What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-13 compared with 2021-11-10 · 102 added, 136 removed, 98 unchanged (71% of the section changed)

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and (v) all dollar amounts refer to United States dollars unless otherwise indicated.

The following should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the nine months ended September 30, 2021 included in this Quarterly Report.

The following should be read in conjunction with our unaudited condensed consolidated interim financial statements and related notes for the three months ended March 31,2022 included in this Quarterly Report.

Company Overview

We are a clinical-stage immuno-oncology company specializing in the development and commercialization of novel T cell-based immunotherapies and innovative peptide-based vaccines for the treatment of hematological malignancies and solid tumor indications.

We developed our lead product candidates from our MultiTAA-specific T cell technology, which is based on the selective expansion of non-engineered, tumor-specific T cells that recognize tumor associated antigens, or TAAs, which are tumor targets, and then kill tumor cells expressing those targets.

These T cells are designed to recognize multiple tumor targets to produce broad spectrum anti-tumor activity.

We are advancing two pipelines of product candidates as part of our MultiTAA-specific T cell program:

the autologous T cells for the treatment of lymphoma, multiple myeloma, or MM, and selected solid tumors and the allogeneic T cells for the treatment of acute myeloid leukemia, or AML, and acute lymphoblastic leukemia, or ALL.

Because we do not genetically engineer the MultiTAA-specific T cell therapies, we believe that our product candidates are easier and less expensive to manufacture, have lower toxicities than current engineered chimeric antigen receptor, or CAR-T, and T cell receptor-based therapies and may provide patients with meaningful clinical benefit.

We are also developing innovative peptide-based immunotherapeutic vaccines for the treatment of metastatic solid tumors.

We are pursuing post-transplant AML as the lead indication for our first company-sponsored MultiTAA-specific T cell program.

In April 2020, the FDA granted orphan drug designation to MT-401 for the treatment of AML after receiving an allogeneic stem cell transplant.

The MultiTAA-specific T cell therapy has been well tolerated in an ongoing Phase 1 clinical trial in AML and myelodysplastic syndrome, or MDS, conducted by our strategic partner Baylor College of Medicine, or BCM.

As reported in a recent publication by Lulla et al., 11 of the 17 patients in the adjuvant disease setting dosed with the MultiTAA-specific T cell therapy after receiving an allogeneic hematopoietic stem cell transplant, or HSCT, never relapsed [median leukemia-free survival, or LFS, not reached at a median follow-up of 1.9 years], with 11 of 15 patients remaining alive (estimated two-year overall survival of 77%) at a median follow-up of 1.9 years post-infusion, which compares favorably with HSCT outcomes for risk-matched AML/MDS patients post-HSCT [median LFS of nine to 15 months and two-year survival probability of 42%].

Additionally, eight patients were treated for active disease that was resistant to salvage therapy post-HSCT with a median of five prior lines of therapy (range:

One of the eight patients crossed over from the adjuvant group, while two patients enrolled twice, but all three patients had active AML that failed another line of salvage therapy after their first MultiTAA-specific T cell infusion.

Two of the eight patients achieved objective responses, with one complete response and one partial response, with six patients continuing with stable disease.

We submitted an investigational new drug, or IND, application to the United States Food and Drug Administration, or the FDA, to initiate a Phase 2 clinical trial of MultiTAA-specific T cell therapy, which we refer to as MT-401 (zedenoleucel), in post-allogeneic HSCT patients with AML in both the adjuvant and active disease setting.

The dose administered in this multicenter trial is currently 100 million cells every two weeks for three doses.

In the adjuvant setting, patients will be randomized to either MultiTAA-specific T cell therapy at approximately 90 days post-transplant versus standard of care observation, while the active disease patients will receive MT-401 following relapse post-transplant as part of a single-arm group.

We have completed the safety lead-in portion of the trial in June 2021.

We initiated the remainder of the Phase 2 trial in July 2021 and plan to complete enrollment of approximately 20 patients and activate additional clinical sites across the United States in the fourth quarter of 2021 in order to report results from the active disease arm of the trial in the first quarter of 2022.

We expect to begin manufacturing MT-401 for the Phase 2 trial at our cGMP manufacturing facility in the fourth quarter of 2021, which facility became fully operational in July 2021.

We reported interim data for an ongoing Phase 1/2 clinical trial of the MultiTAA-specific T cell therapy for the treatment of pancreatic adenocarcinoma being conducted by BCM.

In this trial, we have observed a clinical benefit correlated with the post-infusion detection of tumor-reactive T cells in patient peripheral blood and within tumor biopsy samples in patients in the tumor-resection arm of the trial.

These T cells exhibited activity against both targeted antigens and non-targeted TAAs, indicating induction of antigen spreading.

To date, we have not observed any cytokine release syndrome or neurotoxicity in this trial.

We are also evaluating the MultiTAA-specific T cell therapies in a Phase 2 clinical trial for the treatment of breast cancer and in Phase 1 clinical trials for the treatment of ALL, lymphoma, MM and sarcoma, all of which are being conducted by BCM.

As of June 2021, the MultiTAA-specific T cell therapies have been generally well tolerated by all of the patients enrolled in clinical trials in hematological and solid tumor indications with no incidents of cytokine release syndrome or neurotoxicity, which are frequently associated with CAR-T therapies.

Our ongoing clinical trials may be also affected by the COVID-19 pandemic and the emergence of any new variant strains of COVID-19.

Based on our observations in clinical trials in AML, pancreatic cancer, lymphoma, ALL and MM, we believe that the MultiTAA-specific T cell therapies have the potential to mediate a meaningful anti-tumor effect, as well as significant in vivo expansion of T cells.

We may initiate additional clinical trials investigating other indications in addition to our planned Phase 2 trial in post-transplant AML patients.

We developed our lead product candidates from our MultiTAA-specific T cell technology, which is based on the manufacture of non-engineered, tumor-specific T cells that recognize multiple tumor-associated antigens, or TAAs.

MultiTAA-specific T cells are able to recognize multiple tumor targets to produce broad spectrum anti-tumor activity.

When infused into a cancer patient, the MultiTAA-specific T cells are designed to kill cancer cells expressing the TAA targets and potentially recruit the patient’s immune system to participate in the cancer killing process.

We licensed the underlying technology for MultiTAA-specific T cell therapy from BCM in March 2018.

BCM had utilized the therapy in seven exploratory clinical trials.

In these studies, BCM treated over 150 patients suffering from a variety of cancers including lymphoma, multiple myeloma, acute myeloid leukemia, acute lymphoblastic leukemia, pancreatic cancer, breast cancer and various sarcomas.

In those studies, BCM saw evidence of clinical benefit, expansion of infused cells, epitope spreading, and decreased toxicity compared to other cellular therapies.

We are advancing three product candidates as part of our MultiTAA-specific T cell program for:

autologous treatment of lymphoma, and selected solid tumors

allogeneic T cells for the treatment of acute myeloid leukemia, or AML

off-the-shelf products in various indications

Our current clinical development programs are:

● MT-401 for the treatment of post-transplant AML, currently in a Phase 2 clinical trial

● MT-401-OTS for the treatment of AML, for which we expect to dose the first patient in a Phase 1 clinical trial in 2023

● MT-601 for the treatment of pancreatic cancer, for which we plan to submit an IND to the FDA in 2022 to initiate a Phase 1 trial in 2023

● MT-601 for the treatment of lymphoma, for which we plan to submit an IND to the FDA in 2022 to initiate a Phase 1 trial in 2022

We believe that the simplicity of our manufacturing process allows additional modifications to expand MultiTAA-specific T cell recognition of cancer targets.

For example, we are currently analyzing the potential for a 12-antigen MultiTAA-specific T cell therapy and assessing the potential for combination therapies for our MultiTAA-specific T cell products.

We have positioned ourselves to be in full control of our research and development and clinical manufacturing needs by establishing a fully validated manufacturing facility.

We believe that this has key advantages that distinguish us from our competitors, particularly because we are less reliant on contract manufacturing organizations, which are expensive and often have long lead times, shortages of skilled labor and a backlog of customers.

Our clinical-stage pipeline, including clinical trials being conducted by BCM and other partners, is set forth below:

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In this discussion of our results of operations and financial condition, amounts in financial tables, other than per-share amounts, have been rounded to the nearest thousand.

Comparison of the Three Months Ended September 30, 2021 and 2020

The following table summarizes the results of our operations for the three months ended September 30, 2021 and 2020:

Comparison of the Three Months Ended March 31, 2022 and 2021

The following table summarizes the results of our operations for the three months ended March 31, 2022 and 2021:

For the Three Months Ended

September 30,

Total revenues

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Other income (expense):

Change in fair value of warrant liabilities

Loss on settlement

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Net loss per share, basic and diluted

Weighted average number of common shares outstanding, basic and diluted

Operating Expenses

Operating expenses incurred during the three months ended September 30, 2021 were $10.0 million compared to $7.4 million during the three months ended September 30, 2020.

Significant changes and expenditures in operating expenses are outlined as follows:

Research and Development Expenses

Research and development expenses increased by 41% to $6.8 million for the three months ended September 30, 2021, compared to $4.8 million for the three months ended September 30, 2020.

The increase of $2.0 million in 2021 was primarily attributable to the following:

o increase of $1.0 million in expenses related to our AML clinical trial,

o increase of $0.6 million in headcount-related expenses,

o increase of $0.3 million in sponsored research expenses from BCM agreements,

o increase of $0.1 million in rent and utilities, and

o increase of $0.4 million in depreciation expenses primarily attributable to our manufacturing facility and related expenses, offset by

o decrease of $0.2 million in expenses related to our vaccine clinical trials,

o decrease of $0.1 million in process development expenses, and

o decrease of $0.1 million in other expenses.

General and Administrative Expenses

General and administrative expenses were $3.2 million and $2.6 million for the three months ended September 30, 2021 and 2020, respectively.

The increase of $0.6 million in 2021 was primarily attributable to the following:

o increase of $0.3 million in legal fees,

o increase of $0.2 million in headcount-related expenses, and

o increase of $0.1 million in rent and utilities.

Other Income (Expense)

Arbitration settlement

An arbitration proceeding was brought against us before the FINRA by a broker seeking to be paid compensation for two financing transactions that occurred in 2018, a warrant conversion and a private placement brokered by another broker.

The broker’s claims were based on a placement agent agreement for a private placement it brokered in 2017, under which it alleged it was entitled to compensation for the 2018 transactions.

The FINRA panel found in favor of the broker and awarded the broker $2.4 million for compensation, interest and attorney fees, which we recorded in the three months ended September 30, 2021.

On October 22, 2021, we filed a motion in federal court to vacate the award.

Interest Income

Interest income was $1,000 and $5,000 for the three months ended September 30, 2021 and 2020, respectively, and was attributable to interest income relating to funds that are held in U.S.

Treasury notes and U.S.

government agency-backed securities.

The increase in our net loss during the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was due to the continued expansion of our research and development activities, increased expenses relating to future clinical trials, and the overall growth of our corporate infrastructure.

We anticipate that we will continue to incur net losses in the future as we continue to invest in research and development activities, including clinical development of our MultiTAA T cell product candidates.

Comparison of the Nine months ended September 30, 2021 and 2020

The following table summarizes the results of our operations for the nine months ended September 30, 2021 and 2020:

For the Nine Months Ended

September 30,

Total revenues

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Change in fair value of warrant liabilities

Loss on settlement

Interest income

Net loss per share, basic and diluted

Weighted average number of common shares outstanding

We did not receive any grant income during the nine months ended September 30, 2021.

During the nine months ended September 30, 2020, we received $0.5 million of a grant awarded to the Mayo Foundation from the U.S.

Department of Defense to fund the Phase 2 clinical trial of TPIV100 for the treatment of HER2/neu breast cancer.

The portion of the grant we received compensated us for clinical supplies manufactured by us for the clinical trial.

We did not generate any revenue during the three months ended March 31, 2022 and 2021, respectively, from the sales or licensing of our product candidates.

In August 2021, we received notice of a Product Development Research award totaling approximately $13.1 million from the Cancer Prevention and Research Institute of Texas, or CPRIT, to support our Phase 2 clinical trial of MT-401.

During the three months ended March 31, 2022, we recognized $1.0 million of revenue associated with the CPRIT grant.

Operating Expenses

Operating expenses incurred during the nine months ended September 30, 2021 were $29.7 million compared to $20.8 million during the nine months ended September 30, 2020.

Operating expenses incurred during the three months ended March 31, 2022 were $10.8 million compared to $8.8 million during the three months ended March 31, 2021.

Significant changes and expenditures in operating expenses are outlined as follows:

Research and Development Expenses

Research and development expenses increased by 53% to $19.8 million for the nine months ended September 30, 2021, compared to $12.9 million for the nine months ended September 30, 2020.

Research and development expenses increased by 25% to $7.0 million for the three months ended March 31, 2022, compared to $5.6 million for the three months ended March 31, 2021.

The increase of $1.4 million in 2022 was primarily attributable to the following:

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o increase of $0.5 million in headcount-related expenses,

o increase of $0.4 million in process development expenses,

o increase of $0.4 million in sponsored research expenses from BCM agreements,

o increase of $0.7 million in rent and utilities, and

o increase of $1.3 million in depreciation expenses primarily attributable to our manufacturing facility and related expenses, offset by

o decrease of $0.7 million in expenses related to our vaccine clinical trials.

o increase of $0.1 million in other clinical expenses, and

o increase of $0.1 million in other operating expenses.

General and Administrative Expenses

General and administrative expenses were $9.9 million and $7.9 million for the nine months ended September 30, 2021 and 2020, respectively.

General and administrative expenses were $3.7 million and $3.1 million for the three months ended March 31, 2022 and 2021, respectively.

The increase of $0.6 million in 2022 was primarily attributable to the following:

o increase of $0.2 million in insurance expenses,

o increase of $0.9 million in headcount-related expenses,

o increase of $0.2 million in recruitment expenses,

o increase of $0.4 million in rent and utilities, and

o increase of $0.3 million in legal expenses.

o increase of $0.2 million in legal and professional fees,

o increase of $0.2 million in stock-based compensation expenses, and

o increase of $0.2 million in other operating expenses.

Other Income (Expense)

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities for the nine months ended September 30, 2021 was $0 as compared to $31,000 for the nine months ended September 30, 2020.

Arbitration settlement

An arbitration proceeding was brought against us before the Financial Industry Regulatory Authority, Inc., or FINRA by a broker seeking to be paid compensation for two financing transactions that occurred in 2018, a warrant conversion and a private placement, each brokered by another broker.

The broker’s claims were based on a placement agent agreement for a private placement it brokered in 2017, under which it alleged it was entitled to compensation for the 2018 transactions.

The FINRA panel found in favor of the broker and awarded the broker $2.4 million for compensation, interest and attorney fees, which we recorded in the nine months ended September 30, 2021.

The FINRA panel found in favor of the broker and awarded the broker $2.4 million for compensation, interest and attorney fees, which we recorded in the year ended December 31, 2021.

We removed the case to the United States District Court for the Southern District of New York on September 27, 2021.

On October 22, 2021, we filed a motion in federal court to vacate the award.

On March 9, 2022, we were notified that our motion to vacate the award was denied and the broker was awarded an additional $0.1 million in interest.

Post judgment interest accrued at 1.02% until the judgement was paid.

During the three months ended March 31, 2022, we recorded an additional $0.1 million of expense related to this matter.

We paid the $2.5 million judgement on March 24, 2022.

Interest Income

Interest income was $5,000 and $0.1 million for the nine months ended September 30, 2021 and 2020, respectively, and was attributable to interest income relating to funds that are held in U.S.

Interest income was $3,000 and $2,000 for the three months ended March 31, 2022 and 2021, respectively, and was attributable to interest income relating to funds that are held in U.S.

Treasury notes and U.S.

government agency-backed securities.

As part of the reaction to the COVID-19 pandemic, the Federal Reserve cut rates in mid-March of 2020 to a range of 0.0% - 0.25%.

As such, we recorded lower interest income during the nine months ended September 30, 2021.

The increase in our net loss during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was due to the continued expansion of our research and development activities, increased expenses relating to future clinical trials, and the overall growth of our corporate infrastructure.

The increase in our net loss during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was due to the continued expansion of our research and development activities, increased expenses relating to future clinical trials, and the overall growth of our corporate infrastructure.

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We have financed our operations primarily through public and private offerings of our debt and equity securities.

The following table sets forth our cash and cash equivalents and working capital as of September 30, 2021 and December 31, 2020:

September 30,

Cash and cash equivalents

The following table sets forth our cash and cash equivalents and working capital as of March 31, 2022 and December 31, 2021:

Cash, cash equivalents and restricted cash

Working capital

The following table summarizes our cash flows for the nine months ended September 30, 2021 and 2020:

For the Nine Months Ended

September 30,

The following table summarizes our cash flows for the three months ended March 31, 2022 and 2021:

For the Three Months Ended

Net cash provided by (used in):

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Financing activities

Net increase (decrease) in cash and cash equivalents

Net increase (decrease) in cash, cash equivalents and restricted cash

Operating Activities

Net cash used in operating activities during the nine months ended September 30, 2021 was $22.4 million compared to $14.5 million for the same period last year.

Net cash used in operating activities during the three months ended March 31, 2022 was $12.2 million compared to $8.1 million for the same period last year.

The increase of $4.1 million was primarily attributable to the increased costs in research and development and pre-commercial activities.

The changes in cash flow from operating activities during the nine months ended September 30, 2021 were due to $32.1 million of net losses and a $2.9 million increase from changes in operating assets and liabilities.

The changes in cash flow from operating activities during the three months ended March 31, 2022 were due to $9.9 million of net losses and a $4.8 million decrease from changes in operating assets and liabilities.

This was in addition to $1.6 million of stock-based compensation, $0.6 million of depreciation expense and $0.3 million right-of-use asset amortization and lease liability accretion.

Net cash used in operating activities during the three months ended March 31, 2021 was $8.1 million.

The changes in cash flow from operating activities during the three months ended March 31, 2021 were due to $8.8 million of net losses and a $1.5 million decrease from changes in operating assets and liabilities.

This was offset by $1.4 million of stock-based compensation, $0.5 million of depreciation expense and $0.3 million right-of-use asset amortization and lease liability accretion.

Investing Activities

Net cash used in investing activities was $2.8 million and $5.2 million for the purchase of property and equipment and construction in progress related to the manufacturing facility during the nine months ended September 30, 2021 and 2020, respectively.

Net cash used in investing activities was $2.5 million for the purchase of property and equipment and construction in progress related to the manufacturing facility during the three months ended March 31, 2022.

The increase mainly relates to purchases of equipment for the manufacturing and research facilities.

Net cash used in investing activities was $1.4 million for the purchase of property and equipment and construction in progress during the three months ended March 31, 2021.

The increase relates to purchases of laboratory equipment for the manufacturing facility.

Financing Activities

Net cash provided by financing activities was $52.6 million during the nine months ended September 30, 2021, due to the net proceeds received from the underwritten public offering.

Net cash provided by financing activities was $2.7 million during the nine months ended September 30, 2020, due to the exercise of $0.5 million in stock warrants and the purchase of $2.2 million in common stock.

Net cash provided by financing activities was $52.7 million during the three months ended March 31, 2021, due to the net proceeds received from the underwritten public offering.

Future Capital Requirements

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If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

In August 2021, we entered into a Controlled Equity Offering SM Sales Agreement, or the ATM Agreement, with Cantor Fitzgerald & Co.

and RBC Capital Markets, LLC, or the Sales Agents, pursuant to which we can offer and sell, from time to time at our sole discretion through the Sales Agents, shares of our common stock having an aggregate offering price of up to $75.0 million.

Any shares of our common stock sold will be issued pursuant to our shelf registration statement on Form S-3 (File No.

333-258687), which the SEC declared effective on August 19, 2021.

The Sales Agents will be entitled to compensation under the Sales Agreement at a commission rate equal to 3.0% of the gross sales price per share sold under the ATM Agreement, and we have provided each of the Sales Agents with indemnification and contribution rights.

To date, we have not sold any shares of our common stock under the ATM Agreement.

On March 16, 2021, we issued an aggregate of 32,282,857 shares of our common stock, for net proceeds of $52.6 million pursuant to an underwritten public offering.

As of September 30, 2021, we had working capital of $43.2 million, compared to working capital of $18.0 million as of December 31, 2020.

Based on our clinical and research and development plans and our timing expectations related to the progress of our programs, we expect that our cash and cash equivalents as of September 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

In August 2021, we received notice of a Product Development Research award totaling approximately $13.1 million from CPRIT to support our Phase 2 clinical trial of MT-401.

To date, we have received $2.4 million of funds from the CPRIT grant.

On April 21, 2022, the Company entered into a binding services agreement (the “Agreement”), effective April 12, 2022, with Wilson Wolf Manufacturing Corporation (“Wilson Wolf”).

Wilson Wolf is in the business of creating products and services intended to simply and expedite the transition of cell therapies and gene-modified cell therapies to mainstream society (the “Wilson Wolf Mission”).

Pursuant to the Agreement, Wilson Wolf made a cash payment to the Company in the amount of $8.0 million.

As of March 31, 2022, we had working capital of $22.8 million, compared to working capital of $33.1 million as of December 31, 2021.

Based on our revised clinical and research and development plans and our revised timing expectations related to the progress of our programs, we expect that our cash, cash equivalents and restricted cash as of March 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2023.

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

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● continue the research and development of our product candidates and seek to discover additional product candidates;seek regulatory approvals for our product candidates if they successfully complete clinical trials;

● continue development of our manufacturing capabilities and our manufacturing facility;

● establish sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any product candidates that may receive regulatory approval;

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We may also be required to pay damages or have liabilities associated with litigation or other legal proceedings involving our company.

The CPRIT award is intended to support the adjuvant arm of our Phase 2 clinical trial evaluating MT-401 when given as an adjuvant therapy to patients with AML following a hematopoietic stem cell transplant.

The primary objectives of the adjuvant arm of the trial are to evaluate relapse-free survival after MT-401 treatment when compared with a randomized control group.

To date, the Company has not received any funds from the CPRIT grant.

In addition to the foregoing, based on our current assessment, we do not expect any material impact on our long-term liquidity due to the COVID-19 pandemic.

However, we will continue to assess the effect of the pandemic on our operations.

The extent to which the COVID-19 pandemic will impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, the emergence of any new variant strains of COVID-19, the duration and effect of business disruptions and the short-term effects and ultimate effectiveness of the travel restrictions, quarantines, social distancing requirements, the timing, distribution, rate of public acceptance and efficacy of vaccines and other treatments, and business closures in the United States and other countries to contain and treat the disease.

While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, it could result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession or market correction resulting from the spread of COVID-19 and any variant strains thereof could materially affect our business and the value of our common stock.

In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its long-term liquidity due to the COVID-19 pandemic.

However, the Company will continue to assess the effect of the pandemic on its operations, including its clinical programs.

The extent to which the COVID-19 pandemic will impact the Company’s business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the geographic spread of the disease, the duration of the outbreak, the emergence of any new variant strains of COVID-19, the duration and effect of any future business disruptions in the United States and other countries to contain and treat the disease and the rate of public acceptance and efficacy of vaccines and other treatments.

Further, disruption of global financial markets and a recession or market correction, including as a result of the COVID-19 pandemic and other global macroeconomic factors, could reduce the Company’s ability to access capital, which could in the future negatively affect the Company’s liquidity and could materially affect the Company’s business and the value of its common stock.

On February 16, 2022, the Company received a notice from the Nasdaq Global Market that the Company was not in compliance with Nasdaq’s Listing Rule 5450(a)(1), as the minimum bid price of its common stock had been below $1.00 per share for 30 consecutive business days.

The Company has 180 calendar days, or until August 15, 2022, to regain compliance with the minimum bid price requirement.

To regain compliance, the minimum bid price of the Company’s common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days during this 180-calendar day grace period.

In the event the Company does not regain compliance with the minimum bid price requirement by August 15, 2022, the Company may be eligible for an additional 180-calendar day compliance period if it elects to transfer to the Nasdaq Capital Market to take advantage of the additional compliance period offered on that market.

To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and would need to provide written notice of its intention to cure the bid price deficiency during the second compliance period.

Aspire Common Stock Purchase Agreement

In February 2020, we entered into a common stock purchase agreement, or the Purchase Agreement, with Aspire Capital Fund, LLC, or Aspire Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $30.0 million of shares of our common stock over the 30-month term of the Purchase Agreement.

As of December 31, 2021, Aspire Capital had purchased 4,113,440 shares under the Purchase Agreement, providing aggregate proceeds to the Company of approximately $6.2 million.

In consideration for entering into the Purchase Agreement, concurrently with the execution of the Purchase Agreement, the Company issued to Aspire Capital 345,357 shares of the Company’s common stock.

The Purchase Agreement provides that we and Aspire Capital shall not effect any sales under the Purchase Agreement on any purchase date where the closing sale price of our common stock is less than $0.25.

There are no trading volume requirements or restrictions under the Purchase Agreement, and we will control the timing and amount of sales of our common stock to Aspire Capital.

Aspire Capital has no right to require any sales by us but is obligated to make purchases from us as directed by us on future funding, rights of first refusal, participation rights, penalties, or liquidated damages in the Purchase Agreement.

The Purchase Agreement may be terminated by us at any time, at its discretion, without any cost to us.

Aspire Capital has agreed that neither it nor any of its agents, representatives and affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time prior to the termination of the Purchase Agreement.

We expect to use any proceeds under the Purchase Agreement for working capital and general corporate purposes.

The Purchase Agreement provides that the number of shares that may be sold pursuant to the Purchase Agreement will be limited to 9,232,814 shares, including the Commitment Shares, or the Exchange Cap, which represents 19.99% of our outstanding shares of common stock as of the date of the Purchase Agreement, unless stockholder approval is obtained to issue more than 19.99%.

This limitation will not apply if, at any time the Exchange Cap is reached and at all times thereafter, the average price paid for all shares issued under the Purchase Agreement is equal to or greater than $2.41, which was the closing price of our shares on the Nasdaq Global Market immediately preceding the execution of the Purchase Agreement.

We are not required or permitted to issue any shares of common stock under the Purchase Agreement if such issuance would breach our obligations under the rules or regulations of the Nasdaq Global Market.

ATM Agreement

In August 2021, the Company entered into a Controlled Equity Offering Sales Agreement (the “ATM Agreement”) with Cantor Fitzgerald & Co.

and RBC Capital Markets, LLC (the “Sales Agents”), pursuant to which the Company can offer and sell, from time to time at its sole discretion through the Sales Agents, shares of its common stock having an aggregate offering price of up to $75.0 million.

Any shares of its common stock sold will be issued pursuant to the Company’s shelf registration statement on Form S-3 (File No.

333-258687), which the SEC declared effective on August 19, 2021.

The shelf registration statement on Form S-3 includes a prospectus supplement covering the offering up to $19.8 million of shares of common stock over the 12 months ending March 18, 2023 in accordance with the ATM agreement.

The Sales Agents will be entitled to compensation under the Sales Agreement at a commission rate equal to 3.0% of the gross sales price per share sold under the ATM Agreement, and the Company has provided each of the Sales Agents with indemnification and contribution rights.

From April 1, 2022 to the date of this filing, the Company sold 148,000 shares of its common stock under the ATM Agreement for net proceeds of $63,600.

Going Concern

We have no sources of revenue, other than grant income, to provide incoming cash flows to sustain our future operations.

As outlined above, our ability to pursue our planned business activities is dependent upon our successful efforts to raise additional capital.

These factors raise substantial doubt regarding our ability to continue as a going concern.

Our condensed consolidated financial statements have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business.

Our financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Critical Accounting Policies

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however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

The critical accounting estimates that affect the consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020.

The critical accounting estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021.

Off-Balance Sheet Arrangements

3 unchanged sentences

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What changed 10-Q

Item 2. Management’s Discussion and Analysis