What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-03-03 compared with 2021-02-26 · 60 added, 98 removed, 181 unchanged (47% of the section changed)

5 unchanged sentences

Our goal is to be an industry leader in each of these therapeutic areas and enhance and extend the lives of patients suffering from such diseases.

We currently have four clinical-stage product candidates, in addition to six preclinical programs.

We currently have three clinical-stage product candidates, in addition to one late-stage preclinical product candidate and five additional preclinical programs.

We are developing seralutinib for the treatment of PAH and commenced enrolling patients for a Phase 2 TORREY clinical trial in PAH patients in December 2020.

We expect topline results from this trial in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic.

We expect topline results from this trial in the second half of 2022, subject to developments in the ongoing COVID-19 pandemic.

We are developing GB004 for the treatment of inflammatory bowel disease, including UC and CD.

We commenced enrolling patients for a Phase 2 SHIFT-UC clinical trial in UC in October 2020.

We expect topline results from this trial in the first half of 2022, subject to developments in the ongoing COVID-19 pandemic.

We are developing GB1275 for the treatment of oncology indications.

In the third quarter of 2019, we initiated a Phase 1/2 clinical trial for GB1275 in solid tumor indications as a monotherapy and in combination with either pembrolizumab or chemotherapy.

We have reported data from that ongoing trial, and we expect to report further data from this trial in 2021.

We announced topline Phase 2 asthma results for GB001 in the fourth quarter of 2020.

GB001 did not achieve its primary endpoint of statistically significant reduction in the portion of patients experiencing asthma worsening, though consistent and meaningful numeric reductions in the odds of asthma worsening were observed across all three drug arms, as compared to placebo.

GB001 did achieve statistically significant improvements in the key secondary endpoint of time to first asthma worsening in two of the three drug arms, as compared to placebo.

We do not currently plan to move forward with GB001, or its backup molecule, in further clinical trials without a partner.

We commenced enrolling patients for a Phase 2 SHIFT-UC clinical trial in UC in October 2020, and we completed enrollment in the fourth quarter of 2021.

We expect topline results for the 12-week primary endpoint for this trial in the second quarter of 2022 and topline results for the week 36 treat-through endpoint from this trial in the fourth quarter of 2022.

We are developing GB5121 for the treatment of PCNSL and commenced a Phase 1 study in healthy volunteers in the fourth quarter of 2021.

We are developing GB7208 for the treatment of MS.

GB7208 is currently undergoing preclinical testing, and pending the outcomes of our ongoing preclinical work, we expect to initiate a Phase 1 study in healthy volunteers in the second half of 2022.

We were incorporated in October 2015 and commenced operations in 2017.

To date, we have focused primarily on organizing and staffing our company, business planning, raising capital, identifying, acquiring and in-licensing our product candidates and conducting preclinical studies and early clinical stage trials.

We have funded our operations primarily through equity financings and debt issuance.

We raised $942.0 million from October 2017 through December 31, 2020 through Series A and B convertible preferred stock financings, a convertible note financing, our IPO completed in February 2019, proceeds from our credit facility, and proceeds from our concurrent underwritten public offerings of 5.00% convertible Notes due 2027 (the "2027 Notes") and common stock in May 2020.

In addition, we received $12.8 million in cash in connection with the January 2018 acquisition of AA Biopharma Inc., of which Pulmagen Therapeutics (Asthma) Limited is a wholly-owned subsidiary.

We have funded our operations primarily through equity and debt financings.

We raised $954.8 million from October 2017 through December 31, 2021 through Series A and B convertible preferred stock financings, a convertible note financing, our IPO completed in February 2019, proceeds from our Credit Facility, and proceeds from our concurrent underwritten public offerings of 5.00% convertible Notes due 2027 or the "2027 Notes" and proceeds from our common stock in May 2020.

As of December 31, 2021, we had $325.2 million in cash, cash equivalents and marketable securities.

On February 12, 2019, we closed our IPO and the underwriters in the IPO purchased 19,837,500 shares, including the full exercise of their option to purchase additional shares of common stock.

The net proceeds were $291.3 million, after deducting underwriting discounts and commissions and estimated offering costs.

We have incurred significant operating losses since our inception and expect to continue to incur significant operating losses for the foreseeable future.

2 unchanged sentences

We expect our expenses and operating losses will increase substantially as we conduct our ongoing and planned clinical trials, continue our research and development activities and conduct preclinical studies, and seek regulatory approvals for our product candidates, as well as hire additional personnel, protect our intellectual property and incur additional costs associated with being a public company.

In addition, as our product candidates progress through development and toward commercialization, we will need to make milestone payments to the licensors and other third parties from whom we have in-licensed or acquired our product candidates, including seralutinib, GB004 and GB1275.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending in particular on the timing of our clinical trials and preclinical studies and our expenditures on other research and development activities.

We do not expect to generate any revenue from product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years.

obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

Accordingly, until such time as we can generate substantial product revenues to support our cost structure, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements.

However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all.

Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies.

Our failure to raise capital or enter into such other arrangements when needed could have a negative impact on our financial condition and on our

ability to pursue our business plans and strategies.

If we are unable to raise additional capital when needed, we could be forced to delay, limit, reduce or terminate our product candidate development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

COVID-19 Pandemic

The current COVID-19 worldwide pandemic has presented substantial public health and economic challenges and is affecting our employees, patients, communities and business operations, as well as the U.S.

and global economies and financial markets.

International and U.S.

governmental authorities in impacted regions are taking actions in an effort to slow the spread of COVID-19, including issuing varying forms of “stay-at-home” orders, and restricting business functions outside of one’s home.

In response, we have implemented a work-from-home policy for certain of our employees.

To date, we have been able to continue to supply our product candidates to our patients currently enrolled in our clinical trials, including for seralutinib, GB004 and GB1275, and do not currently anticipate any interruptions in supply.

In addition, while we are continuing the clinical trials we have underway in sites across the globe, COVID-19 precautions have delayed, such as the previous pause in enrollment in our Phase 1b clinical trial for seralutinib in PAH earlier this year, and may continue to delay completion of these and future trials and may directly or indirectly impact the timeline for data readouts, initiation of, as well as monitoring, data collection and analysis and other related activities for, some of our current and future clinical trials.

For example, our current expectations for how we will continue to enroll our Phase 2 clinical trials of seralutinib and GB004 are based on an assumption that clinical trial and healthcare activities begin to return to normal and clinical sites remain open or reopen during the first half of 2021 in light of the continued spread of COVID-19.

In particular with respect to seralutinib, some PAH clinical trial sites are currently closed or limited as PAH patients may be at a higher risk of COVID-19 complications than the general population, and some PAH clinical trials may close again if there is a surge of COVID-19 cases in the specific geographies of such trial site locations.

Therefore, our assumptions around enrollment timing may prove to be incorrect, in particular if COVID-19 continues to spread.

The COVID-19 pandemic continues to rapidly evolve.

The pandemic and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred;

supply chains have been disrupted;

facilities and production have been suspended;

and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen.

The extent to which the COVID-19 pandemic may impact our business, including our preclinical studies, clinical trials, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the continued geographic spread of variants, the duration of the pandemic, the timing and effectiveness of vaccine distribution, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

With a focus on employee safety and well-being during the COVID-19 pandemic, we have transitioned to a hybrid work model with our employees generally working both remotely and onsite.

We anticipate we will continue to use this model going forward as we provide our employees with the flexibility and tools to support their well-being and effectiveness in an evolving public health environment.

To date, we have been able to continue to supply our product candidates to our patients currently enrolled in our clinical trials, including our Phase 2 clinical trials of seralutinib and GB004 and Phase 1 study of GB5121, and do not currently anticipate any interruptions in supply.

In addition, while we are continuing the clinical trials we have underway in sites across the globe, COVID-19 precautions and related staffing shortages at sites and key vendors have delayed, such as the temporary closure of enrollment in 2020 at certain sites in our ongoing Phase 2 trial for seralutinib in PAH, and may continue to delay completion of our current and future trials and may directly or indirectly impact the timeline for data readouts, initiation of, as well as monitoring, data collection and analysis and other related activities for, some of our current and future clinical trials.

For example, our current expectations for how we will continue to enroll our Phase 2 clinical trial of seralutinib are based on an assumption that clinical trial and healthcare activities remain somwhat normal, and clinical sites stay open in the first half of 2022 and that we do not experience another slowdown in enrollment such as what we experienced during the surge of the COVID-19 Delta variant in the summer of 2021.

In particular, with respect to seralutinib, some PAH clinical trial sites may limit operations and enrollment as PAH patients may be at a higher risk of COVID-19 complications than the general population.

Therefore, our assumptions around enrollment timing may prove to be incorrect, in particular if COVID-19 continues to spread and/or surge.

In light of recent developments relating to the COVID-19 pandemic, and consistent with the FDA’s updated industry guidance for conducting clinical trials, clinical trials may be deprioritized in favor of treating patients who have contracted the virus or to prevent the spread of the virus.

3 unchanged sentences

Components of Results of Operations

We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products for the foreseeable future.

Operating expenses

Research and development

Research and development expenses have related primarily to preclinical and clinical development of our product candidates and discovery efforts.

Research and development expenses relate primarily to preclinical and clinical development of our product candidates and discovery efforts.

Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.

32 unchanged sentences

In process research and development, or IPR&D, expenses include IPR&D acquired as part of an asset acquisition or in-license for which there is no alternative future use, are expensed as incurred.

IPR&D expenses consist of our upfront and milestone payments made to Pulmokine, Inc., in connection with the in-license of seralutinib, the value of our stock issued to former AA Biopharma Inc.

shareholders, in connection with the acquisition of GB001, our upfront payments made to Aerpio Pharmaceuticals, Inc., or Aerpio, in connection with the in-license and subsequent amendment of the in-license of GB004, our upfront and milestone payments made to Adhaere Pharmaceuticals, Inc., or Adhaere, in connection with the acquisition of GB1275, and upfront and milestone payments made in connection with the acquisition or in-license of certain preclinical programs.

IPR&D expenses consist of our upfront and milestone payments made to Pulmokine, Inc., in connection with the in-license of seralutinib, our upfront payments made to Aadi in connection with the in-license and subsequent amendment of the in-license of GB004, our upfront and milestone payments made to Adhaere Pharmaceuticals, Inc., or Adhaere, in connection with the acquisition of GB1275, and upfront and milestone payments made in connection with the acquisition of certain preclinical programs.

General and administrative

6 unchanged sentences

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP.

The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, costs and expenses.

We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances.

We evaluate our estimates and assumptions on an ongoing basis.

We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Our actual results may differ from these estimates under different assumptions or conditions (See Note 2 to our consolidated financial statements).

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

The preparation of these financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements.

We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions (See Note 2 to our consolidated financial statements).

Accrued expenses

8 unchanged sentences

In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or

the level of effort varies from our estimate, we adjust the accrual or prepaid expense accordingly.

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid expense accordingly.

Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period.

result in us reporting amounts that are too high or too low in any particular period.

To date, there have been no material differences between our estimates of such expenses and the amounts actually incurred.

Convertible Senior Notes

In accounting for the issuance of the 2027 Notes, we separated the 2027 Notes into liability and equity components.

In accounting for the issuance of the 2027 Notes, we separated the 2027 Notes into liability and equity components at issuance.

The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have associated convertible features.

7 unchanged sentences

The following table sets forth our selected statements of operations data for the years ended December 31, 2021 and 2020:

Years Ended December 31, 2020 vs 2019

Years Ended December 31, 2021 vs 2020 Change

(in thousands)

9 unchanged sentences

Other income (expense) 799 (174) 973

Total other income (expense), net (9,398) 5,832 (15,230)

Total other expense, net (17,880) (9,398) (8,482)

Net loss $ (234,004) $ (243,360) $ 9,356

1 unchanged sentence

Research and development

Research and development expenses were $160.9 million for the year ended December 31, 2020, compared to $143.4 million for the year ended December 31, 2019, for an increase of $17.5 million, which was primarily attributable to an increase of $4.4 million of costs associated with preclinical studies and clinical trials for GB004, an increase of $2.8 million of costs associated with preclinical and clinical trials for GB1275, an increase of $1.4 million of costs associated with preclinical studies and clinical trials for seralutinib, and an increase of $12.6 million of costs associated with preclinical studies for our other programs;

offset by a decrease of $3.8 million of costs associated with preclinical research and clinical trials for GB001.

Research and development expenses were $170.3 million for the year ended December 31, 2021, compared to $160.9 million for the year ended December 31, 2020, for an increase of $9.4 million, which was primarily attributable to an increase of $18.0 million of costs associated with preclinical studies and clinical trials for GB004, an increase of $11.9 million of costs associated with preclinical studies and clinical trials for GB002, an increase of $16.2 million of costs associated with preclinical studies and clinical trials for GB5121, and an increase of $6.2 million of costs associated with preclinical studies for other programs;

offset by a decrease of $34.6 million of costs associated with preclinical studies and clinical trials for GB001 and a decrease of $8.3 million of costs associated with preclinical studies and clinical trials for GB1275.

The following table shows our research and development expenses by program for the years ended December 31, 2021 and 2020:

5 unchanged sentences

GB1275 8,418 16,714

Other Programs 48,618 35,982

Total research and development $ 160,854 $ 143,403

In process research and development

IPR&D expenses were $23.4 million for the year ended December 31, 2020, compared to $3.6 million for the year ended December 31, 2019, for an increase of $19.8 million, which was primarily attributable to a $15.0 million payment to Aerpio in connection with the amendment to the in-license agreement of GB004 in 2020 and a milestone payment of $5.0 million in connection with the initiation of the first Phase 2 clinical trial of seralutinib in 2020.

General and administrative

General and administrative expenses were $49.7 million for the year ended December 31, 2020, compared to $39.1 million for the year ended December 31, 2019, for an increase of $10.6 million, which was primarily attributable to a $9.2 million increase in stock-based compensation costs and a $2.4 million increase in personnel-related costs.

Other income (expense), net

Other expense, net was $9.4 million for the year ended December 31, 2020, compared to other income, net of $5.8 million for the year ended December 31, 2019, for a decrease of $15.2 million, which was primarily related to a $10.7 million increase in interest expense, a $2.4 million decrease in investment income and a $2.1 million decrease in interest income earned on our cash, cash equivalents and marketable securities during the period.

Results of Operations for the Years Ended December 31, 2019 and 2018

The following table sets forth our selected statements of operations data for the years ended December 31, 2019 and 2018:

Years Ended December 31, 2019 vs 2018

(in thousands)

Operating expenses:

Research and development $ 143,403 $ 55,283 $ 88,120

In process research and development 3,600 $ 49,659 (46,059)

General and administrative 39,136 44,051 (4,915)

Total operating expenses 186,139 148,993 37,146

Loss from operations (186,139) (148,993) (37,146)

Other income (expense)

Interest income 5,563 1,720 3,843

Interest expense (1,938) (12) (1,926)

Other income (expense) 2,207 316 1,891

Total other income (expense), net 5,832 2,024 3,808

Net loss $ (180,307) $ (146,969) $ (33,338)

Operating expenses

Research and development

Research and development expenses were $143.4 million for the year ended December 31, 2019, compared to $55.3 million for the year ended December 31, 2018, for an increase of $88.1 million, which was primarily attributable to an increase of $17.1 million of costs associated with preclinical studies and clinical trials for seralutinib, an increase of $17.0 million of costs associated with preclinical and clinical trials for GB001, an increase of $13.2 million of costs associated with preclinical studies and clinical trials for GB004, an increase of $12.7 million of costs associated with preclinical studies and clinical trials for GB1275, an increase of $8.8 million of costs associated with preclinical research for our other programs, and an increase of $19.3 million of costs related to personnel and other associated costs.

The following table shows our research and development expenses by program for the years ended December 31, 2019 and 2018:

Years Ended December 31,

(in thousands)

GB5121 27,365 11,118

Seralutinib 33,161 16,028

GB004 19,986 6,739

GB1275 13,870 1,196

Other Programs 43,692 37,500

1 unchanged sentence

In process research and development

IPR&D expenses were $3.6 million for the year ended December 31, 2019, compared to $49.7 million for the year ended December 31, 2018, for a decrease of $46.1 million, which was primarily attributable to our $20.0 million upfront payment made to Aerpio in connection with the in-license of GB004 in 2018, $19.1 million of costs associated with the issuance of our stock in connection with our acquisition of GB001 and AA Biopharma in 2018, and a $7.5 million upfront payment in connection with our acquisition of GB1275 and Adhaere in 2018.

There were no significant IPR&D expenses for the year ended December 31, 2021.

IPR&D expenses for the year ended December 31, 2020 were $23.4 million, which was primarily attributable to a $15.0 million upfront payment to Aadi in connection with the amendment to the in-license agreement of GB004 and a $5.0 million milestone payment to Pulmokine for the initiation of the Phase 2 clinical trial for seralutinib.

General and administrative

General and administrative expenses were $39.1 million for the year ended December 31, 2019, compared to approximately $44.1 million for the year ended December 31, 2018, for a decrease of $5.0 million, which was primarily attributable to a $19.7 million decrease in stock-based compensation costs, partially offset by a $5.7 million increase in personnel-related costs, a $4.3 million increase in professional and legal fees, a $2.5 million increase associated with insurance costs, and a $1.3 million increase in facility and office-related costs.

Other income, net

Other income, net was $5.8 million for the year ended December 31, 2019, compared to $2.0 million for the year ended December 31, 2018, attributable to a $3.8 million increase in investment income earned on our cash, cash equivalents and marketable securities during the period.

General and administrative expenses were $45.8 million for the year ended December 31, 2021, compared to $49.7 million for the year ended December 31, 2020, for a decrease of $3.9 million, which was primarily attributable to a $6.7 million decrease in stock-based compensation costs;

offset by $2.4 million of accrued costs associated with a settlement of outstanding securities litigation and a $0.5 million increase in insurance costs.

Other expense, net

Other expense, net was $17.9 million for the year ended December 31, 2021, compared to other expense, net of $9.4 million for the year ended December 31, 2020, for an increase of $8.5 million, which was primarily attributable to a $6.8 million increase in interest expense, a $2.7 million decrease in interest income earned on our cash, cash equivalents and marketable securities during the period, offset by an increase of $1.3 million of sublease income.

Results of Operations for the Years Ended December 31, 2020 and 2019

The discussion of our financial condition and results of operations for the year ended December 31, 2019 and the comparison of 2020 and 2019 results included in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2020 is incorporated by reference into this MD&A.

Liquidity and Capital Resources

2 unchanged sentences

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures.

We enter into contracts in the normal course of business with clinical trial sites and clinical supply manufacturers and with vendors for preclinical studies, research supplies and other services and products for operating purposes.

Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

Under our license agreements with Pulmokine and Aerpio, as well as our other license and acquisition agreements, we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under those agreements.

Under our license agreements with Pulmokine and Aadi, as well as our other license and acquisition agreements, we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under those agreements.

As of December 31, 2021, we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales.

6 unchanged sentences

In connection with the closing of the IPO, the outstanding shares of our convertible preferred stock were converted into shares of common stock at a ratio of 4.5-to-one.

On May 2, 2019, we entered into the Credit Facility, as amended on September 18, 2019 and July 2, 2020, pursuant to which the lenders party thereto agreed to make term loans available to us for working capital and general business purposes, in a principal amount of up to $150.0 million in term loan commitments, including a $30.0 million term loan which was funded at the closing date, with the ability to access the remaining $120.0 million in two additional tranches (each $60.0 million).

The remaining two tranches are available no earlier than the satisfaction of the applicable funding conditions, including the applicable clinical development milestones, and no later than December 31, 2022.

As of December 31, 2020, and through the date of this filing, no other tranches under the Credit Facility have been available.

On May 2, 2019, we entered into a credit, guaranty and security agreement, as amended on September 18, 2019 and July 2, 2020, pursuant to which the lenders party thereto agreed to make term loans available to us for working capital and general business purposes, in a principal amount of up to $150.0 million in term loan commitments, including a $30.0 million term loan which was funded at the closing date, with the ability to access the remaining $120.0 million in two additional tranches (each $60.0 million), subject to specified availability periods, the achievement of certain clinical development milestones, minimum cash requirements and other customary conditions, or the Credit Facility.

As of December 31, 2021, no other tranches under the Credit Facility were available to be drawn.

On April 10, 2020, we filed a registration statement on Form S-3, or the Shelf Registration Statement, covering the offering from time to time of common stock, preferred stock, debt securities, warrants and units, which registration statement became automatically effective on April 10, 2020.

In May 2020, we issued $200.0 million aggregate principal amount 5.00% convertible senior notes due 2027 in a registered public offering.

On May 21, 2020, we issued $200.0 million aggregate principal amount 5.00% convertible senior notes due 2027 in a registered public offering.

The interest rate on the 2027 Notes is fixed at 5.00% per annum.

4 unchanged sentences

Our concurrent offerings of 2027 Notes and common stock were registered pursuant to the Shelf Registration Statement.

Additional information about the Credit Facility and our long-term borrowings is presented in Note 5 “Long-term Debt” to the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K, which is incorporated herein by this reference.

Additional information about the our long-term borrowings is presented in Note 5 “Indebtedness” to the Notes to Consolidated Financial Statements included in Part II, Item 8, of this Form 10-K, herein by this reference.

The following table shows a summary of our cash flows for each of the years shown below:

6 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash (165) 9 70

Net increase in cash, cash equivalents and restricted cash $ 351,531 $ 29,670 $ 105,104

Net (decrease) increase in cash, cash equivalents and restricted cash $ (303,153) $ 351,531 $ 29,670

Operating activities

During the year ended December 31, 2021, operating activities used approximately $188.9 million of cash, primarily resulting from a net loss of $234.0 million, partially reduced by stock-based compensation expense of $32.0 million, amortization of long-term debt discount and issuance costs of $6.7 million and accrued research and development expenses of $5.8 million.

During the year ended December 31, 2020, operating activities used approximately $176.4 million of cash, primarily resulting from a net loss of $243.4 million, partially reduced by stock-based compensation expense of $38.7 million, IPR&D expenses of $23.4 million and amortization of long-term debt discount and issuance costs of $3.9 million.

1 unchanged sentence

Net cash provided by changes in operating assets and liabilities consisted primarily of increases in accounts payable, accrued research and development expenses, and accrued expenses of $13.9 million, and an increase in other assets of $2.7 million due to long-term deposits for clinical development activities and property leases, partially offset by an increase in prepaid expenses and other current assets due to prepayments for clinical development activities, investments receivable, and receivables for stock option exercises of $4.4 million.

During the year ended December 31, 2018, operating activities used approximately $51.0 million of cash, primarily resulting from a net loss of $147.0 million, partially reduced by IPR&D expenses of $49.7 million, changes in operating assets and liabilities of $15.0 million and stock-based compensation expense of $30.9 million.

Net cash provided by changes in operating assets and liabilities consisted primarily of increases in accounts payable, accrued research and development expenses, and accrued expenses of $18.6 million, partially offset by an increase in prepaid expenses due to prepayments for clinical development activities and security deposits of $2.8 million.

Investing activities

During the year ended December 31, 2021, investing activities used approximately $117.4 million of cash, primarily resulting from the purchase of marketable securities of $152.0 million, partially offset by maturities of marketable securities of $36.2 million.

During the year ended December 31, 2020, investing activities provided approximately $215.3 million of cash, primarily resulting from the sales and maturities of marketable securities of $349.2 million, partially offset by the purchase of marketable securities of $109.0 million and upfront and milestone payments of $23.4 million made to third parties in connection with the in-license or acquisition of our clinical and preclinical programs.

During the year ended December 31, 2019, investing activities used approximately $147.1 million of cash, primarily resulting from the purchase of marketable securities of $499.1 million, partially offset by sales and maturities of investments of $358.5 million.

During the year ended December 31, 2018, investing activities used approximately $144.7 million of cash, primarily resulting from the upfront payment made to Aerpio of $20.0 million in connection with the in-license of GB004, upfront payments of $10.5 million in connection with the acquisition of our preclinical programs, the purchase of marketable securities of $123.5 million, and the purchase of property and equipment of $3.5 million, partially offset by $12.8 million of cash proceeds received from AA Biopharma in connection with our acquisition.

Financing activities

During the year ended December 31, 2021, financing activities provided $3.3 million of cash, resulting from the proceeds from the exercise of stock options of $2.0 million, and from the purchase of shares pursuant to the Employee Stock Purchase Plan of $1.3 million.

During the year ended December 31, 2020, financing activities provided $312.5 million of cash, primarily resulting from the concurrent registered underwritten public offerings of 2027 Notes and common stock for net proceeds of $193.6 million and $117.1 million, respectively.

During the year ended December 31, 2019, financing activities provided $321.6 million of cash, primarily resulting from the net proceeds from our IPO of $291.3 million, and proceeds from our Credit Facility of $30.0 million, offset by $1.8 million of debt issuance costs.

During the year ended December 31, 2018, financing activities provided $300.9 million of cash, primarily resulting from the net proceeds from issuance of our Series A and B convertible preferred stock of $303.0 million.

Funding requirements

Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities, and access to our Credit Facility, will be sufficient to fund our operations through at least the next 12 months.

However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

24 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis