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Item 2. Management’s Discussion and Analysis

2022-05-06 compared with 2021-11-08 · 69 added, 90 removed, 70 unchanged (69% of the section changed)

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q or this Report, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “Annual Report”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements.

Please see the sections “Forward-Looking Statements,” “Summary Risk Factors,” and Part I, Item 1A.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and the related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”).

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward-looking statements.

Please see the sections “Special Note Regarding Forward-Looking Statements,” “Summary Risk Factors,” and Part II, Item 1A.

“Risk Factors” herein.

Company Overview

We are a clinical-stage biopharmaceutical company engaged in the science of ribosome modulation, leveraging both our innovative TURBO-ZM™ chemistry technology platform in an effort to develop novel Ribosome Modulating Agents (“RMAs”) and its library of Eukaryotic Ribosome Selective Glycosides (“ERSGs”), for the treatment of rare and ultra-rare premature stop codon diseases.

We are a clinical-stage biopharmaceutical company engaged in the science of ribosome modulation, leveraging both our innovative TURBO-ZM™ chemistry technology platform and our library of novel aminoglycosides in an effort to develop novel oral small molecule Ribosome Modulating Agents (“RMAs”) and Eukaryotic Ribosome Selective Glycosides (“ERSGs”), for the treatment of rare and ultra-rare premature stop codon diseases and ribosomal mutations.

Premature stop codons are point mutations that disrupt the stability of the impacted messenger RNA (“mRNA”) and the protein synthesis from that mRNA.

Our lead clinical program, ELX-02, is currently in Phase 2 clinical development for the treatment of cystic fibrosis (“CF”) in patients with diagnosed nonsense mutations and is being conducted at leading investigator sites in Europe, Israel and the United States.

As of the end of June 2021, we believe that we have enrolled a sufficient number of patients to assess biological activity of ELX-02.

We expect to present data from the first four treatment arms of the study before the end of 2021.

The Cystic Fibrosis Foundation (“CFF”) is providing funding for a portion of this clinical trial program.

The FDA has granted orphan drug designation to ELX-02 for the treatment of nephropathic cystinosis, MPS I, Rett syndrome, and CF.

In September 2021 the FDA granted Fast Track designation for ELX-02.

Additionally, certain mutations of the ribosome disrupt normal protein translation and are drivers of a subset of cancers.

We have multiple programs in our pipeline including a clinical program for the treatment of cystic fibrosis (“CF”) patients with nonsense (“Class 1 CF”) mutations, preclinical programs in Recessive Dystrophic (“RDEB”) and Junctional Epidermolysis Bullosa (“JEB”) and Familial Adenomatous Polyposis (“FAP”) and various earlier discovery stage programs in oncology.

We are also actively looking to expand our programs by seeking new indications in other rare diseases for our lead compounds.

In November 2021, we announced positive topline results from the monotherapy arms of a Phase 2 study evaluating the safety and activity of one of our ERSGs, ELX-02, in Class 1 CF patients with at least one G542X nonsense allele mutation.

We have expanded this Phase 2 study to evaluate the safety and efficacy in Class 1 CF patients of a combination of ELX-02 and ivacaftor, an approved drug currently marketed for the treatment of certain CF patients under the trade name “Kalydeco.” The U.S.

Food and Drug Administration (“FDA”) has granted Fast Track designation for ELX-02 for the treatment of CF patients with nonsense mutations.

In addition, the FDA granted ELX-02 Orphan Drug Designation for the treatment of CF in July 2020 and the European Medicines Agency (“EMA”) granted ELX-02 orphan medicinal product designation in September 2018.

In March 2022, we entered into an agreement with the Cystic Fibrosis Foundation (“CFF”) for an award of up to $15.9 million to fund the ongoing global Phase 2 clinical development of ELX-02 in CF.

We received an upfront payment of $7.0 million in March 2022.

The remaining $8.9 million of the award will be payable upon the achievement of certain clinical development milestones.

If we successfully commercialize ELX-02, we agreed to pay the CFF royalties based on future sales tiered on the actual level of funding from the CFF.

Acquisition of Zikani Therapeutics, Inc.

On April 1, 2021, the Company acquired Zikani Therapeutics, Inc.

(“Zikani”), a company in preclinical development and engaged in the science of ribosome modulation, leveraging its innovative TURBO-ZM TM chemistry technology platform to develop novel RMAs as potential therapeutics for diseases with limited treatment options.

(“Zikani” and such acquisition, the “Zikani Merger”)), a company in preclinical development and engaged in the science of ribosome modulation, leveraging its innovative TURBO-ZM TM chemistry technology platform to develop novel RMAs as potential therapeutics for diseases with limited treatment options.

The TURBO-ZM TM platform is designed to enable rapid synthesis of novel compounds that can be optimized to modulate the ribosome in a disease specific manner.

The TURRBO-ZM TM synthetic chemistry platform can design oral novel macrolide-based small molecules that are potent oral modulators with favorable therapeutic indices.

The TURBO-ZM TM synthetic chemistry platform can design oral novel macrolide-based small molecules that are potent oral modulators with favorable therapeutic indices.

Macrolides are antibiotics that inhibit protein synthesis in bacteria.

We expect the combined company to emerge as a leader in the science of ribosome modulation through our complementary platforms and continued development of our library of RMAs and ERSGs.

As a result of the Zikani Merger in April 2021, we expect the Company to emerge as a leader in the science of ribosome modulation through our complementary platforms and continued development of our library of RMAs and ERSGs.

ELX-02, is a small molecule drug candidate designed to restore production of full-length functional proteins.

The investigational therapy has shown strong activity across a full range of mutations in CF preclinical models.

In Phase 1 testing, ELX-02 was generally well tolerated and demonstrated high bioavailability with consistent pharmacokinetics across both single and multiple-dose studies.

In Phase 1 testing, ELX-02 was generally well tolerated and demonstrated high bioavailability with consistent pharmacokinetics across both

single and multiple-dose studies.

The Phase 2 trials are designed to validate the safety of ELX-02 and assess its biological activity.

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Our preclinical programs are focused on select rare diseases including inherited diseases, cancer caused by nonsense mutations, kidney diseases, including autosomal dominant polycystic kidney disease, as well as rare ocular genetic disorders.

In addition, we plan to file an Investigational New Drug (“IND”) in 2022 for what could potentially become the first oral therapy for protein restoration for patients with nonsense mutations in Recessive Dystrophic Epidermolysis Bullosa (“RDEB”) and Junctional Epidermolysis Bullosa (“JEB”).

In addition, we plan to file an Investigational New Drug (“IND”) in 2022 for patients with nonsense mutations in Recessive Dystrophic Epidermolysis Bullosa (“RDEB”) and Junctional Epidermolysis Bullosa (“JEB”).

RDEB is an incurable, extremely painful and often fatal skin blistering condition caused by a lack of collagen type VII that is estimated to affect more than 3,000 people worldwide.

JEB is the most severe form of Epidermolysis Bullosa, with most patients dying in infancy.

By extending the application of ribosomal RNA modulation to the readthrough of nonsense mutations in tumor suppressor genes, we are also rapidly advancing preclinical research for familial adenomatous polyposis (FAP), an inherited pre-cancerous colorectal disease frequently caused by nonsense mutations in the

adenomatous polyposis coli (APC) gene.

We plan to target rare diseases including genetic diseases and cancers caused by nonsense mutations.

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ELX-02 along with the TURBO-ZM TM library of compounds are anticipated to significantly expand to include the treatment of many other rare diseases and certain cancers.

Under the terms of the Agreement and Plan of Merger (the “Merger Agreement”), the Company issued 7,596,810 shares of common stock in exchange for all of the issued and outstanding equity interests of Zikani.

(the “Merger Consideration”).

The ongoing COVID-19 pandemic and the measures that we, our employees, consultants, suppliers, contract research organizations (“CROs”), and other partners or governments may take in response to the pandemic may significantly disrupt our business operations.

We are working to ensure that we can operate with minimal disruption and mitigate the impact of the pandemic on the health and safety of our employees and the patients and healthcare professionals that participate in our clinical trials.

However, given the significant uncertainty regarding the ongoing impact of the COVID-19 pandemic, there remains a risk that we or our employees, contractors, suppliers, and other partners may be prevented or prohibited from conducting business activities for indefinite periods of time, for example due to a substantial percentage of personnel contracting the virus or due to government-mandated restrictions.

While the pandemic has not to date had a material adverse impact on our financial condition, and we have not had to furlough any employees, our clinical trials were temporarily paused in March 021.

As of August 2021, both Phase 2 clinical trials have resumed, and we believe that we have enrolled a sufficient number of patients to assess biological activity of ELX-02.

We continue to monitor our operations, states of affairs in the regions in which we and our business partners operate and conduct research and clinical trial activities, and applicable government recommendations.

Under the terms of the Agreement and Plan of Merger, the Company issued 7,596,810 shares of common stock in exchange for all of the issued and outstanding equity interests of Zikani (the “Merger Consideration”).

The Zikani Merger was accounted for as an asset acquisition with acquired in-process research and development which was immediately expensed.

Results of Operations

Three Months Ended March 31, 2022, Compared to Three Months Ended March 31, 2021

The following table summarizes our results of operations for the periods presented (in thousands):

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

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General and administrative

Acquired in-process research and development

Restructuring charges

Total operating expenses

Loss from operations

Other income (expense), net

Other expense, net

Research and development expense

Research and development expenses were $5.2 million for the three months ended September 30, 2021, compared to $3.4 million for the same period in 2020, an increase of $1.8 million.

The increase was primarily related to a $0.8 million increase in expenses related to subcontractors, consultants and advisors in connection with continued development of ELX-02 due to the impact of the COVID-19 pandemic on the corresponding prior year period expense, an increase in salaries and other personnel related costs of $0.5 million, and an increase in operational facilities of $0.5 million.

Research and development expenses were $15.0 million for the nine months ended September 30, 2021 compared to $12.0 million for the same period in 2020, an increase of $3.0 million.

The increase was primarily related to a $2.2 million

increase in expenses related to subcontractors, consultants and advisors in connection with continued development of ELX-02 due to the impact of the COVID-19 pandemic on the corresponding prior year period expense, an increase of $0.7 million related to operational facilities acquired with Zikani , and a $0.1 million increase in salaries and benefits .

Research and development expenses were $7.9 million for the three months ended March 31, 2022 compared to $4.1 million for the same period in 2021, an increase of $3.8 million.

The increase was primarily related to an increase of $1.9 million related to our preclinical activities, an increase of $0.4 million related to clinical trials, an increase of $0.6 million in employee salaries and benefits, an increase of $0.1 million related to stock-based compensation, and an increase of $0.8 million in overhead and infrastructure costs.

General and administrative expenses

General and administrative expenses were $5.0 million for the three months ended September 30, 2021, compared to $2.9 million for the same period in 2020, an increase of $2.2 million.

The increase was primarily related to a $0.7 million increase in stock-based compensation expense, a $0.5 million increase in in salaries and other personnel related costs related to the merger with Zikani, as well as an increase of $1.0 million in expenses attributable principally to infrastructure related costs including legal, accounting and other professional fees.

General and administrative expenses were $16.7 million for the nine months ended September 30, 2021, compared to $11.7 million for the same period in 2020, an increase of $5.0 million.

The increase was primarily related to $0.8 million increase in expenses attributable principally to infrastructure related costs including legal, accounting and other professional fees, $0.2 million related to office facilities acquired from Zikani and insurance, and, as further described below, $4.0 million related to restructuring charges in 2020 that were not incurred in 2021.

Acquired in-process research and development

Acquired in-process research and development (“IPR&D”) expense of $22.7 million for the nine months ended September 30, 2021 consists of the estimated fair value of the assets acquired and consideration given in connection with the acquisition of the Zikani’s IPR&D.

As the assets acquired were in the research and development phase and were determined to not have any alternative future use, such assets were expensed as acquired IPR&D.

There was no such expense for the nine months ended September 30, 2020.

Restructuring charges

Restructuring charges of $4.0 million for the nine months ended September 30, 2020 resulted from the leadership and organizational realignment during the first quarter of 2020.

The total included $1.9 million related to contract termination and employee separation costs, primarily severance and benefits, and $2.1 million of stock-based compensation, relating to accelerated vesting of stock awards.

There were no similar charges during the nine months ended September 30, 2021.

Other expense, net

We recorded $0.4 million in other income, net for the three months ended September 30, 2021 compared to a $0.3 million other expense, net during the same period in 2020.

We recorded $0.2 million in other expense, net for the nine months ended September 30, 2021, compared to $0.8 million for the same period in 2020.

The increase in the 2021 periods as comparted to the same periods in 2020 was primarily due to the Company recognizing a $0.8 million gain on extinguishment of debt related to the forgiveness of the PPP loan (defined below), offset by a $0.3 million loss on extinguishment of debt related to the repayment of the amounts outstanding under our existing term loan from SVB in September 2021.

General and administrative expenses were $3.1 million for the three months ended March 31, 2022, compared to $4.3 million for the same period in 2021, a decrease of $1.3 million.

The decrease was primarily related to a $0.5 million decrease in salaries and other personnel related costs, a $0.5 million decrease in stock-based compensation expense, a decrease of $0.2 million related to external consultant and professional fees, and a decrease of $0.1 million related to overhead and infrastructure costs.

O ther expense, net

We recorded $0.7 million in other expense, net for the three months ended March 31, 2022, compared to $0.3 million for the same period in 2021.

The increase in other expense, net, was primarily due to the recognition of $0.3 million of derivative liabilities related to the CFF awards and a $0.1 million increase in interest expense under the Hercules Term Loan (as defined below).

Liquidity and Capital Resources

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We have incurred significant operating losses to date and have not generated revenue from sales of any products or services.

Our net losses were $54.6 million and $28.5 million for the nine months ended September 30, 2021, and 2020.

As of September 30, 2021, we had an accumulated deficit of $226.2 million.

Our net losses were $11.6 million and $8.7 million for the three months ended March 31, 2022, and 2021.

As of March 31, 2022, we had an accumulated deficit of $249.9 million.

We have financed our operations primarily through the issuance of equity instruments, and to a lesser extent, from loans and grants.

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advance ELX-02 and/or other product candidates further into clinical development;

experience any additional delays in enrollment and completion of our clinical trials due to the COVID-19 pandemic;

experience additional delays in enrollment and completion of our clinical trials due to the COVID-19 pandemic or otherwise;

continue the preclinical development of our research programs and advance candidates into clinical trials;

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Our cash and cash equivalents are highly liquid investments with original maturities of one year or less at the date of purchase and consist of cash in operating accounts and secured investments, primarily money market funds .

We believe that our cash and cash equivalents of $52.4 million at September 30, 2021, will enable us to meet anticipated cash needs required to maintain our current and planned operations through at least the next 12 months from the issuance of this Report.

Management intends to fund future operations through private or public debt or equity financing transactions and may seek additional capital through arrangements with strategic partners or from other sources.

If we are unable to obtain adequate financing, we will evaluate alternatives which may include reducing or deferring operating expenses, including by downsizing our workforce and curtailing certain development programs, which could have a material adverse effect on our operations and future prospects.

Although the impact of the COVID-19 pandemic on clinical operations and trial enrollment cannot fully be determined, we believe that our cash and cash equivalents of $39.8 million at March 31, 2022, which includes the upfront payment of $7.0 million received from the Cystic Fibrosis Foundation (“CFF”) is not sufficient to maintain our current and planned operations for at least the next twelve months following the filing of this Quarterly Report on Form 10-Q.

We will need to raise additional capital to finance our operations, which cannot be assured.

We have concluded that these conditions, in aggregate, raise substantial doubt about our ability to continue as a going concern without additional funding through one year after the date of the financial statements included in the Quarterly Report on Form 10-Q.

Principal Financing Activities

In April 2020, we entered into a loan agreement with SVB under the U.S.

Small Business Administration (the “SBA”) Paycheck Protection Program (the “PPP”) pursuant to the Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CARES Act”) and received loan proceeds of $0.8 million (the “PPP Loan”).

We used the loan proceeds for payroll and other covered costs in accordance with the relevant terms and conditions of the CARES Act.

The PPP Loan has an interest rate of 1.0% per annum.

Under the terms of the PPP, on September 3, 2021, the PPP Loan was forgiven in full and the Company recognized a gain on extinguishment of debt of $0.8 million during the three and nine months ended September 30, 2021.

On May 13, 2021, we completed an underwritten public offering of 38,333,334 shares of common stock at a price of $1.35 per share and received gross proceeds of approximately $51.8 million, before deducting underwriting discounts and commissions of $3.1 million and offering expenses of $0.8 million.

On September 30, 2021, we entered into a Loan and Security Agreement with Hercules Capital, Inc., (“Hercules” or the “Lender”), Hercules agreed to extend term loans (the “Hercules Term Loan”) to the Company in an aggregate principal amount of up to $30.0 million, comprised of three tranches.

The Company drew on the first tranche of $12.5 million on September 30, 2021 and used $7.7 million of the proceeds to repay the SVB loan principal, final payment, and early termination fees, resulting in net proceeds to us of $4.2 million, net of issuance related costs of $0.6 million.

amount of up to $30.0 millio n, comprised of three tranches, of which $12.5 million had been funded as of March 31, 202 2 .

The remaining tranches totaling $17.5 million will be available to the Company based on achieving certain clinical and equity milestones during defined time periods.

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Any amounts outstanding under the term loan advances, if not repaid sooner, are due and payable on April 1, 2025.

that we partially repay the outstanding obligations, the Company shall pay the Lenders a charge equal to 6.55% of the original principal amount.

On September 30, 2021, the Company entered into a Sales Agreement with SVB Leerink, LLC (“SVB Leerink”) pursuant to which the Company may offer and sell up to $50.0 million of shares of its common stock (the “ATM Shares”) from time to time, through an “at the market offering” program (the “ATM Program”) , under which SVB Leerink will act as sales agent.

On any date that we partially repay the outstanding obligations, the Company shall pay the Lenders a charge equal to 6.55% of the original principal amount.

The Hercules Term Loan contains customary affirmative and negative covenants, which among others requires us to maintain at all times a minimum qualified cash balance equaling amounts ranging from $6.3 million to $10.0 million plus qualified accounts payable.

As of March 31, 2022 we were in compliance with all debt covenants.

However, the inherent uncertainties described above may impact our ability to remain in compliance with these covenants over the next twelve months.

If we breach our financial covenants and fail to secure a waiver or forbearance from the third-party lender, such breach or failure could accelerate the repayment of the outstanding borrowings under the Hercules Term Loan or the exercise of other rights or remedies the third-party lender may have under applicable law.

No assurance can be provided that a waiver or forbearance will be granted or that the outstanding borrowings under the Hercules Term Loan, will be successfully refinanced on terms that are acceptable to the Company.

As previously noted, in March 2022, we entered into an agreement with the CFF for an award of up to $15.9 million to fund the ongoing global Phase 2 clinical development of ELX-02 in CF.

We received an upfront payment of $7.0 million in March 2022.

The remaining $8.9 million of the award will be payable upon the achievement of certain clinical development milestones.

Upon the successful commercialization of ELX-02, we will pay the CFF royalties based on future sales tiered on the actual level of funding from the CFF.

On September 30, 2021, we entered into a Sales Agreement with SVB Leerink, LLC (“SVB Leerink”) pursuant to which the Company may offer and sell up to $50.0 million of shares of its common stock (the “ATM Shares”) from time to time, through an “at the market offering” program (the “ATM Program”), under which SVB Leerink will act as sales agent.

Pursuant to the Sales Agreement, the Company will set the parameters for the sale of ATM Shares, including the number of ATM Shares to be issued, the time period during which sales are requested to be made, limitations on the number of ATM Shares that may be sold in any one trading day and any minimum price below which sales may not be made.

The Company is not obligated to make any sales of Shares under the ATM Program.

This ATM Program was not active as of September 30, 2021, and the Company had not sold any shares under the ATM Program as of such date.

The Company has not sold any shares under the ATM Program as of March 31, 2022.

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

Nine Months Ended

September 30,

Three Months Ended

Net cash used in operating activities

Net cash provided by investing activities

Net cash provided by (used in) financing activities

Our operating activities used cash of $25.1 million and $23.5 million during the nine months ended September 30, 2021 and 2020, respectively.

For the nine months ended September 30, 2021, net cash used in operating activities resulted primarily from our net loss of $54.6 million, partially offset by total non-cash charges of $31.5 million.

Non-cash charges primarily related to $22.7 million of acquired in-process research and development, $7.6 million of stock-based compensation, $0.7 million of amortization of lease assets, and $0.3 million of debt discount amortization.

Changes in working capital were primarily related to decreases of $0.6 million in prepaid expenses, $0.7 million in operating lease liabilities, $0.2 million net of accounts payable and accrued expenses, and $1.0 million of merger related costs.

For the nine months ended September 30, 2020, net cash used in operating activities resulted primarily from our net loss of $28.5 million and total changes in working capital of $3.4 million partially offset by total non-cash charges of $8.3 million.

Net cash (used in) provided by investing activities

Net cash provided by financing activities

Our operating activities used cash of $9.5 million and $7.7 million during the three months ended March 31, 2022 and 2021, respectively.

For the three months ended March 31, 2022, net cash used in operating activities resulted primarily from our net loss of $11.6 million and changes in working capital of $0.6 million, partially offset by total non-cash charges of $1.5 million.

Non-cash charges primarily related to $0.9 million of stock-based compensation, $0.2 million of amortization of lease assets, $0.3 million of derivative liabilities, and $0.1 million of debt discount amortization.

For the three months ended March 31, 2021, net cash used in operating activities resulted primarily from our net loss of $8.7 million and changes in working capital of $0.5 million, partially offset by total non-cash charges of $1.5 million.

Non-cash charges primarily related to $1.3 million of stock-based compensation, $0.1 million of amortization of lease assets, and $0.1 million of debt discount amortization.

Changes in working capital were primarily related to increases of $1.7 million in accrued expenses, $1.2 million in accounts payable, $0.4 million in operating lease liabilities, and in increase of $0.1 million in prepaid expenses and other current assets.

Our investing activities provided cash of $2.1 million and $33.8 million during the nine months ended September 30, 2021 and 2020, respectively.

For the nine months ended September 30, 2021, cash provided in investing activities was primarily related to $2.1 million of cash acquired as part of the merger.

For the nine months ended September 30, 2020, cash provided in investing activities was primarily related to $33.8 million of proceeds from the maturity of marketable securities .

Our financing activities provided cash of $50.9 million during the nine months ended September 30, 2021 and used cash of $2.2 million during the nine months ended September 30, 2020.

For the nine months ended September 30, 2021, net cash provided by financing activities consisted primarily of net proceeds of $47.7 million from our public offering of common stock in May 2021, $2.9 million in advances received from collaboration partners, $11.9 million of net cash received from the Hercules term loan, offset by $11.3 million in SVB term loan principal and repayments and final loan payment, and $0.2 million related to the settlement of taxes upon vesting of restricted stock units.

For the nine months ended September 30, 2020, net cash used in financing activities consisted primarily of $3.3 million in term loan principal repayments, offset by $0.8 million received from the PPP Loan and $0.4 million in advances received from collaboration partners.

Off- b alance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

We had no material investing activities during the three months ended March 31, 2022 and 2021.

Our financing activities provided cash of $7.0 million during the three months ended March 31, 2022 and provided cash of $1.3 million during the three months ended March 31, 2021.

For the three months ended March 31, 2022, net cash provided by financing activities consisted primarily of $7.0 million in advances received from the CFF.

For the three months ended March 31, 2021, net cash provided by financing activities consisted primarily of $1.3 million in term loan principal repayments and $2.6 million in advances received from collaboration partners.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or U.S.

Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States (“U.S.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expense during the reporting periods.

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Actual results may differ materially from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies through September 30, 2021 from those discussed in our Annual Report filed with the SEC on March 12, 2021.

The critical accounting policies that we believe impact significant judgments and estimates used in the preparation of our condensed consolidated financial statements presented in this Report are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our 2021 Annual Report and Note – Basis of Presentation and Significant Accounting to our financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

There have been no material changes to our critical accounting policies through March 31, 2022 from those discussed in our 2021 Annual Report.

Quantitative and Qualitative Disclosures about Market Risk

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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