Kura Oncology, Inc. 10-Q

ITEM 2. 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 unaudited condensed financial statements and related notes included in this Quarterly Report on Form 10-Q, or Quarterly Report, and the audited financial statements and notes thereto as of and for the fiscal year ended December 31, 2019 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission, or SEC, on February, 25, 2020. This Quarterly Report includes forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections, that involve a number of risks, uncertainties and assumptions. These forward-looking statements can generally be identified as such because the context of the statement will include words such as “may,” “will,” “intend,” “plan,” “believe,” “anticipate,” “expect,” “seek”, “estimate,” “predict,” “potential,” “continue,” “likely,” or “opportunity,” the negative of these words or other similar words. Similarly, statements that describe our plans, strategies, intentions, expectations, objectives, goals or prospects and other statements that are not historical facts are also forward-looking statements. For such statements, we claim the protection of the Private Securities Litigation Reform Act of 1995. Readers of this Quarterly Report are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the time this Quarterly Report was filed with the SEC. These forward-looking statements are based largely on our expectations and projections about future events and future trends affecting our business, and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include, without limitation, the risk factors identified in our SEC reports, including this Quarterly Report. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate results or future period trends. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. Except as required by law, we undertake no obligation to update publicly or revise our forward-looking statements. References to “we,” “us” and “our” refer to Kura Oncology, Inc. Overview We are a clinical-stage biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline consists of small molecule product candidates that target cancer signaling pathways where there is a strong scientific and clinical rationale to improve outcomes, and we intend to pair them with molecular or cellular diagnostics to identify those patients most likely to respond to treatment. We plan to advance our product candidates through a combination of internal development and strategic partnerships while maintaining significant development and commercial rights. We presently have two key product candidates in clinical trials, tipifarnib and KO-539. Tipifarnib is a potent, selective and orally bioavailable inhibitor of farnesyl transferase that has been previously studied in more than 5,000 cancer patients and demonstrated compelling and durable anti-cancer activity in certain patients with a manageable side effect profile. We are currently evaluating tipifarnib in multiple solid tumor and hematologic indications. Our most advanced solid tumor indication for tipifarnib is in patients with head and neck squamous cell carcinoma, or HNSCC, that carry mutations in the HRAS gene. We are currently conducting a global, multi-center, open-label, non-comparative registration-directed clinical trial of tipifarnib in HRAS mutant HNSCC designed with two cohorts: a treatment cohort, which we call AIM-HN, and a prospective observational cohort. On July 6, 2020, we amended the AIM-HN trial protocol to enable enrollment of patients with any HRAS mutation in addition to patients with a high HRAS variant allele frequency in order to assess the potential for clinical benefit in the overall HRAS mutant HNSCC population, which increased the number of evaluable HNSCC patients for AIM-HN. As a result of the COVID-19 pandemic and the additional patients required for the trial, we anticipate we will face delays in our timelines and milestones for the AIM-HN trial and, accordingly, are unable to reasonably forecast at this time when our AIM-HN trial will become fully enrolled. In addition to studying tipifarnib in recurrent or metastatic HRAS mutant HNSCC as a monotherapy, we are also examining the potential use of tipifarnib in combination with other oncology therapies to address larger patient populations 13 and pursue earlier lines of therapy. In particular, we are increasingly interested in HNSCC patients whose tumors are dependent on HRAS and/or PI3 kinase alpha, as evidenced by overexpression of the HRAS protein, or PIK3CA mutation or amplification. HRAS and PI3 kinase alpha are believed to be “co-dependent” oncoproteins in HNSCC. Our preclinical data support that notion and suggest that a combination approach has the potential to provide superior antitumor activity relative to inhibiting either target alone . Based upon the unmet need and our encouraging preclinical data, we are prioritizing the clinical development of tipifarnib in combination with a PI3 kinase alpha inhibitor as a strategy to treat both HRAS -dependent and PI3K alpha- dependent HNSCC patients . Our second product candidate, KO-539, is a potent, selective, reversible and oral small molecule inhibitor of the Lysine K-specific Methyl Transferase 2A gene, or KMT2A (formerly referred to as the mixed-lineage leukemia 1 gene, or MLL1), protein-protein interaction. We have generated preclinical data that support the potential anti-tumor activity of KO-539 in genetically defined subsets of acute leukemia, including those with rearrangements or partial tandem duplications in the KMT2A gene as well as those with oncogenic driver mutations in genes such as nucleophosmin 1, or NPM1. Our preclinical data support the hypothesis that KO-539 targets epigenetic dysregulation and removes a key block to cellular differentiation to drive anti-tumor activity. We believe KO-539 has the potential to address approximately 35% of acute myeloid leukemia, or AML, including NPM1-mutant AML and KMT2A-rearranged AML. In the pediatric population, KMT2A-rearranged leukemias make up approximately 10% of acute leukemias in all age groups and in the case of infant leukemias, the frequency of KMT2A rearrangements is 70–80%. These pediatric leukemia sub-types portend a poorer prognosis and five-year survival rate that is lower than other leukemia sub-types and therefore represent a significant unmet medical need given the lack of curative therapeutic options. In April 2020, a competitor reported that its menin-KMT2A inhibitor showed potential anti-tumor activity in patients with KMT2A-rearranged AML. We received orphan drug designation for KO-539 for the treatment of AML from the FDA in July 2019. We initiated our Phase 1/2A clinical trial of KO-539 in relapsed or refractory AML in September 2019 and are actively recruiting at multiple sites in the United States and France with the anticipation of expanding to additional sites in the United States, France and other countries during the expansion phase of the study. Our menin-KMT2A Phase 1/2A clinical trial, which we call the K ura O ncology ME nin-KMT2A T rial, or KOMET-001, has an accelerated design and will determine a recommended Phase 2 dose and schedule, or RP2D, using a modified toxicity probability interval, or MTPI, model. We expect to determine a RP2D for KO-539 in Q1 2021 and, if we determine the RP2D for KO-539, we intend to advance into genetically-defined expansion cohorts, including NPM1-mutant AML and KMT2A-rearranged AML. An abstract reporting preliminary data from KOMET-001 and that will be the subject of an oral presentation at the 2020 Annual Meeting of the American Society of Hematology, or ASH, on December 5, 2020 was posted on the ASH website on November 4, 2020. We anticipate sharing a more mature dataset from KOMET-001, including preliminary data from approximately 10 patients with relapsed/refractory AML, at the ASH oral presentation on December 5, 2020. The COVID-19 Pandemic The novel coronavirus pandemic, COVID-19, has resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions and business interruptions and shutdowns. These precautions may continue to disrupt our business operations and prospects. Since early March 2020, we have taken temporary precautionary measures, including routine screening and remote working initiatives, intended to help minimize the risk of COVID-19 to our employees and their families. We also suspended non-essential travel worldwide for our employees. In addition, we have experienced, and expect to continue to experience, patient screening and enrollment at a slower pace at many of our clinical trial sites than what was projected when the trials began. Some of our clinical sites have experienced challenges in conducting trial activities while they focus critical resources on caring for COVID-19 patients and due to facility restrictions, quarantines, travel restrictions, remote work requirements and other precautions. To manage the COVID-19 impact on our business, we developed a comprehensive COVID-19 contingency plan designed to work closely with our third-party contractors and investigators to ensure our ongoing clinical trials proceed safely and efficiently. As a result of these efforts, we continue to accrue patients for our clinical trials, but we expect the disruption caused by and the challenges associated with COVID-19 to continue for the foreseeable future. The long-term trends impacting our business from COVID-19 are uncertain and will depend on the continued world-wide progress toward managing this health crisis. Liquidity Overview As of September 30, 2020, we had cash, cash equivalents and short-term investments of $325.4 million. In May 2020, we completed a public offering that resulted in net proceeds to us, after deducting underwriting discounts, commissions and offering expenses, of approximately $134.9 million. We have a term loan facility with Silicon Valley Bank under which we may, at our sole discretion, borrow up to an additional $12.5 million at any time until November 30, 2020. In addition, we 14 have an at-the-market issuance sales agreement with SVB Leerink LLC and Stifel, Nicolaus & Company, Incorporated, or ATM facility, under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $75.0 million. We have not yet sold any shares of our common stock under the ATM facility. To date, we have not generated any revenues from product sales, and we do not have any approved products. Since our inception, we have funded our operations primarily through equity and debt financings. We anticipate that we will require significant additional financing in the future to continue to fund our operations as discussed more fully below under the heading “Liquidity and Capital Resources. ” Financial Operations Overview Research and Development Expenses We focus on the research and development of our product programs. Our research and development expenses consist of costs associated with our research and development activities including salaries, benefits, share-based compensation and other personnel costs, clinical trial costs, manufacturing costs for non-commercial products, fees paid to external service providers and consultants, facilities costs and supplies, equipment and materials used in clinical and preclinical studies and research and development. All such costs are charged to research and development expense as incurred. Payments that we make in connection with in-licensed technology for a particular research and development project that have no alternative future uses in other research and development projects or otherwise and therefore, no separate economic values, are expensed as research and development costs at the time such costs are incurred. As of September 30, 2020, we have no in-licensed technologies that have alternative future uses in research and development projects or otherwise. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we are unable to estimate with any certainty the costs we will incur and the timelines we will require in the continued development of our product candidates and our other pipeline programs. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. Our future research and development expenses will depend on the preclinical and clinical success of each product candidate that we develop, as well as ongoing assessments of the commercial potential of such product candidates. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements. Completion of clinical trials may take several years or more, and the length of time generally varies according to the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others: • managing the impact of COVID-19 pandemic and related precautions on the operation of our clinical trials; • per patient clinical trial costs; • the number of clinical trials required for approval; • the number of sites included in the clinical trials; • the length of time required to enroll suitable patients; • the number of doses that patients receive; • the number of patients that participate in the clinical trials; • the drop-out or discontinuation rates of patients; • the duration of patient follow-up; • potential additional safety monitoring or other studies requested by regulatory agencies; • the number and complexity of analyses and tests performed during the clinical trial; • the phase of development of the product candidate; and • the efficacy and safety profile of the product candidate. 15 General and Administrative Expenses General and administrative expenses consist primarily of salaries, benefits, share-based compensation and other personnel costs for employees in executive, finance, business development and support functions. Other significant general and administrative expenses include the costs associated with obtaining and maintaining our patent portfolio, professional services for audit, legal, pre-commercial planning, investor and public relations, corporate activities and allocated facilities. Other Income (Expense) Other income (expense) consists primarily of management fee income, interest income and interest expense. Management fee income is earned in accordance with the management services agreement, as amended, with Araxes Pharma LLC. Interest expense mainly consists of interest on long-term debt. Income Taxes We have incurred net losses and have not recorded any U.S. federal or state income tax benefits for the losses as they have been offset by valuation allowances. Results of Operations The following table sets forth our results of operations for the periods presented, in thousands: Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 Change 2020 2019 Change Research and development expenses $ 16,601 $ 12,540 $ 4,061 $ 42,873 $ 34,362 $ 8,511 General and administrative expenses 7,593 5,134 2,459 22,694 14,154 8,540 Other income, net 425 1,282 (857 ) 2,101 3,241 (1,140 ) Comparison of the Three Months Ended September 30, 2020 and 2019 Research and Development Expenses . The following table illustrates the components of our research and development expenses for the periods presented, in thousands: Three Months Ended September 30, 2020 2019 Change Tipifarnib-related costs $ 7,524 $ 7,370 $ 154 KO-539-related costs 2,416 749 1,667 KO-947-related costs 464 656 (192 ) Personnel costs and other expenses 5,194 2,851 2,343 Share-based compensation expense 1,003 914 89 Total research and development expenses $ 16,601 $ 12,540 $ 4,061 The increase in KO-539-related research and development expenses for the three months ended September 30, 2020 compared to the same period in 2019 was primarily due to increases in costs related to our Phase 1/2A clinical trial of KO-539 which was initiated in September 2019 and manufacturing development activities. The increase in personnel costs and other expenses was to support our registration-directed clinical trial of tipifarnib and the Phase 1/2A clinical trial of KO-539. Personnel costs and other expenses include employee salaries and related expenses, facilities expense and overhead expenses. We expect our research and development expenses to increase in future periods as we continue clinical development activities for tipifarnib and KO-539. General and Administrative Expenses . The increase in general and administrative expenses for the three months ended September 30, 2020 compared to the same period in 2019 was primarily due to increases of $0.8 million in non-cash share-based compensation expense, $0.7 million in pre-commercial planning expenses and $0.6 million in personnel costs. We expect our general and administrative expenses to increase in future periods to support our planned increase in research and development activities. 16 Other income, net . The decrease in other income, net, for the three months ended September 30, 2020 compared to the same period in 2019 was primarily due to a decrease in interest income. Comparison of the Nine Months Ended September 30, 2020 and 2019 Research and Development Expenses . The following table illustrates the components of our research and development expenses for the periods presented, in thousands: Nine Months Ended September 30, 2020 2019 Change Tipifarnib-related costs $ 21,236 $ 19,358 $ 1,878 KO-539-related costs 3,865 1,696 2,169 KO-947-related costs 1,745 2,499 (754 ) Personnel costs and other expenses 13,409 8,214 5,195 Share-based compensation expense 2,618 2,595 23 Total research and development expenses $ 42,873 $ 34,362 $ 8,511 The increase in tipifarnib-related research and development expenses for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to increases in costs related to our ongoing registration-directed clinical trial and other Phase 2 clinical trials, manufacturing and other preclinical development activities. The increase in KO-539-related research and development expenses was primarily due to increases in costs related to our Phase 1/2A clinical trial of KO-539 which was initiated in September 2019 and manufacturing development activities. The decrease in KO-947-related costs is due to the termination of the ERK inhibitor program. The increase in personnel costs and other expenses was to support our registration-directed clinical trial of tipifarnib and the Phase 1/2A clinical trial of KO-539. General and Administrative Expenses . The increase in general and administrative expenses for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to increases of $2.4 million in pre-commercial planning expenses, $2.1 million in non-cash share-based compensation expense, $1.8 million in professional and legal fees and $1.7 million in personnel costs. Other income, net . The decrease in other income, net, for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to a decrease in interest income. Liquidity and Capital Resources Since our inception, we have funded our operations primarily through equity and debt financings. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities. In May 2020, we completed a public offering in which we sold an aggregate of 10,465,000 shares of common stock at a price of $13.75 per share. Net proceeds from the public offering, after deducting underwriting discounts, commissions and offering expenses, were approximately $134.9 million. In March 2019, we entered into the ATM facility under which we may offer and sell, from time to time, at our sole discretion, shares of our common stock having an aggregate offering price of up to $75.0 million. We have not yet sold any shares of our common stock under the ATM facility. In November 2018, we entered into a loan and security agreement with Silicon Valley Bank providing for up to $20.0 million in a series of term loans. The loan and security agreement was subsequently amended in April 2020 to extend the second draw period. The loan and security agreement, as amended, shall be referred to herein as the loan agreement. Under the terms of the loan agreement, we borrowed $7.5 million, or the Term A Loan, and we may, at our sole discretion, borrow up to an additional $12.5 million at any time until November 30, 2020, or the Term B Loan, and together with the Term A Loan, the Term Loans. In addition, each Term B Loan must be in an amount equal to the lesser of $5.0 million or the amount that is remaining under the Term B Loan. All of the Term Loans will be due on the scheduled maturity date of May 1, 2023 , or the Maturity Date. Repayment of the Term Loans is interest only through November 30, 2020, followed by 30 equal monthly payments of principal plus accrued interest commencing on December 1, 2020. The per annum interest rate for the Term Loans is the greater of (i) 5.50% and (ii) the sum of (a) the prime rate reported in The Wall Street Journal plus 17 (b) 0.25%. In addition, a final payment of 7.75% of the amounts of the Term Loans drawn will be due on the earlier of the Maturity Date, acceleration or prepayment of the Term Loans. If we elect to prepay the Term Loans, a prepayment fee equal to 1% or 2% of the then outstanding principal balance also will be due, depending upon when the prepayment occurs. Our obligations under the loan agreement are secured by substantially all of our assets other than our intellectual property, but including proceeds from the sale, licensing or other disposition of our intellectual property. Our intellectual property is subject to negative covenants, which, among other things, prohibit us from selling, transferring, assigning, mortgaging, pledging, leasing, granting a security interest in or otherwise encumbering our intellectual property, subject to limited exceptions. We have incurred operating losses since inception and negative cash flows from operating activities. As of September 30, 2020, we had an accumulated deficit of $276.3 million. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue and initiate clinical trials of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we expect to continue to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. As a result of the COVID-19 pandemic and actions taken to slow its spread, the global financial markets have experienced volatility and uncertainty. There can be no assurance that further volatility and uncertainty in the financial markets and declining confidence in economic conditions will not occur. If financial markets remain volatile and uncertain, and for so long as they do, it may make any necessary capital financing more difficult to obtain, more costly and/or more dilutive. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. As of September 30, 2020, we had cash, cash equivalents and short-term investments of $325.4 million. Based on our current plans, we believe that our existing cash, cash equivalents and short-term investments will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into 2023. During the period of uncertainty of volatility related to the COVID-19 pandemic, we will continue to monitor our liquidity. Our future capital requirements will depend on many factors, including: • the scope, progress, results and costs of drug discovery, pre-clinical development, laboratory testing and clinical trials for our product candidates, including as such activities may be adversely impacted by COVID-19; • the costs, timing and outcome of regulatory review of our product candidates; • the costs of establishing or contracting for sales, marketing and distribution capabilities if we obtain regulatory approvals to market our product candidates; • the costs of securing and producing drug substance and drug product material for use in pre-clinical studies, clinical trials and for use as commercial supply; • the costs of securing manufacturing arrangements for development activities and commercial production; • the scope, prioritization and number of our research and development programs; • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements, if any; • the extent to which we acquire or in-license other product candidates and technologies; • the success of our current or future companion diagnostic test collaborations for companion diagnostic tests; and • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims. To date, we have not generated any revenues from product sales, and we do not have any approved products. We do not know when, or if, we will generate any revenue from product sales. We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize one of our current or future product candidates. We are subject to all of the risks incident in the development of new therapeutic products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations. 18 Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of stock offerings, debt financings, collaborations, strategic partnerships or licensing arrangements. Other than our term loan facility, we do not have any committed external source of funds. Additional capital may not be available on reasonable terms, if at all. Subject to limited exceptions, our term loan facility also prohibits us from incurring indebtedness without the prior written consent of the l ender. To the extent that we raise additional capital through the sale of stock or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include increased fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, selling or licensing intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. As a result of the COVID-19 pandemic and actions taken to slow its spread, the global financial markets have experienced volatility and uncertainty. There can be no assurance that further volatility and uncertainty in the financial markets and declining confidence in economic conditions will not occur. If financial markets deteriorate, it may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, including our other technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be unable to carry out our business plan. As a result, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our product candidates even if we would otherwise prefer to develop and commercialize such product candidates ourselves, and our business, financial condition and results of operations would be materially adversely affected. The following table provides a summary of our net cash flow activities for the periods presented, in thousands: Nine Months Ended September 30, 2020 2019 Change Net cash used in operating activities $ (51,522 ) $ (40,827 ) $ (10,695 ) Net cash used in investing activities (39,746 ) (31,068 ) (8,678 ) Net cash provided by financing activities 142,298 110,518 31,780 Operating Activities. The increase in net cash used in operating activities for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to an increase of $18.2 million in net loss, offset by a decrease of $3.2 million in payments of accounts payable and accrued expenses and an increase of $2.1 million in non-cash share-based compensation expense. Investing Activities. The increase in net cash used in investing activities for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to a decrease of $10.7 million in maturities and sales of marketable securities and an increase of $1.9 million in purchases of property and equipment, offset by a decrease of $3.9 million in purchases of marketable securities. Financing Activities. The increase in net cash provided by financing activities for the nine months ended September 30, 2020 compared to the same period in 2019 was primarily due to increases of $26.8 million in proceeds from sale of common stock and $5.0 million in proceeds from exercise of stock options and purchases under our employee stock purchase plan. Contractual Obligations There were no material changes in contractual obligations from the amounts disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and in our Quarterly Report on Form 10-Q for the period ended March 31, 2020. Off-Balance Sheet Arrangements As of September 30, 2020, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC. 19 Critical Accounting Policies and Management Estimates The SEC defines critical accounting policies as those that are, in management’s view, important to the portrayal of our financial condition and results of operations and demanding of management’s judgment. Management’s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these unaudited condensed financial statements required estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in the unaudited condensed financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and share-based compensation. 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. Actual results may differ from these estimates under different assumptions or conditions. Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to inform our critical accounting estimates. There have been no material changes to our critical accounting policies and estimates from the information provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Management Estimates,” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.