What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-05 · 116 added, 83 removed, 132 unchanged (60% 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 with the potential to treat solid cancers, T-cell lymphomas, autoimmune diseases and infectious 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, allergic 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 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.

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 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.

After our review of recent encouraging Phase 1 clinical data for our ITK inhibitor, CPI-818, in T cell lymphomas, demonstrated activity in several preclinical models with CPI-818 in autoimmune and allergic diseases, and the potential near-term timing of additional clinical data for CPI-818, we have decided to prioritize and focus our efforts on advancing the development of CPI-818.

CPI-818 is an investigational selective, orally bioavailable, covalent inhibitor of ITK.

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.

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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.

One of the key survival mechanisms of both lymphomas and 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 as well as lymphomas.

CPI-818 is currently being studied in a Phase 1/1b clinical trial that was designed to select the recommended Phase 2 clinical trial dose of CPI-818 and evaluate its safety, pharmacokinetics, target occupancy, immunologic effects, 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.

Of the seven evaluable patients with peripheral T-cell lymphoma (“PTCL”), there were two objective tumor responses as of the cut-off date of October 5, 2020:

One patient, who previously failed chemotherapy and high dose chemotherapy with autologous bone marrow transplantation, achieved a complete response (“CR”) with CPI-818 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).

One patient who failed multiple prior therapies achieved a partial response (“PR”) 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.

Of the 11 evaluable patients with cutaneous T-cell lymphoma (“CTCL”):

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.

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.

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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”).

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

After reviewing this clinical trial data in the second quarter of 2022, we identified the optimum dosing regimen for CPI-818.

The dosing regimen of 200 mg orally twice per day was found to affect T cell differentiation and induce the generation of Th1 helper cells while blocking the development of Th2 cells.

Th1 cells are required for immunity to tumors, viral infections and other infectious diseases.

Th2 helper T cells are involved in the pathogenesis of many autoimmune and allergic diseases.

The immunologic effects of CPI-818 lead to what is known as Th1 skewing and is made possible by the high selectivity of the drug for ITK.

In some patients, a decrease in blood eosinophil count has been observed, consistent with blockade of Th2 cells.

We and Angel Pharmaceuticals are now enrolling additional patients with T cell lymphoma in the 200 mg cohort.

As of July 22, 2022, in the 200 mg cohort, 12 patients have been enrolled and eight are evaluable for response.

As of July 22, 2022, there has been one complete response (CR) lasting 25 months;

one nodal CR lasting 16 months;

one partial response (PR) ongoing at two months follow up.

As of July 22, 2022, five patients had stable disease (SD), two of the patients with SD have been on treatment for approximately 12 weeks and continue on study.

Two additional patients are on treatment and have not yet had their disease monitoring assessments.

An additional patient in the 600 mg cohort also had a PR.

Analysis of blood in four of four patients treated in the 200 mg cohort showed increases in Th1 cells compared to baseline and increases in terminally differentiated T effector memory cells, which are T cells that are antigen primed and capable of destroying tumor cells.

A tumor biopsy from one patient taken during response demonstrated an increase in T effector memory cells in the tumor.

Several patients with high baseline, pretreatment eosinophil counts showed reductions in circulating eosinophils during treatment with CPI-818.

Eosinophils are white blood cells that play a key role in allergic and autoimmune diseases, and they are often elevated in patients with T Cell lymphomas (“TCL”).

We expect to present additional data from this clinical trial later this year.

Our second product candidate, ciforadenant, 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 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.

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.

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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.

Our third product candidate is mupadolimab, a humanized monoclonal antibody that is designed to react with a specific site on CD73.

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.

Mupadolimab is a unique anti-CD73 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 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.

As of July 1, 2022, we have enrolled over 115 patients in this clinical trial at doses of up to 24 mg/kg every three weeks.

Key findings from this trial as of July 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, of 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.

We have completed enrollment in two Phase 1/1b clinical trial expansion cohorts of patients with (1) HNSCC that have failed previous treatment with anti-PD-1 therapy and chemotherapy and (2) relapsed refractory NSCLC who have failed previous treatment with anti-PD(L)-1 therapy and chemotherapy.

We will not initiate a planned randomized Phase 2 clinical trial evaluating mupadolimab in combination with pembrolizumab and chemotherapy as a front-line therapy for the treatment of patients with advanced NSCLC this year.

The delay is based on our plan to conserve capital and focus on advancing our T cell lymphoma and autoimmunity programs with CPI-818.

We believe the mupadolimab program is well-positioned to re-enter clinical trials and we may reinitiate such clinical activity depending on any changes to our clinical development strategy.

Notwithstanding our strategic decision, Angel Pharmaceuticals plans to continue the development of mupadolimab in China.

In July 2022, the Center for Drug Evaluation in China accepted for

filing the Investigational New Drug application (“IND”) to initiate a Phase 1 trial with mupadolimab alone and together with pembrolizumab in patients with advanced NSCLC and HNSCC.

This study is planned to be conducted by Angel Pharmaceuticals.

To date, the majority of our efforts have been focused on the research, development and advancement of CPI-818, ciforadenant, and mupadolimab, 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 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.

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 six months ended June 30, 2022 was $8.4 million and $16.7 million, respectively.

As of June 30, 2022, we had an accumulated deficit of $283.0 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 CPI-818, ciforadenant and mupadolimab, 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 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.

Since our inception and through June 30, 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.

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

During the six months ended June 30, 2022, we did not sell any shares under our at-the-market offering program.

As of June 30, 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 June 30, 2022, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $56.7 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 CPI-818, ciforadenant or mupadolimab 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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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 three months ended March 31, 2022.

There have been no material changes to our significant accounting policies during the six months ended June 30, 2022.

Components of Results of Operations

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Our current planned research and development activities include the following:

● enrollment and completion of our Phase 1/1b clinical trial of mupadolimab in patients with NSCLC and advanced, HPV+ head and neck cancer;

● completion of our Phase 1/1b clinical trial of mupadolimab in patients with NSCLC and advanced, HPV+ head and neck cancer;

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

● enrollment and completion of our Phase 2 clinical trials of mupadolimab;

● process development and manufacturing of drug supply of mupadolimab, CPI-818 and ciforadenant;

● enrollment and completion of our planned Phase 2 clinical trial with ciforadenant in collaboration with the Kidney Cancer Clinical Trials Consortium;

● process development and manufacturing of drug supply of CPI-818, ciforadenant and mupadolimab;

● preclinical studies under our other programs in order to select development 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

Six Months Ended

Operating expenses:

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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):

Research and development expenses for the three and six months ended June 30, 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

Six Months Ended

Ciforadenant (formerly CPI-444)

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Unallocated employee and overhead 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.

For the three months ended June 30, 2022, the decrease in ciforadenant costs of $0.1 million as compared to the three months ended June 30, 2021, primarily consisted of a decrease of $0.2 million in clinical trial expenses, which were partially offset by an increase of $0.1 million in drug manufacturing costs.

For the six months ended June 30, 2022, the increase in ciforadenant costs of $0.1 million as compared to the six months ended June 30, 2021, primarily consisted of an increase of $0.3 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 $0.3 million in clinical trial expenses.

For the three months ended June 30, 2022, the decrease in mupadolimab costs of $3.5 million as compared to the three months ended June 30, 2021, primarily consisted of a decrease of $3.7 million in clinical trial expenses and a decrease of $0.3 million in other outside service costs, which were partially offset by an increase of $0.5 million in drug manufacturing costs.

For the six months ended June 30, 2022, the decrease in mupadolimab costs of $5.7 million as compared to the six months ended June 30, 2021, primarily consisted of a decrease of $5.7 million in clinical trial expenses, a decrease of $0.4 million in licensing expense and a decrease of $0.3 million in other outside service costs, which were partially offset by an increase of $0.7 million in drug manufacturing costs.

For the three months ended June 30, 2022, the increase in CPI-818 costs of $0.4 million as compared to the three months ended June 30, 2021, primarily consisted of an increase of $0.3 million in drug manufacturing costs and an increase of $0.1 million in clinical trial expenses.

For the six months ended June 30, 2022, the increase in CPI-818 costs of $0.5 million as compared to the six months ended June 30, 2021, primarily consisted of an increase of $0.3 million in drug manufacturing costs, an increase of $0.1 million in clinical trial expenses and an increase of $0.1 million in other outside service costs.

For the three months ended June 30, 2022, the decrease in unallocated costs of $1.1 million as compared to the three months ended June 30, 2021, primarily consisted of a decrease of $1.0 million in personnel and related costs and a decrease of $0.3 million in facility related expenses, which were partially offset by an increase of $0.2 million in other outside service costs.

For the six months ended June 30, 2022, the decrease in unallocated costs of $2.2 million as compared to the six months ended June 30, 2021, primarily consisted of a decrease of $2.0 million in personnel and related costs and a decrease of $0.3 million in facility related expenses, which were partially offset by an increase of $0.1 million in other outside service costs

General and Administrative Expense

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.

For the three months ended June 30, 2022, the decrease in general and administrative expenses of $0.1 million as compared to the three months ended June 30, 2021, primarily consisted of a decrease of $0.1 million in personnel and related costs.

For the six months ended June 30, 2022, the decrease in general and administrative expenses of $1.0 million as compared to the six months ended June 30, 2021, primarily consisted of a decrease of $0.8 million in personnel and related costs and a decrease of $0.2 million in professional service costs

Interest Income and Other Expense, net

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

For the three months ended June 30, 2022, the increase in interest income and other expense, net of $0.1 million as compared to the three months ended June 30, 2021, primarily consisted of additional interest income earned due to a higher rate of return on investments.

For the six months ended June 30, 2022, the increase in interest income and other expense, net of $0.1 million as compared to the six months ended June 30, 2021, primarily consisted of additional interest income earned due to a higher rate of return on investments

Sublease Income – Related Party

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.

For the three and six months ended June 30, 2022, sublease income of $0.1 million and $0.3 million, respectively, represents rental income associated with our building sublease to Angel Pharmaceuticals.

Loss from equity method investment

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.

For the three months ended June 30, 2022, the increase in loss from equity method investment of $1.6 million as compared to the three months ended June 30, 2021, primarily consisted of an increase in our share of Angel Pharmaceutical’s loss for the three months ended June 30, 2022.

For the six months ended June 30, 2022, the increase in loss from equity method investment of $2.6 million as compared to the six months ended June 30, 2021, primarily consisted of an increase in our share of Angel Pharmaceutical’s loss for the six months ended June 30, 2022

Liquidity and Capital Resources

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.

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $56.7 million, and an accumulated deficit of $283.0 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.

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.

Since our inception and through June 30, 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.

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.

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 months ended March 31, 2022.

During the six months ended June 30, 2022, we did not sell any shares under our at-the-market offering program.

As of June 30, 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 progress, timing, costs and results of clinical trials for CPI-818, ciforadenant and mupadolimab;

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

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

If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible and/or suspend or curtail planned programs.

If we are not

able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible and/or suspend or curtail planned programs.

Any of these actions could have a material effect on our business, financial condition and results of operations.

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

Three Months Ended

Six Months Ended

Net cash provided by (used in):

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Cash Flows from Operating Activities

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 used in operating activities during the six months ended June 30, 2022 was $12.5 million, which primarily consisted of a net loss of $16.7 million, adjusted by non-cash charges of $4.3 million, that primarily consisted of $1.4 million of stock compensation expense and $2.6 million of loss from equity method investment, an increase of $0.4 million in prepaid and other current assets, a decrease of $0.1 million in accounts receivable, an increase of $0.8 million in accounts payable and a decrease of $0.7 million in accrued and other current liabilities.

Cash used in operating activities during the six months ended June 30, 2021 was $21.4 million, which primarily consisted of a net loss of $23.3 million, adjusted by non-cash charges of $3.4 million, primarily consisting of $2.4 million of stock compensation expense, an increase of $1.6 million in prepaid and other current assets and an increase of $0.1 million in accounts payable and accrued and other current liabilities.

Cash Flows from Investing Activities

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.

During the six months ended June 30, 2022, cash used in investing activities was $22.4 million, that consisted of purchases of marketable securities of $29.4 million, which were partially offset by proceeds from maturities of marketable securities of $7.0 million.

During the six months ended June 30, 2021, cash provided in investing activities was $20.1 million, which consisted of proceeds from maturities of marketable securities of $24.8 million, partially offset by purchases of marketable securities of $4.7 million.

Cash Flows from Financing Activities

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.

During the six months ended June 30, 2022, there were no cash flows from financing activities.

During the six months ended June 30, 2021, cash provided by financing activities was $43.8 million, which consisted of $32.0 million in net proceeds from our February 2021 follow-on public offering and $11.8 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 three months ended March 31, 2022, as compared to those disclosed in our Annual Report on Form 10-K.

There have been no material changes outside the ordinary course of our business to our contractual obligations during the six months ended June 30, 2022, as compared to those disclosed in our Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis