Edgewise Therapeutics, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion of the financial condition and results of operations of Edgewise Therapeutics, Inc. should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, or Quarterly Report, and the audited financial statements and notes included in our Annual Report on Form 10-K, or Annual Report, filed with the Securities and Exchange Commission, on February 23, 2023. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. As a result of many factors, including those factors set forth in the “Risk Factors” section of this quarterly report, our actual results could differ materially from the results described in or implied by these forward-looking statements. You should carefully read the “Risk Factors” to gain an understanding of the factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section titled “Special Note Regarding Forward-Looking Statements.” Overview We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of innovative treatments for severe, genetic neuromuscular and cardiac disorders for which there is significant unmet medical need. Guided by our holistic drug discovery approach to targeting the muscle as an organ, we have combined our foundational expertise in muscle biology and small molecule engineering to build our proprietary, muscle focused drug discovery platform. Our platform utilizes custom-built high throughput and translatable systems that measure integrated muscle function in whole organ extracts to identify small molecule precision medicines regulating key proteins in muscle tissue, initially focused on addressing rare neuromuscular and cardiac diseases. We have developed and characterized a library of novel sarcomere modulators exhibiting a broad range of pharmacological and pharmacokinetic (PK) properties regulating disease-related muscle biology. Our lead product candidate, EDG-5506, is an orally administered allosteric, selective, fast myofiber (type II) myosin small molecule inhibitor designed to address the root cause of dystrophinopathies including Duchenne muscular dystrophy (Duchenne) and Becker muscular dystrophy (Becker). The Company is also advancing EDG-7500, a first-in-class oral, selective, cardiac sarcomere modulator, specifically designed to slow early contraction velocity and address impaired cardiac relaxation associated with HCM and other diseases of diastolic dysfunction. In October 2021, we announced positive topline results from the multiple ascending dose (MAD) portion of a first-in-human Phase 1, HV clinical trial. In addition, in January 2022, we announced positive topline results from the Becker, or Phase 1b, portion of a first-in-human Phase 1 clinical trial assessing the safety, tolerability, PK and pharmacodynamic (PD) of EDG-5506. We have fully enrolled an open-label, single-center study, known as ARCH, that will assess the safety and PK of EDG-5506 over two years in adults with Becker and in June 2023, we announced positive interim 12-month results from the ongoing study . We initiated a Phase 2 clinical trial in individuals with Becker in July 2022, known as CANYON, which is now fully enrolled, and in September 2023, we initiated GRAND CANYON, a potentially registrational cohort in individuals with Becker. In October 2022, we initiated a Phase 2 clinical trial in children with Duchenne, known as LYNX. In October 2023, we expanded enrollment in LYNX to include a new cohort for further dose escalation and an additional cohort that will study boys with Duchenne not currently treated with corticosteroids. Also, in October 2023, we announced the initiation of FOX, a new Phase 2 placebo-controlled trial, which will assess the effect of EDG-5506 in children and adolescents with Duchenne who have been previously treated with gene therapy. We are also continuing to recruit the DUNE Phase 2 exercise challenge study, to evaluate the effect of EDG-5506 on biomarkers of muscle damage following exercise in adults with Limb Girdle muscular dystrophy 2i (LGMD2i), BMD or McArdle disease at a single site in Denmark. We have also evolved a second muscle-targeted initiative that focuses on identification of novel cardiac muscle modulators. We are initially pursuing our lead product candidate, EDG-7500, for hypertrophic cardiomyopathy (HCM) in addition to exploring the potential of this novel mechanism in disorders of diastolic dysfunction. In September 2023, we announced initial dosing in a Phase 1 trial of EDG-7500 which is assessing the tolerability, pharmacokinetics, and pharmacodynamics of EDG-7500 in healthy adults. The Company is also planning to begin a Phase 1b study of EDG-7500 in individuals with obstructive HCM in the first half of 2024. Additionally, our EDG-003 discovery program is exploring the potential of other unique and novel mechanisms to address a variety of disorders, including cardiometabolic disease. We believe our programs also offer substantial opportunities for us to expand into other rare muscle diseases for which there are limited or no approved treatments. 20 Table of Contents Since our inception in 2017, we have devoted substantially all of our focus and financial resources to discovering, identifying and developing potential product candidates, including advancing our development programs, conducting preclinical studies of our product candidates and initiating a clinical trial, organizing and staffing our company, business planning, raising capital and securing related intellectual property rights. To date, we have not completed the development of any of our product candidates, have not generated any revenue and have never been profitable. Our ability to achieve profitability, if ever, will depend heavily on the successful development and eventual commercialization of one or more of our product candidates. We will need substantial additional funding to support our continuing operations and pursue our development and commercialization strategy. Until such time that we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including income from collaborations, strategic partnerships or marketing, distribution or licensing arrangements with third parties or from grants from organizations and foundations. We may be unable to raise additional funds or to enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay or terminate our efforts to expand our product pipeline. We have incurred significant losses since the commencement of our operations. Our net losses were $25.7 million and $70.0 million for the three and nine months ended September 30, 2023, respectively and $17.5 million and $48.2 million for the three and nine months ended September 30, 2022, respectively, and we expect to continue to incur significant losses for the foreseeable future as we advance our product candidates through preclinical development and clinical trials and seek regulatory approval of our product candidates. Our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities. As of September 30, 2023, we had an accumulated deficit of $214.6 million. To date, we have financed our operations primarily through private placements of convertible preferred stock, and public offerings of our common stock. From inception through September 30, 2023, these private placements have provided gross proceeds of $160.7 million, and the initial public offering and follow-on public offering of our common stock have generated net proceeds of $315.3 million. We believe that our existing cash and cash equivalents and marketable securities of $289.7 million will enable us to fund our planned operating expenses and capital expenditure requirements through at least the next 12 months. Macroeconomic and Geopolitical Developments We are monitoring macroeconomic and geopolitical developments, such as inflation, instability in the banking and financial services sector, tightening of the credit markets, cybersecurity risks, the Russia-Ukraine and Israel-Hamas conflicts, and sanctions so that the Company can be prepared to react to new developments as they arise. We are carefully monitoring these developments, as well as the COVID-19 pandemic, and the resulting economic impact. Components of Our Results of Operations Operating expenses Research and development expenses Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We record research and development expenses when these are incurred. Such expenses include: ● employee and external consultant-related expenses including salaries, bonuses, benefits and stock-based compensation expense for employees engaged in research and development functions; ● external expenses incurred in connection with the clinical development of our product candidates including under agreements with third parties, such as consultants and contract research organizations (CROs); 21 Table of Contents ● the cost of external manufacturing drug products for use in our preclinical studies and ongoing and planned clinical trials including under agreements with third parties such as consultants and contract development and manufacturing organizations (CDMOs); ● expenses incurred in connection with the preclinical development of our product candidates including external, or outsourced professional scientific development services, consulting research fees and payments made under sponsored research arrangements with third parties; ● laboratory supplies; ● facilities, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of facilities; ● expenses related to compliance with regulatory requirements; and ● payments made under third-party licensing agreements. The majority of these expenses have been incurred to advance our lead product candidate, EDG-5506 and to a lesser degree EDG-7500. We expect that significant additional spending will be required to progress these and other potential discoveries through the remainder of the clinical development phases. These expenses will primarily consist of expenses for the administration of clinical trials as well as manufacturing costs for clinical material supply. We track our direct research and development expenses on a program-by-program basis once a lead compound has been selected and clinical trials have been initiated. These direct costs consist primarily of external costs such as fees paid to outside consultants, CROs, CDMOs, clinical trial sites and central laboratories in connection with our discovery and preclinical activities, process development, manufacturing and clinical development activities. These expenses are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers or our estimate of the level of service that has been performed at each reporting date. Our direct research and development expenses by program also include costs of laboratory supplies that can be directly attributed to a specific program as well as any fees incurred under license agreements. We do not allocate employee-related costs, including stock-based compensation, or facility expenses, including rent, depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to conduct our research and discovery activities and to manage our preclinical development, manufacturing and clinical development activities. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages, primarily due to the increased size and duration of later-stage clinical trials. As of September 30, 2023 we have initiated four Phase 2 clinical trials for EDG-5506 (CANYON, LYNX, FOX and DUNE) and a potentially registrational cohort in individuals with Becker (GRAND CANYON). As a result, we expect that our research and development expenses will increase substantially over the next several years as we advance EDG-5506, EDG-7500, a product from our EDG-003 cardiometabolic discovery program through clinical trials and additional product candidates enter clinical trials; continue to develop our proprietary drug discovery platform; continue to discover and develop additional product candidates; and hire additional personnel. The successful development of our product candidates is highly uncertain, and we do not believe it is possible at this time to accurately project the nature, timing and extent of expenses necessary to complete the development of our product candidates. We are also unable to predict when, if ever, we will generate revenue from our product candidates to offset these expenses. Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of preclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including: ● the timing and progress of preclinical and clinical development activities; 22 Table of Contents ● the number and scope of preclinical and clinical programs we decide to pursue; ● our ability to maintain our current research and development programs and to establish new ones; ● establishing an appropriate safety profile with IND-enabling studies; ● successful patient enrollment in, and the initiation and completion of, clinical trials; ● the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; ● the receipt of regulatory approvals from applicable regulatory authorities; ● the timing, receipt and terms of any marketing approvals from applicable regulatory authorities; ● our ability to establish new licensing or collaboration arrangements; ● the performance of our future collaborators, if any; ● establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; ● development and timely delivery of sufficient supplies of our drug product that can be used in our planned clinical trials and for commercial launch upon approval; ● obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; ● launching commercial sales of our product candidates, if approved, whether alone or in collaboration with others; and ● maintaining a continued acceptable safety profile of the product candidates following approval. Any changes in the outcome of any of these factors could significantly impact the costs and timing associated with the development of our product candidates. General and administrative expenses General and administrative expenses consist primarily of salaries, related benefits and stock-based compensation expense for personnel in executive, finance, accounting, legal and administrative functions. General and administrative expenses also include facilities and other expenses, which include direct or allocated expenses for rent and maintenance of facilities and insurance, not otherwise included in research and development expenses, as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the continued research and development of our programs. Interest income Interest income primarily consists of interest income generated from our cash, cash equivalents and marketable securities. ​ ​ ​ 23 Table of Contents Results of Operations Comparison of the three months ended September 30, 2023 and 2022 The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ ​ ​ ​ 2023 2022 Change ​ ​ (in thousands) Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ $ 23,786 ​ $ 13,894 ​ $ 9,892 General and administrative ​ 5,666 ​ 4,368 ​ 1,298 Total operating expenses ​ 29,452 ​ 18,262 ​ 11,190 Loss from operations ​ ​ ​ ​ ​ ​ Interest income ​ 3,739 ​ 764 ​ 2,975 Net loss ​ $ 25,713 ​ $ 17,498 ​ $ 8,215 ​ Research and development expenses ​ The following table summarizes our research and development expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended September 30, ​ ​ ​ ​ 2023 2022 Change ​ ​ (in thousands) External research and development expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ EDG-5506 clinical program ​ $ 8,538 ​ $ 4,836 ​ $ 3,702 EDG-7500 clinical program ​ ​ 3,979 ​ ​ — ​ ​ 3,979 Discovery and preclinical ​ 2,450 ​ 4,193 ​ (1,743) Internal costs, including personnel related ​ 8,819 ​ 4,865 ​ 3,954 Total research and development expenses ​ $ 23,786 ​ $ 13,894 ​ $ 9,892 ​ Research and development expenses were $23.8 million and $13.9 million for the three months ended September 30, 2023 and 2022, respectively. The increase of $9.9 million was primarily driven by an increase of $4.0 million in internal costs, including personnel related costs and stock-based compensation resulting from increased employee headcount to support the growth of our research and development programs. EDG-5506 clinical program expenses increased by $3.7 million, which was primarily due to costs incurred in connection with our LYNX and GRAND CANYON trials which were not active during the comparable period in 2022, increased clinical trial activity in our CANYON study from site activations and patient enrollment and higher product candidate manufacturing costs to support current and future trials. EDG-7500 clinical program expenses of $4.0 million are now shown separately in the above table due to advancing into a Phase 1 trial. These expenses include the trial costs as well as manufacturing costs to support current and future trials and nonclinical costs during the three months ended September 30, 2023. Discovery and preclinical expenses decreased $1.7 million primarily due to EDG-7500 costs, now shown separately, were a significant portion of the 2022 period’s discovery and preclinical expenses along with other costs from the EDG-003 program. General and administrative expenses General and administrative expenses were $5.7 million and $4.4 million for the three months ended September 30, 2023 and 2022, respectively. The increase of $1.3 million was primarily due to $1.0 million in increased personnel-related costs from increased headcount and stock-based compensation and $0.3 million in increased professional and consulting costs and other administrative costs. 24 Table of Contents Interest income Interest income was $3.7 million and $0.8 million for the three months ended September 30, 2023 and 2022, respectively. The increase of $3.0 million was primarily due to higher balances and interest rates on our marketable securities during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022. Comparison of the nine months ended September 30, 2023 and 2022 The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, ​ ​ ​ ​ 2023 2022 Change ​ ​ (in thousands) Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ $ 63,221 ​ $ 37,420 ​ $ 25,801 General and administrative ​ 17,274 ​ 12,159 ​ 5,115 Total operating expenses ​ 80,495 ​ 49,579 ​ 30,916 Loss from operations ​ ​ ​ ​ ​ ​ Interest income ​ 10,475 ​ 1,354 ​ 9,121 Net loss ​ $ 70,020 ​ $ 48,225 ​ $ 21,795 ​ Research and development expenses ​ The following table summarizes our research and development expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, ​ ​ ​ ​ 2023 2022 Change ​ ​ (in thousands) External research and development expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ EDG-5506 clinical program ​ $ 23,231 ​ $ 13,612 ​ $ 9,619 EDG-7500 clinical program ​ ​ 3,979 ​ ​ — ​ ​ 3,979 Discovery and preclinical ​ 11,885 ​ 11,263 ​ 622 Internal costs, including personnel related ​ 24,126 ​ 12,545 ​ 11,581 Total research and development expenses ​ $ 63,221 ​ $ 37,420 ​ $ 25,801 ​ Research and development expenses were $63.2 million and $37.4 million for the nine months ended September 30, 2023 and 2022, respectively. The increase of $25.8 million was primarily driven by an increase of $11.6 million in internal costs, including personnel related costs and stock-based compensation resulting from increased employee headcount to support the growth of our research and development programs. EDG-5506 clinical program expenses increased by $9.6 million which was primarily due to the activation of our LYNX and GRAND CANYON trials which were not active during the comparable period in 2022, increased clinical trial activity in our CANYON study from site activations and patient enrollment and higher product candidate manufacturing costs to support current and future trials. EDG-7500 clinical program expenses of $4.0 million are now shown separately in the above table due to advancing into a Phase 1 trial. These expenses include the trial costs as well as manufacturing costs to support current and future trials and nonclinical costs during the three months ended September 30, 2023. Discovery and preclinical expenses increased $0.6 million primarily due to increased development of our product candidate EDG-7500, which has now advanced into a Phase 1 trial and our EDG-003 cardiometabolic discovery program. General and administrative expenses General and administrative expenses were $17.3 million and $12.2 million for the nine months ended September 30, 2023 and 2022, respectively. The increase of $5.1 million was primarily due to $3.7 million in increased 25 Table of Contents personnel-related costs from increased headcount and stock-based compensation and $1.4 million in increased professional and consulting costs and other administrative costs. Interest income Interest income was $10.5 million and $1.4 million for the nine months ended September 30, 2023 and 2022, respectively. The increase of $9.1 million was primarily due to higher balances and interest rates on our marketable securities during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022. Liquidity and Capital Resources Sources of liquidity Since our inception, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations. To date, we have financed our operations primarily through private placements of convertible preferred stock and public offerings of our common stock. From inception through September 30, 2023, these private placements have provided gross proceeds of $160.7 million, and the initial public offering and follow-on public offering of our common stock have generated net proceeds of $315.3 million. As of September 30, 2023, we had cash, cash equivalents and marketable securities in the amount of $289.7 million. We filed on April 1, 2022, a shelf registration statement on Form S-3 with the SEC that became effective on May 5, 2022 and allows us to undertake various equity and debt offerings up to $400,000,000. On June 16, 2023, we entered into a Sales Agreement with BofA Securities under which we may offer and sell shares of common stock, having aggregate sales proceeds of up to $125,000,000 from time to time, through an “at the market offering” program under which BofA Securities will act as sales agent. As of September 30, 2023, we have not sold any shares under the ATM Program. Cash flows The following table summarizes our sources and uses of cash for each of the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended September 30, ​ 2023 2022 ​ ​ (in thousands) Net cash used in operating activities ​ $ (65,118) ​ $ (40,780) Net cash provided by investing activities ​ 75,903 ​ 5,019 Net cash provided by financing activities ​ 179 ​ 129,942 Net increase in cash and cash equivalents ​ $ 10,964 ​ $ 94,181 ​ Operating activities Cash used in operating activities during the nine months ended September 30, 2023 was primarily driven by our net loss for the period of $70.0 million, and was also impacted by changes in operating assets and liabilities which increased net working capital by $1.4 million. Cash used in operating activities was reduced by non-cash charges of $6.3 million relating to stock-based compensation expense of $12.4 million, amortization of premium and accretion of discounts, net on marketable securities of $7.3 million, depreciation of $1.1 million and amortization of right-of-use asset of 0.1 million. Cash used in operating activities during the nine months ended September 30, 2022 was primarily driven by our net loss for the period of $48.2 million, and was also impacted by changes in operating assets and liabilities which increased net working capital by $1.4 million. Cash used in operating activities was reduced by non-cash charges of $8.9 million relating to stock-based compensation expense of $7.2 million, amortization of premium and accretion of discounts, net 26 Table of Contents on marketable securities of $1.2 million, depreciation of $0.3 million and amortization of right-of-use asset of $0.2 million. Investing activities Cash provided by investing activities during the nine months ended September 30, 2023 amounted to $75.9 million, which was due to $278.4 million in maturities of marketable securities and $19.2 million in sales of marketable securities, which was partially offset by $216.1 million in purchases of marketable securities and $5.6 million for purchases of equipment. Cash provided by investing activities during the nine months ended September 30, 2022 amounted to $5.0 million which was due to $126.9 million in maturities of marketable securities and $26.0 million in sales of marketable securities, which was partially offset by $145.7 million in purchases of marketable securities and $2.3 million for purchases of equipment. Financing activities Cash provided by financing activities during the nine months ended September 30, 2023 was $0.2 million, which was due to cash proceeds of $0.3 million in proceeds from the employee stock purchase plan and cash proceeds of 0.1 million from the issuance of common stock upon the exercise of stock options, which was partially offset by $0.2 million for the payment of deferred offering costs. Cash provided by financing activities during the nine months ended September 30, 2022 was $130.0 million, which was due to $129.7 million in net proceeds from the September 2022 Offering, cash proceeds of $0.4 million from the issuance of common stock upon the exercise of stock options, $0.3 million for the payment of offering costs and deferred offering costs and $0.2 million in proceeds from the employee stock purchase plan. Funding requirements We will continue to require substantial additional capital to develop our product candidates and fund operations for the foreseeable future. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the development of and seek regulatory approvals for our product candidates and begin to commercialize any approved products. We are subject to all of the risks incident in the development of new products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may harm our business. In addition, we expect to continue to incur additional costs associated with operating as a public company. Our expenses will also increase if, and as, we: ● advance our product candidates through preclinical and clinical development; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● continue to invest in our proprietary drug discovery platform; ● seek to discover and develop additional product candidates; ● establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own or jointly; ● hire additional clinical, quality control, scientific and other personnel; ● expand our operational, financial and management systems and increase personnel including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; 27 Table of Contents ● maintain, expand, protect and enforce our intellectual property portfolio; and ● acquire or in-license other product candidates and technologies. We do not currently have material any long-term capital requirements other than what will be required to fund operations for the foreseeable future and the amounts disclosed on the contractual obligations and commitments section below. In order to complete the process of obtaining regulatory approval for our product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we will require substantial additional funding. We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount and timing of our working capital requirements. Our future funding requirements will depend on many factors, including: ● the scope, progress, results and costs of researching and developing our product candidates including ● conducting preclinical studies and clinical trials; ● the costs, timing and outcome of regulatory review of our product candidates; ● the number and characteristics of other product candidates that we pursue; ● the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; ● the costs of manufacturing products of consistent quality and obtaining sufficient inventory to support commercial launch; ● the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; ● the cost and timing of hiring new employees to support our continued growth; ● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; ● the effect of competing products that may limit market penetration of our products; ● the ability to establish and maintain collaborations on favorable terms, if at all; ● the extent to which we acquire or in-license other product candidates and technologies; ● the timing, receipt and amount of sales of, or milestone payments related to or royalties on, our current or future product candidates, if any; ● our need to implement additional internal systems and infrastructure, including financial and reporting systems; ● the compliance and administrative costs associated with being a public company; ● the effects of inflation on our business operations; and 28 Table of Contents ● the extent to which we acquire or invest in businesses, products, or technologies, although we currently have no commitments or agreements relating to any of these types of transactions. A change in the outcome of any of these or other factors with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. If we are unable to raise additional funds when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts. We may also be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. The issuance of additional equity securities may cause our stockholders to experience dilution. Future equity or debt financings may contain terms that are not favorable to us or our stockholders including debt instruments imposing covenants that restrict our operations and limit our ability to incur liens, issue additional debt, pay dividends, repurchase our common stock, make certain investments or engage in merger, consolidation, licensing or asset sale transactions. Operating and Capital Expenditure Requirements and Contractual Obligations We expect that our existing cash and cash equivalents and marketable securities, will be sufficient to enable us to fund our planned operating expenses and capital expenditure requirements through at least the next 12 months. Our short-term material cash requirements as of September 30, 2023 are to fund our operations, which consist primarily of research and development expenses related to our programs, and to a lesser extent, general and administrative expenses. We have entered into contracts in the normal course of business with CROs, CDMOs and other third parties for preclinical research studies and testing, clinical trials and manufacturing services. These contracts do not contain any minimum purchase commitments and are cancelable by us upon prior notice. Payments due upon cancellation consist only of payments for services provided and expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation. In addition, we previously had exclusively licensed intellectual property from The Ohio State Innovation Foundation (OSIF) pursuant to a license agreement effective November 20, 2020. Under the license agreement, we were obligated to make payments to OSIF aggregating up to $1.3 million per product covered by the OSIF licensed patent rights upon the achievement of specified development and regulatory approval milestones and approximately $2.3 million per product covered by the OSIF licensed patent rights upon the achievement of specified sales milestones. We were also obligated to pay low single-digit royalties to OSIF based on net sales by us and our affiliates and sublicensees of each product covered by the OSIF licensed patent rights. In addition, in the event we sublicensed the OSIF licensed patent rights, we were obligated to pay OSIF a specified portion of income we receive from sublicensing. On July 27, 2023, we provided notice to OSIF to terminate the license agreement because the licensed technology is no longer relevant to the Company’s business. The license agreement was terminated effective, October 25, 2023. Our long-term cash requirements as of September 30, 2023 includes our lease obligations. In January 2022, we entered into a lease agreement for approximately 18,614 square feet of office and laboratory space in Boulder, Colorado which includes escalating rent payments and an 8.2 year term, plus our share of operating expenses. In February 2023, the lease was modified to occupy an additional 9,624 square feet of office space, with aggregate payments of approximately $1.5 million over the initial 7.3 year term, plus our share of operating expenses. As of September 30, 2023 our total operating lease liability balance is $5.5 million, of which $0.9 million is a current liability. Critical Accounting Estimates Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and 29 Table of Contents various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on a periodic basis. Our actual results may differ from these estimates. Our critical accounting policies are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in our Annual Report on Form 10-K filed with the SEC on February 23, 2023 and the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. During the three and nine months ended September 30, 2023, there were no material changes to our critical accounting estimates from those discussed in our Annual Report on Form 10-K filed on February 23, 2023. ​ Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our financial statements appearing in our Quarterly Report. Emerging Growth Company and Smaller Reporting Company Status Section 107 of The Jumpstart Our Business Startups Act of 2012 (JOBS Act) permits an “emerging growth company” such as us to take advantage of an extended transition time to comply with new or revised accounting standards as applicable to public companies. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for private companies. We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.07 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering. We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company if either (1) the market value of our stock held by non-affiliates is less than $250 million or (2) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. Item 3. Quantitative and Qualitative Disclosures About Market Risk We are a smaller reporting company as defined by Rule 12b‑2 of the Exchange Act and are not required to provide the information required under this item.