What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-08 · 66 added, 56 removed, 429 unchanged (22% of the section changed)

21 unchanged sentences

● We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development, other operations or commercialization efforts.

● The COVID-19 pandemic could adversely impact our business, including our clinical trials, and financial condition.

● Our product candidates are in various stages of development and may fail or suffer delays that materially and adversely affect their commercial viability.

1 unchanged sentence

● Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and the results of preclinical studies and early clinical trials are not necessarily predictive of future results.

Any product candidate we or any of our existing or potential future collaborators advance into clinical trials, including CPI-818, ciforadenant and mupadolimab, may not have favorable results in later clinical trials, if any, or receive regulatory approval.

Any product candidate we or any of our existing or potential future collaborators advance into clinical trials, including soquelitinib, ciforadenant and mupadolimab, may not have favorable results in later clinical trials, if any, or receive regulatory approval.

● Any termination or suspension of, or delays in the commencement or completion of, our planned clinical trials could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

● Our product candidates are subject to extensive regulation, compliance with which is costly and time consuming, and such regulation may cause unanticipated delays or prevent the receipt of the required approvals to commercialize our product candidates.

● We are conducting and plan to conduct clinical trials for CPI-818, ciforadenant and mupadolimab, and we and Angel Pharmaceuticals may in the future, conduct additional clinical trials of product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in foreign locations.

● We are conducting and plan to conduct clinical trials for soquelitinib, ciforadenant and mupadolimab, and we and Angel Pharmaceuticals may in the future, conduct additional clinical trials of product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in foreign locations.

● If we encounter difficulties enrolling subjects in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

2 unchanged sentences

● We rely, and expect to continue to rely, on third parties to conduct our clinical trials.

If these third parties do not meet our deadlines or otherwise conduct the trials as required, our clinical development programs could be delayed or unsuccessful and we may not be able to obtain regulatory approval for or commercialize our product candidates when expected, or at all.

If these third parties do not meet our deadlines or otherwise conduct the trials as required, our clinical development programs could be

delayed or unsuccessful and we may not be able to obtain regulatory approval for or commercialize our product candidates when expected, or at all.

● We rely on third parties to conduct some or all aspects of our manufacturing, research and preclinical and clinical testing, and these third parties may not perform satisfactorily.

32 unchanged sentences

$ 0.0001 par value;

10,000,000 shares authorized at March 31, 2023 and December 31, 2022;

0 shares issued and outstanding at March 31, 2023 and December 31, 2022

10,000,000 shares authorized at June 30, 2023 and December 31, 2022;

0 shares issued and outstanding at June 30, 2023 and December 31, 2022

Common stock:

$ 0.0001 par value;

290,000,000 shares authorized at March 31, 2023 and December 31, 2022;

46,568,511 and 46,553,511 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

290,000,000 shares authorized at June 30, 2023 and December 31, 2022;

48,898,362 and 46,553,511 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Six Months Ended

Operating expenses:

16 unchanged sentences

(in thousands, except share data)

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Comprehensive

6 unchanged sentences

Balance at March 31, 2023

Three Months Ended March 31, 2022

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Issuance of common stock in connection with at-the-market offering, net

Balance at June 30, 2023

Six Months Ended June 30, 2022

Comprehensive

5 unchanged sentences

Balance at March 31, 2022

Stock-based compensation expense

Unrealized loss on marketable securities

Foreign currency translation adjustment

Balance at June 30, 2022

The accompanying notes are an integral part of these condensed consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

18 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of common stock in connection with at-the-market offering, net

Proceeds from exercise of common stock options

27 unchanged sentences

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations.

Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of CPI-818, ciforadenant and mupadolimab (formerly CPI-006).

The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of CPI-818, ciforadenant and mupadolimab, as well as product candidates under the Company’s other development programs.

These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining regulatory

approvals, manufacturing and supply, sales and marketing and general operations.

Since commencing operations in 2014, the majority of the Company’s efforts have been focused on the research and development of soquelitinib (formerly CPI-818), ciforadenant and mupadolimab.

The Company believes that it will continue to expend substantial resources for the foreseeable future as it continues clinical development of, seek regulatory approval for and, if approved, prepare for the commercialization of soquelitinib, ciforadenant and mupadolimab, as well as product candidates under the Company’s other development programs.

These expenditures will include costs associated with research and development, conducting preclinical studies and clinical trials, obtaining

regulatory approvals, manufacturing and supply, sales and marketing and general operations.

In addition, other unanticipated costs may arise.

Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of CPI-818, ciforadenant and mupadolimab or any other product candidates.

The Company does not expect its existing capital resources to be sufficient to enable it to fund the completion of its clinical trials and remaining development program of CPI-818, ciforadenant and mupadolimab through commercialization.

Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, the Company may not be able to accurately estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization of soquelitinib, ciforadenant and mupadolimab or any other product candidates.

The Company does not expect its existing capital resources to be sufficient to enable it to fund the completion of its clinical trials and remaining development program of soquelitinib, ciforadenant and mupadolimab through commercialization.

In addition, its operating plan may change as a result of many factors, including those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 28, 2023 and this Quarterly Report on Form 10-Q.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 315.6 million as of March 31, 2023.

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $ 322.1 million as of June 30, 2023.

The Company has historically financed its operations primarily through the sale of common stock and redeemable convertible preferred stock.

1 unchanged sentence

Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

As of March 31, 2023, the Company had cash, cash equivalents and short-term marketable securities of $ 34.5 million.

As of June 30, 2023, the Company had cash, cash equivalents and short-term marketable securities of $ 37.0 million.

Management believes that the Company’s current cash, cash equivalents and short-term marketable securities will be sufficient to fund its planned operations for at least 12 months from the date of the issuance of these financial statements.

As of March 28, 2023, at the time of the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and during the sixty-day period preceding this date, its calculated public float was below $ 75.0 million.

As a result, it has been and will be subject to baby shelf rules for any offerings conducted on its shelf registration statement, including any sales under its ATM with Jefferies LLC (“Jefferies”).

Such rules limit the amount the Company can raise until such time that its public float is above $ 75.0 million.

Summary of Significant Accounting Policies

7 unchanged sentences

The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

The condensed consolidated results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The condensed consolidated results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year or for any other future year or interim period.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2023.

22 unchanged sentences

If the Company does not successfully commercialize or partner any of its product candidates, it will be unable to generate product revenue or achieve profitability.

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource

allocation and assessing performance.

The Company views its operations and manages its business in one operating segment, that of the development of and commercialization of precisely targeted oncology therapies.

1 unchanged sentence

The Company’s significant accounting policies are described in Note 2 to its consolidated financial statements for the year ended December 31, 2022, included in its Annual Report on Form 10-K.

There have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2023.

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2023.

Recent Accounting Pronouncements

15 unchanged sentences

Three Months Ended

Six Months Ended

Net loss - basic and diluted

3 unchanged sentences

Three Months Ended

Six Months Ended

Outstanding options

2 unchanged sentences

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values.

The fair value hierarchy prioritizes valuation inputs based on the observable nature of those inputs.

The fair value hierarchy prioritizes valuation inputs based on the observable nature of those

The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments and is not a measure of the investment credit quality.

7 unchanged sentences

These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default projections based on historical data and other observable inputs.

The following tables present information as of March 31, 2023 and December 31, 2022 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):

March 31, 2023

The following tables present information as of June 30, 2023 and December 31, 2022 about the Company’s assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy the Company utilized to determine such fair values (in thousands):

June 30, 2023

Fair Value Measured Using

5 unchanged sentences

Marketable securities

As of March 31, 2023 marketable securities had a maximum remaining maturity of nine months .

As of March 31, 2023 and December 31, 2022, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

March 31, 2023

As of June 30, 2023 marketable securities had a maximum remaining maturity of twelve months .

As of June 30, 2023 and December 31, 2022, the fair value of available for sale marketable securities by type of security were as follows (in thousands):

June 30, 2023

Treasury securities

4 unchanged sentences

Equity Method Investment

As of March 31, 2023 and December 31, 2022, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel ESOP.

The Company recognized its share of losses in Angel for the total amount of $ 1.7 million and $ 1.0 million as loss from equity method investment on the consolidated statement of operations for the three months ended March 31, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, the Company’s ownership interest in Angel was approximately 49.7 %, excluding 7 % of Angel’s equity reserved for issuance under the Angel ESOP.

The Company recognized its share of losses in Angel for the total amount of $ 1.3 million and $ 3.0 million as loss from equity method investment on the consolidated statement of operations for the three and six months ended June 30, 2023, respectively.

Summary Financial Information

1 unchanged sentence

Balance Sheet Data

March 31, 2023

June 30, 2023

December 31, 2022

6 unchanged sentences

Three Months Ended

Six Months Ended

Statement of Operations Data

22 unchanged sentences

In February 2017, the Company made a milestone payment of $ 3.0 million to Vernalis following the expansion of a cohort of patients with renal cell cancer treated with single agent ciforadenant in the Company’s Phase 1/1b clinical trial.

During the three months ended March 31, 2023, no clinical or regulatory milestones were completed or paid to Vernalis and the aggregate potential milestone payments were approximately $ 220 million for all indications as of March 31, 2023.

During the six months ended June 30, 2023, no clinical or regulatory milestones were completed or paid to Vernalis and the aggregate potential milestone payments were approximately $ 220 million for all indications as of June 30, 2023.

The Company has also agreed to pay Vernalis tiered incremental royalties based on the annual net sales of licensed products containing ciforadenant on a product by product and country by country basis, subject to certain offsets and reductions.

17 unchanged sentences

The Company is also required to make development and sales milestone payments to Monash with respect to the licensed products.

During the three months ended March 31, 2023, no development or sales milestones were completed or paid to Monash and the aggregate potential milestones were $ 45.1 million as of March 31, 2023.

During the six months ended June 30, 2023, no development or sales milestones were completed or paid to Monash and the aggregate potential milestones were $ 45.1 million as of June 30, 2023.

The Company is also required to pay to Monash tiered royalties on net sales of licensed products sold by it, its affiliates and its sublicensees at a rate ranging in the low single digits.

19 unchanged sentences

Accrued legal and accounting

During the three months ended March 31, 2023 and 2022, the Company recorded approximately $ 57,000 and $ 87,000 in depreciation expense, respectively.

As of March 31, 2023, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.

During the three months ended June 30, 2023 and 2022, the Company recorded approximately $ 36,000 and $ 92,000 in depreciation expense, respectively, and during the six months ended June 30, 2023 and 2022, the Company recorded approximately $ 93,000 and $ 179,000 in depreciation expense, respectively.

As of June 30, 2023, the amended and restated certificate of incorporation authorizes the Company to issue 290 million shares of common stock and 10 million shares of preferred stock.

Each share of common stock is entitled to one vote.

Common stockholders are entitled to dividends if and when declared by the board of directors.

As of March 31, 2023, no dividends on common stock had been declared.

As of June 30, 2023, no dividends on common stock had been declared.

In March 2020, the Company entered into an open market sale agreement (the “2020 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s common stock, from time-to-time, with aggregate gross sales proceeds of up to $ 50,000,000 , through an at-the-market equity offering program under which Jefferies will act as its sales agent.

3 unchanged sentences

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 2023 Sales Agreement.

During the three months ended March 31, 2023, the Company did no t sell any shares of common stock under its at-the-market offering program.

As of March 31, 2023, the Company had sold 6,920,339 shares of common stock for gross proceeds of $ 31.1 million under the 2020 Sales Agreement.

During the six months ended June 30, 2023, the Company sold 2,329,851 shares of common stock under its at-the-market offering program resulting in net proceeds of $ 7.5 million.

As of June 30, 2023, $ 82.3 million remained available for sale under the 2023 Sales Agreement.

The Company has reserved shares of common stock for issuance as follows:

21 unchanged sentences

Options forfeited

Balance at March 31, 2023

Balance at June 30, 2023

Stock-Based Compensation

1 unchanged sentence

Three Months Ended

Six Months Ended

Research and development

General and administrative

During the three months ended March 31, 2023 and 2022, the Company recorded no income tax benefits for the net operating losses (NOLs) incurred due to the uncertainty of realizing a benefit from those items.

During the six months ended June 30, 2023 and 2022, the Company recorded no income tax benefits for the net operating losses (NOLs) incurred due to the uncertainty of realizing a benefit from those items.

The Company continues to maintain a full valuation allowance against its net deferred tax assets.

9 unchanged sentences

Therefore, the non-lease components were not included in the right-of-use asset and liability and are reflected as an expense in the period incurred.

In September 2021, the Company entered into a lease amendment to extend the expiration of its operating lease by two years from February 2023 to February 2025.

As a result of this lease extension, the Company recorded a $ 2.4 million increase in the operating lease right-of-use asset and a corresponding increase in the operating lease liability .

As of March 31, 2023 and December 31, 2022, the right-of-use asset under operating lease was $ 2.0 million and $ 2.2 million, respectively.

The elements of lease expense for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

As of June 30, 2023 and December 31, 2022, the right-of-use asset under operating lease was $ 1.7 million and $ 2.2 million, respectively.

The elements of lease expense for the three and six months ended June 30, 2023 and 2022 were as follows (in thousands):

Three Months Ended

Six Months Ended

Statements of operations and

12 unchanged sentences

Discount rate

As of March 31, 2023, minimum rental commitments under this lease were as follows (in thousands):

As of June 30, 2023, minimum rental commitments under this lease were as follows (in thousands):

Year Ended December 31 (in thousands)

8 unchanged sentences

Pursuant to the sublease, rent is due monthly and is subject to scheduled annual increases and Angel Pharmaceuticals is responsible for certain operating expenses and taxes throughout the life of the sublease.

The sublease will expire in February 2023 and Angel Pharmaceuticals has no option to extend the sublease term.

The sublease expired in January 2023.

Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.

For the three months ended March 31, 2023 and 2022, the Company recognized approximately $ 56,000 and $ 146,000 of sublease income, respectively.

For the three and six months ended June 30, 2023, the Company recognized $ 0.0 million and $ 0.1 million of sublease income, respectively.

Commitments and Contingencies

19 unchanged sentences

Third-party and internal personnel costs incurred by the Company are billed to Angel Pharmaceuticals in the period incurred and recorded as an offset to expenses.

During the three months ended March 31, 2023 and 2022, the Company billed Angel for $ 0.0 million and approximately $ 50,000 , respectively, in internal personnel costs and approximately $ 48,000 and $ 101,000 , respectively, in third-party party costs.

During the six months ended June 30, 2023 and 2022, the Company billed Angel for $ 0.0 million and approximately $ 120,000 , respectively, in internal personnel costs and approximately $ 48,000 and $ 252,000 , respectively, in third-party party costs.

In addition to the provision of clinical supplies to Angel Pharmaceuticals, Angel Pharmaceuticals may provide clinical supplies or research services to the Company on an as needed basis.

These costs are recorded as research and development expense.

During the three months ended March 31, 2023, Angel Pharmaceuticals billed the Company for approximately $ 0.1 million in research services.

During the three and six months ended June 30, 2023, Angel Pharmaceuticals billed the Company for approximately $ 0.1 million and $ 0.2 million in research services, respectively.

In August 2021, the Company entered into an agreement to sublease 7,585 square feet of its office and laboratory space in Burlingame, California to Angel Pharmaceuticals.

The sublease will expire in February 2023 and Angel Pharmaceuticals has no option to extend the sublease term.

The sublease expired in January 2023.

Sublease income is recognized on a straight-line basis as other income in our consolidated statements of operations.

For the three months ended March 31, 2023 and 2022, the Company recognized approximately $ 56,000 and $ 146,000 of sublease income, respectively.

During the six months ended June 30, 2023 and 2022, the Company recognized approximately $ 0.1 million and $ 0.3 million of sublease income, respectively.

In July 2021, Linda S.

1 unchanged sentence

ICON is a clinical research organization and provides services to support the Company’s clinical trials.

During the three months ended March 31, 2023 and 2022, the Company recorded approximately $ 118,000 and $ 69,000 , respectively, in clinical trial expenses under its agreements with ICON.

During the six months ended June 30, 2023 and 2022, the Company recorded approximately $ 0.2 million and $ 0.2 million, respectively, in clinical trial expenses under its agreements with ICON.

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 1. Financial Statements