What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-06 · 80 added, 85 removed, 183 unchanged (47% of the section changed)

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Our lead product candidate, soquelitinib (formerly CPI-818), binds specifically to a protein, interleukin 2 inducible T cell kinase (ITK), involved in T cell proliferation, differentiation and function.

Based on the mechanism of action, soquelitinib has the potential to be utilized to inhibit the production of a number of cytokines involved diseases such as atopic dermatitis, asthma, psoriasis and fibrotic diseases.

In cancers, soquelitinib has been observed to affect T cell differentiation leading to enhanced function of T cells involved in tumor cell killing.

Since the immune cells affected by our product candidates play a role in many diseases, our strategy is to leverage our research and development capabilities by evaluating our drugs in clinical trials where there is an understanding of the role of specific T cells in the target indication and where we believe such product candidate has optimum chances for success.

Based on the mechanism of action, soquelitinib has the potential to be utilized to inhibit the production of a number of cytokines involved in diseases such as atopic dermatitis, asthma, psoriasis and fibrotic diseases.

In cancers, soquelitinib has been demonstrated to affect T cell differentiation leading to enhanced function of T cells involved in tumor cell killing.

We believe this strategy has enabled us to move rapidly from preclinical to clinical trials in diverse disease areas, each with large unmet needs.

Soquelitiib is expected to enter a registrational, Phase 3 clinical trial for relapsed T cell lymphomas later this year and is now being evaluated in a randomized, placebo controlled Phase 1 trial in patients with atopic dermatitis.

Soquelitinib entered a registrational, Phase 3 clinical trial for relapsed T cell lymphomas and is also being evaluated in a randomized, placebo controlled Phase 1 trial in patients with atopic dermatitis.

We have two additional product candidates which are in clinical development for the treatment of various solid tumors, also based on modulation of immune function.

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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.

Inhibition of ITK with soquelitinib 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 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 and Th17 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 helper T cells, potentially leading to a biasing toward the differentiation of naïve T cells into Th1 helper T 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.

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

The study is no longer enrolling new patients, however, some of the patients remain on therapy and are continuing to receive follow-up monitoring.

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.

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The median progression free survival was 6.2 months.

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 July 16, 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.

As of October 1, 2024, four of the responding patients remain on therapy;

3 with CRs and one with a PR.

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 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.

We initiated 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.

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, 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.

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

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

The primary endpoint is progression-free survival.

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

Leading academic and private medical centers with significant experience in lymphoma research are participating 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.

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Initial results, as of July 31, 2024, from three evaluable patients in the first cohort of the trial that completed the 28-day dosing regimen and follow-up visit demonstrated signs of clinical activity and corresponding changes in serum cytokine levels that are consistent with soquelitinib’s mechanism of action.

Enrollment of patients in the first cohort of this trial has been completed.

These patients received a dose of 100 mg two-times a day, the lowest dose level planned for the trial.

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

We expect additional data from this clinical trial before year-end 2024.

Beyond our current and planned clinical trials for soquelitinib, we also 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.

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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 31, 2024, a total of 32 patients were enrolled in the trial.

The clinical trial is expected to enroll up to 60 patients and as of September 30, 2024, a total of 46 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 31, 2024, the interim analysis of the clinical trial has met the threshold for efficacy and therefore enrollment continues.

An interim analysis performed on May 31, 2024 of the clinical trial has met the threshold for efficacy and therefore enrollment continues.

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

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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”).

We believe the breadth and status of our pipeline demonstrates our management team’s expertise in understanding and developing immunology focused assets as well as in identifying product candidates that can be in-licensed and further developed internally to treat many types of cancer.

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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.

Such cash is not available for our use.

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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 six months ended June 30, 2024 was $4.3 million and $10.0 million, respectively.

As of June 30, 2024, we had an accumulated deficit of $344.7 million.

Our net loss for the three and nine months ended September 30, 2024 was $40.2 million and $50.2 million, respectively.

As of September 30, 2024, we had an accumulated deficit of $384.9 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 June 30, 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, a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of $30.3 million.

Since our inception and through September 30, 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, a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of $30.3 million.

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.

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.

On August 6, 2024, we entered into an open market sale agreement (the “2024 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 $100.0 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 2024 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.

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

During the six months ended June 30, 2024, we did not sell any shares of common stock under our at-the-market offering program.

As of June 30, 2024, $100,000 remained available for sale under the 2023 Sales Agreement.

Jefferies is entitled to compensation for its services of up to 3.0% of the gross proceeds of any shares of common stock sold through Jefferies under the 2024 Sales Agreement.

During the nine months ended September 30, 2024, we did not sell any shares of common stock under our at-the-market offering program and $100.0 million remained or sale under the 2024 Sales Agreement.

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

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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.

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 June 30, 2024, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $47.2 million.

Based on our currently available cash resources 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.

As of September 30, 2024, we had capital resources consisting of cash, cash equivalents and marketable securities of approximately $41.7 million.

On October 29, 2024, we received approximately $5.9 million in cash from the early exercise of common stock warrants.

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 are sufficient to fund our operations for at least the next 12 months from issuance of the condensed consolidated financial statements.

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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 six months ended June 30, 2024 from those discussed in our Form 10-K.

There have been no material changes to our significant accounting policies during the nine months ended September 30, 2024 from those discussed in our Form 10-K.

Components of Results of Operations

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

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

● completion of our ongoing Phase 3 registrational clinical trial for soquelitinib in PTCL;

● enrollment and completion of our Phase 1b/2 clinical trial with ciforadenant in collaboration with the Kidney Cancer Research Consortium;

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating expenses:

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Research and Development Expenses

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

Research and development expenses for the three and nine months ended September 30, 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

Six Months Ended

Nine Months Ended

September 30,

Unallocated employee and overhead costs

For the three months ended June 30, 2024, the increase in soquelitinib costs of $0.5 million as compared to the three months ended June 30, 2023, primarily consisted of an increase of $0.5 million in clinical trial expenses and an increase of $0.2 million in other outside service costs, which were partially offset by decrease of $0.2 million in drug manufacturing costs.

For the six months ended June 30, 2024, the increase in soquelitinib costs of $0.2 million as compared to the six months ended June 30, 2023, primarily consisted of an increase of $0.4 million in clinical trial expenses and an increase of $0.8 million in other outside service costs, which were partially offset by decrease of $1.0 million in drug manufacturing costs.

For the three months ended June 30, 2024, the decrease in ciforadenant costs of $0.1 million as compared to the three months ended June 30, 2023, primarily consisted of a decrease in other outside service costs.

For the six months ended June 30, 2024, the decrease in ciforadenant costs of $0.1 million as compared to the six months ended June 30, 2023, primarily consisted of a decrease of $0.2 million in other outside service costs, which was partially offset by an increase of $0.1 million in clinical trial expenses.

For the three months ended June 30, 2024, the decrease in mupadolimab costs of $0.5 million as compared to the three months ended June 30, 2023, primarily consisted of a decrease of $0.3 million in manufacturing costs and a decrease of $0.2 million in clinical trial expenses.

For the six months ended June 30, 2024, the decrease in mupadolimab costs of $0.5 million as compared to the months ended June 30, 2023, primarily consisted of a decrease of $0.2 million in manufacturing costs and a decrease of $0.3 million in clinical trial expenses.

For the three months ended June 30, 2024, the increase in unallocated costs of $0.2 million as compared to the three months ended June 30, 2023, primarily consisted of an increase in personnel and related costs.

For the six months ended June 30, 2024, the increase in unallocated costs of $0.1 million as compared to the three months ended June 30, 2023, primarily consisted of an increase in personnel and related costs.

For the three months ended September 30, 2024, the increase in soquelitinib costs of $1.2 million as compared to the three months ended September 30, 2023, primarily consisted of an increase of $0.9 million in clinical trial expenses and an increase of $0.4 million in drug manufacturing costs, which were partially offset by a decrease of $0.1 million in other outside service costs.

For the nine months ended September 30, 2024, the increase in soquelitinib costs of $1.3 million as compared to the nine months ended September 30, 2023, primarily consisted of an increase of $1.3 million in clinical trial expenses and an increase of $0.6 million in other outside service costs, which were partially offset by a decrease of $0.6 million in drug manufacturing costs.

For the three months ended September 30, 2024, the decrease in ciforadenant costs of $0.1 million as compared to the three months ended September 30, 2023, primarily consisted of a decrease in other outside service costs.

For the nine months ended September 30, 2024, the decrease in ciforadenant costs of $0.2 million as compared to the nine months ended September 30, 2023, primarily consisted of a decrease of $0.3 million in other outside service costs, which was partially offset by an increase of $0.1 million in clinical trial expenses.

For the three months ended September 30, 2024, the decrease in mupadolimab costs of $0.2 million as compared to the three months ended September 30, 2023, primarily consisted of a decrease of $0.1 million in manufacturing costs and a decrease of $0.1 million in clinical trial expenses.

For the nine months ended September 30, 2024, the decrease in mupadolimab costs of $0.6 million as compared to the months ended September 30, 2023, primarily consisted of a decrease of $0.4 million in clinical trial expenses and a decrease of $0.3 million in manufacturing costs, which were partially offset by an increase of $0.1 million in other outside service costs.

For the three months ended September 30, 2024, the increase in unallocated costs of $0.4 million as compared to the three months ended September 30, 2023, primarily consisted of an increase in personnel and related costs.

For the nine months ended September 30, 2024, the increase in unallocated costs of $0.4 million as compared to the three months ended September 30, 2023, primarily consisted of an increase of $0.5 million in personnel and related costs, which were partially offset by a decrease of $0.1 million in outside service costs.

General and Administrative Expense

For the three months ended June 30, 2024, the increase in general and administrative expenses of $0.2 million as compared to the three months ended June 30, 2023, primarily consisted of an increase in personnel and related costs.

For the six months ended June 30, 2024, the increase in general and administrative expenses of $0.4 million as compared to the six months ended June 30, 2023, primarily consisted of an increase in personnel and related costs.

For the three months ended September 30, 2024, the increase in general and administrative expenses of $0.4 million as compared to the three months ended September 30, 2023, primarily consisted of an increase of $0.2 million in personnel and related costs and an increase of $0.2 million in outside service costs.

For the nine months ended September 30, 2024, the increase in general and administrative expenses of $0.8 million as compared to the nine months ended September 30, 2023, primarily consisted of an increase of $0.6 million in personnel and related costs and an increase of $0.2 million in outside service costs.

Interest Income and Other Expense, net

For the three and six months ended June 30, 2024, the change in interest income and other expense, net was negligible.

For the three and nine months ended September 30, 2024, the increase in interest income and other expense, net of $0.1 million primarily consisted of an increase in interest income earned due to an increase in cash equivalents and marketable securities.

Change in fair value of warrant liabilities

For the three and six months ended June 30, 2024, the change in fair value of warrant liabilities represents a decrease in the fair value of common warrants from the issuance date of May 6, 2024 to June 30, 2024.

For the three months ended September 30, 2024, the change in fair value of warrant liability of $32.8 million represents an increase in the fair value of common warrants from June 30, 2024 to September 30, 2024, which was primarily due to an increase in the market price of the Company’s common stock.

For the nine months ended September 30, 2024, the change in fair value of warrant liability of $31.0 million represents an increase in the fair value of common warrants from the issuance date of May 6, 2024 to September 30, 2024, which was primarily due to an increase in the market price of the Company’s common stock.

Sublease Income – Related Party

For the three months ended June 30, 2024 and 2023, there was no sublease income.

For the six months ended June 30, 2024, the decrease in sublease income of $0.1 million as compared to the six months ended June 30, 2023, was due to the expiration of the building sublease agreement with Angel Pharmaceuticals in January 2023

For the three months ended September 30, 2024 and 2023, there was no sublease income.

For the nine months ended September 30, 2024, the decrease in sublease income of $0.1 million as compared to the nine months ended September 30, 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 June 30, 2024, the decrease in loss from equity method investment of $0.7 million as compared to the three months ended June 30, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the three months ended June 30, 2024.

For the six months ended June 30, 2024, the decrease in loss from equity method investment of $2.7 million as compared to the six months ended June 30, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the six months ended June 30, 2024.

For the three months ended September 30, 2024, the decrease in loss from equity method investment of $0.2 million as compared to the three months ended September 30, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the three months ended September 30, 2024.

For the nine months ended September 30, 2024, the decrease in loss from equity method investment of $2.9 million as compared to the nine months ended September 30, 2023, primarily consisted of a decrease in Angel Pharmaceuticals’ loss for the nine months ended September 30, 2024.

Liquidity and Capital Resources

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $47.2 million, and an accumulated deficit of $344.7 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.

Since our inception and through June 30, 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, a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of approximately $30.3 million.

During the six months ended June 30, 2024, we did not sell any shares of common stock under our at-the-market offering program.

As of June 30, 2024, $100,000 remained available for sale under the 2023 Sales Agreement.

As of September 30, 2024, we had cash, cash equivalents and marketable securities of $41.7 million, and an accumulated deficit of $384.9 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.

Since our inception and through September 30, 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, a follow on offering in February 2021, in which we raised net proceeds of approximately $32.0 million and a registered direct offering in May 2024, in which we sold shares of our common stock, pre-funded warrants and common warrants for net proceeds of approximately $30.3 million.

During the nine months ended September 30, 2024, we did not sell any shares of common stock under our at-the-market offering program.

As of September 30, 2024, $100 million remained available for sale under the 2024 Sales Agreement.

Funding Requirements

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

We have an accumulated deficit of $344.7 million through June 30, 2024.

We have an accumulated deficit of $384.9 million through September 30, 2024.

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

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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.

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, the potential exercise of outstanding common warrants with an exercise price of $3.50 per share and potential future collaboration, license and development agreements.

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

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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, which includes proceeds from our recent financing, will be sufficient to enable us to advance our programs into the fourth quarter of 2025.

We believe that our existing cash, cash equivalents and marketable securities and the proceeds from the recent early exercise of common stock warrants will be sufficient to enable us to advance our programs into 2026.

However, our forecast of the period of time through which our financial resources will be adequate to support our

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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.

Because of the numerous risks and uncertainties associated with research, development and commercialization of our 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 planned Phase 3 registrational clinical trial for soquelitinib for the treatment of PTCL, and to a lesser extent, the timing, costs and results of the clinical trials for ciforadenant and mupadolimab;

● the progress, timing, costs and results of clinical trials for soquelitinib, including the ongoing Phase 3 registrational clinical trial for soquelitinib for the treatment of PTCL, and to a lesser extent, the timing, costs and results of the clinical trials for ciforadenant and mupadolimab;

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

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

Six Months Ended

Nine Months Ended

September 30,

Net cash provided by (used in):

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Cash Flows from Operating Activities

Cash used in operating activities during the six months ended June 30, 2024 was $10.6 million, which primarily consisted of a net loss of $10.0 million, adjusted by net non-cash transactions of $0.3 million, that primarily consisted of $1.5 million of stock compensation expense, $0.3 million of loss from equity method investment and a decrease of $1.8 million in the fair value of warrant liability;

an increase of $0.2 million in prepaid and other current assets, a decrease of $0.3 million in accounts payable, an increase of $0.3 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 six months ended June 30, 2023 was $13.3 million, which primarily consisted of a net loss of $14.4 million, adjusted by non-cash charges of $3.6 million, that primarily consisted of $1.0 million of stock compensation expense and $3.0 million of loss from equity method investment;

an increase of $0.1

million in prepaid and other current assets, an increase of $0.1 million in accounts payable, a decrease of $3.1 million in accrued and other current liabilities and a decrease of $0.6 million in accounts receivable – related party.

Cash used in operating activities during the nine months ended September 30, 2024 was $17.0 million, which primarily consisted of a net loss of $50.2 million, adjusted by net non-cash transactions of $33.4 million, that primarily consisted of $2.2 million of stock compensation expense, $1.0 million of loss from equity method investment and an increase of $31.0 million in the fair value of warrant liability;

an increase of $0.4 million in prepaid and other current assets, an increase of $0.3 million in accounts payable, an increase of $0.2 million in accrued and other current liabilities and a decrease of $0.2 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, 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 Flows from Investing Activities

During the six months ended June 30, 2024, net cash flows used in investing activities was $17.5 million, which primarily consisted of purchases of marketable securities of $30.9 million, which were partially offset by maturities of marketable securities of $13.4 million.

During the six months ended June 30, 2023, cash provided by investing activities was $0.3 million, which primarily consisted of proceeds from maturities of marketable securities of $34.2 million, which were partially offset by purchases of marketable securities of $33.8 million.

During the nine months ended September 30, 2024, net cash flows used in investing activities was $21.4 million, which primarily consisted of purchases of marketable securities of $49.8 million, which were partially offset by maturities of marketable securities of $28.4 million.

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.

Cash Flows from Financing Activities

During the six months ended June 30, 2024, cash provided by financing activities was $30.4 million, which primarily consisted of net proceeds of $16.4 million from the issuance of common stock, net proceeds of $5.0 million from the issuance of pre-funded warrants and proceeds of $8.9 million from the issuance of common warrants.

During the six months ended June 30, 2023, the cash provided by financing activities of $7.5 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, 2024, cash provided by financing activities was $30.4 million, which primarily consisted of net proceeds of $16.4 million from the issuance of common stock, net proceeds of $5.0 million from the issuance of pre-funded warrants and proceeds of $8.9 million from the issuance of common warrants.

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.

Contractual Obligations

There have been no material changes outside the ordinary course of our business to our contractual obligations during the six months ended June 30, 2024, 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 nine months ended September 30, 2024, as compared to those disclosed in our Annual Report on Form 10-K.

Critical Accounting Estimates

There have been no changes to our critical accounting estimates during the six months ended June 30, 2024, as compared to those disclosed in our Annual Report on Form 10-K

There have been no changes to our critical accounting estimates during the nine months ended September 30, 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