What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-05 · 82 added, 112 removed, 201 unchanged (49% of the section changed)

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Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”

We are a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics that selectively degrade disease-causing proteins by harnessing the body’s own natural protein degradation system.

We are a clinical-stage biopharmaceutical company focused on discovering and developing novel small molecule therapeutics that selectively degrade disease-causing proteins by harnessing the body’s own natural protein degradation system.

Our proprietary targeted protein degradation platform, which we refer to as Pegasus™, allows us to discover highly selective small molecule protein degraders with activity against disease-causing proteins throughout the body.

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To date, we have utilized our Pegasus™ platform to design novel protein degraders focused in the areas of immunology-inflammation and oncology, and continue to apply our platform’s capabilities to additional therapeutic areas.

Our initial programs include IRAK4, IRAKIMiD, and STAT3.

With respect to our IRAK4 program, we are collaborating with Sanofi on the development of drug candidates targeting IRAK4 outside the oncology and immuno-oncology fields.

We expect to submit an Investigational New Drug Application, or IND, to the U.S.

Food and Drug Administration, or FDA, for KT-474 in the first half of 2021, and if cleared, to initiate a Phase 1 trial in adult healthy volunteers and hidradenitis suppurativa, or HS, and atopic dermatitis, or AD, patients shortly thereafter.

We also expect to submit INDs for degraders from our IRAKIMiD and STAT3 programs in the second half of 2021, and if cleared, to initiate Phase 1 trials in patients for each program shortly thereafter.

Since our inception in 2015, we have devoted substantially all of our efforts to organizing and staffing our company, research and development activities, business planning, raising capital, building our intellectual property portfolio and providing general and administrative support for these operations To date, we had received gross proceeds of $617.8 million from the sale of common stock including our August 2020 initial public offering and concurrent private placement, sales of our convertible preferred stock and through our collaborations with Vertex Pharmaceuticals Incorporated, or Vertex, and Genzyme Corporation, or Sanofi.

Our initial programs are IRAK4, IRAKIMiD, and STAT3, which each address high impact targets within the interleukin-1 receptor/toll-like receptor, or IL-1R/TLR, and janus kinase/signal transducers and activators of transcription, or JAK/STAT, providing the opportunity to treat a broad range of immune-inflammatory diseases, hematologic malignancies, and solid tumors.

Our programs exemplify our focus on addressing high impact targets that have been elusive to conventional modalities and that drive the pathogenesis of multiple serious diseases with significant unmet medical needs.

With respect to our IRAK4 program, we are collaborating with Genzyme Corporation, a subsidiary of Sanofi S.A., or Sanofi, on the development of drug candidates targeting IRAK4 outside the oncology and immuno-oncology fields.

We submitted an Investigational New Drug Application, or IND, to the U.S.

Food and Drug Administration, or FDA, for KT-474 in 2020, and initiated the single ascending dose (SAD) portion of our Phase 1 trial in adult healthy volunteers in February 2021.

The program is on partial clinical hold regarding the multiple ascending dose (MAD) portion of the Phase 1 trial, pending FDA review of interim data in healthy volunteers from the SAD portion of the trial.

In the second half of 2021, we expect to initiate enrollment in the MAD portion of the trial, including healthy volunteers and a subsequent cohort of hidradenitis suppurativa, or HS, and atopic dermatitis, or AD, patients, pending FDA’s removal of the partial clinical hold.

We also expect to submit INDs for degraders KT-413 and KT-333 from our IRAKIMiD and STAT3 programs, respectively, in the second half of 2021, and if cleared, to initiate Phase 1 trials in patients thereafter.

To date, we have received gross proceeds of $617.8 million from the sale of common stock including our August 2020 initial public offering (“IPO”) and concurrent private placement, sales of our Convertible Preferred Stock (the “Convertible Preferred Stock”) and through our collaborations with Vertex Pharmaceuticals Incorporated, or Vertex, and Genzyme Corporation, or Sanofi.

We have incurred significant operating losses since inception.

Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current product candidates or any future product candidates.

Our net losses were $21.5 million and $41.2 million for the years ended December 31, 2018 and 2019, respectively, and $32.9 million and $29.7 million for the nine months ended September 30, 2020 and 2019, respectively.

In addition, as of September 30, 2020 and December 31, 2019 we had an accumulated deficit of $116.1 million and $76.5 million, respectively.

Our net losses were $45.6 million and $41.2 million for the years ended December 31, 2020 and 2019, respectively, and $13.1 million and $10.9 million for the three months ended March 31, 2021 and 2020, respectively.

In addition, as of March 31, 2021 and December 31, 2020 we had an accumulated deficit of $141.8 million and $128.8 million, respectively.

We expect that our expense and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

continue preclinical activities of our initial programs, IRAK4, IRAKIMiD and STAT3, including the advancement of our IRAK4 program into a Phase 1 Clinical Trial;

initiate and continue research and preclinical and clinical development of our other product candidates;

advance the development of our product candidate pipeline;

continue the ongoing Phase 1 trial for our IRAK4 program;

continue IND-enabling activities of our other lead programs, IRAKIMiD and STAT3;

initiate and continue research and development activities to support our pre-clinical product candidate pipeline;

continue to develop and expand our Pegasus platform to identify additional product candidates;

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require the manufacture of larger quantities of our product candidates for clinical development and potential commercialization;

establish a sales, marketing and distribution infrast ructure to commercialize any products for which we may obtain marketing approval;

establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

add operational, financial and management information systems and personnel, including personnel to support our research and development programs, any future commercialization efforts and operating as a public company.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of September 30, 2020, we had cash, cash equivalents and marketable securities of $481.3 million.

As of March 31, 2021, we had cash, cash equivalents and marketable securities of $435.2 million.

We believe the existing cash, cash equivalents and marketable securities on hand, will enable us to fund our operating expenses and capital expenditure requirements into 2025.

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See “—Liquidity and capital resources.”

Since it was reported to have surfaced in December 2019, a novel strain of coronavirus, COVID-19, has spread across the world and has been declared a pandemic by the World Health Organization.

Since it was reported to have surfaced in December 2019, a novel strain of coronavirus, Sars-Cov-2 which leads to COVID-19, has spread across the world and has been declared a pandemic by the World Health Organization.

Efforts to contain the spread of COVID-19 have intensified and governments around the world, including in the United States, Europe and Asia, have implemented severe travel restrictions, social distancing requirements, stay-at-home orders and have delayed the commencement of non-COVID-19-related clinical trials, among other restrictions.

As a result, the current COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting our employees, patients, communities and business operations, as well as contributing to significant volatility and negative pressure on the U.S.

economy and in financial markets We expect that COVID-19 precautions will directly or indirectly impact the timeline for some of our planned clinical trials and are continuing to assess the potential impact of the COVID-19 pandemic on our current and future business and operations, including our expenses and clinical trials, as well as on our industry and the healthcare system.

economy and in financial markets.

We expect that COVID-19 precautions will directly or indirectly impact the timeline for some of our planned clinical trials and are continuing to assess the potential impact of the COVID-19 pandemic on our current and future business and operations, including our expenses and clinical trials, as well as on our industry and the healthcare system.

As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served.

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We are continuing to assess the impact of the COVID-19 pandemic on our current and future business and operations, including our expenses and planned clinical trial and other development timelines, as well as on our industry and the healthcare system.

Reorganization

We are a Delaware corporation that was incorporated in September 2015 under the name Project HSC, Inc.

and in June 2016, changed our name to Project Chimera, Inc.

On November 1, 2018, we completed a series of transactions, or the Reorganization, pursuant to which Kymera Therapeutics LLC, or Kymera LLC, merged with and into Kymera Therapeutics, Inc.

The purpose of the Reorganization was to reorganize our corporate structure so that its existing investors would own capital stock in a corporation rather than equity interest in a limited liability company.

In connection with the Reorganization, (i) the existing unitholders of Kymera LLC exchanged their units of Kymera LLC for the same number and classes of our common stock and convertible preferred stock on a one-to-one basis, with rights identical to the exchanged units of Kymera LLC;

and (ii) the holders of all outstanding common incentive units

of Kymera LLC exchanged their units for a combination of our restricted common stock and options to purchase our common stock.

These exchanges resulted in the common incentive unit holders being given either one-for-one restricted stock for their incentive units or a split of approximately sixt y to forty percent of restricted stock and options to purchase common stock based on the threshold value amount of the incentive units held by such holders.

Upon completion of the Reorganization, the historical consolidated financial statements of Kymera LLC became the historical consolidated financial statements of Kymera Therapeutics, Inc.

because the Reorganization was accounted for as a reorganization of entities under common control.

Components of Our Results of Operations

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We expect that our revenue for the next several years will be derived primarily from our current collaboration agreements and any additional collaborations that we may enter into in the future.

To date, we have not received any royalties under any of the collaboration agreements.

To date, we have not received any milestone payments or royalties under any of the collaboration agreements.

Vertex Collaboration Agreement

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We have an exclusive option, or Opt-In Right, exercisable on a collaboration target-by-collaboration target basis that will include the right to (i) to fund 50% of the United States development costs for collaboration products directed against such target in the applicable field of use and (ii) share equally in the net profits and net losses of commercializing collaboration products directed against such target in the applicable field of use in the United States.

In addition, if we exercise the Opt-In Right, Sanofi will grant to an exclusive option, applicable to each collaboration target, which upon exercise will allow us to conduct certain co-promotion activities in the field in the United States.

In addition, if we exercise the Opt-In Right, Sanofi will grant us an exclusive option, applicable to each collaboration target, which upon exercise will allow us to conduct certain co-promotion activities in the field in the United States.

The Sanofi Agreement, unless earlier terminated, will expire on a product-by-product basis on the date of expiration of all payment obligations under the Sanofi Agreement with respect to such product.

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In addition, Sanofi may terminate the agreement for convenience or for a material safety event upon advance prior written notice, and we may terminate the agreement with respect to any collaboration candidate if, following Sanofi’s assumption of responsibility for the development, commercialization or manufacturing of collaboration candidates with respect to a particular target, Sanofi ceases to exploit any collaboration candidates directed to such target for a specified period.

In consideration for the exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi will pay an upfront payment of $150 million.

In consideration for the exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi paid an upfront payment of $150 million.

In addition to the upfront payment, we are eligible to receive certain development milestone payments of up to $1.48 billion in the aggregate, of which more than $1.0 billion relates to the IRAK4 program, upon the achievement of certain developmental or regulatory events.

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Interest income and expense, net

Interest income consists of interest earned on our invested cash balances.

Interest income consists of interest earned on our invested cash balances and interest expense on our finance leases.

Results of Operations

Comparison of three months ended September 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019:

Comparison of three months ended March 31, 2021 and 2020

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended

September 30,

(in thousands)

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Collaboration revenue

Collaboration revenues were $14.5 million for the three months ended September 30, 2020, of which $10.9 million and $3.6 million were attributable to our collaboration agreements with Sanofi and Vertex, respectively.

Collaboration revenue was $1.0 million for the three months ended September 30, 2019 all of which were attributable to our collaboration with Vertex.

Collaboration revenues were $18.7 million for the three months ended March 31, 2021, of which $11.6 million and $7.1 million were attributable to our collaboration agreements with Sanofi and Vertex, respectively.

Collaboration revenue was $3.4 million for the three months ended March 31, 2020 all of which was attributable to our collaboration with Vertex.

Research and development expenses

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Three Months Ended

September 30,

(in thousands)

External research and development costs:

IRAK4 and IRAKIMiD

Internal research and development costs

Total research and development expenses

Research and development expenses were $15.8 million for the three months ended September 30, 2020, compared to $11.3 million for three months ended September 30, 2019.

The increase of $4.5 million was primarily due to higher direct expenses related to IND-enabling studies for our IRAK programs of $0.6 million and lead optimization activities for our STAT3 programs of $0.6 million, as well as increased investment in our platform, exploratory programs, and Vertex collaboration of $0.7 million.

We also had a $2.5 million increase in personnel, occupancy and related costs due to increases in employee headcount in the research and development functions and our move to a new facility.

General and administrative expenses

General and administrative expenses were $6.8 million for the three months ended September 30, 2020, compared to $1.5 million for the three months ended September 30, 2019.

The increase of $5.3 million was primarily due to increases in legal and professional service fees in support of operations and an increase in personnel, facility and other expenses stemming from an increase in headcount to support our growth as a public company.

Other Income (Expense), Net

Other income, net was $0.1 million for the three months ended September 30, 2020, as compared to $0.4 million for the three months ended September 30, 2019.

The decrease in was primarily due to the prevailing interest rates in the respective periods.

Comparison of nine months ended September 30, 2020 and 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019 :

Nine Months Ended

September 30,

(in thousands)

Revenue—from related parties

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Interest income (expense), net

Collaboration revenue

Collaboration revenues were $21.2 million for the nine months ended September 30, 2020, of which $10.9 million and $10.3 million were attributable to our collaboration agreements with Vertex and Sanofi, respectively.

Collaboration revenue was $1.1 million for the nine months ended September 30, 2019, all of which was attributable to our collaboration with Vertex.

Research and development expenses

The following table summarizes our research and development expenses for each period presented:

Nine Months Ended

September 30,

(in thousands)

External research and development costs:

IRAK4 and IRAKIMiD

Internal research and development costs

Total research and development expenses

Research and development expenses were $41.7 million for the nine months ended September 30, 2020, compared to $26.1 million for the nine months ended September 30, 2019.

The increase of $15.6 million was primarily due to higher direct expenses related to IND-enabling activities for our IRAK programs of $5.1 million and lead optimization activities for our STAT3 programs of $3.3 million as well as increased investment in our platform, exploratory programs, and Vertex collaboration of $0.6 million.

We also had a $6.7 million increase in personnel, occupancy and related costs due to increases in employee headcount in the research and development functions and our move to a new facility.

Research and development expenses were $26.0 million for the three months ended March 31, 2021, compared to $12.1 million for the three months ended March 31, 2020.

The increase of $13.8 million was primarily due to higher direct expenses related to IND-enabling studies and clinical activities for IRAK4, IRAKIMiD, and STAT3 programs of $3.9 million, as well as increased expenses related to the investment in our platform, exploratory programs, and Vertex collaboration of $5.3 million.

We also had a $4.7 million increase in personnel, occupancy and related costs due to increases in employee headcount in the research and development functions.

General and administrative expenses

General and administrative expenses were $13.1 million for the nine months ended September 31, 2020, compared to $5.5 million for the nine months ended September 30, 2019.

The increase was primarily due to an increase in legal and professional service fees in support of our growth and increases in personnel, facility and other expenses stemming from an increase in headcount to support our initial public offering and operations as a public company.

General and administrative expenses were $5.9 million for the three months ended March 31, 2021, compared to $2.6 million for the three months ended March 31, 2020.

The increase of $3.3 million was primarily due to increases in legal and professional service fees and an increase in personnel, facility and other expenses stemming from an increase in headcount to support our growth as a public company.

Other Income (Expense), Net

Other income, net was $0.6 million for the nine months ended September 30, 2020, compared to $0.7 million for the nine months ended September 30, 2019.

The decrease in was primarily due to the prevailing interest rates in the respective periods.

Other income, net was $0.1 million for the three months ended March 31, 2021, as compared to $0.3 million for the three months ended March 31, 2020.

The decrease was primarily due to the prevailing interest rates in the respective periods.

Liquidity and capital resources

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We have not yet commercialized any products and we do not expect to generate revenue from sales of products for several years, if at all.

To date, we have funded our operations primarily with proceeds from our initial public offering, sale of our convertible preferred stock and collaboration agreements.

To date, we had received gross proceeds of $617.8 million from the sale of common stock in our August 2020 initial public offering and concurrent private placement, sales of our convertible preferred stock and through our collaborations with Vertex and Sanofi.

As of September 30, 2020, we had cash and cash equivalents and marketable securities of $481.3 million.

To date, we have funded our operations primarily with proceeds from our IPO, sale of our Convertible Preferred Stock and collaboration agreements.

To date, we have received gross proceeds of $617.8 million from the sale of common stock in our August 2020 IPO and concurrent private placement, sales of our Convertible Preferred Stock and through our collaborations with Vertex and Sanofi.

As of March 31, 2021, we had cash and cash equivalents and marketable securities of $435.2 million.

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

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

Cash provided by operating activities

Cash used in investing activities

Cash used in operating activities

Cash provided by (used in) investing activities

Cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Cash Flow from Operating Activities

During the nine months ended September 30, 2020, operating activities provided $108.2 million of cash, primarily resulting from $150.0 million of proceeds received under our collaboration agreement with Sanofi executed in July 2020.

Cash provided by operating activities also includes an increase of accounts payable and accruals of $2.8 million, an increase in net operating assets and liabilities of $4.0 million, offset by our net loss of $32.9 million adjusted for net non-cash items of $5.0 million (primarily stock-based compensation and depreciation expense).

During the nine months ended September 30, 2019, operating activities provided $28.7 million of cash, resulting from the $55.8 million in aggregate payments received in connection with the Vertex Agreement, including the premium paid on the Series B-1 convertible preferred stock purchase.

Cash provided by operating activities also includes a net increase of accounts payable and accruals of $2.2 million, an increase in net operating assets and liabilities of $0.3 million, offset by our net loss of $29.7 million adjusted for net non-cash items of $1.7 million (primarily stock-based compensation and depreciation expense).

Cash Flow used in Investing Activities

During the nine months ended September 30, 2020 cash used in investing activities was $418.6 million comprised of purchases of marketable securities of $460.9 million and purchases of property and equipment of $7.7 million offset by maturities of marketable securities of $50.0 million.

During the nine months ended September 30, 2019 cash used in investing activities was $78.4 million comprised of purchases of marketable securities of $78.1 million and purchases of property and equipment of $0.3 million.

Cash Flow from Financing Activities

During the nine months ended September 30, 2020, net cash provided by financing activities was $289.0 million, primarily consisting of $182.7 million of net proceed received in our August 2020 initial public offering, $13.5 million from our August 2020 concurrent private place, $88.2 million of proceeds from our issuances of Series C convertible preferred stock in March 2020, net of issuance costs and $4.8 million of proceeds from the second closing of our Series B convertible preferred stock financing in January 2020, net of issuance costs.

During the nine months ended September 30, 2019, net cash provide d by financing activities was $13.

8 million, primarily consisting of $14.

0 million of proceeds from our issuances of Series B-1 convertible preferred stock in May 2019, net of issuance costs offset by payments of financing leases of $0.3 million.

Cash Flow used in Operating Activities

During the three months ended March 31, 2021, cash used in operating activities was $22.8 million, primarily resulting from our net loss of $13.1 million during the period and $17.8 million change in deferred revenue under our Sanofi and Vertex collaboration agreements.

These were offset by adjustments for non-cash items of $4.9 million (primarily consisting of stock-based compensation, depreciation and amortization and premiums and discounts on available-sale-securities) and a $3.2 million net increase in operating assets and liabilities primarily driven by changes in accounts payable and accrued expenses partially offset by changes in prepaid expenses and other operating assets and liabilities.

During the three months ended March 31, 2020, cash used in operating activities was $12.1 million, primarily resulting from our net loss of $10.9 million during the period and $3.4 million change in deferred revenue under our Vertex collaboration agreement.

These were offset by adjustments for non-cash items of $0.9 million (primarily consisting of stock-based compensation and depreciation expense) and a $1.4 million net increase in operating assets and liabilities primarily driven by changes in prepaid expenses partially offset by changes in accrued expenses.

Cash Flow provided by (used in) Investing Activities

During the three months ended March 31, 2021, cash provided by investing activities was $44.3 million, comprised of maturities of marketable securities of $60.5 million offset by purchases of marketable securities of $16.0 million and purchases of property and equipment of $0.2 million.

During the three months ended March 31, 2020, cash used in investing activities was $37.4 million, comprised of purchases of marketable securities of $36.0 million and purchases of property and equipment of $1.4 million.

Cash Flow provided by Financing Activities

During the three months ended March 31, 2021, net cash provided by financing activities was $0.6 million, primarily consisting of $1.1 million in proceeds from the exercise of employee stock options offset by the payment of $0.4 million in offering costs related to our August 2020 IPO and finance lease payments of $0.2 million.

During the three months ended March 31, 2020, net cash provided by financing activities was $93.1 million, primarily consisting of $88.5 million of proceeds from the issuance of our Series C Preferred Stock, net of issuance costs and $4.8 million of proceeds from our issuances of Series B Preferred Stock, net of issuance costs, offset by payments under finance leases of $0.1 million.

Future funding requirements

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the initiation, progress, timing, costs and results of nonclinical studies and clinical trials for our product candidates or any future product candidates we may develop;

our ability to maintain our relationships with Vertex and other key collaborators;

our ability to maintain our relationships with Sanofi, Vertex and other key collaborators;

the outcome, timing and cost of seeking and obtaining regulatory approvals from the FDA and comparable foreign regulatory authorities, including the potential for such authorities to require that we perform more nonclinical studies or clinical trials than those that we currently expect or change their requirements on studies that had previously been agreed to;

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our need to implement additional internal systems and infrastructure, including financial and reporting systems.

We believe the existing cash, cash equivalents and marketable securities on enable us to fund our operating expenses and capital expenditure requirements into 2025.

We believe the existing cash, cash equivalents and marketable securities of $435.2 million as of March 31, 2021 will enable us to fund our operating expenses and capital expenditure requirements into 2025.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties.

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

Market volatility resulting from the COVID-19 pa ndemic or other factors could also adversely impact our ability to access capital as and when needed.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockhold ers may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise funds through collaborations, strategic alliances or marketing, distribu tion or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

If we are unable t o raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candid ates that we would otherwise prefer to develop and market ourselves.

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

Market volatility resulting from the COVID-19 pandemic or other factors could also adversely impact our ability to access capital as and when needed.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders may be materially diluted, and the terms of such securities could include liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specified actions, such as incurring additional

debt, making capital expenditures or declaring dividends.

If we raise funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, reduce or eliminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Other Commitments

During the three and nine months ended September 30, 2020, there have been no material changes to our contractual obligations and commitments outside the ordinary course of business from those descri bed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Other Commitments” in our final prospectus for our IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on August 21, 2020.

There were no material changes to our contractual obligations and commitments described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Critical Accounting Policies and Estimates

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

During the three and nine months ended September 30, 2020, there were no material changes to our critical accounting policies from those described in our final prospectus for our IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on August 21, 2020.

During the three months ended March 31, 2021, there were no material changes to our critical accounting policies from those described in our Annual Report Form 10-K filed with the SEC on March 11, 2021.

JOBS Act Accounting Election

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There are other exemptions and reduced reporting requirements provided by the JOBS Act that we are currently evaluating.

For example, as an “emerging growth company,” we are exempt from Sections 14A(a) and (b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would otherwise require us to (1) submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “golden parachutes;” and (2) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of our chief executive officer’s compensation to our median employee compensation.

and (2) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of our chief executive officer’s compensation to our median employee compensation.

We also intend to rely on an exemption from the rule requiring us to provide an auditor’s attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act.

We will continue to remain an “emerging growth company” until the earliest of the following:

(1) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering;

(1) the last day of the fiscal year following the fifth anniversary of the date of the completion of our IPO;

(2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.07 billion;

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We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is more than $250 million measured on the last business day of our second fiscal quarter, or our annual revenues are less than $100 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is more than $700 million measured on the last business day of our second fiscal quarter.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Recently Issued and Adopted 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 elsewhere in this Quarterly Report .

Quantitative and Qualitati ve Disclosures About Market Risk.

Our primary exposure to market risk relates to changes in interest rates.

As of March 31, 2021, we had cash and cash equivalents and marketable securities of $435.2 million.

Our exposure to interest rate sensitivity is impacted by changes in the underlying U.S.

bank interest rates.

Our surplus cash has been invested in money market fund accounts, interest-bearing savings accounts, U.S.

government debt securities as well as corporate debt securities from time to time.

We have not entered into investments for trading or speculative purposes.

Due to the conservative nature of our investment portfolio, which is predicated on capital preservation of investments with short-term maturities, we do not believe an immediate one percentage point change in interest rates would have a material effect on the fair market value of our portfolio, and therefore we do not expect our operating results or cash flows to be significantly affected by changes in market interest rates.

All of our employees and our operations are currently located in the United States.

We have, from time to time, engaged in contracts with contractors or other vendors in a currency other than the U.S.

To date, we have had minimal exposure to fluctuations in foreign currency exchange rates as the time period between the date that transactions are initiated, and the date of payment or receipt of payment is generally of short duration.

Accordingly, we believe we do not have a material exposure to foreign currency risk.

Inflation generally affects us by increasing our cost of labor.

We do not believe that inflation had a material effect on our business, financial condition or results of operations during the periods presented.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis