What changed in this filing

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Item 2. Management’s Discussion and Analysis

2019-08-07 compared with 2019-05-09 · 99 added, 85 removed, 90 unchanged (67% of the section changed)

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ELX-02 is an investigational drug that has not been approved by any global regulatory body.

In addition, we recently announced a new program studying intravitreal administration of ERSG compounds for rare inherited retinal disorders with a focus on Usher Syndrome.

In addition, we recently announced a new program studying intravitreal administration of ERSG compounds for rare inherited retinal disorders with an initial focus on Usher Syndrome.

During the quarter ended June 30, 2019, w e completed a multiple ascending dose (MAD) study for ELX-02 and the clinical program has progressed into Phase 2 studies.

In addition, w e completed a renal study with ELX-02 in subjects with mild, moderate, and severe renal impairment.

To date, the preliminary results from the renal impairment study provide support for both continuing our clinical development programs and evaluating the suitability of our ERSG library for development in additional renal disorders, including autosomal dominant polycystic kidney disease, and cystinuria .

Our preclinical candidate pool consists of a library of novel ERSG drug candidates identified based on read-through potential and cytoplasmic ribosomal selectivity.

From the outset, our research and development strategy targets rare or ultra-rare diseases where:

a high unmet medical need exists, an identified nonsense mutation-bearing patient population is established, preclinical read-through can be established in predictive personalized medicine models, and a defined path through Orphan Drug development, regulatory approval, patient access and commercialization is identifiable.

a high unmet medical need exists, identified nonsense mutation-bearing patient population is established, preclinical read-through can be established in predictive personalized medicine models, and a defined path through Orphan Drug development, regulatory approval, patient access and commercialization is identifiable.

We believe patient advocacy to be an important element of patient focused drug development and seek opportunities to collaborate with patient advocacy groups throughout the discovery and development process.

Our current clinical focus for our lead investigational drug product candidate, ELX-02 is Cystic Fibrosis where we expect to complete our MAD study in the first half of 2019 and report top line results from our Phase 2 clinical trial in the second half of 2019.

We have participated in the North American Cystic Fibrosis Foundation (CFF) CFTR Translational Read-through Workshop and are engaged with CFF on extending our Cystic Fibrosis clinical studies to the United States.

Eloxx presented positive new data for its lead investigational drug, ELX-02, at the European Cystic Fibrosis Society (ECFS) Basic Science Conference.

In 2018, the European Cystic Fibrosis Society Clinical Trial Network assigned a “high priority” rating to our Phase 2 program.

We have recently initiated a new program studying inherited retinal disease and are conducting IND enabling studies for several ERSG compounds from our library.

Eloxx presented at the Sixth Annual Retinal Cell and Gene Therapy Innovation Summit and the Association for Research in Vision and Ophthalmology 2019 Annual Meeting.

We entered into a multiyear partnership with the Foundation Fighting Blindness (FFB) to support the inherited retinal degenerative disease registry and educational programs.

We presented as part of the FFB “Investing in Cures” 2019 meeting and believe that the ongoing R&D consultation and support provided by the FFB will accelerate our development programs that seek to support patients with ocular disease and high unmet medical need.

We intend to be t he global leader in the application of the science of translational read-through and the associated pathway of nonsense mediated decay (NMD).

We believe that expanding our expertise across these basic science areas of mRNA regulation, ribosomal function, a nd protein translation forms a solid foundation to support our discovery and development activities.

Our ERSG compounds modulate the activity of the ribosome, a complex of RNAs and proteins, and therefore, a ribonucleoprotein, responsible for protein produ ction, a process also known as translation.

Our current clinical program for our lead investigational drug product candidate, ELX-02 includes studies in both cystic fibrosis and cystinosis.

We intend to be the global leader in the application of the science of translational read-through and the associated pathway of nonsense mediated decay (NMD).

We believe that expanding our expertise across these basic science areas of mRNA regulation, ribosomal function, and protein translation forms a solid foundation to support our discovery and development activities.

Our ERSG compounds modulate the activity of the ribosome, a complex of RNAs and proteins, and therefore, a ribonucleoprotein, responsible for protein production, a process also known as translation.

These novel small molecule ERSG compounds are designed to allow the ribosome to read-through a nonsense mutation in mRNA (which is transcribed from the DNA sequence), to restore the translation process to produce full-length, functional proteins and increase the amount of mRNA that would otherwise be degraded as part of a phenomenon called nonsense mediated mRNA decay.

As our ERSG compounds target the general mechanism for protein production in the cell, we believ e they have the potential to treat hundreds of genetic diseases where nonsense mutations have impaired gene function.

Since nonsense mutations may occur at different positions within a given gene, a potential advantage of the small molecule ERSG approach i s being able to use one molecule to address a range of mutations within a given disease state.

Our subcutaneously injected ERSG molecules have the potential to be self-administered for systemic disease and to be active at most tissue locations across the b ody.

As our ERSG compounds target the general mechanism for protein production in the cell, we believe they have the potential to treat hundreds of genetic diseases where nonsense mutations have impaired gene function.

Since nonsense mutations may occur at different positions within a given gene, a potential advantage of the small molecule ERSG approach is being able to use one molecule to address a range of mutations within a given disease state.

Our subcutaneously injected ERSG molecules have the potential to be self-administered for systemic disease and to be active at most tissue locations across the body.

We believe that our library of related novel small molecules holds the potential to be disease-modifying therapies that may change the course of hundreds of genetic diseases and improve the lives of patients.

Our early preclinical data in animal models of nonsense mutations suggests that drug product candidates from our read-through compound library may have potential beneficial effects for each of the following diseases:

cystic fibrosis, cystinosis, a variety of inherited retinal diseases (including Usher Syndrome), primary ciliary diskinesia, polycystic kidney disease, mucopolysaccharidosis type 1, Duchenne muscular dystrophy and Rett syndrome, and have demonstrated the potential for beneficial effects in multiple organs such as the brain, eye, kidney, muscles and others.

Of the novel compounds in the ERSG Library, approximately 30 compounds have been selected, based on read-through activity, for continued preclinical research and we anticipate additional compounds advancing toward IND filings.

Our ear ly preclinical data in animal models of nonsense mutations suggests that drug product candidates from our read-through compound library may have potential beneficial effects for each of the following diseases:

cystic fibrosis, cystinosis, a variety of inhe rited retinal diseases (including Usher Syndrome), primary ciliary dyskinesia, polycystic kidney disease, mucopolysaccharidosis type 1, Duchenne muscular dystrophy and Rett syndrome, and have shown potential for beneficial effects in multiple organs such a s the brain, eye, kidney, muscles and others.

Currently our lead program, ELX-02, is focused on development for cystic fibrosis and cystinosis patients with diagnosed nonsense mutations.

Our clinical trial application (“CTA”) has been approved by the Federal Agency for Medicines and Health Products (the “FAMHP”) in Brussels and our IND submitted to the U.S.

Food and Drug Administration (the “FDA”) is open.

Our Phase 2 program has been given a “high priority” ranking by the European Cystic Fibrosis Society Clinical Trial Network.

We expect to initiate Phase 2 studies in cystic fibrosis and cystinosis following completion of our ongoing Phase 1b MAD study in the first half and to report top line Phase 2 data in the second half of 2019.

In 2018, we entered into a collaboration with Dr.

Paul Goodyear at McGill University as part of the Genome Canada Genomic Applications Partnership Program (GAAP), to conduct clinical trials of ELX-02 for the treatment of cystinosis.

During 2018, Eloxx submitted an IND to the FDA for the conduct of Phase 2 studies in cystinosis and the IND is now open.

The Phase 2 program as discussed with the FDA will enroll no more than 6 patients to evaluate multiple doses of ELX-02 for the primary endpoint of safety and exploratory endpoints that will include white blood cell cystine levels.

In support of the cystinosis program where many patients have impaired renal function, we initiated a renal impairment safety study.

We are pleased that the cohorts of subjects with mild and moderate renal impairment have been successfully completed.

To date, the pharmacokinetic results were as expected with no adverse events.

As part of our clinical program, we have completed a Phase 1 SAD study in a total of 60 healthy volunteers at sites in Israel (ClinicalTrials.gov Identifier:

With ELX-02, we have completed a Phase 1 single ascending dose (SAD) trial at sites in Israel (ClinicalTrials.gov Identifier:

NCT02807961) and Belgium (ClinicalTrials.gov Identifier:

NCT03292302).

The results of the SAD study were published in the Journal of Clinical Pharmacology in January 2019.

Our MAD study is being conducted in Belgium (ClinicalTrials.gov Identifier:

NCT03309605).

We have initiated the 7 th and final cohort of the MAD study in the U.S.

and expect to complete the study in the first half of this year.

In 2018, we initiated a new program studying inherited retinal disorders with a focus on Usher Syndrome by conducting pre-IND enabling studies on several compounds from our library.

We expect to advance one or more compounds into development for intravitreal administration.

We believe there is a significant unmet medical need in the treatment of cystic fibrosis patients carrying nonsense mutations on one or both alleles of the Cystic Fibrosis Transmembrane Conductance Regulator (“CFTR”) gene.

Cystic fibrosis is the most prevalent genetic disease in the western world and there are no currently approved therapies that target the impairment associated with Class 1 CFTR mutations.

We believe that nonsense mutations may impact a similar proportion of patients diagnosed with cystinosis.

There are no currently approved therapeutics that target the nonsense mutation mediated impairment of cystinosin, the cystine-selective transport channel in the lysosomal membrane that is attributed as the cause for the accumulation of cystine in this disease state.

Given the high proportion of pediatric patients in each of these rare orphan diseases we intend to apply for relevant Orphan Drug incentives in the U.S.

and Europe, including the Rare Pediatric Disease Priority Review Voucher in the U.S.

Currently, the European Medicines Agency (the “EMA”) has designated ELX-02 as an orphan medicine for the treatment of cystic fibrosis and mucopolysaccharidosis type I (“MPS I”), and the FDA has granted orphan drug designation to ELX-02 for the t reatment of cystinosis, MPS I, and Rett Syndrome.

We hold worldwide development and commercialization rights to ELX-02 and other novel compounds in our read-through library, for all indications, in all territories, under a license from the Technion Research and Development Foundation Ltd.

NCT03292302), a multiple ascending dose (MAD) trial in Belgium and the U.S.

(ClinicalTrials.gov Identifier:

NCT03309605) and a renal study in the U.S.

(ClinicalTrials.gov Identifier:

NCT03776539) with subjects having mild, moderate and severe renal impairment.

The results of the SAD study were published in the Journal of Clinical Pharmacology in Drug Development in January 2019.

An abstract on the results of the MAD study will be presented at the 2019 North American Cystic Fibrosis Conference (NACFC) on October 31-November 2, 2019 in Nashville, Tennessee.

With the completion of our Phase 1 studies, the program is now focused on our Phase 2 clinical studies.

In the U.S., our IND for cystic fibrosis Phase 2 is open and the Cystic Fibrosis Foundation (CFF) has endorsed our protocol.

Ahmet Uluer, Director of the Adult Cystic Fibrosis Program at the Boston Children’s Hospital/ Brigham and Women’s Hospital CF Center, is the lead study investigator in the U.S.

In Europe, our clinical trial application (CTA) has been approved by the Federal Agency for Medicines and Health Products (FAMHP) in Brussels and our Phase 2 protocol has been given a “high priority” ranking by the European Cystic Fibrosis Society Clinical Trial Network.

Professor Eitan Kerem, M.D., Head of the Division of Pediatrics, Children’s Hospital, Hadassah Medical Center in Israel will serve as the global lead investigator.

In Canada, our cystinosis CTA is approved and with the support of the Genome Canada Genomic Applications Partnership Program, we are currently enrolling 6 patients in this Phase 2 clinical trial.

Paul Goodyer, Professor of Pediatrics at McGill University will serve as our principal investigator.

This trial will evaluate multiple doses of ELX-02 for the primary endpoint of safety and exploratory endpoints that will include white blood cell cystine levels.

We expect to report top line cystinosis data early in the fourth quarter and top line cystic fibrosis data before year-end.

We presented positive data in three presentations at the 42 nd European Cystic Fibrosis Society Conference on June 5-8, 2019 in Liverpool, U.K., demonstrating that ELX-02 increases functional CFTR protein in organoid, human bronchial epithelial cells, and Ussing chamber systems and restores CFTR mRNA to healthy control levels.

We have had three ELX-02 abstracts accepted for presentation at the 2019 North American Cystic Fibrosis Conference (NACFC) on October 31-November 2, 2019 in Nashville, Tennessee.

We have initiated a new program studying inherited retinal disease and are conducting IND enabling studies for several ERSG compounds from our library.

We presented at the Ophthalmology Innovation Summit at the 2019 American Society of Retina Specialists (OIS@ASRS) in a special session hosted by Foundation Fighting Blindness (FFB), the 2019 USH Connections Conference, the Sixth Annual Retinal Cell and Gene Therapy Innovation Summit and the Association for Research in Vision and Ophthalmology (ARVO) 2019 Annual Meeting.

We entered into a multiyear partnership with the FFB to support its inherited retinal degenerative disease registry and educational programs.

We presented as part of the FFB “Investing in Cures” 2019 meeting and we believe that the ongoing research and development consultation and support provided by the FFB will accelerate our development programs that seek to support patients with ocular disease and high unmet medical need.

We are also evaluating the suitability of our ERSG library for development in rare renal disorders associated with nonsense mutations, such as autosomal dominant polycystic kidney disease, and cystinuria.

Currently, the European Medicines Agency (EMA) has designated ELX-02 as an orphan medicine for the treatment of cystic fibrosis and mucopolysaccharidosis type I (MPS I), and the FDA has granted orphan drug designation to ELX-02 for the treatment of cystinosis, MPS I, and Rett Syndrome.

We hold worldwide development and commercialization rights to ELX-02 and all other novel compounds in our ESRG library, for all indications, in all territories, under a license from the Technion Research and Development Foundation Ltd.

Professor Timor Baasov, the inventor of our compounds, has served as our senior consultant since our incorporation.

We believe that our cash, cash equivalents and marketable securities of $53.5 million at March 31, 2019 will enable us to meet the anticipated cash needs required to reach top line Phase 2 data in cystic fibrosis and cystinosis in 2019 and maintain our current and planned operations into the second quarter of 2020.

We believe that our cash , cash equivalents and marketable securities of $ 76.3 million at June 30 , 2019 will enable us to meet the anticipated cash needs required to reach top line Phase 2 data in cystic fibrosis and cystinosis in 2019 and maintain our current and planned operations into the first quarter of 202 1 .

Since our inception, we have incurred significant operating losses.

As of March 31, 2019, we had an accumulated deficit of $98.1 million.

To date, we have financed our operations primarily through equity capital investments, and to a lesser extent, from loans and grants from the Israeli Innovation Authority of the Ministry of Economy and Industry, or the IIA.

As of June 30 , 2019, we had an accumulated deficit of $ 1 12.5 million.

To date, we have financed our operations primarily through equity capital investments, and to a less er extent, from loans and grants from the Israeli Innovation Authority of the Ministry of Economy and Industry, or the IIA.

We have devoted substantially all of our financial resources and efforts to research and development.

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We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future.

Our net losses may fluctuate significantly from quarter to quarter and year to year.

Our net losses may fluctuate si gnificantly from quarter to quarter and year to year.

We anticipate that our expenses will increase substantially if, and as, we:

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The critical accounting policies that we believe impact significant judgments and estimates used in the preparation of our financial statements presented in this Report are described in our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K.

There have been no material changes to our critical accounting p o licies through March 31, 2019 , from those discussed in our Annual Report on Form 1 0-K filed with the SEC on March 1 4 , 201 9 .

There have been no material changes to our critical accounting policies through June 30, 2019, from those discussed in our Annual Report on Form 10-K filed with the SEC on March 14, 2019.

Results of Operations

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Three Months Ended

Six Months Ended

Operating expenses:

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Loss from operations

Other (income) expense, net

Other expense (income), net

Research and development expense

Research and development expenses were $6.0 million for the three months ended March 31, 2019 compared to $4.4 million for the same period ended March 31, 2018, an increase of $1.6 million.

Research and development expenses were $7.3 million for the three months ended June 30, 2019 compared to $4.2 million for the same period ended June 30, 2018, an increase of $3.2 million.

Research and development expenses increased $2.2 million primarily related to fees incurred for subcontractors, consultants and advisors in connection with ongoing clinical trials and research and development activities and $1.0 million due to an increase in headcount and related salaries, stock-based compensation, and other personnel related costs.

Research and development expenses for the three months ended June 30, 2019 and June 30, 2018 included non-cash stock-based compensation expense totaling $0.7 million and $0.3 million, respectively.

Research and development expenses were $13.3 million for the six months ended June 30, 2019 compared to $8.5 million for the same period ended June 30, 2018, an increase of $4.8 million.

Research and development expenses increased $2.9 million primarily related to fees incurred for subcontractors, consultants and advisors in connection with ongoing clinical trials and research and development activities and $1.9 million due to an increase in headcount and related salaries, stock-based compensation, and other personnel related costs.

Research and development expenses for the six months ended June 30, 2019 and June 30, 2018 included non-cash stock-based compensation expense totaling $1.3 million and $0.4 million, respectively.

General and administrative expenses

General and administrative expenses were $6.0 million for the three months ended March 31, 2019, compared to $3.4 million for the same period ended March 31, 2018, an increase of $2.6 million.

The increase in general and administrative expenses was primarily due to an increase in headcount and related salaries, stock-based compensation, and other personnel related costs of $2.8 million, offset by infrastructure-related costs of $0.2 million, including legal, accounting and other professional fees following the reverse merger.

General and administrative expenses were $7.0 million for the three months ended June 30, 2019, compared to $9.6 million for the same period ended June 30, 2018, a decrease of $2.6 million.

The decrease in general and administrative expenses was primarily due to a decrease in non-cash stock-based compensation offset by higher personnel, other personnel related costs, stock-based compensation and other infrastructure-related costs of $1.0 million, including legal, accounting and other professional fees following the reverse merger.

General and administrative expenses for the three months ended June 30, 2019 and June 30, 2018 included non-cash stock-based compensation expense totaling $2.3 million and $5.8 million, respectively.

General and administrative expenses were $12.9 million for the six months ended June 30, 2019, compared to $13.0 million for the same period ended June 30, 2018, a decrease of $24 thousand.

This change was primarily the result of higher personnel costs offset by lower non-cash stock-based compensation and other infrastructure-related costs, including legal, accounting and other professional fees following the reverse merger.

General and administrative expenses for the six months ended June 30, 2019 and June 30, 2018 included non-cash stock-based compensation expense totaling $4.4 million and $6.5 million, respectively.

Reverse merger related expenses

We recorded a decrease of $0.8 million in professional service fees incurred during the three months ended March 31, 2018 related to the reverse merger we completed on December 19, 2017.

Other (income) expense

We recorded $60 thousand in other income for the three months ended March 31, 2019, compared to $43 thousand in other expense for the same period ended March 31, 2018.

The increase was primarily due to an increase in interest income of $0.3 million due to our higher cash balance resulting from net proceeds of $53.6 million received from our initial public offering, described below under Principal Financing Activities in April 2018 and proceeds received of $15 million from the issuance of debt in January 2019, offset by interest expense incurred on that debt of $0.3 million.

During the three months ended June 30, 2018, we recorded a decrease in reverse merger related expenses of $0.2 million in professional service fees incurred.

During the six months ended June 30, 2018, we recorded $0.6 million in professional service fees for the six months ended June 30, 2018, related to the reverse merger we completed on December 19, 2017.

There was no reverse merger related expenses recorded during the three and six months ended June 30, 2019.

O ther expense (income ), net

We recorded $138 thousand in other expense, net for the three months ended June 30, 2019, compared to $137 thousand in other income, net for the same period ended June 30, 2018.

The change in other expense, net was primarily due to an increase in debt issuance costs and interest expense of $0.5 million associated with our bank debt issued in first quarter of 2019 offset by interest income of $0.2 million.

Our interest income increase was primarily due to higher cash resulting from $32.2 million received from our public offering in June 2019.

We recorded $78 thousand in other expense, net for the six months ended June 30, 2019, compared to $94 thousand in other income, net for the same period ended June 30, 2018.

The change in other expense, net was primarily due to an increase in debt issuance costs and interest expense of $0.7 million associated with our bank debt issued in the first quarter of 2019 offset by interest income $0.5 million for the same reason described above.

Liquidity and Capital Resources

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Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

Since our inception and through March 31, 2019, we have funded our operations primarily through equity and convertible debt financings in private placements, as described below.

We have a history of net losses and negative cash flows from operating activities since inception, and as of March 31, 2019, had an accumulated deficit of $98.1 million.

Since our inception and through June 30, 2019, we have funded our operations primarily through equity and capital investments.

We have a history of net losses and negative cash flows from operating activities since inception, and as of June 30, 2019, had an accumulated deficit of $112.5 million.

We expect to continue to incur net losses and use cash in our operations in the foreseeable future.

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We may never achieve profitability, and unless and until we do, we will continue to need to raise additional cash to fund our operations.

We believe that our cash and cash equivalents of $53.5 million at March 31, 2019 will enable us to meet the anticipated cash needs required to reach top line Phase 2 data in cystic fibrosis and cystinosis in 2019 and maintain our current and planned operations into the second quarter of 2020.

We believe that our cash, cash equivalents and marketable securities of $76.3 million at June 30, 2019 will enable us to meet the anticipated cash needs required to reach top line Phase 2 data in cystic fibrosis and cystinosis in 2019 and maintain our current and planned operations into the first quarter of 2021.

Our cash and cash equivalents are highly liquid investments with original maturities of 90 days or less at the date of purchase and consist of cash in operating accounts and secured investments, primarily in U.S.

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Principal Financing Activities

On April 30, 2018, we completed an underwritten public offering of 5,899,500 shares of common stock of the Company at the public offering price of $9.75 per share.

On April 30, 2018, we completed an underwritten public offering of 5,899,500 shares of common stock at the public offering price of $9.75 per share (the “2018 Offering”).

We received net proceeds of approximately $53.6 million after deducting underwriting discounts and commissions and estimated offering expenses.

In November 2018, we entered into an Equity Distribution Agreement (“the Agreement”) with Citigroup Global Markets Inc.

and Cantor Fitzgerald & Co.

(collectively, the “Sales Agents”), pursuant to which we may sell and issue shares of our common stock up to an aggregate of $50 million through the Sales Agents.

The shares were offered pursuant to the April 2018 Shelf.

In January 2019, we sold 35,362 shares of common stock and received net proceeds of $0.7 million.

At June 30, 2019, there was approximately $47 million available for future sales pursuant to the Agreement.

On January 30, 2019, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”), in its capacity as administrative agent, collateral agent and lender, and WestRiver Innovation Lending Fund VIII, L.P.

(“WestRiver”).

Pursuant to the terms and conditions of the Loan Agreement, the Lenders agreed to extend term loans to us in an aggregate principal amount of up to $25 million, comprised of (i) an initial loan advance of $15 million and (ii) a subsequent loan advance of $10 million, subject to first achieving certain conditions (collectively, the “Term Loan Advances”).

(“WestRiver”, together with SVB, the “Lenders”).

Pursuant to the terms and conditions of the Loan Agreement, the Lenders agreed to extend term loans to us in an aggregate principal amount of up to $25 million, comprised of (i) an initial loan ad vance of $15 million and (ii) a subsequent loan advance of $10 million, subject to first achieving certain conditions (collectively, the “Term Loan Advances”).

The initial term loan was funded on January 30, 2019.

The subsequent loan advance is available at our election prior to December 31, 2019 after the occurrence of certain milestone events relating to data from our clinical trials and receipt by us of certain minimum cash proceeds of at least $75 million from an additional equity offering through a private placement or a public offering.

The subsequent loan advance is available a t our election prior to December 31, 2019 after the occurrence of certain milestone events relating to data from our clinical trials and receipt by us of certain minimum cash proceeds of at least $75 million from an additional equity offering through a pri vate placement or a public offering.

On June 24, 2019, we completed an underwritten public offering of 3,833,334 shares of common stock at the public offering price of $9.00 per share (the “2019 Offering”).

We received net proceeds of approximately $32.2 million after deducting underwriting discounts and commissions and estimated offering expenses.

The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities

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Net cash provided by financing activities

Our operating activities used cash of $ 9.

2 million and $5.7 million during the three months ended March 31, 2019 and March 31, 2018 , respectively .

For the three month s ended March 31, 2019, n et cash used in operating activities resulted primarily from our net loss of $ 11.9 million partially offset by n on-cash charges of $ 2.

7 million related to stock-based compensation , $ 33 thousand of depreciation expen se and $0.1 million related to our amortization of debt discount.

For the three months ended March 31, 2018, net cash used in operating activities resulted primarily from our net loss of $ 8.6 million partially offset by non-cash charges of $ 2.1 million related to changes in working capital primarily for accounts payable and accrued expenses and $0.7 million related to stock-based compensation.

Our investing activities used cash of $19 thousand and $57 thousand during the three months ended March 31, 2019 and March 31, 2018, respectively.

Cash used in investing activities was primarily for the purchase of property and equipment and deposits on leased office space.

Our financing activities provided cash of $5.2 million for the three months ended March 31, 2019.

Cash provided resulted primarily from the issuance of debt of $15 million in January 2019 and proceeds of $0.5 million from the purchase of common stock offset by the purchase of marketable securities of $8.9 million and the payment of taxes of $1.1 million associated with the vesting of restricted stock units.

No cash was provided or used by financing activities during the period ended March 31, 2018.

Our operating activities used cash of $18.8 million and $14.2 million during the six months ended June 30, 2019 and June 30, 2018, respectively.

For the six months ended June 30, 2019, net cash used in operating activities resulted primarily from our net loss of $26.4 million partially offset by total non-cash charges of $6.1 million and total changes in working capital of $1.5 million.

Non-cash charges primarily related to $5.7 million of stock-based compensation, $0.2 million of amortization of our lease asset, $0.2 million of our amortization of debt discount and $50 thousand of depreciation expense offset by $0.1 million of amortization on our investments.

Changes in working capital were primarily related to higher prepaid and other current assets of $0.3 million and higher payables.

For the six months ended June 30, 2018, net cash used in operating activities resulted primarily from our net loss of $22.0 million partially offset by non-cash charges of $6.9 million related to stock-based compensation, and $0.8 million related to changes in working capital.

Our investing activities used cash of $26.9 million and $101 thousand during the six months ended June 30, 2019 and June 30, 2018, respectively.

For the six months ended June 30, 2019, cash used in investing activities was primarily for the purchase of marketable securities of $33.6 million offset by proceeds of $6.8 million received upon the maturity of marketable securities.

For the six months ended June 30, 2018, cash used in investing activities was primarily for the purchase of property and equipment and deposits on leased office space.

Our financing activities provided cash of $46.4 million and $53.7 million during the six months ended June 30, 2019 and June 30, 2018, respectively.

For the six months ended June 30, 2019, net cash provided by financing activities resulted primarily from net proceeds of $32.2 million from the 2019 offering, issuance of debt of $15 million in January 2019 and proceeds of $0.6 million from the purchase of common stock offset by the payment of taxes of $1.1 million associated with the vesting of restricted stock units.

For the six months ended June 30, 2018, net cash provided by financing activities resulted primarily from net proceeds from the 2018 Offering of $53.6 million and $0.1 million of proceeds from stock-based compensation arrangements.

Form S-3 and Equity Sales Agreement

On April 10, 2018, we filed a shelf registration statement (“April 2018 Shelf”) on Form S-3 with the Securities and Exchange Commission (the “SEC”).

The 2018 Shelf (File No.

The April 2018 Shelf (File No.

333-224207) was declared effective on April 20, 2018 and covers the offering, issuance and sale of up to $125 million of our common stock, preferred stock, debt securities or warrants and other securities, either individually or in combination.

In November 2018, we entered into an Equity Distribution Agreement (“the Agreement”) with Citigroup Global Markets Inc.

and Cantor Fitzgerald & Co.

(collectively, the “Sales Agents”), pursuant to which we may sell and issue shares of our common stock up to an aggregate of $50 million through the Sales Agents.

The shares were offered pursuant to the April 2018 Shelf.

In January 2019, we sold 35,362 shares of common stock and received net proceeds of $0.7 million.

At March 31, 2019, there was approximately $47.0 million available for future sales pursuant to the Agreement.

On November 16, 2018, we filed a shelf registration statement (“November 2018 Shelf”) on Form S-3 with the SEC.

The November 2018 Shelf (File No.

333-228430) was declared effective on November 21, 2018 and covers the offering, issuance and sale of up to $200 million of our common stock, preferred stock, debt securities or warrants and other securities, either individually or in combination.

Off-Balance Sheet Arrangements

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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