What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-09 compared with 2023-05-10 · 86 added, 45 removed, 150 unchanged (47% of the section changed)

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We seek to develop drug candidates in the precision medicine space, and our processes for selection and clinical development of drug candidates is based on scientific insights into cancer-promoting factors, as well as on our understanding of the clinical landscape and regulatory requirements.

NXP800 (HSF1-Pathway Inhibitor)

We have licensed exclusive world-wide development and commercial rights to NXP800, a novel Heat Shock Factor 1 (“HSF1”) pathway inhibitor, which was discovered at the Institute of Cancer Research (“ICR”) in London, England.

NXP800 (Integrated Stress Response Activator)

We have licensed exclusive world-wide development and commercial rights to NXP800, a novel Integrated Stress Response (“ISR”) pathway inhibitor, which was discovered at the Institute of Cancer Research (“ICR”) in London, England.

NXP800 is an oral, small molecule discovered in a phenotypic screen for inhibitors of the heat shock factor 1 stress response.

In a panel of human carcinoma cell lines NXP800 induced the of genes associated with activation of the integrated ISR via activation of the general control non-derepessible 2 ("GCN2”) kinase.

Consistent with activation of the ISR, NXP800 increased the expression of the following downstream ISR markers/effectors activating transcription factor 4 (“ATF4”), ChaC glutathione specific gamma-glutamylcyclotransferase 1 (“CHAC1”) and C/EBP homologous protein (“CHOP”) both in human ovarian cells in vitro and corresponding tumor xenograft models in vivo.

NXP800 acts on cancer cells to stimulate the GCN2 kinase, which activates the ISR pathway, leading to inhibition of cap-dependent protein translation, including heat shock factor 1 (“HSF1”) regulated proteins.

In preclinical studies, treatment with NXP800 inhibited tumor growth in xenografts models of human ovarian and gastric cancers, in which, a genetic mutation in the AT-rich interactive domain-containing protein 1A (“ARID1a”) gene was present, potentially rendering ARID1a a biomarker for treatment sensitivity.

Based on this work, we have begun to clinically investigate NXP800 in ARID1a-mutated ovarian carcinoma, a type of cancer which is primarily comprised of two histologies, Ovarian Clear Cell Carcinoma (“OCCC”) and ovarian endometrioid carcinoma (“OEC”), and to investigate the utility of ARID1a deficiency as a patient selection marker in additional tumor types.

The genetic screening for the ARID1a mutation is performed using commercially available next generation sequencing-based in vitro diagnostic test, which is routinely utilized in the clinic for cancer patients.

Based on this work, we have begun to clinically investigate NXP800 in platinum-resistant ARID1a-mutated ovarian carcinoma, a type of cancer which is primarily comprised of two histologies, Ovarian Clear Cell Carcinoma (“OCCC”) and ovarian endometrioid carcinoma (“OEC”), and to investigate the utility of ARID1a deficiency as a patient selection marker in additional tumor types.

The Phase 1 study was initiated in December 2021 and is comprised of two parts:

dose-escalation (Phase 1a), followed by an expansion phase (Phase 1b).

In Phase 1a, the safety and tolerability of NXP800 is being evaluated in patients with advanced solid tumors to identify a dose and dosing schedule for Phase 1b.

In the Phase 1a, the safety and tolerability of NXP800 was evaluated in patients with advanced solid tumors to identify a dose and dosing schedule for Phase 1b.

The Phase 1b portion of the study, which was initiated in April 2023, will evaluate the safety and preliminary anti-tumor activity of NXP800 in patients with platinum-resistant, ARID1a-mutated ovarian carcinoma.

Additional studies to evaluate the safety and preliminary anti-tumor activity of NXP800 in additional tumor types are planned.

In June 2022, the Investigational New Drug Application (“IND”) for NXP800, which was previously submitted to the U.S.

Food and Drug Administration (the “FDA”), was cleared, which included the Phase 1 clinical trial protocol.

Additional preclinical studies are being conducted to identify development opportunities for NXP800 in additional solid tumor types.

Preclinical studies were conducted and additional preclinical studies are being conducted to identify development opportunities for NXP800 in additional solid tumor types.

In December 2022, we announced that the FDA granted Fast Track Designation status to the development program of NXP800 for the treatment of platinum-resistant, ARID1a-mutated ovarian carcinoma.

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YES1 gene amplification has been reported to be implicated in several tumors including lung, head and neck, bladder and esophageal cancers.

In addition, YES1 directly phosphorylates and activates the Yes-associated protein, the main effector of the

Hippo pathway, which has been identified as a promoter of drug resistance, cancer progression, and metastasis in several cancer types, including squamous cell, mesothelioma and papillary kidney cancers.

In addition, YES1 directly phosphorylates and activates the Yes-associated protein (“YAP1”), the main effector of the Hippo pathway, which has been identified as a promoter of drug resistance, cancer progression, and metastasis in several cancer types, including squamous cell, mesothelioma and papillary kidney cancers.

In vivo, treatment with NXP900 inhibited primary and metastatic tumor growth in xenograft models of breast, cervical, esophageal, head and neck and medulloblastoma cancers, and demonstrated on-target pharmacodynamic effects.

Furthermore, it has been found that YES1 gene amplification is a key mechanism of resistance to Epidermal Growth Factor Receptor (“EGFR”) or (Human Epidermal Growth Factor Receptor 2 and anaplastic lymphoma kinase inhibitors.

A recent, peer reviewed study published in Nature Communication (not sponsored by the Company) demonstrated that NXP900 is able to re-sensitize resistant non-small cell lung cancer (“NSCLC”) cells to osimertinib (Tagrisso®), the leading EFGR inhibitor used for the treatment of EGFR mutation-positive NSCLC, when used in combination with Tagrisso®.

We have completed the IND enabling preclinical studies and the IND for NXP900 is currently pending.

A peer reviewed study published in Nature Communication (not sponsored by the Company) published in April 2022 demonstrated that NXP900 was able to re-sensitize resistant non-small cell lung cancer (“NSCLC”) cells to osimertinib (active ingredient in Tagrisso®), the leading EFGR inhibitor used for the treatment of EGFR mutation-positive NSCLC, when used in combination with osimertinib.

In May 2023, the U.S.

Food and Drug Administration (“FDA”) cleared the Company's Investigational New Drug Application (“IND”) for NXP900, which includes the Phase 1 clinical trial protocol.

Since our inception in 2020, we have devoted all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, acquiring product candidates and securing related intellectual property rights and conducting research and development activities.

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Results of Operations

From our inception on July 27, 2020, through March 31, 2023, we did not generate any revenue.

Our main activities through March 31, 2023 have been organizational and capital raising activities, the completion of the in-license agreements for our two drug candidates, NXP800 and NXP900, our Clinical Trial Application by the Medicines and Healthcare Regulatory Agency, preparation for the Phase 1a and Phase 1b clinical trials for NXP800, which commenced in December 2021 and April 2023, respectively, and beginning our IND-enabling studies for NXP900, which commenced in late 2021.

Additionally, we completed our initial public offering in February 2022 and a private placement offering in July 2022.

From our inception on July 27, 2020, through June 30, 2023, we did not generate any revenue.

Our main activities through June 30, 2023, have been organizational and capital raising activities, the completion of the in-license agreements for our two drug candidates, NXP800 and NXP900, our Clinical Trial Application by the Medicines and Healthcare Regulatory Agency, preparation for the Phase 1a and Phase 1b clinical trials for NXP800, which commenced in December 2021 and April 2023, respectively, and beginning our IND-enabling studies, which commenced in late 2021, along with preparation for the Phase 1a clinical trial for NXP900, which received FDA clearance in May 2023.

Additionally, we completed our initial public offering in February 2022, a private placement offering in July 2022 and a shelf registration in March 2023.

Research and Development Expenses

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General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, for our personnel in executive, finance and accounting, and other administrative functions.

General and administrative expenses also include legal fees relating to patent and corporate matters;

General and administrative expenses also include

legal fees relating to patent and corporate matters;

professional fees paid for accounting, auditing, consulting, and tax services;

insurance costs;

investor relations activities;

travel expenses;

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We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development activities.

The following table summarizes our results of operations expenses for the three months ended March 31, 2023 and 2022:

The following table summarizes our results of operations expenses for the three months ended June 30, 2023 and 2022:

(in thousands)

Three Months Ended March 31

Three Months Ended June 30

OPERATING EXPENSES:

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Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022:

The following table summarizes our research and development expenses for the three months ended June 30, 2023 and 2022:

(in thousands)

For the three months ended March 31

For the three months ended June 30

Clinical Expenses

Employee Compensation and Benefits

Clinical Expense

Manufacturing

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Total research and development expenses

Research and development expenses increased by $0.6 million, during the three months ended March 31, 2023 compared to the same period in 2022.

The increase in research and development expense during the three months ended March 31, 2023 was primarily driven by a $0.9 million increase in employee compensation and benefits including $0.4 million in stock based compensation, $0.2 million in clinical expenses paid out in connection with our product candidates NXP800 and NXP900, $0.1 million in manufacturing expenses including $0.2 million associated with one-time expenses associated with our process development of NXP900, partially offset by a $0.4 million decrease in license fees paid during 2022 to UoE for NXP900 net of fees owed to the UoE associated with our 2022 IPO and $0.1 million in professional services and other expenses associated with our drug product programs.

Research and development expenses increased by $1.8 million, or 70% during the three months ended June 30, 2023, compared to the same period in 2022.

The increase in research and development expense during the three months ended June 30, 2023, was primarily driven by $0.5 million in one-time licensing fees for NXP900, $0.8 million increase in manufacturing related costs due to the manufacture of NXP800 for the ongoing and planned Phase 1 clinical programs for NXP900, $0.4 million increase in employee compensation including $0.2 million increase related to employee stock compensation, and $0.1 million increase in clinical trial expenses.

The following table summarizes our general and administrative expenses for the three months ended June 30, 2023 and 2022:

(in thousands)

For the three months ended June 30

Professional and consulting services

Employee Compensation and Benefits

Insurance and Other

Total general and administrative expenses

General and administrative expenses increased by $0.4 million, or 41%, during the three months ended June 30, 2023, compared to the same period in 2022.

The increase in general and administrative expense during the three months ended June 30, 2023, was primarily driven by the $0.3 million increase in professional and consulting services related to public company related expenses and $0.2 million related to employee compensation and benefits related to the increase in employee stock-based compensation.

As a result of the foregoing, our loss from operations for the three months ended June 30, 2023, increased $2.1 million or 60%, compared to the same period in 2022.

The following table summarizes our results of operations expenses for the six months ended June 30, 2023 and 2022:

(in thousands)

Six Months Ended June 30

OPERATING EXPENSES:

Research and Development

General and Administrative

OPERATING LOSS

Finance Income

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2023 and 2022:

(in thousands)

For the six months ended June 30

Employee Compensation and Benefits

Clinical Expenses

Manufacturing

Professional services and other

Total research and development expenses

Research and development expenses increased by $2.3 million, during the six months ended June 30, 2023 compared to the same period in 2022.

The increase in research and development expense during the six months ended June 30, 2023 was primarily driven by a $1.3 million increase in employee compensation and benefits including $0.9 million increase in stock based compensation, $0.8 million increase in manufacturing related costs due to the manufacture of NXP800 for the ongoing and planned clinical trials and of NXP900 for the upcoming phase 1 clinical trial, $0.1 million related to one-time licensing fee expenses for NXP900 partially offset by payments in the same period in 2022 and $0.3 million in clinical expenses paid out in connection with our product candidates NXP800 and NXP900, partially offset by a $0.2 million in professional services and other expenses associated with our drug product programs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended March 31, 2023 and 2022:

The following table summarizes our general and administrative expenses for the six months ended June 30, 2023 and 2022:

(in thousands)

For the three months ended March 31

For the six months ended June 30

Professional and consulting services

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Total general and administrative expenses

General and administrative expenses increased by $0.6 million, during the three months ended March 31, 2023 compared to the same period in 2022.

The increase in general and administrative expenses for the three months ended March 31, 2023, was primarily driven by $0.3 million in employee compensation including $0.2 million in stock compensation expense, an increase of $0.2 million in professional and consulting fees paid to third-party providers including $0.4 million in stock compensation expense and $0.1 million in insurance and other due to public company expenses.

As a result of the foregoing, our loss from operations for the three months ended March 31, 2023, increased $1.1 million, compared to the same period in 2022 primarily driven by employee compensation and benefits, clinical trial expenses, and manufacturing expenses.

General and administrative expenses increased by $1.0 million, during the six months ended June 30, 2023 compared to the same period in 2022.

The increase in general and administrative expenses for the six months ended June 30, 2023, was primarily driven by $0.5 million in employee compensation including $0.5 million increase in stock compensation expense, an increase of $0.4 million in professional and consulting fees paid to third-party providers including $0.4 million in increase stock compensation expense and $0.1 million in insurance and other due to public company expenses.

As a result of the foregoing, our loss from operations for the six months ended June 30, 2023, increased $3.2 million, compared to the same period in 2022 primarily driven by employee compensation and benefits, clinical trial expenses, and manufacturing expenses.

Liquidity and Capital Resources

As of March 31, 2023, we had $15.5 million of cash and cash equivalents.

For the three months ended March 31, 2023, and 2022, we had net losses of $4.0 million and $2.9 million, respectively.

As of March 31, 2023, we had an accumulated deficit of $36 million.

As of June 30, 2023, we had $24.6 million of cash and cash equivalents.

For the three months ended June 30, 2023, and 2022, we had net losses of $5.7 million and $3.6 million, respectively.

For the six months ended June 30, 2023, and 2022, we had net losses of $9.8 million and $6.5 million, respectively.

As of June 30, 2023, we had an accumulated deficit of $41.7 million.

On February 4, 2022, we announced the pricing of our initial public offering of common stock (the “IPO”) of 3,200,000 shares of common stock for a price of $5.00 per share, less certain underwriting discounts and commissions.

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The IPO closed on February 8, 2022, with gross proceeds of $16.0 million, before deducting underwriting discounts and expenses (for net proceeds of $12.6 million).

In addition, on July 29, 2022, we completed a private placement in which we received gross proceeds of $15.9 million before deducting fees and expenses (for net proceeds of $14.2 million) excluding payments required by our license agreements.

We believe that the proceeds from our IPO and private placement will enable us to fund our operating expenses and capital expenditures through at least the next 12 months from the issuance of our financial statements.

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.

Our future viability in the long term is dependent on our ability to raise additional capital to finance our operations.

In addition, on July 29, 2022, we completed the July 2022 Private Placement in which we received gross proceeds of $15.9 million before deducting fees and expenses (for net proceeds of $14.2 million) excluding payments required by our license agreements.

As part of this transaction, we issued Preferred Investment Options which became exercisable on January 23, 2023, and are exercisable through January 29, 2026, at an exercise price of $9.65 per share, subject to certain adjustments as defined in the securities purchase agreement.

For the six months ended June 30, 2023, 1,001,091 Preferred Investment Options were exercised, and $8.9 million, net of fees, was received as of June 30, 2023.

In addition, as part of the July 2022 Private Placement, the Company issued warrants to the placement agent to purchase up to 115,481 shares of common stock.

The placement agent warrants are in substantially the same form as the Preferred Investment Options, except that the exercise price is $10.31.For the three months ended June 30, 2023, 79,104 placement agent warrants were exercised, and $0.8 million, net of fees, was received.

On March 17, 2023, we filed a shelf registration statement on Form S-3 (the “Registration Statement”).

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We are not obligated to make any sales of shares of our common stock under the ATM.

We have not sold any shares of our common stock under the ATM as of March 31, 2023.

As of June 30, 2023, we have sold 188,970 shares of our common stock and received $3.1 million in net proceeds under the ATM.

We believe that the proceeds from our IPO, private placement and ATM will enable us to fund our operating expenses and capital expenditures through at least the next 12 months from the issuance of our financial statements.

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.

Our future viability in the long term is dependent on our ability to raise additional capital to finance our operations.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our current or future product candidates, including payments of milestones and sponsored research commitments associated with our license agreements for NXP800 and NXP900.

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Our future funding requirements will depend on and could increase significantly as a result of many factors, including:

● the scope, progress, results and costs of researching and developing our current or future product candidates, and conducting preclinical and clinical trials;

● the scope, progress and costs of researching and developing our current or future product candidates, including the timing and safety, tolerability and efficacy results from our preclinical and clinical trials;

● the costs, timing and outcome of regulatory review of our current or future product candidates;

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(in thousands)

For the three months ended March 31

For the six months ended June 30

Net cash used in operating activities

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Operating Activities

During the three months ended March 31, 2023, $4.8 million of cash was used in operating activities.

During the six months ended June 30, 2023, $8.9 million of cash was used in operating activities.

This was primarily attributable to our net loss of $9.8 million, partially offset by non-cash charges of $2.4 million.

The change in our operating assets and liabilities was primarily due to $0.7 million payment of employee compensation and benefits, $0.5 million payment for our director and officer insurance of deferred offering costs, and $0.5 million payments related to public company operations.

During the three months ended March 31, 2022, $3.0 million of cash was used in operating activities.

During the six months ended June 30, 2022, $5.6 million of cash was used in operating activities.

This was primarily attributable to our net loss of $6.5 million, partially offset by non-cash charges of $0.7 million.

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Financing activities

During the three months ended March 31, 2023, net cash provided by financing activities was $0.3 million, consisting primarily of $0.7 million proceeds from the exercise of warrants associated with our IPO and private placement, offset by $0.4 million of deferred offering costs paid.

During the three months ended March 31, 2022, net cash provided by financing activities was $14.0 million (gross proceeds $16.0 million), consisting primarily of proceeds from the sale of our common stock, offset by $2.0 million of commission and deferred offering costs paid.

During the six months ended June 30, 2023, net cash provided by financing activities was $13.5 million, consisting primarily of $10.7 million net proceeds from the exercise of warrants associated with our IPO and private placement along with $3.1 million net proceeds from the sale of common stock through the ATM, offset by $0.4 million of deferred offering costs paid.

During the six months ended June 30, 2022, net cash provided by financing activities was $13.4 million, consisting primarily of proceeds from the sale of our common stock, offset by $2.6 million of commission and deferred offering costs paid.

Contractual Obligations and Other Commitments

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Pursuant to the NXP800 License Agreement, we are required to make payments to the ICR for certain development and regulatory milestones.

As of March 31, 2023, we were obligated to pay up to $22.0 million in milestone payments to the ICR related to pre-approval milestones, up to $178 million (in addition to the $22.0 million) in regulatory and commercial sales milestones, and mid-single digit to 10% royalties on a tiered basis on net sales, unless development ceases.

Additionally, the Company originally agreed to provide the ICR with up to an additional $0.5 million in research and development.

As of June, 2023, we were obligated to pay up to $22.0 million in milestone payments to the ICR related to pre-approval milestones, up to $178 million (in addition to the $22.0 million) in regulatory and commercial sales milestones, and mid-single digit to 10% royalties on a tiered basis on net sales, unless development ceases.

Additionally, the Company originally agreed to provide the ICR

with up to an additional $0.5 million in research and development.

On March 31, 2022, the Company and ICR agreed to research and development support of an additional $0.4 million ($0.9 million total).

Pursuant to the NXP900 License Agreement, we are required to make payments to the UoE for certain development and regulatory milestones.

As of March 31, 2023, we were obligated to make up to $45.5 million in milestone payments to the UoE related to pre-approval milestones, including $0.5 million on the first anniversary of the agreement which we accrued for as of March 31, 2023, up to $279.6 million in regulatory and commercial sales milestones, mid-single digit to 8% royalties on a tiered basis on net sales and 2.5%

of the gross amount of each of our future fund raising up to a cumulative total of $3.0 million, unless development ceases.

As of June 30, 2023, we were obligated to make up to $45.5 million in milestone payments to the UoE related to pre-approval milestones, including $0.5 million on the first anniversary of the agreement which we paid as of June 30, 2023, up to $279.6 million in regulatory and commercial sales milestones, mid-single digit to 8% royalties on a tiered basis on net sales and 2.5% of the gross amount of each of our future fund raising up to a cumulative total of $3.0 million, unless development ceases.

Additionally, we will provide UoE with up to an additional $754,000 in research and development support.

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Our condensed financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q are prepared in accordance with U.S.

generally accepted accounting principles (“U.S.

generally accepted accounting principles.

The preparation of condensed financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs, expenses, and related disclosures.

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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