $ 2.8 million and a corresponding liability of $ 3.8 million and eliminated $ 1.0 million of deferred rent in the Company’s consolidated balance sheet.
−Removed: The adoption of ASU 2016-02 did not have any impact on the Company’s consolidated statements of operations and comprehensive loss.
−Removed: See also Note 12.
In December 2019, the FASB issued ASU No.
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ASU 2019-12 removes certain exceptions to the general principles related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.
−Removed: This new standard will be effective for the Company for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
+Added: This new standard became effective for the Company for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.
Early adoption is permitted.
−Removed: The Company will adopt this standard effective January 1, 2021.
+Added: The Company adopted this standard effective January 1, 2021.
+Added: Adoption of this standard in the first quarter of fiscal year 2021 did not have a material impact on the Company’s consolidated financial statements.
Net Loss per Share
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Year Ended December 31,
−Removed: Common stock subject to repurchase
Outstanding options
−Removed: Total shares of common stock equivalents
Fair Value Measurements
28 unchanged sentences
Government agency securities
−Removed: Corporate debt obligations
Equity Method Investment
10 unchanged sentences
As of December 31, 2021, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel ESOP.
−Removed: The Company recognized its share of losses in Angel for the total amount of $ 0.2 million as loss from equity method investment on the consolidated statement of operations for the year ended December 31, 2020.
−Removed: The Company’s maximum exposure to losses from its investment in Angel is to the extent of the carrying value of its investment since the Company is not obligated to provide additional financial support.
−Removed: At December 31, 2020 the Company reviewed its investment in Angel for impairment by determining whether events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable.
−Removed: In making this judgment, the Company considered available quantitative and qualitative evidence in evaluating potential impairment of these investments.
−Removed: The Company determined that the carrying value of the investment did not exceed its fair value and, therefore, there are no indicators that its investment in Angel is impaired.
+Added: The Company recognized its share of losses in Angel for the total amount of $4.8 million and $ 0.2 million as loss from equity method investment on the consolidated statement of operations for the years ended December 31, 2021 and 2020, respectively.
Summary Financial Information
2 unchanged sentences
December 31, 2021
+Added: December 31, 2020
(In thousands)
Current assets
+Added: Non-current assets
Current liabilities
+Added: Non-current liabilities
Stockholders' equity
Statement of Operations Data (unaudited)
−Removed: December 31, 2020
(In thousands)
Share of loss from investments accounted for using the equity method
−Removed: (1) The Company’s share of loss is based on pro-rated net loss beginning October 2020 upon the deconsolidation of Angel Pharmaceuticals.
+Added: (1) The Company’s share of loss is based on net loss beginning October 2020 upon the deconsolidation of Angel Pharmaceuticals .
License and Collaboration Agreements
12 unchanged sentences
The Company’s license agreement with Scripps will terminate upon expiration of its obligation to pay royalties to Scripps under the license agreement.
−Removed: The Company’s license agreement with Scripps is terminable by the consent of the parties, at will by the Company upon providing 90 days written notice to Scripps, or by Scripps for certain material breaches, or if the Company undergoes a bankruptcy event.
−Removed: In addition, Scripps may terminate the license on a product-by-product basis, or the entire agreement, if the Company fails to meet specified diligence obligations related to
−Removed: the development and commercialization of licensed products.
+Added: The Company’s license agreement with Scripps is terminable by the consent of the parties, at will by the Company upon providing 90 days written notice to Scripps, or by Scripps for certain material
+Added: breaches, or if the Company undergoes a bankruptcy event.
+Added: In addition, Scripps may terminate the license on a product-by-product basis, or the entire agreement, if the Company fails to meet specified diligence obligations related to the development and commercialization of licensed products.
Scripps may also terminate the agreement after the third anniversary of the effective date of the agreement if it reasonably believes, based on reports the Company provides to Scripps, that the Company has not used commercially reasonable efforts as required under the agreement, subject to a specified notice and cure period.
13 unchanged sentences
Genentech Collaboration Agreement
−Removed: In October 2015, the Company entered into a clinical trial collaboration agreement with Genentech to evaluate the safety, tolerability and preliminary efficacy of ciforadenant combined with Genentech’s investigational cancer immunotherapy, Tecentriq (atezolizumab), a fully humanized monoclonal antibody targeting protein programmed cell death ligand 1(“PD-(L)1”), in a variety of solid tumors in a Phase 1/1b clinical trial.
−Removed: Pursuant to this agreement, the Company will be responsible for the conduct and cost of the relevant studies, under the supervision of a joint development committee made up of representatives of the Company and representatives of Genentech.
+Added: In October 2015, the Company entered into a clinical trial collaboration agreement with Genentech to evaluate the safety, tolerability and preliminary efficacy of ciforadenant combined with Genentech’s investigational cancer immunotherapy, Tecentriq, a fully humanized monoclonal antibody targeting PD-L1, in a variety of solid tumors in our Phase 1/1b clinical trial.
+Added: Pursuant to this agreement, the Company will be responsible for the conduct and cost of the relevant studies, under the supervision of a joint development committee made up of the Company’s representatives and representatives of Genentech.
Genentech will supply Tecentriq.
+Added: At this time, no further patients are being enrolled in this trial.
As part of the agreement, the Company granted Genentech certain rights of first negotiation to participate in future clinical trials that the Company may conduct evaluating the administration of ciforadenant in combination with an anti-PD-1 or anti-PD-L1 antibody.
−Removed: If the Company and Genentech do not reach agreement on the terms of any such participation by Genentech within a specified time period, the Company retains the right to collaborate with third parties in such activities.
−Removed: The Company also granted Genentech certain rights of first negotiation should it decide to license development and commercialization rights to ciforadenant.
−Removed: Should the Company and Genentech not reach agreement on the terms of such a license within a specified time period, it retains the right to enter into a license with another third party.
−Removed: The Company and Genentech each have the right to terminate the agreement for material breach by the other party.
−Removed: In addition, the agreement may be terminated by either party due to safety considerations, if directed by a
−Removed: regulatory authority or if development of ciforadenant or Tecentriq is discontinued.
−Removed: Further, the agreement will expire after a set period of time following the provision by the Company of the final clinical study report to Genentech.
−Removed: In May 2017, the Company signed a second clinical trial collaboration agreement with Genentech.
−Removed: Under the second agreement, ciforadenant administered in combination with Tecentriq is being evaluated in a Phase 1b/2 randomized, controlled clinical study, known as Morpheus, as second-line therapy in patients with non-small cell lung cancer who are resistant and/or refractory to prior therapy with an anti-PD-(L)1 antibody.
−Removed: The patients in the Morpheus trial are currently in the follow-up phase of the trial.
−Removed: Genentech is responsible for the conduct of the study and the parties share the cost of the Morpheus trial, which began enrolling patients in the fourth quarter of 2017.
+Added: If both parties do not reach agreement on the terms of any such participation by Genentech within a specified time period, the Company retains the right to collaborate with third parties in such activities.
+Added: The Company also granted Genentech certain rights of first negotiation should the Company decide to license development and commercialization rights to ciforadenant.
+Added: Should both parties not reach agreement on the terms of such a license within a specified time of period, the Company retains the right to enter into a license with another third party.
+Added: This agreement will expire after a set period of time following the provision by the Company of the final clinical study report to Genentech, which has not yet been finalized.
+Added: In May 2017, the Company entered into a second clinical trial collaboration agreement with Genentech.
+Added: Under the new agreement, ciforadenant administered in combination with Tecentriq will be evaluated in a Phase 1b/2 randomized, controlled clinical study as second-line therapy in patients with NSCLC who are resistant and/or refractory to prior therapy with an anti-PD-(L)1 antibody.
+Added: This study has completed patient enrollment of 16 patients.
+Added: Genentech was responsible for the conduct of the study and the Company will share the cost of the Phase 1b/2 trial, which began enrolling patients in the fourth quarter of 2017.
The Company is responsible for supplying ciforadenant and retains global development and commercialization rights to ciforadenant.
−Removed: The Company and Genentech each have the right to terminate the agreement for material breach by the other party.
−Removed: In addition, the agreement may be terminated by either party due to safety considerations, if directed by a regulatory authority or if development of ciforadenant or Tecentriq is discontinued.
+Added: This agreement will expire after a set period of time following the provision by Genentech of a final study report to the Company.
Monash License Agreement
20 unchanged sentences
Accrued and Other Liabilities
−Removed: Accrued clinical trial related
+Added: Accrued clinical trial expense
Accrued manufacturing expense
Personnel related
+Added: Accrued legal and accounting
As of December 31, 2021, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.
3 unchanged sentences
In March 2020, the Company entered into an open market sale agreement (the “2020 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s 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.
−Removed: The issuance and sale of shares of common stock by the Company pursuant to the Sales Agreement are deemed an “at-the-market” offering under the Securities Act of 1933, as amended.
−Removed: 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.
−Removed: During the year ended December 31, 2020, the Company sold an aggregate of 310,734 shares under its at-the-market offering program at an average price of approximately $ 4.06 per share resulting in net proceeds of $ 1.2 million.
−Removed: As of December 31, 2020, $ 48.7 million remained for sale under the Sales Agreement.
+Added: In November 2021, the Company entered into another Sale Agreement (“2021 Sales Agreement”) with Jefferies to sell shares of our common stock from time-to-time, with aggregate gross sales proceeds of up to $ 40,000,000 .
+Added: The issuance and sale of shares of common stock by the Company pursuant to the Sales Agreements are deemed an “at-the-market” offering under the Securities Act of 1933, as amended.
+Added: 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 Agreements.
+Added: During the year ended December 31, 2021, the Company sold 6,609,605 shares under its at-the-market offering program resulting in net proceeds of $ 29.0 million.
+Added: As of December 31, 2021, $ 18.9 million remained for sale under the 2020 Sales Agreement and $ 40.0 million remained for sale under the 2021 Sales Agreement.
The Company has reserved shares of common stock, for issuance as follows:
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Outstanding options
−Removed: Unvested restricted common stock (founders and early exercise of stock options)
Shares reserved for employee stock purchase plan
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Options forfeited
+Added: ( 1,625,200 )
Balance at December 31, 2021
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Deconsolidation gain
+Added: Gain on transfer of intellectual property
Prior year federal true-up
Effective income tax rate
−Removed: The effective tax rate is different from the federal statutory tax rate primarily due to the deconsolidation gain, uncertain tax positions, share based compensation and a valuation allowance against deferred tax assets as a result of the Company’s history of losses.
−Removed: The principal components of the Company’s net deferred tax assets are as follows (in thousands)
+Added: The effective tax rate is different from the federal statutory tax rate primarily due to a foreign rate differential and a valuation allowance against deferred tax assets as a result of the Company’s history of losses.
+Added: The significant components of the Company’s net deferred tax assets are as follows (in thousands)
Deferred tax assets
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Utilization of the net operating loss carryforwards are subject to various limitations due to the ownership change limitations provided by Internal Revenue Code (IRC) Section 382 and similar state provisions.
−Removed: On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was enacted and signed into law.
−Removed: The tax relief measures for businesses include suspension of annual deduction limitation of 80% of taxable income from net operating losses generated in a tax year beginning after December 31, 2017, changes in the deductibility of interest, acceleration of alternative minimum tax credit refunds, and a technical correction to allow accelerated deductions for qualified improvement property.
−Removed: The CARES Act did not have a material impact on the Company’s financial statements.
−Removed: On December 21, 2020, the Consolidated Appropriations Act, 2021 was enacted and signed into law for further COVID-19 economic relief and extension of certain expiring tax provisions.
−Removed: The act provides for a temporary full deduction for business expenses for food and beverages provided by a restaurant for 2021 and 2022.
−Removed: The Consolidated Appropriations Act did not have a material impact on the Company’s financial statements
+Added: On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, an economic stimulus package in response to the COVID-19 global pandemic and the Families First Coronavirus Response Act, or FFCR Act, which permits employees of certain organizations paid sick time stemming from COVID-19-related issues.
+Added: The CARES Act contains several corporate income tax provisions, including making remaining alternative minimum tax credits immediately refundable;
+Added: providing a 5-year carryback of NOLs generated in tax years 2018, 2019, and 2020, and removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021;
+Added: temporarily liberalizing the interest deductibility rules under Section 163(j) of the CARES Act, by raising the adjusted taxable income limitation from 30% to 50% for tax years 2019 and 2020 and giving taxpayers the election of using 2019 adjusted taxable income for purposes of computing 2020 interest deductibility.
+Added: The CARES Act did not have a material impact on the Company’s tax provision for the years ended December 31, 2020 or 2021.
+Added: The Consolidated Appropriations Act, 2021, which was enacted on December 27, 2020, has expanded, extended, and clarified selected CARES Act provisions, specifically on Paycheck Protection Program loans and Employee Retention Tax Credits, 100% deductibility of business meals as well as other tax extenders.
+Added: The Consolidated Appropriations Act did not have a material impact on the Company’s tax provision for the years ended December 31, 2020 or 2021.
On June 29, 2020, Assembly Bill 85 (“A.B.
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The Company does not expect the impact of this standard on its consolidated financial statements to be material.
+Added: California Senate Bill 113 (SB 113), was signed into law by Governor Newsom on February 9, 2022.
+Added: The legislation contains important California tax law changes, including reinstatement of business tax credits and net NOL deductions limited by AB 85 mentioned above.
+Added: The new tax law should be accounted for under ASC 740 in the period of enactment (2022) but is not expected to have a material impact on the Company’s tax provision due to its taxable loss position.
As of December 31, 2021, the Company also had $ 7.9 million of federal and $ 4.5 million of state research and development tax credit carryforwards available to reduce future income taxes.
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The Company determines its uncertain tax positions based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be sustained upon examination by the relevant income tax authorities.
−Removed: None of the Company’s
−Removed: unrecognized tax benefits that, if recognized, would affect its effective tax rate.
+Added: None of the Company’s unrecognized tax benefits that, if recognized, would affect its effective tax rate.
The Company does not anticipate the total amounts of unrecognized tax benefits will significantly increase or decrease in the next 12 months.
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In January 2015, the Company signed an initial operating lease, effective February 1, 2015 for 8,138 square feet of office and laboratory space with a one year term.
−Removed: Between January 2015 and October 2018, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the lease to February 2023.
+Added: Between January 2015 and September 2021, the Company entered into a series of lease amendments to increase the amount of leased space to 27,280 square feet and extend the expiration of the lease to February 2025.
The lease agreement includes annual rent escalations.
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Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.
+Added: In September 2021, the Company entered into a lease amendment to extend the expiration of its operating lease by two years , from February 2023 to February 2025.
+Added: As a result of this lease extension, the Company recorded a $ 2.4 million increase in the operating lease right-of-use asset and a corresponding increase in the operating lease liability
As of December 31, 2021 and 2020, the right-of-use asset under operating lease was $ 3.2 million and $ 1.6 million, respectively.
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imputed interest
+Added: In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel Pharmaceuticals.
+Added: Pursuant to the sublease, rent is due monthly and is subject to scheduled annual increases and Angel Pharmaceuticals is responsible for certain operating expenses and taxes throughout the life of the sublease.
+Added: The sublease will expire in February 2023 and Angel Pharmaceuticals has no option to extend the sublease term.
+Added: Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.
+Added: For the year ended December 31, 2021, the Company recognized $ 0.2 million of sublease income.
Commitments and Contingencies
+Added: As of December 31, 2021, the Company had total non-cancellable purchase commitments of $ 9.3 million for the purchase of drug substance in 2022.
+Added: Contingencies
In August 2015, the Company entered into an agreement for a line of credit of $ 0.1 million for the purpose of issuing its landlord a letter of credit of $ 0.1 million as a security deposit under its facility lease.
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Pursuant to the Company’s license agreements with each of Vernalis and Scripps, it has obligations to make future milestone and royalty payments to these parties, respectively.
−Removed: However, because these amounts are contingent, they have not been included on the Company’s balance sheet.
+Added: However, because these amounts are contingent,
+Added: they have not been included on the Company’s balance sheet.
For further discussion of the Vernalis and Scripps licensing agreements, see Note 6.
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Related Party Transactions
−Removed: In March 2018, the Company completed a follow-on public offering in which the Company sold 8,117,647 shares of common stock at a price of $ 8.50 per share, which included 1,058,823 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.
−Removed: The aggregate net proceeds received by the Company from the offering were approximately $ 64.9 million, net of underwriting discounts and commissions and offering expenses payable by the Company.
−Removed: The following aggregate number of shares of common stock were sold to our owners of more than 5% of our common stock, directors, or executive officers during the March 2018 underwritten public offering:
+Added: In February 2021, the Company completed a follow-on public offering in which the Company sold 9,783,660 shares of common stock at a price of $ 3.50 per share, which included 1,212,231 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.
+Added: The aggregate net proceeds received by the Company from the offering were approximately $ 32.0 million, net of underwriting discounts and commissions and offering expenses.
+Added: The following aggregate number of shares of common stock were sold to the Company’s owners of more than 5% of our common stock, directors, or executive officers during the February 2021 underwritten public offering:
Owners of More Than 5% of Our Common Stock
OrbiMed Advisors LLC (1)
−Removed: Novo Holdings A/S (2)
−Removed: Adams Street Partners (3)
Board of Directors
(1) Peter Thompson, M.D., a member of our Board of Directors since November 2014, is a Private Equity Partner at OrbiMed Advisors, LLC.
−Removed: (3) Peter Moldt, Ph.D., a Partner at Novo Ventures (US) Inc., which provide certain consultancy services to Novo Holdings A/S, served as a member of our Board of Directors from January 2015 to January 2019.
−Removed: (4) Elisha P.
−Removed: (Terry) Gould III, a member of our Board of Directors since November 2014, is a Partner at Adams Street Partners, LLC.
+Added: As more fully described in Note 5, the Company holds a 49.7 % ownership in Angel Pharmaceuticals and, in connection with intellectual property licensing agreements between the Company and Angel Pharmaceuticals, the Company provides operational support and clinical drug supplies to Angel Pharmaceuticals.
+Added: Third-party and internal personnel costs incurred by the Company are billed to Angel Pharmaceuticals in the period incurred and recorded as an offset to expenses.
+Added: During the year ended December 31, 2021, the Company billed Angel for approximately $ 0.2 million in internal personnel costs and $ 1.6 million in third-party costs.
+Added: Of the third-party costs, approximately $ 0.6 million were associated with clinical drug supply manufactured and expensed in prior years.
+Added: The remaining $ 1.0 million in third-party costs were primarily associated with clinical drug supply passthrough costs incurred during the year ended December 31, 2021 and did not have an impact on the Company’s consolidated statements of operations.
+Added: In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel Pharmaceuticals.
+Added: Pursuant to the sublease, rent is due monthly and is subject to scheduled annual increases and Angel Pharmaceuticals is responsible for certain operating expenses and taxes throughout the life of the sublease.
+Added: The sublease will expire in February 2023 and Angel Pharmaceuticals has no option to extend the sublease term.
+Added: Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.
+Added: For the year ended December 31, 2021, the Company recognized $ 0.2 million of sublease income.
+Added: In July 2021, Linda S.
+Added: Grais, M.D., J.D., a member of the Company’s Board of Directors, was appointed as a non-executive member of the Board of Directors of ICON plc (“ICON”), effective upon completion of ICON’s acquisition of PRA Health Sciences, Inc.
+Added: ICON is a clinical research organization and provides services to support the Company’s clinical trials.
+Added: During the year ended December 31, 2021, the Company recorded approximately $ 246,000 in clinical trial expenses under its agreements with ICON.
Quarterly Selected Financial Data (unaudited)
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Operating expenses
−Removed: Net loss per share, basic and diluted
+Added: Net income (loss)
+Added: Net income (loss) per share, basic and diluted
Subsequent Event
−Removed: On February 17, 2021, the Company completed a follow-on public offering in which the Company sold 9,783,660 shares of common stock at a price of $ 3.50 per share, which included 1,212,231 shares issued pursuant to the underwriters’ exercise of their option to purchase additional shares of common stock.
−Removed: The aggregate net proceeds received by the Company from the offering were approximately $ 31.8 million, net of underwriting discounts and commissions and offering expenses.
−Removed: The following aggregate number of shares of common stock were sold to our owners of more than 5% of our common stock, directors, or executive officers during the February 17, 2021 underwritten public offering:
−Removed: Owners of More Than 5% of Our Common Stock
−Removed: OrbiMed Advisors LLC (1)
−Removed: Board of Directors
−Removed: (1) Peter Thompson, M.D., a member of our Board of Directors since November 2014, is a Private Equity Partner at OrbiMed Advisors, LLC.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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.