What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-01 · 104 added, 128 removed, 111 unchanged (68% of the section changed)

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We are a clinical stage biopharmaceutical company.

Our strategy is to focus our efforts on the development of immune modulator product candidates to treat cancers, T-cell lymphomas, and autoimmune diseases.

Our strategy is to focus our efforts on the development of immune modulator product candidates with the potential to treat solid cancers, T-cell lymphomas, autoimmune diseases and infectious diseases.

We have built a pipeline of five programs, three of which are in clinical development.

Our lead product candidate is mupadolimab (formerly CPI-006), a potent humanized monoclonal antibody that is designed to react with a specific site on CD73.

In both preclinical and in vivo studies in cancer patients and patients with COVID-19, mupadolimab has demonstrated binding to various immune cells and the inducement of an enhanced humoral immune response.

Our lead product candidate is mupadolimab (formerly CPI-006), a humanized monoclonal antibody that is designed to react with a specific site on CD73.

In both preclinical and in vivo studies in cancer patients and patients with COVID-19, mupadolimab has demonstrated binding to various immune cells and the enhancement of immune responses by activating B cells.

We believe mupadolimab has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad range of cancers and infectious diseases.

In February 2021, we initiated a Phase 3 trial evaluating mupadolimab in a global, randomized, double-blind trial designed to evaluate the efficacy and safety of mupadolimab compared to placebo in hospitalized patients with mild-to-moderate COVID-19.

On July 15, 2021, we announced that we discontinued our Phase 3 clinical trial due to positive trends exhibited by COVID-19 vaccines in lowering serious infection and hospitalizations due to COVID-19.

The discontinuation was not related to any safety or efficacy issues observed in the trial patients.

On September 21, 2021, we published preliminary results of our discontinued Phase 3 trial.

The primary endpoint of the trial was the proportion of patients free from respiratory failure or death within 28 days after receiving either mupadolimab 2mg/kg, 1mg/kg or placebo.

Forty patients were enrolled in the clinical trial.

In the 2mg/kg cohort, 93.3% of patients were alive and free from respiratory failure compared to 85.7% in the 1mg/kg cohort and 81.1% in the placebo.

Secondary endpoints also favored mupadolimab treatment cohorts.

Due to the number of participants enrolled in the trial before it was discontinued, the foregoing results were not sufficiently powered for statistical significance.

Mupadolimab is a unique antibody that is designed to bind to a critical epitope involved in B cell signaling.

Our work in both cancer and viral diseases, such as COVID-19, have provided important insights and data into how we may best utilize the biologic properties of our antibody candidate in the clinic.

Our studies have uncovered a novel mechanism of action:

mupadolimab is designed to activate B cells which may then be driven into antibody producing plasma cells by the presence of tumor associated antigens within the tumor.

Recent work by two other academic groups have shown that B cells present within the tumors of head and neck cancers produce specific antibodies directed to tumor associated viral antigens.

As published in Nature in 2020, other groups have also shown that B cell infiltration in other tumors are strong predictors of response to immunotherapies.

Human papilloma virus (“HPV+”) head and neck cancers are increasing in incidence in the United States and are now more common than head and neck cancers associated with tobacco use.

From 1990 to 2005 there was a 225% increase in HPV+ head and neck cancers with HPV believed to be the causative factor in approximately 75% of such cancer cases.

HPV is also associated with cervical, anal, vulvar, penis and other cancers.

Reflecting an increase in the importance of HPV+ cancers, they were the subject of this year’s Karnofsky Lecture at the American Society of Clinical Oncology (“ASCO”) meeting in June 2021.

More broadly, many other cancers are believed to be associated with or caused by viruses including hepatoma, lymphomas, brain tumors, skin cancer and others.

We believe that, if successfully

developed and approved, mupadolimab’s mechanism and unique properties could position it as new treatment option for these viral associated cancers.

Other tumors, such as non-small cell lung cancer (“NSCLC”), are also thought to contain neoantigens within the tumors.

These antigens are derived from mutations that occur in the cancer cells.

If sufficient immune responses to these antigens can be generated, it could have a beneficial effect on tumor growth or response to therapies.

Various immunotherapies are now approved to enhance immune responses to tumor antigens such as anti-PD1 antibodies.

In our ongoing Phase 1/1b cancer clinical trial with mupadolimab, we have observed evidence of anti-tumor activity in NSCLC and in oropharyngeal head and neck cancers.

Based on these findings, during the second quarter, we began enrolling an expansion cohort of up to 15 patients with advanced, HPV+ head and neck cancer that have failed treatment with anti-PD-1 therapy and chemotherapy.

In this cohort, mupadolimab will be given in combination with pembrolizumab.

Our objective is to evaluate response rate in this expansion cohort.

In the third quarter of 2021, we began enrolling an expansion of up to 15 patients with relapsed refractory NSCLC who have failed therapies with anti-PD(L)-1 therapy and chemotherapy.

In this cohort, mupadolimab will be given in combination with pembrolizumab.

Our objective is to evaluate response rate in this expansion cohort.

Our next product candidate, CPI-818, is a selective, covalent inhibitor of ITK and is in a multi-center Phase 1/1b clinical trial in patients with various malignant T-cell lymphomas.

CPI-818 is designed to inhibit the proliferation of certain malignant T-cells, and we believe it also has the potential to regulate the growth of abnormal T-cells involved in autoimmunity.

CPI-818 is currently being studied in a Phase 1/1b clinical trial in patients with several types of advanced, refractory T cell lymphomas at sites in the United States, Australia, and South Korea.

Interim data from the Phase 1/1b clinical trial of CPI-818 for T cell lymphoma demonstrated tumor responses in very advanced, refractory, difficult to treat T cell malignancies.

As reported in December 2020 at the meeting of the American Society of Hematology, of seven patients with PTCL, there had been one complete response lasting over 15 months and one partial response lasting for over five months.

In October 2021, Angel Pharmaceuticals received an IND approval notice from the Center for Drug Evaluation (“CDE”) of China for CPI-818.

Angel plans to initiate a Phase 1/1b clinical trial of CPI-818 in China for the treatment of refractory T cell lymphomas in early 2022, with the potential to expand into autoimmune diseases over time.

Our work in both cancer and viral diseases, such as COVID-19, have provided important insights and data into how we may best evaluate the biologic properties of our antibody candidate in the clinic.

Our studies have uncovered a novel potential mechanism of action:

mupadolimab has the ability to activate B cells which may then be driven into antibody producing plasma cells by the presence of tumor associated antigens within the tumor.

Recent work by several groups have highlighted the importance of B cells in anti-tumor immunity.

As published in Nature in 2020, investigators have shown that B cell infiltration in some tumors are strong predictors of response to immunotherapies and predictors of favorable outcomes.

In February 2018, we initiated a Phase 1/1b clinical trial with mupadolimab administered alone and in combination with ciforadenant or pembrolizumab, and in combination with ciforadenant and pembrolizumab.

As of March 1, 2022, we have enrolled over 110 patients in this clinical trial at doses of up to 24 mg/kg every three weeks.

Key findings from this trial as of March 1, 2022 include the observation that mupadolimab was 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 mupadolimab was also associated with increases in memory B-cells in the blood, the emergence of new B-cell clones and, in some patients, the production of novel anti-tumor antibodies.

At the 2021 Annual Meeting of the Society for Immunotherapy of Cancer (“SITC”) in November 2021, we presented interim data demonstrating anti-tumor activity in NSCLC and head and neck cancer (“HNSCC”) patients treated with 12 mg./kg or greater of mupadolimab as a single agent, in combination with ciforadenant, in combination with pembrolizumab or in combination with pembrolizumab and ciforadenant.

These patients had advanced refractory disease and failed a median of three prior therapies.

Further, all but one had failed therapy with prior anti PD(L)-1 antibodies.

There were 16 evaluable NSCLC and HNSCC patients.

Seven patients achieved tumor regression, which did not meet the criteria for partial response by RECIST.

However, for the patients that showed tumor regression, six patients had progressive disease as their best response to their last treatment prior to entering the Phase 1/1b clinical trial, which indicates that the tumors in these patients were not responsive to their last therapy.

The seven patients who showed tumor regression on the trial were treated for a period of 4.5 to 12.5 months.

Based on the interim results presented at SITC, we plan to initiate a placebo controlled, randomized Phase 2 clinical trial of mupadolimab as a front-line therapy for the treatment of patients with advanced NSCLC.

The randomized, blinded trial will compare standard chemotherapy plus pembrolizumab (anti-PDL-1) with or without mupadolimab.

The trial is planned to enroll approximately 150 patients with any tumor PDL-1 expression.

The primary endpoint for the study will be progression free survival and secondary endpoints will include objective response rate and overall survival.

Our next product candidate, CPI-818, is an investigational selective, orally bioavailable, covalent inhibitor of ITK designed to have low nanomolar affinity.

ITK, an enzyme that functions in T cell signaling and differentiation, is expressed predominantly in T cells, which are lymphocytes that play a vital role in immune responses.

T cell lymphomas are malignancies of T cells that proliferate and spread throughout the body.

These lymphomas often have tonic signaling through the T cell receptor pathway, which involves ITK.

Inhibition of ITK could result in blockade of this signaling pathway and potential control of the malignancy.

One of the key survival mechanisms of solid tumors is believed to be the reprogramming of normal T cells to create an inflammatory environment that inhibits anti-tumor immune response and favors tumor growth.

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

CPI-818 is currently being studied in a Phase 1/1b clinical trial that was designed to select the recommended dose of CPI-818 and evaluate its safety, pharmacokinetics, target occupancy, biomarkers and efficacy.

The study employs an adaptive, expansion cohort design, with an initial phase that evaluated escalating doses (100, 200, 400, 600 mg taken twice a day) in successive cohorts of patients, followed by a second phase that is designed to evaluate safety and tumor response to the recommended dose of CPI-818 in disease-specific patient cohorts.

By protocol design, treatment is discontinued after one year or upon disease progression.

The study enrolled 25 patients from the United States, Australia and South Korea with several types of advanced, refractory T cell lymphomas, including nine patients with peripheral T-cell lymphoma (“PTCL”), 12 patients with cutaneous T-cell lymphoma (“CTCL”), and four patients with other T-cell lymphomas.

All patients had failed multiple prior therapies.

In December 2020 at the American Society of Hematology Annual Meeting, we presented preliminary Phase 1/1b clinical data with CPI-818 in refractory T cell lymphomas in patients receiving adequate doses of the drug.

The data presented were as follows:

● Of the seven evaluable patients with PTCL, there were two objective tumor responses as of the cut-off date of October 5, 2020:

o One patient, who previously failed chemotherapy and high dose chemotherapy with autologous bone marrow transplantation, achieved a complete response (“CR”) with CPI-818 at month 8 that remained ongoing after 12 months on study.

The patient received CPI-818 for 12 months and the CR persisted beyond discontinuation of therapy (per the study protocol, the patient stopped receiving therapy after 12 months on study).

o One patient who failed multiple prior therapies achieved a partial response at four months on therapy.

This patient then went on to receive a bone marrow transplant.

● Of the 11 evaluable patients with CTCL:

o One patient achieved a complete response in lymph node disease and continued to have stable cutaneous disease at more than 12 months on therapy as of November 2, 2020.

o Three patients achieved stable disease on therapy for between 3 and 5 months.

● There was a dose dependent increase in receptor occupancy, with trough occupancy >75% observed at the 200, 400 and 600 mg doses.

● No dose limiting toxicities and no grade 3 or 4 treatment related adverse events have been observed to date.

Based on the interim results from our Phase 1/1b clinical trial, Angel Pharmaceuticals joined this clinical trial.

T cell lymphomas are more common in China than the United States representing approximately 26% of non-Hodgkins lymphomas in China.

In January 2022, Angel Pharmaceuticals announced the enrollment of the first patient in the clinical trial.

Our third product candidate, ciforadenant (formerly CPI-444), is an oral, small molecule antagonist of the A2A receptor for adenosine with which we completed a Phase 2 expansion protocol in combination with Genentech, Inc.’s cancer immunotherapy, Tecentriq® (atezolizumab) for patients with either advanced or refractory renal cell cancer (“RCC”).

Ciforadenant is designed to disable a tumor’s ability to subvert attack by the immune system by blocking the binding of adenosine in the tumor microenvironment to the A2A receptor.

We also discovered the Adenosine Gene Signature, which has demonstrated the potential to serve as a biomarker to identify patients most likely to respond to treatment with ciforadenant.

We have refined our strategy with ciforadenant and plan to collaborate with the Kidney Cancer Consortium to evaluate ciforadenant in a Phase 2 clinical trial in first-line therapy for metastatic RCC in combination with pembrolizumab and another approved agent for RCC.

The trial is expected to enroll up to 60 patients and is intended to increase complete responses and deep responses in the front-line setting.

Preclinical studies and data from earlier clinical trials with ciforadenant, indicate adenosine may be a cause of resistance to current therapies with anti PD(L)-1.

Tumor biopsies will be evaluated for expression of the Adenosine Gene Signature.

We also discovered the Adenosine Gene Signature, which we believe has demonstrated the potential to serve as a biomarker to identify patients most likely to respond to treatment with ciforadenant.

The results of our Phase 1/1b clinical trial involving 68 patients with RCC were published in the journal Cancer Discovery in January 2020.

This study reported that in 30 patients evaluated for the Adenosine Gene Signature, no patients showing a low Adenosine Gene Signature exhibited signs of tumor regression while 17% (3 of 18) of patients with a high Adenosine Gene Signature had an overall response rate by RECIST criteria.

We have refined our strategy with ciforadenant and plan to collaborate with the Kidney Cancer Consortium to evaluate ciforadenant in a Phase 2 clinical trial in first-line therapy for advanced RCC in combination with ipilimumab and nivolumab.

The trial is expected to enroll approximately 60 patients.

The endpoint of the clinical trial is expected to be deep response rate defined as greater than 50% reduction of tumor volume.

Deep response rates in renal cell cancer have been found to correlate with long term progression free survival.

The Adenosine Gene Signature biomarker also will be evaluated in tumor biopsy specimens.

Preclinical studies and data from earlier clinical trials with ciforadenant, suggest adenosine may be a cause of resistance to current therapies with anti PD(L)-1.

To date, the majority of our efforts have been focused on the research, development and advancement of mupadolimab, CPI-818 and ciforadenant, and we have not generated any revenue from product sales and, as a result, we have incurred significant losses.

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

Our net loss for the three and nine months ended September 30, 2021 was $10.7 million and $34.0 million, respectively.

As of September 30, 2021, we had an accumulated deficit of $257.1 million.

Our net loss for the three months ended March 31, 2022 and 2021 was $8.3 million and $11.6 million, respectively.

As of March 31, 2022, we had an accumulated deficit of $274.7 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 mupadolimab, CPI-818 and ciforadenant, 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 September 30, 2021, we have funded our operations primarily through the sale and issuance of stock.

In March 2018, in a follow-on offering, we sold 8,117,647 shares of our 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.

We received aggregate net proceeds of approximately $64.9 million, after underwriting discounts, commissions and offering expenses.

In February 2021, we completed a follow-on public offering in which we 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.

We received aggregate net proceeds of approximately $32.0 million, net of underwriting discounts and commissions and offering expenses.

In March 2020, we entered into an open market sales agreement (the “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 acts as our sales agent.

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

During the nine months ended September 30, 2021, we sold 6,609,605 shares under our at-the-market offering program resulting in net proceeds of $29.0 million.

As of September 30, 2021, $18.9 million remained for sale under 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.

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 – mupadolimab, CPI-818 and ciforadenant – in greater China and obtained global rights to our BTK inhibitor preclinical programs.

Under the collaboration, we currently have a 49.7% equity interest in Angel Pharmaceuticals, excluding 7% of Angel’s equity reserved for issuance under the Angel ESOP, and are entitled to designate three individuals on Angel’s five-person Board of Directors.

As of September 30, 2021, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $76.3 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 mupadolimab, CPI-818 or ciforadenant through commercialization.

Since our inception and through March 31, 2022, we have funded our operations primarily through the sale and issuance of stock, including through our initial public offering (“IPO”) in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million and a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million, in each case net of underwriting discounts and commissions and offering expenses.

Immediately prior to the consummation of the IPO, all of our outstanding shares of convertible preferred stock were converted into 14.3 million shares of our common stock.

In March 2020, we 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 our sales agent.

In November 2021, we 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.

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 2020 Sales Agreement and 2021 Sales Agreement.

During the quarter ended March 31, 2022, we did not sell any shares under our at-the-market offering program.

As of March 31, 2022, we had sold 6,920,339 shares of common stock for gross proceeds of $31.1 million under the 2020 Sales Agreement, and $18.9 million and $40.0 million remained for sale under the 2020 Sales Agreement and 2021 Sales Agreement, respectively.

As of March 31, 2022, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $62.9 million.

While we believe that our current cash, cash equivalents and short-term marketable securities will be sufficient to fund our planned operations for at least 12 months from the date of the issuance of these financial statements, 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 mupadolimab, CPI-818 or ciforadenant through commercialization.

In addition, our operating plan may change as a result of many factors, including those described in the section of this report entitled “Risk Factors” and others currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity, debt financings or other sources, such as strategic collaborations.

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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 clinical 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.

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

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Our significant accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2021 included in our Annual Report on Form 10-K.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 2021.

There have been no material changes to our significant accounting policies during the three months ended March 31, 2022.

Components of Results of Operations

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We do not expect to receive any revenues from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our products or enter into revenue-generating collaboration agreements with third parties.

Research and Development Expense

Research and Development Expenses

Our research and development expenses consist primarily of costs incurred to conduct research and development of our product candidates.

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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.

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.

We may never succeed in achieving regulatory approval for any of our product candidates.

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Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Loss from equity method investment

Research and Development Expense

Research and development expenses for the three and nine months ended September 30, 2021 and 2020 consisted of the following costs by program (specific program costs consist solely of external costs)(in thousands):

Research and Development Expenses

Research and development expenses for the three months ended March 31, 2022 and 2021 consisted of the following costs by program and unallocated employee costs and overhead costs (specific program costs consist solely of external costs) (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Ciforadenant (formerly CPI-444)

Mupadolimab (formerly CPI‑006)

Other programs

Unallocated employee and overhead costs

For the three months ended September 30, 2021, the decrease in ciforadenant costs of $0.6 million as compared to the three months ended September 30, 2020, primarily consisted of a decrease of $0.5 million in clinical trial expenses.

For the nine months ended September 30, 2021, the decrease in ciforadenant costs of $2.0 million as compared to the nine months ended September 30, 2020, primarily consisted of a decrease of $1.6 million in clinical trial expenses and a decrease of $0.4 million in other outside service costs.

For the three months ended September 30, 2021, the increase in mupadolimab costs of $1.9 million as compared to the three months ended September 30, 2020, primarily consisted of an increase of $1.1 million in clinical trial expenses and an increase of $0.8 million in drug manufacturing costs.

For the nine months ended September 30, 2021, the increase in mupadolimab costs of $6.3 million as compared to the nine months ended September 30, 2020, primarily consisted of an increase of $4.4 million in clinical trial expenses, an increase of $0.4 million in licensing expense, an increase of $1.4 million in drug manufacturing costs and in increase of $0.1 million in other outside service costs.

For the three months ended September 30, 2021, the decrease in CPI-818 costs of $0.1 million as compared to the three months ended September 30, 2020, primarily consisted of a decrease $0.2 million in clinical trial expenses, which were partially offset by an increase of $0.1 million in drug manufacturing costs.

For the nine months ended September 30, 2021, the decrease in CPI-818 costs of $1.2 million as compared to the nine months ended September 30, 2020, primarily consisted of a decrease of $0.9 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 service costs.

For the three months ended September 30, 2021, other program costs were negligible.

For the nine months ended September 30, 2021, the decrease in other program costs of $0.8 million as compared to the nine months ended September 30, 2020, primarily consisted of a decrease of $0.7 million in drug manufacturing costs and a decrease of $0.1 million in other outside services costs .

For the three months ended September 30, 2021, the decrease in unallocated costs of $1.0 million as compared to the three months ended September 30, 2020, primarily consisted of a decrease of $0.9 million in personnel and related costs and a decrease of $0.1 million in other outside service costs.

For the nine months ended September 30, 2021, the decrease in unallocated costs of $2.6 million as compared to the nine months ended September 30, 2020, primarily consisted of a decrease of $2.2 million in personnel and related costs and a decrease of $0.4 million in other outside service costs.

For the three months ended March 31, 2022, the increase in ciforadenant costs of $0.1 million as compared to the three months ended March 31, 2021, primarily consisted of an increase of $0.1 million in drug manufacturing costs and an increase of $0.1 million in other outside service costs, which were partially offset by a decrease of $0.1 million in clinical trial expenses.

For the three months ended March 31, 2022, the decrease in mupadolimab costs of $2.2 million as compared to the three months ended March 31, 2021, primarily consisted of a decrease of $2.0 million in clinical trial expenses and a decrease of $0.4 million in licensing expense, which were partially offset by an increase of $0.2 million in drug manufacturing costs.

For the three months ended March 31, 2022, the increase in CPI-818 costs of $0.1 million as compared to the three months ended March 31, 2021, primarily consisted of an increase in drug manufacturing costs.

For the three months ended March 31, 2022, the decrease in unallocated costs of $1.1 million as compared to the three months ended March 31, 2021, primarily consisted of a decrease of $1.0 million in personnel and related costs and a decrease of $0.1 million in other outside service costs.

General and Administrative Expense

For the three months ended September 30, 2021, the decrease in general and administrative expenses of $1.2 million as compared to the three months ended September 30, 2020, primarily consisted of a decrease of $1.0 million in professional service costs and a decrease of $0.2 million in personnel and related costs.

For the nine months ended September 30, 2021, the decrease in general and administrative expenses of $1.7 million as compared to the nine months ended September 30, 2020, primarily consisted of a decrease of $1.0 million in professional service costs and a decrease of $0.7 million in personnel and related costs.

For the three months ended March 31, 2022, the decrease in general and administrative expenses of $0.9 million as compared to the three months ended March 31, 2021, primarily consisted of a decrease of $0.6 million in personnel and related costs and a decrease of $0.3 million in professional service costs.

Interest Income and Other Expense, net

For the three months ended September 30, 2021, the decrease in interest income and other expense, net of $0.1 million as compared to the three months ended September 30, 2020, primarily consisted of a decrease in interest income earned due to a decrease in interest rates.

For the nine months ended September 30, 2021, the decrease in interest income and other expense, net of $0.5 million as compared to the nine months ended September 30, 2020, primarily consisted of a decrease in interest income earned due to a decrease in interest rates.

For the three months ended March 31, 2022 and 2021, interest income and other expense, net was negligible.

Sublease Income – Related Party

For the three and nine months ended September 30, 2021, sublease income of $0.1 million represents rental income associated with our building sublease to Angel Pharmaceuticals.

For the three months ended March 31, 2022, sublease income of $0.1 million represents rental income associated with our building sublease to Angel Pharmaceuticals.

Loss from equity method investment

For the three months ended September 30, 2021, the loss from equity method investment of $1.7 million represents our share of Angel Pharmaceutical’s loss for the period.

For the nine months ended September 30, 2021, the loss from equity method investment of $2.3 million represents our share of Angel Pharmaceutical’s loss for the period.

For the three months ended March 31, 2022, the increase in loss from equity method investment of $0.9 million as compared to the three months ended March 31, 2021, primarily consisted of an increase in our share of Angel Pharmaceutical’s loss for the three months ended March 31, 2022.

Liquidity and Capital Resources

As of September 30, 2021, we had cash, cash equivalents and marketable securities of $76.3 million, and an accumulated deficit of $257.1 million, compared to cash and cash equivalents and marketable securities of $44.3 million and an accumulated deficit of $223.1 million as of December 31, 2020.

As of March 31, 2022, we had cash, cash equivalents and marketable securities of $62.9 million, and an accumulated deficit of $274.7 million, compared to cash and cash equivalents and marketable securities of $69.5 million and an accumulated deficit of $266.4 million as of December 31, 2021.

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

In March 2016, we consummated our IPO and sold 4,700,000 shares of our common stock at a price of $15.00 per share, and in April 2016, sold 502,618 shares at a price of $15.00 per share pursuant to the partial exercise of the underwriters’ option to purchase additional shares of common stock.

We received net proceeds of approximately $70.6 million, after deducting underwriting discounts, commissions and offering expenses.

Immediately prior to the consummation of our IPO, all outstanding shares of the convertible preferred stock were converted into common stock on a one-for-one basis.

We received aggregate net proceeds of approximately $64.9 million, after underwriting discounts, commissions and offering expenses.

option to purchase additional shares of common stock.

We received aggregate net proceeds of approximately $32.0 million, net of underwriting discounts and commissions and offering expenses.

In March 2020, we entered into a Sales Agreement (“the “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 $50.0 million, through an at the market equity offering program under which Jefferies acts as our sales agent.

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.

During the nine months ended September 30, 2021, the Company sold 6,609,605 shares under its at-the-market offering program resulting in net proceeds of $29.0 million.

As of September 30, 2021, $18.9 million remained for sale under 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 nine months ended September 30, 2021.

Since our inception and through March 31, 2022, we have funded our operations primarily through the sale and issuance of stock, including through our IPO in March 2016, in which we raised net proceeds of approximately $70.6 million, a follow-on offering of our common stock in March 2018, in which we raised net proceeds of approximately $64.9 million and a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million, in each case net of underwriting discounts and commissions and offering expenses.

Immediately prior to the consummation of the IPO, all of our outstanding shares of convertible preferred stock were converted into 14.3 million shares of our common stock.

In March 2020, we entered into the 2020 Sales Agreement with 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 our sales agent.

In November 2021, we entered into the 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.

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 2020 Sales Agreement and 2021 Sales Agreement.

During the three months ended March 31, 2022, we did not sell any shares under our at-the-market offering program.

As of March 31, 2022, we had sold 6,920,339 shares of common stock for gross proceeds of $31.1 million under the 2020 Sales Agreement and $18.9 million and $40.0 million remained for sale under the 2020 Sales Agreement and 2021 Sales Agreement, respectively.

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

● the progress, timing, costs and results of clinical trials for mupadolimab, CPI-818 and ciforadenant;

● the extent to which the COVID-19 coronavirus may impact our business, including our clinical trials and financial condition;

● the timing, progress, costs and results of preclinical and clinical development activities for our other product candidates;

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● our efforts to enhance operational systems and hire additional personnel, including personnel to support development of our product candidates and satisfy our obligations as a public company;

● the extent to which the COVID-19 pandemic may impact our business, including our clinical trials and financial condition;

● other factors described in the section of this report entitled “Risk Factors.”

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

Nine Months Ended

September 30,

Three Months Ended

Net cash provided by (used in):

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Cash Flows from Operating Activities

Cash used in operating activities during the nine months ended September 30, 2021 was $29.9 million, which primarily consisted of a net loss of $34.0 million, adjusted by non-cash charges of $4.6 million, primarily consisting of $3.5 million of stock compensation expense and $2.3 million of loss from equity method investment, an increase of $1.1 million in prepaid and other current assets, an increase of $0.3 million in accounts receivable, a decrease of $0.8 million in accounts payable and accrued and other current liabilities, and an increase in operating lease right-of-use asset of $0.2 million, net of a corresponding increase in operating lease liability.

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 three months ended March 31, 2022 was $6.4 million, which primarily consisted of a net loss of $8.3 million, adjusted by non-cash charges of $1.9 million, that primarily consisted of $0.7 million of stock compensation expense and $1.0 million of loss from equity method investment, a decrease of $0.3 million in prepaid and other current assets, a decrease of $0.1 million in accounts receivable, a decrease of $0.5 million in accounts payable and accrued and other current liabilities.

Cash used in operating activities during the three months ended March 31, 2021 was $8.8 million, which primarily consisted of a net loss of $11.6 million, adjusted by non-cash charges of $1.6 million, that primarily consisted of $1.2 million of stock compensation expense, an increase of $1.7 million in accounts payable and accrued and other current liabilities, a decrease in prepaid and other current assets of $0.2 million, and an increase in other assets of $0.7 million.

Cash Flows from Investing Activities

During the nine months ended September 30, 2021, cash provided in investing activities was $23.6 million, which consisted of proceeds from maturities of marketable securities of $28.4 million, partially offset by purchases of marketable securities of $4.9 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 three months ended March 31, 2022, cash used in investing activities was $25.6 million, that consisted of purchases of marketable securities of $26.4 million, which were partially offset by proceeds from maturities of marketable securities of $0.8 million.

During the three months ended March 31, 2021, cash provided in investing activities was $4.8 million, that consisted of proceeds from maturities of marketable securities of $8.2 million, which were partially offset by purchases of marketable securities of $3.3 million.

Cash Flows from Financing Activities

During the nine months ended September 30, 2021, cash provided by financing activities was $62.1 million, which consisted of $32.0 million in net proceeds from our February 2021 follow-on public offering, $29.0 million in net proceeds from the issuance of common stock through our at-the-market offering program, and $1.2 million in proceeds from the exercise of stock options.

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 three months ended March 31, 2022, there were no cash flows from financing activities.

During the three months ended March 31, 2021, cash provided by financing activities was $32.6 million, which consisted of $32.0 million in net proceeds from our February 2021 follow-on public offering and $0.6 million in net proceeds from the issuance of common stock through our at-the-market offering program.

Contractual Obligations

There have been no material changes outside the ordinary course of our business to our contractual obligations during the nine months ended September 30, 2021, as compared to those disclosed in our Annual Report on Form 10-K.

JOBS Act Accounting Election

We are an emerging growth company, as defined in the JOBS Act.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

We also rely on other exemptions provided by the JOBS Act, including, without limitation, providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.

We will remain an emerging growth company until the earlier of (1) December 31, 2021, (2) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (3) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such fiscal year, or (4) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which may allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

There have been no material changes outside the ordinary course of our business to our contractual obligations during the three months ended March 31, 2022, as compared to those disclosed in our Annual Report on Form 10-K.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis