Eledon Pharmaceuticals, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The unaudited interim financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with our audited financial statements and accompanying notes for the year ended December 31, 2021 included in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 24, 2022. In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please see Part II, Item 1A. Risk Factors for a discussion of certain risk factors applicable to our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur for the full fiscal year or any other future period. Unless otherwise indicated, references to the terms “Eledon”, the “Company”, “we”, “our”, and “us” refer to Eledon Pharmaceuticals, Inc. References to the term “Tokai” refer to Tokai Pharmaceuticals, Inc., the legal predecessor of the Company. ABOUT ELEDON PHARMACEUTICALS Overview Eledon Pharmaceuticals, Inc. (“Eledon” or the “Company”) is a clinical stage biopharmaceutical company focused on developing life-changing, targeted medicines for persons requiring an organ or cell-based transplant, living with autoimmune disease, or living with amyotrophic lateral sclerosis (“ALS”) . The Company’s lead compound in development is tegoprubart, an IgG1, anti-CD40L antibody with high affinity for CD40 Ligand (“CD40L”, also called “CD154”), a well-validated biological target that we believe has broad therapeutic potential. Tegoprubart is engineered to potentially both improve safety and provide pharmacokinetic, pharmacodynamic, and dosing advantages compared to other anti-CD40 approaches. The CD40L/CD40 pathway is recognized for its prominent role in immune regulation. CD40L is primarily expressed on activated CD4+ T cells, platelets and endothelial cells while the CD40 receptor is constitutively expressed on antigen presenting cells such as macrophages and dendritic cells, as well as B cells. By blocking CD40L and not the CD40 receptor, tegopurbart inhibits both the CD40 and CD11 costimulatory signaling pathways, providing the potential for improved efficacy compared to anti-CD40 receptor approaches. Blocking CD40L also increases polarization of CD4+ lymphocytes to Tregs, a specialized subpopulation of T cells that act to suppress an immune response, thus creating a more tolerogenic environment, which may play a therapeutic role for autoimmune diseases and in the transplant setting. Tegopurbart is designed to negate the risk of thrombolytic events seen in the first generation of anti-CD40L antibodies by introducing structural modifications that have been shown in preclinical models to eliminate binding to the Fcγ receptors associated with platelet activation without altering the binding of tegoprubart to CD40L. In non-human primate studies, dosing of Tegoprubart up to 200 mg/kg per week for 26 weeks, demonstrated no adverse events regarding coagulation, platelet activation or thromboembolism. In September 2020, we acquired Anelixis Therapeutics, Inc. (“Anelixis”), the company that owned or controlled the intellectual property related to tegoprubart. Our business strategy is to optimize the clinical and commercial value of tegoprubart and become a global biopharmaceutical company with a focused autoimmune franchise. We have completed a single ascending dose Phase 1 study of tegoprubart in healthy volunteers and people with ALS. In this study, the doses of tegoprubart studied were well tolerated in healthy subjects and adults with ALS. Tegopurbart demonstrated low anti-drug antibody responses that were not dose related, linear dose proportionality across the dose ranges, and a half-life of up to 26 days. We plan to develop tegoprubart in up to four indications: ALS, prevention of kidney allograft rejection, prevention of islet cell allograft rejection, and IgA Nephropathy (“IgAN”). We selected our indications based on preclinical and clinical data that was generated with either our molecule or historical anti-CD40L molecules. In October 2020, we initiated a Phase 2a clinical trial of tegoprubart in ALS. In November 2020, we received clearance from Health Canada to proceed with the initiation of a Phase 2a clinical trial of tegoprubart for people with type 1 diabetes undergoing islet cell transplantation. In July 2021, we received clearance from Health Canada to proceed with initiation of a Phase 1b clinical trial of tegoprubart in patients undergoing kidney transplantation. In November 2021, we received investigational new drug (“IND”) clearance from the FDA for a Phase 2a clinical trial of tegoprubart for people with type 1 diabetes undergoing islet cell transplantation in the United States. In December 2021, we received approval for a Phase 1b clinical trial of tegoprubart in kidney transplantation in the United Kingdom. Through March 2022, we received regulatory approvals for a Phase 2a clinical trial of tegoprubart in IgAN in Australia, New Zealand and Malaysia. 20 Amyotrophic Lateral Sclerosis ALS is a progressive, paralytic disorder characterized by degeneration of motor neurons in the brain and spinal cord. In the U.S., the incidence is estimated at approximately 5,000 cases per year with a prevalence of approximately 30,000 cases overall. Despite 2 approved drugs, in most cases, death from respiratory failure occurs approximately 3 to 5 years after diagnosis, with 50% of patients living at least 3 years from diagnosis and only 20% of patients living at least 5 years from diagnosis. While the exact pathogenic mechanism of ALS is still not fully understood, there is strong evidence indicating that neuroinflammation plays an important role in the disease’s pathogenesis. Neuroinflammation in ALS is characterized by the infiltration of lymphocytes and macrophages into the central nervous system, and the activation of microglia and reactive astrocytes. Reactive astrocytes and microglia as well as infiltrating lymphocytes, dendritic cells, monocytes, macrophages and immune complexes have been identified in cerebrospinal fluid and neural tissues in both animal models of ALS and at autopsy in ALS patients. Tegoprubart is designed to block CD40L binding to CD40, thereby potentially inhibiting neuroinflammatory pathways leading to disease progression in ALS. In vitro proof-of-concept studies have shown that tegoprubart binds to CD40L in human cells and blocks CD40L binding on APCs and activated T cells. The potential for therapeutic benefit of CD40L blockage in treating ALS has been demonstrated in a SOD1 mouse model of ALS, where a murine anti-CD40L antibody, MR1, prolonged survival and delayed the onset of neurological disease progression. These clinical manifestations are believed to be due to reduced immune cell infiltration of macrophages into skeletal muscle and their destroying denervated nerves. The plasticity of the nervous system to repair itself in the absence of this immune cell attack is believed to result in improved neuromuscular junction occupancy and improved muscle function. Blocking CD40L signaling also prevents pro-inflammatory polarization of lymphocytes, reduced neuroinflammation and improved motor neuron survival in rodent ALS models. In October 2020, the Company initiated a Phase 2a, open-label, multi-center study to evaluate the safety and tolerability of multiple doses of tegoprubart in adult subjects with ALS. Fifty-four subjects with ALS have been enrolled into the study in the United States and Canada at 13 ALS treatment sites. Ascending doses of tegoprubart were administered as IV infusions to four sequentially enrolling cohorts. The first two cohorts consisted of nine participants, and the last two cohorts of 18 participants each. All enrolled subjects received six bi-weekly infusions of tegoprubart over a 12-week study period. Blood samples for target engagement, and exploratory biomarkers for inflammation and neurodegeneration are being taken and analyzed. Participant-focused clinical outcomes will also be assessed. As of March 31, 2022, all patients were enrolled and completed participation in the trial. Kidney transplantation: prevention of allograft rejection Kidney transplantation is the most common type of solid organ transplantation in the United States with an estimated 227,000 Americans living with a transplanted kidney. In 2019, an estimated 23,000 kidneys were transplanted, of which up to 15% were re-transplants in persons that had already received at least one other kidney. Over 90,000 people in the U.S. are waiting for a kidney transplant and in 2014, nearly 5,000 Americans died waiting for a kidney with another nearly 4,000 becoming too sick to receive a transplant. Calcineurin inhibitors (“CNI”s) are a critical component of many immunosuppressive regimens to prevent acute and long-term kidney transplant rejection. However, chronic exposure to certain CNIs including tacrolimus is associated with nephrotoxicity, cardiotoxicity, new onset diabetes due to pancreatic Beta cell toxicity and an increase in both opportunistic infections and malignancies. Over time, these CNI side effects may significantly damage transplanted kidneys or result in a requirement for reduced exposures to CNIs and a resulting potential decrease in the ability to prevent long-term rejection. Tegoprubart seeks to address challenges associated with current immunosuppressive transplantation regimens using CNI-based therapies. The ability to prevent acute and chronic transplant rejection without the need for CNIs has the potential to transform the clinical management of preventing graft rejection by mitigating the adverse events associated with CNIs and improving long-term graft survival, thus potentially decreasing the need for repeat kidney transplants. 21 In July 2021, the C ompany received a No Objection Letter (NOL) from Health Canada for a Phase 1b clinical trial of tegoprubart, in 6 to 12 subjects, replacing tacrolimus as an immunosuppressive regimen component in patients undergoing kidney transplantation. In December 2021, the Company received approval for a Phase 1b clinical trial of tegoprubart, replacing tacrolimus as an immunosuppressive regimen component in patients undergoing kidney transplantation in the United Kingdom . In March 2022 , the Company completed a non-human primate study evaluating tegoprubart monotherapy in the prevention of allograft rejection. Islet cell transplantation: prevention of allograft rejection Type 1 diabetes is a T cell mediated autoimmune disease with progressive loss of insulin producing pancreatic beta cells and affects over one million persons in the U.S. Of these individuals, an estimated 70,000 people have a particularly hard to control type 1 diabetes called Brittle Diabetes (“BT1D”) which is in part characterized by large swings in blood glucose levels and impaired awareness of hypoglycemia. Impaired awareness of hypoglycemia for people with type 1 diabetes is associated with severe hypoglycemic events which can lead to significant symptoms and even death. Pancreatic islet cell transplantation may be a therapeutic option for type 1 diabetes because it can restore physiological insulin secretion, minimize the risk of hypoglycemic unawareness, and reduce the risk of death due to severe hypoglycemia. The advances made in this field over the past decade have improved patient outcomes. A number of issues are believed to continue to hamper the overall success of islet cell transplantation and to need to be addressed in order for there to be widespread clinical acceptance. These include the acute loss of transplanted islets with current immunosuppressive treatments, particularly those with CNI-based therapies, due to islet cell toxicity and alloreactive immunologic responses to transplanted islets. Over time, the progressive loss of islet cells and decline in islet cell function often leads to the need for multiple transplant procedures in order for BTID patients to have optimal response to blood glucose levels and possibly achieve insulin independence. We believe that treatment with tegoprubart will address the challenges associated with current islet cell transplantation immunosuppressive regimens using CNI-based therapies, by replacing the CNIs with tegoprubart. CD40L blockade may abolish many effector mechanisms of inflammation, prevent, and intervene in the progression of autoimmunity, and instill transplant tolerance without causing harm to islet cells. Historical studies in nonhuman primate models of islet cell transplantation have demonstrated that treatment with anti-CD40L antibodies induces long term islet cell function and graft survival, even as a monotherapy. Tegoprubart has shown pre-clinical, proof-of-concept efficacy in a non-human primate model of type 1 diabetes, where animals undergoing islet cell transplantation maintained glucose control and sustained levels of C-peptide with chronic tegoprubart treatment for up to a year. Compared to combination immunosuppressive therapy including CNIs, tegoprubart monotherapy was more effective in preventing long term islet cell rejection, associated with better graft function, and showed an improved safety profile. In November 2020, the Company received clearance from Health Canada to proceed with the initiation of a Phase 2a clinical trial of tegoprubart for people with type 1 diabetes undergoing islet cell transplantation. In November 2021, the Company received investigational new drug (“IND”) clearance from the FDA for a Phase 2a clinical trial of tegoprubart for people with type 1 diabetes undergoing islet cell transplantation in the United States. IgA Nephropathy IgAN is the leading cause of glomerulonephritis, a state of inflammation producing damage to the filtering part of the kidney. Disease manifestation and clinical presentation involves renal dysfunction characterized by proteinuria with a slow relentless course. Approximately 30%-40% of patients ultimately reach end stage renal disease (ESRD). The standard of care for ESRD is dialysis or kidney transplant, which represents a significant economic burden as well as a major impact on a patient’s quality of life. With an estimated prevalence of approximately 150,000 persons in the United States, IgAN is one of the most common autoimmune glomerulonephropathies. There are currently no European Medicines Agency (“EMA”) approved treatments for IgAN, although in the United States budesonide was approved for use in IgAN by the FDA in December 2021. The pathophysiology of IgAN has been well characterized, and based on its mechanism of action, tegoprubart has the potential to impact the disease process both upstream, at the source of the immune complexes, and downstream in the kidney itself, where it may reduce inflammation in the glomeruli. By disrupting multiple steps in the IgAN’s pathophysiology, tegoprubart has the potential to affect the clinical course of the disease and improve outcomes for patients. The inhibition of CD40L has been shown to be effective in models of multiple glomerulonephritides, as measured by a reduction in proteinuria and were associated with a decrease in immune cell infiltrate into the glomeruli 22 Through March 2022 , the Company r eceived regulatory clearances to initiate a phase 2a study in IgAN in Australia , New Zealand, and Malaysia, and plan s to expand to other countries. The global study will include up to 42 subjects in a high dose and a low dose cohort, with endpoints starting at 24 weeks including change in urinary protein. COVID-19 Impact The COVID-19 pandemic and resulting global disruptions have adversely affected our business and operations, including, but not limited to, the operations of third parties upon whom we rely. The effects of executive and similar government orders, including shelter-in-place orders and work-from-home policies may negatively impact our productivity and disrupt our business. Although the impacts of COVID-19 have not been material to-date, we have experienced delays in certain clinical studies and resulting delays in data collection and have also experienced inefficiencies in planning and executing trials due to our limited ability to conduct meetings with key third parties. In response to the COVID-19 pandemic, we quickly implemented safety and health standards and protocols for our employees. We have been responsive to local guidelines in respect of the COVID-19 pandemic, which included shutting our offices for part of 2021 and having our employees work from home, re-opening in deliberate fashion following local guidelines, and installing COVID-19 plans and policies to be followed at our offices (including mask protocols, and limitations on attendance in common spaces). The further spread of COVID-19 and its effects, including actions to limit the spread of the illness, could impact our ability to carry out our business and may materially adversely impact global economic conditions. The extent of the impact of COVID-19 on our business will depend on future developments, including the duration and severity of the outbreak (including the severity and transmission rates of new variants of the virus, such as the Delta and Omicron variants), the timing, distribution, rate of public acceptance and efficacy of vaccines and other treatments, the effect of governmental regulations imposed in response to the pandemic and the magnitude and duration of global supply chain constraints, all of which are highly uncertain and ever-changing. The COVID-19 pandemic and resulting global disruptions have caused significant volatility in financial and credit markets. We have utilized a range of financing methods to fund our operations in the past; however, current conditions in the financial and credit markets may limit the availability of funding or increase the cost of funding. Any of the foregoing factors, or other effects of the COVID-19 pandemic, could materially affect our business, possibly to a significant degree. The severity and duration of any such impacts cannot be predicted. CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) . The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. There have been no significant and material changes in our critical accounting policies and significant judgments and estimates during the three months ended March 31, 2022, as compared to those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021 filed by the Company with the SEC on March 24, 2022. 23 RESULTS OF OPERATIONS Comparison of the Three Months Ended March 31, 2022 and 2021 The following table provides comparative unaudited results of operations for the three months ended March 31, 2022 and 2021 (in thousands): For the Three Months Ended March 31, 2022 2021 $ Variance Operating expenses: Research and development $ 6,635 $ 5,653 982 General and administrative 3,224 3,352 (128 ) Total operating expenses 9,859 9,005 854 Loss from operations (9,859 ) (9,005 ) (854 ) Other income/(expense), net (5 ) 5 (10 ) Loss before income tax benefit (9,864 ) (9,000 ) (864 ) Income tax benefit — 501 (501 ) Net loss $ (9,864 ) $ (8,499 ) (1,365 ) Research and Development Expenses Research and development expenses increased $1.0 million, to $6.6 million for the three months ended March 31, 2022, as compared to $5.7 million for the three months ended March 31, 2021. The increase was primarily due to an increase in clinical development costs, primarily with external CROs of $1.0 million, as we advance our tegoprubart program, an increase in consulting services of $0.2 million as well as increases in stock-based compensation costs of $0.2 million and personnel costs of $0.1 million, due to increased headcount. The increase was partially offset by a decrease of $0.5 million in external costs related to the production of clinical trial materials. General and Administrative Expenses General and administrative expenses decreased $0.1 million to $3.2 million for the three months ended March 31, 2022, as compared to $3.4 million for the three months ended March 31, 2021. The decrease was primarily related to declines in professional fees of $0.2 million and personnel costs of $0.1 million. The decrease was partially offset by an increase in stock-based compensation costs of $0.2 million. Other Income (Expense), Net The increase in other expense, net, was primarily due to a decrease in interest income and an increase in realized losses on foreign currency translation for the three months ended March 31, 2022. Income Tax Benefit The Company recognized an income tax benefit of $501,000 for the three months ended March 31, 2021 due to the change in deferred tax liabilities for acquired IPR&D related to the Anelixis acquisition. LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity As of March 31, 2022, we had cash and cash equivalents of $76.7 million, consisting of readily available cash in bank accounts. While we believe our cash and cash equivalents are not subject to excessive risk, we maintain significant amounts of cash at one or more financial institutions that are in excess of federally insured limits. To date, our operations have been financed primarily by net proceeds from the sale of preferred and common stock, the sale of warrants, and the issuance of convertible promissory notes. We do not have any approved products for commercial sale and have never generated revenue from product sales and have incurred significant net losses since our inception and expect to continue to incur net operating losses for the foreseeable future. We do not expect to receive any revenue from any product candidates that we develop unless and until we obtain 24 regulatory approval and commercialize our product candidates or enter into collaborative arrangements with third parties. We currently have no credit facility or committed sources of capital. We believe our cash balance at March 31, 2022, will be sufficient to meet our projected operating requirements for at least the next 12 months from the date of this filing. We have based this estimate on assumptions that may prove to be incorrect, and we could utilize our available resources sooner than we currently expect. Further our operating plan may change, and we may need additional funds to meet operational needs for clinical studies sooner than planned or to fund additional clinical studies. Material Cash Requirements Our primary use of cash is to fund operating expenses, which consist of clinical research and development expenses, manufacturing expenses, legal and compliance expenses, compensation and related expenses, and general overhead costs. Cash used to fund operating expenses is impacted by the timing of when we pay or prepay these expenses. As of March 31, 2022, there have been no material changes in our cash requirements from known contractual and other obligations, including commitments for capital expenditures, as disclosed under “Liquidity and Capital Resources—Material Cash Requirements” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K. We expect our expenses to increase in connection with our ongoing activities, particularly as we expand our clinical program with tegoprubart, continue the research and development of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. We will continue to require additional financing in order to advance our drug product through clinical development, to manufacture, obtain regulatory approval for and to commercialize our product candidates, to develop, acquire or in-license other potential product candidates, and to fund operations for the foreseeable future. Therefore, we will seek to raise additional capital through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. The ability to raise substantial additional capital will depend on many factors, including: • the initiation, progress, timing, costs and results of our ongoing and future clinical trials of tegoprubart, including as such activities may be adversely impacted by global events, including the COVID-19 pandemic and the Russian invasion of Ukraine; • the number and scope of indications we decide to pursue for tegoprubart development; • the cost, timing and outcome of regulatory review of any BLA, we may submit for tegoprubart; • the costs and timing of manufacturing for tegoprubart, if approved; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of tegoprubart; • the costs associated with being a public company; • the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; • the extent to which we acquire or in-license other product candidates and technologies; and • the cost associated with commercializing tegoprubart, if approved for commercial sale. Current conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding. As a result of any of the foregoing factors, or other effects of global events, such as the COVID-19 pandemic or the Russian invasion of Ukraine , adequate additional funding may not be available to us on acceptable terms on a timely basis, or at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies, and may cause us to delay the scope of or suspend one or more of our clinical trials, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interests will be diluted, and the 25 terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. Debt financing, if available, would result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Please see Part I I , Item 1A. Risk Factors in this Quarterly Report on Form 10- Q for additional risks associated with our substantial capital requirements and the challenges we may face in raising capital. On March 31, 2021, the Company filed a registration statement on Form S-3 containing a prospectus and prospectus supplement under which the Company may offer and sell up to $75.0 million in shares of its common stock, from time to time, pursuant to an open market sale agreement with Jeffries LLC and by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933 (the “ATM Program”). Pursuant to the “baby shelf rules” promulgated by the SEC, if the Company’s public float is less than $75.0 million as of specified measurement periods, the number of shares of common stock that may be offered and sold by the Company under a Form S-3 registration statement, including pursuant to the ATM Program, in any twelve-month period is limited to an aggregate amount that does not exceed one-third of the Company’s public float. As of March 31, 2022, due to the SEC’s “baby shelf rules,” the Company was permitted to sell up to $16.4 million of shares of common stock pursuant to the ATM Program. The Company will remain subject to the “baby shelf rules” under the Form S-3 registration statement until such time as its public float exceeds $75.0 million. Through March 31, 2022, no shares of common stock have been sold under the ATM program. Cash Flows The following table provides a summary of our net cash flow activity (in thousands): For the Three Months Ended March 31, 2022 2021 Net cash used in operating activities $ (8,156 ) $ (5,166 ) Net cash used in financing activities — (450 ) Net change in cash and cash equivalents $ (8,156 ) $ (5,616 ) Comparison of the Three Months Ended March 31, 2022 and 202 Net cash used in operating activities for the three months ended March 31, 2022 consisted primarily of our net loss of $9.9 million, a net decrease in cash from changes in operating assets and liabilities of $0.6 million, primarily due to a decrease in accounts payable and accrued expenses of $1.4 million and a decrease in prepaid expenses of $0.9 million, partially offset by non-cash items consisting primarily of stock-based compensation and amortization of operating lease assets totaling $2.3 million. Net cash used in operating activities for the three months ended March 31, 2021 consisted primarily of our net loss of $8.5 million, partially offset by non-cash items consisting primarily of stock-based compensation and amortization of operating lease assets totaling $1.8 million, as well as deferred income taxes of $0.5 million. Additionally, cash used in operating activities for the three months ended March 31, 2021 reflected a net increase in cash from changes in operating assets and liabilities of $2.0 million, primarily due to an increase in our prepaid expenses and other current assets of $0.2 million, an increase in our accounts payable and other accrued expenses of $2.2 million. There was no cash provided by or used in the Company’s investing activities for the three months ended March 31, 2022 and 2021. Net cash used in financing activities for the three months ended March 31, 2021 was comprised of $0.5 million of offering costs accrued as of December 31, 2020 in connection with the sale of shares of common stock. Item 3. Quantitative and Qualitative Disclosures About Market Risk Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item. 26