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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2023-11-07 · 179 added, 139 removed, 123 unchanged (72% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with the U.S.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited condensed consolidated financial statements and notes for the year ended December 31, 2023, included in our Annual Report on Form 10-K filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 19, 2024.

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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 three product candidates which are in clinical development for treatment of various solid tumors and lymphomas.

Our lead product candidate, soquelitinib (CPI-818), is an investigational selective, orally bioavailable, covalent inhibitor of ITK.

We have three product candidates which are in clinical development for the treatment of various solid tumors, lymphomas and autoimmune diseases.

Our lead product candidate is soquelitinib (formerly CPI-818), a selective, covalent inhibitor of ITK (interleukin 2 inducible T cell kinase), and it is in a multi-center Phase 1/1b clinical trial in patients with various recurrent, malignant T cell lymphomas.

Soquelitinib is designed to inhibit the proliferation of certain malignant T cells and also to affect the differentiation of normal T cells, which could enhance immunity to tumor cells.

We believe these properties have the potential to regulate the growth and activity of both abnormal malignant T cells and abnormal T cells involved in autoimmunity and allergy.

Soquelitinib 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.

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

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

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 control the growth of the malignancy.

In addition, 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 through the function of Th2 cells.

In addition, 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 environment in the tissues that inhibits an anti-tumor immune response and favors tumor growth.

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

Selective inhibition of ITK can block the production and function of Th2 cells, potentially leading to a biasing toward the differentiation of naïve T cells into Th1 cells, a process known as Th1 skewing.

Selective inhibition of ITK can block the production and function of Th2 and Th17 cells, potentially leading to a biasing toward the differentiation of naïve T cells into Th1 cells, a process known as Th1 skewing.

Th1 cells lead to the generation of killer T cells that can eliminate tumor cells or viral infected cells.

Th1 cells produce interferon gamma and tumor necrosis factor that are cytokines known to destroy cancer cells.

We believe that soquelitinib can lead to reprograming of normal immune responses that also could be beneficial for the treatment of certain autoimmune and allergic diseases.

Overactive Th2 cells play a role in autoimmune and allergic diseases, which can potentially be ameliorated by selective ITK inhibition by blocking Th2 function and their production of inflammatory cytokines.

Soquelitinib is currently being studied in a Phase 1/1b clinical trial that was designed to select the recommended Phase 2 dose of soquelitinib and evaluate its safety, pharmacokinetics (“PK”), 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 soquelitinib in disease-specific patient cohorts.

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

We believe that soquelitinib can lead to reprogramming of normal immune responses that also could be beneficial for the treatment of certain autoimmune and allergic diseases.

Overactive Th2 and Th17 cells play a role in autoimmune and allergic diseases, which can potentially be ameliorated by selective ITK inhibition by blocking Th2 and Th17 function and their production of inflammatory cytokines such as IL4, IL5, IL13, IL17 and others.

T cell signaling involving ITK is required in the development of many T cell lymphomas.

The ITK cell signaling pathway is similar to the signaling that occurs in B cells, which is mediated by a homologous enzyme known as BTK, the target of ibrutinib, an approved treatment for patients with B cell lymphomas and leukemias.

ITK is expressed in many T cell lymphomas, including peripheral T cell lymphoma (“PTCL”), angioimmunoblastic T cell lymphoma (“AITL”), cutaneous T cell lymphomas (“CTCL”), anaplastic large cell lymphomas (“ALCL”), natural killer T cell lymphomas (“NKTCL”) and other T cell malignancies.

In ITK genetic knockout mice, which completely lack expression of ITK, T cells exhibit defects in T helper cell differentiation and cytokine secretion but retain the ability to differentiate into cytotoxic T cells that secrete IL-2 and interferon gamma (“IFNg”), which are the cells responsible for tumor rejection.

We believe that skewing T helper cell differentiation to favor cytotoxic T cells, known as Th1 skewing, may be beneficial in treating T cell lymphomas and many other types of cancer.

Mice with genetic knock-out of ITK also demonstrate a reduction in Th2 cells, which produce the cytokines that are often responsible for autoimmunity and allergy.

We developed soquelitinib by covalently targeting the cysteine amino acid residue at position 442 in the ITK protein.

We believe this irreversible targeting of ITK has the potential to provide a potent, selective and prolonged duration of activity without the need for high systemic exposures and thereby may improve the therapeutic window.

This approach was previously used by our cofounders to generate ibrutinib.

We believe that the potential selectivity of soquelitinib could mimic the immune effects seen in ITK knockout mice and skew the immune response toward a more favorable anti-tumor immune response as well as reducing the activity of Th2 and Th17 cells.

The blockade of Th2 and Th17 differentiation has the potential to suppress inflammatory reactions involved in various autoimmune and allergic diseases.

Soquelitinib was designed to have the necessary selectivity to specifically block ITK function without altering other closely related enzymes involved in T cell differentiation.

We believe such selectivity is required for achieving Th1 skewing and Th2/Th17 blockade, as established by ITK genetic knockout studies in mice.

ITK also plays a role in the proliferation of some T cell lymphomas and we believe its inhibition could lead to growth arrest and/or tumor cell cytotoxicity.

In our preclinical studies of soquelitinib, objective tumor responses were observed in dogs with spontaneous T cell lymphomas.

Soquelitinib is currently being studied in a Phase 1/1b clinical trial that was designed to select the optimal dose of soquelitinib and evaluate its safety, pharmacokinetics (“PK”), target occupancy, immunologic effects, biomarkers and efficacy in patients with various T cell lymphomas.

The study employs an adaptive, expansion cohort design, with an initial phase that evaluated escalating doses (100, 200, 400 or 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 soquelitinib in disease-specific patient cohorts.

The study has enrolled patients from the United States, Australia, China and South Korea with several types of advanced, refractory T cell lymphomas.

During the dose escalation phase of the study, and with longer follow up, it became clear that the patients receiving the 200mg twice per day dose were demonstrating higher response rates as well as longer disease control.

This dose was determined to be the optimal dose and was consistent with dose-response effects seen in in vitro preclinical experiments.

In December 2022 at the American Society of Hematology Annual Meeting (“ASH”), we presented preliminary Phase 1/1b clinical data with soquelitinib in refractory T cell lymphomas.

The data presented were as of a September 2, 2022 data cut-off:

T Cell Lymphoma Interim Data Highlights

● 13 patients were enrolled in the 200 mg cohort and 11 were evaluable for response.

Overall objective responses were seen in 4 of 11 patients.

Enrolled patients were heavily pretreated receiving a median of 3 prior therapies.

In this group, there was one complete response (“CR”) lasting 25 months in a patient with peripheral T cell lymphoma (“PTCL”);

one nodal CR lasting 19 months in a patient with cutaneous T cell lymphoma;

and two partial responses (“PR”) ongoing at six and eight months follow up, respectively, in patients with PTCL and anaplastic large cell lymphoma.

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

● No dose limiting toxicities were observed, and a maximum tolerated dose was not reached at doses as high as 600 mg twice per day.

Immunologic Interim Data Highlights

● The 200 mg dose induced Th1 skewing and both Th2 and Th17 blockade based on peripheral blood samples from several patients:

o In one patient that had a substantial reduction of a large tumor on the abdominal wall, a blood sample analysis demonstrated an increase in blood Th1, a decrease in blood Th17, and a reduction of both, blood eosinophil count and IL-5, consistent with Th1 skewing and Th2 blockade.

Tumor samples in this patient were also analyzed and showed an increase in terminally differentiated T effector memory cells (“TEMRA” cells), which are T cells that have responded to an antigen and are able to mediate effector functions, such as the destruction of tumor cells.

o In four patients (two with PRs, one with stable disease (“SD”) and one with progressive disease (“PD”), the change in Th1 and CD8+ TEMRA cells was serially measured over time.

The PR and SD patients showed an increase in both Th1 and CD8+ TEMRA cells.

Of note, SD and PD patients were lymphopenic at baseline with absolute lymphocyte counts less than 1,000, suggesting the need for a minimal level of immune competence.

● In vitro data demonstrated that soquelitinib induced Th1 skewing and Th2 blockade in a dose-dependent manner that supported the selection of the 200 mg dose.

This includes an analysis of peripheral blood samples from 12 healthy volunteers that were stimulated in the presence of various concentrations of soquelitinib and other studies that showed that soquelitinib inhibited Th2 cytokine production from normal CD4+ and malignant Sezary cells.

● Other in vitro studies showed that soquelitinib inhibited the production of interleukin 4, 5 and 13 cytokines produced by Th2 cells.

● In vivo preclinical studies in mice with transplanted T cell lymphoma showed that soquelitinib led to an increase in infiltration of normal CD8+ T cells in the tumor and inhibition of tumor growth.

● The findings of the human and preclinical studies suggest that soquelitinib has the potential to enhance anti-tumor immunity representing a potentially novel approach to immunotherapy.

As of May 18, 2023, enrollment in the 200 mg cohort is continuing with 30 patients enrolled, including 20 evaluable for tumor response.

As of May 18, 2023, there were 3 CRs and 3 PRs with one of these PRs demonstrating continued regression of the tumor.

One of the patients with a CR and 2 with PRs remained on therapy.

A total of ten patients remained on therapy, including six who have not had their initial tumor response evaluation.

Treating patients in the 200 mg cohort has identified a biomarker associated with response to soquelitinib.

Soquelitinib is designed to induce a host anti-tumor cell mediated immune response that requires normal functioning T cells.

Data from the 200 mg cohort in the Phase 1/1b clinical trial indicates that a minimum absolute lymphocyte count (“ALC”) above 900 cells per cubic milliliter of blood may be required for potential tumor response and disease control.

As of May 18, 2023, for patients with ALC above 900 per cubic milliliter of blood, objective responses (CR plus PR)

were seen in 6 of 14 patients with disease control (CR, PR and stable disease) in 12 of 14 patients.

No objective responses were seen in six patients (0 for 6) with ALC below 900.

No dose limiting toxicities were observed in any of the dose levels.

As of January 22, 2024, and in a safety population of 73 patients, no hematologic, renal or hepatic treatment-related adverse events were observed and the most common grade 3 to 4 adverse event was pruritus, seen in four patients with lymphoma involving skin.

The optimum dose was determined to be 200 mg twice per day based on anti- tumor efficacy and pharmacodynamic studies which revealed full occupancy of the ITK active site by the drug.

This dose was also consistent with dose-response effects seen in preclinical experiments both in vitro and in vivo.

Soquelitinib is designed to induce a host anti-tumor cell mediated immune response that requires normal functioning T cells and an adequately functioning immune system.

Therapies for T cell lymphomas, such as chemotherapy, are frequently immunosuppressive.

Data from the Phase 1/1b clinical trial suggest that the number of prior therapies and immunocompetence were associated with tumor response to soquelitinib and are important patient eligibility requirements, with an optimum range of ≥1 to ≤3 prior therapies.

Interim data from the Phase 1/1b clinical trial were presented at the American Society of Hematology Annual Meeting (“ASH”) in December 2023.

At that time, we also announced interim data from the trial as of November 21, 2023 on 21 evaluable patients receiving a dose of 200 mg twice per day and revealed an objective response rate (“ORR”) of 33.3% with 3 complete responses (“CRs”) and 4 partial responses (“PRs”).

Since that report, one of the patients achieving a PR continued to respond and showed a CR resulting in an ORR of 33.3% with 4 CRs and 3 PRs as of an updated cutoff date of January 22, 2024.

As of May 3, 2024, 25 patients were enrolled in the trial at the optimal dose, including 23 evaluable patients.

For the 23 evaluable patients, objective responses (complete response, CR plus partial response, PR) were seen in nine patients (39%), including five CRs (23%) and four PRs.

See waterfall plot below.

Disease control (CR, PR and stable disease) was seen in 14 of 23 patients (61%).

The stable disease group included five patients who achieved tumor reductions that did not meet the criteria for a PR.

Several patients experiencing tumor regression are continuing on therapy as of the data cutoff.

Waterfall Plot for Patients in the 200 mg Dose Cohort of the Soquelitinib Phase 1/1b Clinical Trial for Peripheral T Cell Lymphoma .

The plot shows the best percent change in tumor volume in the 23 evaluable patients (eligible patient population), as of May 3, 2024, that were measurable by CT scan or by Modified Severity-Weighted Assessment Tool (mSWAT) for patients with cutaneous involvement.

PTCL-NOS, peripheral T cell lymphoma not otherwise specified;

CTCL, cutaneous T cell lymphoma of either Sezary or mycosis fungoides type;

NKTCL, natural killer cell T cell lymphoma;

ALCL, anaplastic large cell lymphoma;

AITL, angioimmunoblastic T cell lymphoma.

In August 2023, we completed an End-of-Phase/Pre-Phase 3 meeting with the Food and Drug Administration (“FDA”) regarding our plans to conduct a potentially registrational Phase 3 clinical trial of soquelitinib in relapsed PTCL.

The FDA provided feedback on our plans and proposed registration trial and we anticipate that we will be able to initiate this clinical trial in early 2024.

The FDA provided feedback on our proposed registration trial, including the proposed endpoints.

We anticipate that we will be able to initiate this clinical trial in the third quarter of 2024.

The clinical trial is designed to enroll a total of 150 patients with relapsed PTCL that have received ≥ 1 prior therapy and≤3 prior therapies.

Number of prior therapies in this range selects for immunocompetent patients.

Patients will be randomized 1:1 to soquelitinib 200 mg two-times a day or standard of care chemotherapy.

The standard of care agent will be based on physicians choice of either gemcitabine, belinostat or pralatrexate.

The number of prior therapies in this range selects for immunocompetent patients.

Patients will be randomized 1:1 to soquelitinib 200 mg two-times a day or one of the standard of care chemotherapies.

The standard of care agent will be based on the physician’s choice of either belinostat or pralatrexate.

The primary endpoint will be progression-free survival.

Secondary endpoints will include objective response rate and overall survival.

We are recruiting investigators and anticipate that leading academic and private medical centers with significant experience in lymphoma research will participate in the trial, including a principal investigator who has conducted other Phase 3 clinical trials in T cell lymphoma and authored many peer-reviewed articles on lymphomas.

As reported at the International Conference of Malignant Lymphoma in June 2023, preclinical data suggest that ITK inhibition with soquelitinib has the potential to treat solid and hematological cancers through a novel mechanism of action that has modulated T cell differentiation and enhanced the anti-tumor immune response via Th1 skewing, increased T cell cytolytic capacity and reduced of T cell exhaustion in preclinical models.

Secondary endpoints will include objective response rate, overall survival and duration of response.

We are recruiting investigators and anticipate that leading academic and private medical centers with significant experience in lymphoma research will participate in the trial, including investigators who have conducted other Phase 3 clinical trials in T cell lymphoma and authored many peer-reviewed articles on lymphomas.

There are currently no FDA fully approved agents for the treatment of relapsed PTCL.

As reported at the International Conference of Malignant Lymphoma in June 2023, preclinical data suggest that ITK

inhibition with soquelitinib has the potential to treat solid and hematological cancers based on its novel proposed mechanism of action.

Tumor immune responses were enhanced by the modulation of T cell differentiation resulting in increased T cell cytolytic capacity, increased migration of T cells into the tumor and reduced T cell exhaustion.

Highlights of the presentation included:

● soquelitinib monotherapy provided statistically significant inhibition of tumor growth in established tumors in the following cancer models:

EL4 TCL, A20 B cell lymphoma and CT26 colon cancer.

● monotherapy provided statistically significant inhibition of tumor growth in established tumors in the following cancer models:

EL4 TCL (T cell lymphoma), A20 B cell lymphoma and CT26 colon cancer.

● In the EL4 TCL model, treatment with soquelitinib led to increased infiltration of normal CD8+ T cells into the tumor.

In addition, these CD8+ T cells had higher expression of perforin, an effector molecule produced by killer T cells that is involved in killing cancer cells.

● In the CT26 colon cancer model, the depletion of CD8 cells reduced the activity observed for soquelitinib treatment, suggesting that its potential mechanism of action involves the production of normal CD8+ T cells.

● In the CT26 colon cancer model, the depletion of normal CD8 cells reduced the activity observed for soquelitinib treatment, suggesting that its potential mechanism of action involves the production of normal CD8+ T cells.

● In the CT26 colon cancer model, treatment with soquelitinib reduced the expression of T cell exhaustion markers.

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These reinvigorated T cells regained their cancer cell killing capacity.

These findings suggest that the inhibition of ITK by soquelitinib produced changes in the tumor microenvironment that enhanced anti-tumor immunity creating a less favorable environment for tumor growth and provides the rationale for clinical investigation in a monotherapy Phase 1 clinical trial of soquelitinib in solid tumors, which we plan to initiate in the first half of 2024.

On July 6, 2023, Corvus announced the publication of preclinical data on soquelitinib in bioRxiv, which highlighted the potential of selective inhibition of ITK to enhance anti-tumor immune response to hematologic and solid tumors and provide a novel approach to cancer immunotherapy.

Key results from the preclinical studies described in the publication demonstrated that soquelitinib:

● Selectively bound to and inhibited ITK function while sparing other closely related kinases, including resting lymphocyte kinase.

We believe these findings suggest that the inhibition of ITK by soquelitinib produced changes in the tumor microenvironment that enhanced anti-tumor immunity creating a less favorable environment for tumor growth and provides the rationale for clinical investigation in a monotherapy trial of soquelitinib in solid tumors.

We are planning a Phase 1b/2 clinical trial, in collaboration with the Kidney Cancer Research Consortium, of soquelitinib in solid tumors in patients with renal cell cancer (“RCC”) who have failed checkpoint inhibitor therapy.

In July 2023, we announced the posting of preclinical data on soquelitinib in bioRxiv, the online archive for unpublished preprints in the life sciences, which highlighted the potential of selective inhibition of ITK to enhance anti-tumor immune response to hematologic and solid tumors and provide a novel approach to cancer immunotherapy.

Key results from the preclinical studies described in the paper demonstrated that soquelitinib:

● Selectively bound to and inhibited ITK function while sparing other closely related kinases, including resting lymphocyte kinase (“RLK”).

● Inhibited Th2 T cell function and the production of various Th2 cytokines leading to Th1 skewing and production of interferon gamma and tumor necrosis factor, which are important cytokines in tumor rejection.

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● Led to in vivo anti-tumor activity in several mouse tumor models, including colon, renal, melanoma, B cell and T cell tumor.

In September 2023, a paper was published by an independent academic group in Scientific Reports supporting the potential of ITK inhibition for treatment of solid tumors.

The preclinical data demonstrated a reduction and reversal of T cell exhaustion markers and an increase in the infiltration of killer T cells into tumors, consistent with soquelitinib’s proposed mechanism of action.

The paper highlights the potential of selective ITK inhibition for the treatment of cancers and helps to confirm preclinical and clinical results generated by Corvus.

In November 2023, we announced the posting of preclinical data on soquelitinib in bioRxiv that demonstrated that ITK’s selective inhibition produced therapeutic benefits in several autoimmune and allergy preclinical models, including psoriasis, asthma, pulmonary fibrosis, scleroderma and graft versus host disease.

The mechanism of action involves the inhibition of Th2 and Th17 cells and their subsequent production of cytokines such as IL-4, IL-5, IL-17 and other cytokines involved in these diseases.

The novel mechanism is a result of ITK inhibition and blockade of formation of Th2 and Th17 cells.

We are enrolling patients at multiple clinical sites in a randomized, placebo-controlled Phase 1 clinical trial of soquelitinib in patients with moderate to severe atopic dermatitis.

The trial is planned to enroll 64 patients that have failed at least one prior therapy across four different 28-day dosing regimens of soquelitinib compared to a placebo group.

The endpoints include safety and improvement in Eczema Area and Severity Index (“EASI”).

Patients and physicians will be blinded to treatment assignment.

We expect initial data for this clinical trial before year-end 2024.

We continue to advance our next-generation ITK inhibitor preclinical product candidates, which were designed to deliver precise T-cell modulation that is optimized for specific immunology indications.

The next-generation ITK inhibitor candidates are part of our ongoing business development efforts to maximize the potential of the our ITK inhibitor programs and other programs.

We have issued patents covering composition of matter and uses of our ITK inhibitors and hold exclusive worldwide rights (except for greater China) for all indications.

Our second product candidate, ciforadenant, is an oral, small molecule antagonist of the A2A receptor for adenosine designed to disable a tumor’s ability to subvert attack by the immune system by blocking the binding of immunosuppressive adenosine in the tumor microenvironment to the A2A receptor.

We are collaborating with the Kidney Cancer Research Consortium to evaluate ciforadenant in an open label Phase 1b/2 clinical trial as a first line therapy for metastatic renal cell cancer (“RCC”) in combination with ipilimumab (anti-CTLA-4) and nivolumab (anti-PD-1).

The clinical trial is expected to enroll up to 60 patients and interim data are anticipated in early 2024.

This study has fully enrolled patients in the Phase 1b safety portion of the trial and is now enrolling patients in the Phase 2 portion of the trial.

The safety portion of the study evaluated the safety of ciforadenant administered in combination with nivolumab and ipilimumab.

Ciforadenant preclinical data were presented at the Japanese Cancer Association and American Association for Cancer Research Precision Cancer Medicine International Conference, which is took place June 28 to June 30, 2023 in Kyoto, Japan.

In 2018, we published preclinical findings in animal tumor models demonstrating that treatment with anti-CTLA4 antibody combined with ciforadenant provided synergistic anti-tumor activity based on a novel mechanism of action.

We are collaborating with the Kidney Cancer Research Consortium to evaluate ciforadenant in an open label Phase 1b/2 clinical trial as a first line therapy for metastatic RCC in combination with ipilimumab (anti-CTLA-4) and nivolumab (anti-PD-1).

The efficacy endpoint for the trial is deep response rate, defined as CR plus PRs of greater than 50% tumor volume reduction.

The clinical trial is expected to enroll up to 60 patients and as of May 2, 2024, a total of 27 patients were enrolled in the trial.

The protocol defined pre-specified statistical threshold for efficacy is a 50% increase above the 32% deep response rate seen with previous ipilimumab/nivolumab combination trials in RCC conducted by investigators at the Kidney Cancer Research Consortium.

As of May 2, 2024, the interim analysis of the clinical trial has met the threshold for efficacy and therefore enrollment continues.

Ciforadenant preclinical data were presented at the Japanese Cancer Association and American Association for Cancer Research Precision Cancer Medicine International Conference, which took place June 28 to June 30, 2023 in Kyoto, Japan.

The presentation highlighted data supporting the synergy between ciforadenant and immune checkpoint blockade (“ICB”), leading to a proinflammatory response.

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

While 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, we are waiting to initiate a potential Phase 2 randomized clinical trial in order to prioritize the development of our other two lead product candidates.

Angel Pharmaceuticals is continuing the development of mupadolimab in China and is enrolling patients in a Phase 1 trial with mupadolimab alone and together with pembrolizumab in patients with advanced NSCLC and head and neck cancer.

While 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, we are waiting to initiate a potential Phase 2 randomized clinical trial in order to prioritize the development of our other two lead product candidates.

Angel Pharmaceuticals Co.

(“Angel Pharmaceuticals”) is continuing the development of mupadolimab in China and is enrolling patients in a Phase 1/1b clinical trial with mupadolimab alone and together with pembrolizumab in patients with advanced NSCLC and head and neck squamous cell cancer (“HNSCC”).

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

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

Our diverse and versatile product candidates have also enabled us to address markets in foreign markets.

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

(“Angel Pharmaceuticals”), a 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.

Our diverse and versatile product candidates also have enabled us to take steps to address markets in foreign countries.

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

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

Our net loss for the three and nine months ended September 30, 2023 was $6.0 million and $20.4 million, respectively.

As of September 30, 2023, we had an accumulated deficit of $328.1 million.

Our net loss for the three months ended March 31, 2024 was $5.7 million.

As of March 31, 2024, we had an accumulated deficit of $340.4 million.

We expect our losses will increase as we continue our development of, seek regulatory approval for and begin to commercialize soquelitinib, 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 September 30, 2023, 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 March 31, 2024, we have funded our operations primarily through the sale and issuance of preferred and common 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 redeemable 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 our common stock, from time-to-time, with aggregate gross sales proceeds of up to $50,000,000, through an at-the-market equity offering program under which Jefferies will act as 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.

On March 28, 2023, we terminated both the 2020 Sales Agreement and the 2021 Sales Agreement and concurrently entered into a new open market sale agreement (the “2023 Sales Agreement”) with Jefferies to sell shares of our common stock, from time-to-time, with aggregate gross sales proceeds of up to $90,000,000, through an at-the-market equity offering program under which Jefferies will act as our sales agent.

On March 28, 2023, we entered into an open market sale agreement (the “2023 Sales Agreement”) with Jefferies LLC (“Jefferies”) to sell shares of our common stock, from time-to-time, with aggregate gross sales proceeds of up to $90.0 million, through an at-the-market equity offering program under which Jefferies will act as our sales agent.

The issuance and sale of shares of common stock pursuant to the 2023 Sales Agreement are deemed an “at-the-market” offering under the Securities Act of 1933, as amended.

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 nine months ended September 30, 2023, we sold 2,461,903 shares of common stock under our at-the-market offering program resulting in net proceeds of $7.8 million.

As of September 30, 2023, $81.9 million remained available for sale under the 2023 Sales Agreement.

As of September 30, 2023, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $32.2 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 soquelitinib, 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.

Such financing would result in dilution to stockholders, imposition of debt covenants and repayment obligations or other restrictions that may affect our business.

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

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

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

During the three months ended March 31, 2024, we did not sell any shares of common stock under our at-the-market offering program.

As of March 31, 2024, $81.9 million remained available for sale under the 2023 Sales Agreement.

On May 1, 2024, we amended the 2023 Sales Agreement to decrease the aggregate gross sales proceeds from $90.0 million to $8.2 million, which decreased the amount available for sale under the 2023 Sales Agreement from $81.9 million to $100,000.

Our three product candidates, soquelitinib, ciforadenant and mupadolimab, are in clinical development by us and / or our partner, Angel Pharmaceuticals.

Except for Greater China, we own the world-wide rights to these product candidates.

We plan to focus our development efforts in 2024 on soquelitinib with the start of a potentially registrational Phase 3 clinical trial of soquelitinib in relapsed PTCL and a randomized, placebo-controlled Phase 1 trial of soquelitinib in patients with moderate to severe atopic dermatitis.

As a result of our ongoing development efforts, we anticipate needing to spend substantial resources for the foreseeable future.

Consequently, we will need additional financing to support our continuing operations.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity or debt financings or other sources, which may include collaborations with third parties.

Such financing could result in dilution to stockholders and may include the imposition of debt covenants and repayment obligations or other restrictions that may affect our business.

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

Adequate additional financing may not be available to us on acceptable terms, or at all.

For example, the trading prices for our and other biopharmaceutical companies’ stock have been highly volatile as a result of factors such as the impacts of pandemics, such as COVID-19, and increases in inflation rates or interest rates.

As a result, we may face difficulties raising capital through sales of our common stock and any such sales may be on unfavorable terms.

Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

We will need to generate significant revenue to achieve profitability, and we may never do so.

As of March 31, 2024, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $22.1 million.

On May 6, 2024, we closed a registered direct offering which resulted in gross proceeds of approximately $30.6 million.

Based on our currently available cash resources, the proceeds from our recent financing and our currently planned level of operations and cash flows, we expect that our cash resources will be sufficient to enable us to advance our programs into the fourth quarter of 2025.

In accordance with applicable accounting standards, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern for at least the next 12 months after the date of the issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and concluded that our existing cash, cash equivalents and marketable securities, including the approximate gross proceeds of $30.6 million from our May 2024 registered direct offering, are sufficient to fund our operations for at least the next 12 months from issuance of the condensed consolidated financial statements.

However, the Company will need to continue to raise additional capital to fund its operations.

See “Risk Factors—Risks Related to Our Limited Operating History, Financial Condition and Need for Additional Capital.”

We currently have no manufacturing capabilities and do not intend to establish any such capabilities.

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Significant Accounting Policies

Our significant accounting policies are described in Note 2 to our consolidated financial statements for the year ended December 31, 2022 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, 2023.

Our significant accounting policies are described in Note 2 to our condensed consolidated financial statements for the year ended December 31, 2023 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, 2024.

Components of Results of Operations

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Our current planned research and development activities include the following:

● enrollment and completion of our ongoing Phase 1/1b clinical trial of soquelitinib;

● completion of our ongoing Phase 1/1b clinical trial of soquelitinib in PTCL;

● completion of our ongoing Phase 1 clinical trial of soquelitinib in atopic dermatitis;

● a potential Phase 3 registrational clinical trial for soquelitinib in PTCL;

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● a potential clinical trial of soquelitinib in solid tumors;

● a potential clinical trial of soquelitinib in atopic dermatitis;

● process development and manufacturing of drug supply of soquelitinib and ciforadenant;

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Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties related to timing and cost to completion.

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

The duration, costs and timing of clinical trials and development

of product candidates will depend on a variety of factors, including many of which are beyond our control.

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

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Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Sublease income - related party

Loss from equity method investment

Loss before equity method investment

Income (loss) from equity method investment

Research and Development Expenses

Research and development expenses for the three and nine months ended September 30, 2023 and 2022 consisted of the following costs by program as well as unallocated employee costs and overhead costs (specific program costs consist solely of external costs) (in thousands):

Research and development expenses for the three months ended March 31, 2024 and 2023 consisted of the following costs by program as well as unallocated employee costs and overhead costs (specific program costs consist solely of external costs) (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Soquelitinib (CPI-818)

Unallocated employee and overhead costs

For the three months ended September 30, 2023, the increase in soquelitinib costs of $0.3 million as compared to the three months ended September 30, 2022, primarily consisted of an increase of $0.1 million in clinical trial expenses and an increase of $0.5 million in other outside service costs, which were partially offset by a decrease of $0.3 million in drug manufacturing costs.

For the nine months ended September 30, 2023, the increase in soquelitinib costs of $1.9 million as compared to the nine months ended September 30, 2022, primarily consisted of an increase of $0.4 million in drug manufacturing costs, an increase of $0.6 million in clinical trial expenses and an increase of $0.9 million in other outside service costs.

For the three months ended September 30, 2023, the increase in ciforadenant costs of $0.1 million as compared to the three months ended September 30, 2022, primarily consisted of an increase of $0.3 million in clinical trial expenses, which was partially offset by a decrease of $0.2 million other outside service costs.

For the nine months ended September 30, 2023, the decrease in ciforadenant costs of $0.3 million as compared to the nine months ended September 30, 2022, primarily consisted of a decrease of $0.3 million in drug manufacturing costs and a decrease of $0.2 million in other outside service costs, which were partially offset by an increase of $0.2 million in clinical trial expenses.

For the three months ended September 30, 2023, the decrease in mupadolimab costs of $6.5 million as compared to the three months ended September 30, 2022, primarily consisted of a decrease of $6.3 million in drug manufacturing costs and a decrease of $0.2 million in clinical trial expenses as a result of pausing development of this product candidate.

For the nine months ended September 30, 2023, the decrease in mupadolimab costs of $9.3 million as compared to the nine months ended September 30, 2022, primarily consisted of a decrease of $7.7 million in drug manufacturing costs, a decrease of $1.3 million in clinical trial expenses and a decrease of $0.3 million in other outside service costs as a result of pausing development of this product candidate.

For the three months ended September 30, 2023, the decrease in unallocated costs of $0.3 million as compared to the three months ended September 30, 2022, primarily consisted of a decrease in personnel and related costs.

For the nine months ended September 30, 2023, the decrease in unallocated costs of $0.1 million as compared to the nine months ended September 30, 2022, primarily consisted of a decrease of $0.6 million in personnel and related costs, which was partially offset by an increase of $0.5 million in other outside costs.

For the three months ended March 31, 2024, the decrease in soquelitinib costs of $0.3 million as compared to the three months ended March 31, 2023, primarily consisted of a decrease of $0.8 million in drug manufacturing costs and a decrease of $0.1 million in clinical trial expenses, which were partially offset by an increase of $0.6 million in other outside service costs.

For the three months ended March 31, 2024, the decrease in ciforadenant and mupadolimab costs were negligible.

For the three months ended March 31, 2024, the decrease in unallocated costs of $0.2 million as compared to the three months ended March 31, 2023, primarily consisted of a decrease in other outside service costs.

General and Administrative Expense

For the three months ended September 30, 2023, the decrease in general and administrative expenses of $0.5 million as compared to the three months ended September 30, 2022, primarily consisted of a decrease of $0.1 million in personnel and related costs and a decrease of $0.4 million in outside costs.

For the nine months ended September 30, 2023, the decrease in general and administrative expenses of $1.3 million as compared to the nine months ended September 30, 2022, primarily consisted of a decrease of $0.6 million in personnel and related costs and a decrease of $0.7 million in outside costs.

For the three months ended March 31, 2024, the increase in general and administrative expenses of $0.2 million as compared to the three months ended March 31, 2023, primarily consisted of an increase in personnel and related costs.

Interest Income and Other Expense, net

For the three months ended September 30, 2023, the increase in interest income and other expense, net of $0.2 million as compared to the three months ended September 30, 2022, primarily consisted of an increase in interest income earned due to an increase in interest rates.

For the nine months ended September 30, 2023, the increase in interest income and other expense, net of $0.9 million as compared to the nine months ended September 30, 2022, primarily consisted of an increase in interest income earned due to an increase in interest rates.

For the three months ended March 31, 2024, the decrease in interest income and other expense, net of $0.1 million as compared to the three months ended March 31, 2023, primarily consisted of a decrease in interest income earned due to a decrease in cash equivalents and marketable securities.

Sublease Income – Related Party

For the three months ended September 30, 2023, the decrease in sublease income of $0.1 million was due to the expiration of the building sublease agreement with Angel Pharmaceuticals in January 2023.

For the nine months ended September 30, 2023, the decrease in sublease income of $0.4 million was due to the expiration of the building sublease agreement with Angel Pharmaceuticals in January 2023.

Loss from equity method investment

For the three months ended September 30, 2023, the decrease in loss from equity method investment of $1.9 million as compared to the three months ended September 30, 2022, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the three months ended September 30, 2023.

For the nine months ended September 30, 2023, the decrease in loss from equity method investment of $1.5 million as compared to the nine months ended September 30, 2022, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the nine months ended September 30, 2023.

For the three months ended March 31, 2024, the decrease in sublease income of $0.1 million as compared to the three months ended March 31, 2023, was due to the expiration of the building sublease agreement with Angel Pharmaceuticals in January 2023.

Income (loss) from equity method investment

For the three months ended March 31, 2024, the decrease in loss from equity method investment of $2.0 million as compared to the three months ended March 31, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the three months ended March 31, 2024.

Liquidity and Capital Resources

As of September 30, 2023, we had cash, cash equivalents and marketable securities of $32.2 million, and an accumulated deficit of $328.1 million, compared to cash and cash equivalents and marketable securities of $42.3 million and an accumulated deficit of $307.7 million as of December 31, 2022.

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

Since our inception and through September 30, 2023, 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, a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million, and the sale of common stock through at-the-market equity offering programs, in which we raised approximately $38.0 million, in each case net of underwriting discounts and commissions and offering expenses.

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 September 30, 2023.

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

As of March 31, 2024, we had cash, cash equivalents and marketable securities of $22.1 million, and an accumulated deficit of $340.4 million, compared to cash and cash equivalents and marketable securities of $27.1 million and an accumulated deficit of $334.7 million as of December 31, 2023.

On May 6, 2024, we closed a registered direct offering which resulted in gross proceeds of approximately $30.6 million.

Since our inception and through March 31, 2024, we have funded our operations primarily through the sale and issuance of preferred and common 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.

During the three months ended March 31, 2024, we did not sell any shares of common stock under our at-the-market offering program.

As of March 31, 2024, $81.9 million remained available for sale under the 2023 Sales Agreement.

Funding Requirements

Since our inception, we have incurred significant losses and negative cash flows from operations.

We have an accumulated deficit of $340.4 million through March 31, 2024.

We do not expect positive cash flows from operations in the foreseeable future, if ever.

Historically, we have incurred operating losses as a result of ongoing efforts to develop our product candidates, including conducting ongoing research and development, clinical and preclinical studies and providing general and administrative support for these operations.

We do not have any products approved for sale, and we do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our current and future product candidates and/or enter into additional significant collaboration agreements with third parties, and we do not know when, or if, either will occur.

We expect to continue to incur net operating losses for at least the next several years and we expect the losses to increase as we advance our soquelitinib, ciforadenant and mupadolimab product candidates, as well as any future product candidates, through clinical development, seek regulatory approval, prepare for and, if approved, proceed to commercialization and continue our research and development efforts.

We are subject to all the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

We do not yet have a sales organization or commercial infrastructure and, accordingly, we will need to incur significant expenses to develop a sales organization and commercial infrastructure in advance of generating any commercial product sales.

Moreover, we incur substantial costs associated with operating as a public company.

We anticipate that we will need substantial additional funding in connection with our continuing operations.

Until we can generate a sufficient amount of revenue from the commercialization of our product candidates or from additional significant collaboration or license agreements with third parties, if ever, we expect to finance our future cash needs through private and public equity offerings, including our “at-the-market” offering program, debt financings, and potential future collaboration, license and development agreements.

Adequate funding may not be available to us on acceptable terms, or at all.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be required to significantly reduce our operating expenses and may have to significantly delay, scale back or discontinue the development of one or more of our current or future product candidates.

If we raise additional funds by issuing equity or convertible debt securities, it could result in dilution to our existing stockholders and increased fixed payment obligations.

In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders.

If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business.

Additionally, any future collaborations we enter into with third parties may provide capital in the near term, but we may have to relinquish valuable rights to our product candidates or grant licenses on terms that are not favorable to us.

Any of the foregoing could significantly harm our business, financial condition and prospects.

We expect to incur substantial additional losses in the future as we conduct our planned research and development activities.

We believe that our existing cash, cash equivalents and marketable securities and the proceeds from our recent financing will be sufficient to enable us to advance our programs into the fourth quarter of 2025.

However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially based on a number of factors.

We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our operating capital requirements.

Our future capital requirements depend on many factors, including:

● the progress, timing, costs and results of clinical trials for soquelitinib, including the potential registrational clinical trial for soquelitinib, and to a lesser extent, the timing, costs and results of the clinical trials for ciforadenant and mupadolimab;

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

We expect to increase our spending in connection with the development and commercialization of our product candidates.

Until such time, if ever, as we can generate substantial revenue from product sales, we expect to fund our operations and capital funding needs through equity and/or debt financings.

We may also enter into additional collaboration arrangements or selectively partner for clinical development and commercialization.

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

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

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.

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

Summary of Statement of Cash Flows

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, 2023 was $18.8 million, which primarily consisted of a net loss of $20.4 million, adjusted by non-cash charges of $4.8 million, that primarily consisted of $1.6 million of stock compensation expense and $3.9 million of loss from equity method investment;

an increase of $0.1 million in prepaid and other current assets, a decrease of $0.6 million in accounts payable, a decrease of $3.0 million in accrued and other current liabilities, a decrease of $0.6 million in accounts receivable – related party and a decrease of $0.1 million in operating lease liability net of operating lease right-of-use assets amortization.

Cash used in operating activities during the nine months ended September 30, 2022 was $19.5 million, which primarily consisted of a net loss of $31.5 million, adjusted by non-cash charges of $7.7 million, that primarily consisted of $2.1 million of stock compensation expense and $5.4 million of loss from equity method investment, a decrease of $0.2 million in prepaid and other current assets, an increase of $2.7 million in accounts payable, an increase of $1.5 million in accrued and other current liabilities and a decrease of $0.1 million in operating lease liability net of operating lease right-of-use asset amortization.

Cash used in operating activities during the three months ended March 31, 2024 was $5.2 million, which primarily consisted of a net loss of $5.7 million, adjusted by non-cash charges of $0.4 million, that primarily consisted of $0.7 million of stock compensation expense and $0.2 million of income from equity method investment;

a decrease of $0.1 million in prepaid and other current assets, an increase of $0.1 million in accounts payable, an increase of $0.1 million in accrued and other current liabilities and a decrease of $0.1 million in operating lease liability net of operating lease right-of-use assets amortization.

Cash used in operating activities during the three months ended March 31, 2023 was $8.1 million, which primarily consisted of a net loss of $7.9 million, adjusted by non-cash charges of $2.0 million, that primarily consisted of $0.5 million of stock compensation expense and $1.7 million of loss from equity method investment, a decrease of $0.1 million in prepaid and other current assets, a decrease of $0.6 million in accounts payable and a decrease of $1.9 million in accrued and other current liabilities.

Cash Flows from Investing Activities

During the nine months ended September 30, 2023, cash provided by investing activities was $17.9 million, which primarily consisted of proceeds from maturities of marketable securities of $53.5 million, which were partially offset by purchases of marketable securities of $35.6 million.

During the nine months ended September 30, 2022, cash used in investing activities was $19.4 million, which primarily consisted of purchases of marketable securities of $46.9 million and purchases of property and equipment of $0.3 million, which were partially offset by proceeds from maturities of marketable securities of $27.8 million.

During the three months ended March 31, 2024, net cash flows from investing activities was negligible and primarily consisted of proceeds from maturities of marketable securities of $4.6 million, which were offset by purchases of marketable securities of $4.6 million.

During the three months ended March 31, 2023, cash provided by investing activities was $4.6 million, which primarily consisted of proceeds from maturities of marketable securities of $17.7 million, which were partially offset by purchases of marketable securities of $13.1 million.

Cash Flows from Financing Activities

During the nine months ended September 30, 2023, the cash provided by financing activities of $7.9 million primarily consisted of net proceeds from the issuance of common stock through our at-the-market offering program.

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

During the three months ended March 31, 2024, there were no cash flows from financing activities.

During the three months ended March 31, 2023, the cash provided by financing activities were negligible.

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, 2023, 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 three months ended March 31, 2024, 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