What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-08 compared with 2023-05-09 · 98 added, 68 removed, 171 unchanged (49% of the section changed)

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Our team has spent the past decade characterizing the structure and function of the estrogen receptor, or ER, a key driver of breast cancer in approximately 75% of patients, in order to develop more potent, oral therapies that completely inactivate this signaling pathway.

Our lead product candidate, OP-1250, is a novel oral therapy with combined activity as both a complete ER antagonist, or CERAN, and a selective ER degrader, or SERD, which we believe will drive deeper, more durable responses than existing therapies.

OP-1250, both as a monotherapy and in combination with inhibitors of cyclin-dependent kinase 4 and 6, or CDK4/6, demonstrated robust anti-tumor activity in a range of preclinical xenograft models of breast cancer, including in ESR1 and PIK3CA mutations and central nervous system, or CNS, metastasis.

In August 2020, we initiated an ongoing Phase 1/2 monotherapy dose escalation and expansion study evaluating OP-1250 for the treatment of recurrent, locally advanced or metastatic ER-positive, or ER+, human epidermal growth factor receptor 2-negative, or HER2-, breast cancer.

We reported initial data from the Phase 1a dose escalation portion of this study in November 2021, which provided proof-of-concept for OP-1250 as a monotherapy treatment for ER+/HER2- breast cancer.

Our lead product candidate, palazestrant (OP-1250), is a novel oral therapy with combined activity as both a complete ER antagonist, or CERAN, and a selective ER degrader, or SERD, which we believe will drive deeper, more durable responses than existing therapies.

Palazestrant, both as a monotherapy and in combination with inhibitors of cyclin-dependent kinase 4 and 6, or CDK4/6, demonstrated robust anti-tumor activity in a range of preclinical xenograft models of breast cancer, including in ESR1 and PIK3CA mutations and central nervous system, or CNS, metastasis.

In August 2020, we initiated an ongoing Phase 1/2 monotherapy dose escalation and expansion study evaluating palazestrant for the treatment of recurrent, locally advanced or metastatic ER-positive, or ER+, human epidermal growth factor receptor 2-negative, or HER2-, breast cancer.

We reported initial data from the Phase 1a dose escalation portion of this study in November 2021, which provided proof-of-concept for palazestrant as a monotherapy treatment for ER+/HER2- breast cancer.

We reported additional monotherapy data from the Phase 1b dose expansion portion of this study in October 2022 and initiated the Phase 2 portion of the study.

We anticipate presenting Phase 2 clinical data for OP-1250 as a monotherapy in the second half of 2023.

In 2022, we also initiated Phase 1b/2 dose escalation and expansion studies evaluating OP-1250 in combination with CDK4/6 inhibitors palbociclib and ribociclib and phosphatidylinositol 3 kinase alpha, or PI3K a inhibitor, alpelisib.

We plan to present Phase 2 clinical data for palazestrant as a monotherapy at the European Society for Medical Oncology Congress 2023 in October 2023.

We expect to initiate our proposed Phase 3 monotherapy clinical trial for the treatment of advanced or metastatic breast cancer (OPERA-01) in the fourth quarter of 2023.

In 2022, we also initiated Phase 1b/2 dose escalation and expansion studies evaluating palazestrant in combination with CDK4/6 inhibitors palbociclib and ribociclib and phosphatidylinositol 3 kinase alpha, or PI3K a,

inhibitor, alpelisib.

In December 2022, we reported initial data from the Phase 1a dose escalation portion of the study in combination with palbociclib which demonstrated combinability including no drug-drug interaction, or DDI, between the two agents.

We anticipate presenting results from the Phase 2 clinical study for OP-1250 in combination with palbociclib in the second quarter of

2023 and from the Phase 1b clinical study for OP-1250 in combination with ribociclib in the second half of 2023.

In May 2023, we presented additional interim data from the combination study which continued to demonstrate combinability, with no DDI between palbociclib and palazestrant.

Exposure of palbociclib and palazestrant in combination with each other was consistent with observed monotherapy exposure levels.

We anticipate presenting updated results from the Phase 2 expansion portion of the palazestrant-palbociclib combination clinical study and from the Phase 1b dose escalation portion of the palazestrant-ribociclib combination clinical study in the fourth quarter of 2023.

In July 2022, we were granted Fast Track designation from the U.S.

Food and Drug Administration, or the FDA, for OP-1250 for patients with ER+/HER2- metastatic breast cancer that has progressed following one or more lines of endocrine therapy with at least one line given in combination with a CDK4/6 inhibitor.

Based on the clinical results we have achieved to date, we are advancing OP-1250 through to late stage clinical development both as a monotherapy and in combination with other targeted agents.

We own worldwide development and commercialization rights to OP-1250.

We believe OP-1250’s oral formulation and dual mechanism of action directly address the limitations of current endocrine therapies, such as fulvestrant and tamoxifen, and position OP-1250 as a potential endocrine therapy of choice for the treatment of ER+ breast cancers.

Food and Drug Administration, or the FDA, for palazestrant for patients with ER+/HER2- metastatic breast cancer that has progressed following one or more lines of endocrine therapy with at least one line given in combination with a CDK4/6 inhibitor.

Based on the clinical results we have achieved to date, we are advancing palazestrant through late-stage clinical development both as a monotherapy and in combination with other targeted agents.

We own worldwide development and commercialization rights to palazestrant.

We believe palazestrant’s oral formulation and dual mechanism of action directly address the limitations of current endocrine therapies, such as fulvestrant and tamoxifen, and position palazestrant as a potential endocrine therapy of choice for the treatment of ER+ breast cancers.

Our goal is to transform the standard of care for women living with cancers by developing more effective therapies that apply our deep understanding and collective expertise in endocrine-driven cancers, nuclear receptor activities and mechanisms of acquired resistance.

On March 9, 2023, we announced a corporate restructuring and portfolio prioritization to focus our resources on the late-stage clinical development of OP-1250 for the treatment of ER+/HER2- metastatic breast cancer.

On March 9, 2023, we announced a corporate restructuring and portfolio prioritization to focus our resources on the late-stage clinical development of palazestrant for the treatment of ER+/HER2- metastatic breast cancer.

Since our inception, we have devoted substantially all of our resources to organizing and staffing our company, research and development activities, business planning, raising capital, establishing and maintaining our intellectual property portfolio, conducting nonclinical studies and clinical trials and providing general and administrative support for these operations.

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We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment and personnel while also enabling us to focus our expertise and resources on the development of our product candidates.

As of March 31, 2023, we had cash, cash equivalents, and marketable securities of $186.0 million.

Based on our current operating plan, we believe that our cash, cash equivalents, and marketable securities as of March 31, 2023 will be sufficient to fund our planned operating expenses and capital expenditure requirements into 2025.

As of June 30, 2023, we had cash, cash equivalents, and marketable securities of $167.4 million.

Based on our current operating plan, we believe that our cash, cash equivalents, and marketable securities as of June 30, 2023 will be sufficient to fund our planned operating expenses and capital expenditure requirements into the second quarter of 2025.

We have incurred significant operating losses since the commencement of our operations.

Our net losses were $28.3 million and $23.0 million for the three months ended March 31, 2023 and 2022, respectively.

Our net losses were $20.1 million and $32.9 million for the three months ended June 30, 2023 and 2022, respectively, and $48.4 million and $55.9 million for the six months ended June 30, 2023 and 2022, respectively.

We expect to incur significant and increasing losses for the foreseeable future as we continue to advance our product candidate, make potential milestone payments to our licensors, and as we continue to operate as a public company.

Our net losses may fluctuate significantly from period to period, depending on the timing of expenditures on our research and development activities.

As of March 31, 2023, we had an accumulated deficit of $237.3 million.

As of June 30, 2023, we had an accumulated deficit of $257.4 million.

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

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

Cash used to fund operating expenses is impacted

by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and other current liabilities.

We expect to continue to incur net operating losses for at least the next several years, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase.

We expect our expenses and capital requirements will increase significantly in connection with our ongoing activities as we :

● continue our ongoing and planned research and development of our lead product candidate OP-1250 for the treatment of ER+ positive breast cancer;

● continue our ongoing and planned research and development of our lead product candidate, palazestrant, for the treatment of ER+ positive breast cancer;

● initiate nonclinical studies and clinical trials for any additional product candidates that we may pursue in the future;

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We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all.

Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from geopolitical and macroeconomic events, such as the COVID-19 pandemic, the ongoing conflict between Ukraine and Russia and related sanctions, and recent bank failures and financial stability.

and macroeconomic events, such as the COVID-19 pandemic, the ongoing conflict between Ukraine and Russia and related sanctions, and recent bank failures.

Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to have to delay, reduce or eliminate our product development or future commercialization efforts.

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Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal expenses incurred in connection with the discovery and development of our product candidates.

To date, our research and development expenses have related primarily to discovery efforts and nonclinical and clinical development of our product candidate OP-1250.

To date, our research and development expenses have related primarily to discovery efforts and nonclinical and clinical development of our product candidate, palazestrant.

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

External expenses include:

● expenses incurred in connection with the discovery and nonclinical development of our product candidates, including under agreements with third parties, such as consultants and CROs;

● costs of manufacturing products for use in our nonclinical studies and clinical trials, including payments to CMOs and consultants;

● expenses incurred in connection with the discovery and nonclinical development of our product candidates, including under agreements with third parties, such as consultants and contract research organizations, or CROs;

● costs of manufacturing products for use in our nonclinical studies and clinical trials, including payments to contract manufacturing organizations, or CMOs, and consultants;

● costs of funding research performed by third parties;

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We track outsourced development costs by product candidate or nonclinical program, but we do not allocate personnel costs, other internal costs or external consultant costs to specific product candidates or nonclinical programs.

Research and development expenses to advance the development of our lead product candidate and nonclinical program were $22.8 million and $16.0 million for the three months ended March 31, 2023 and 2022, respectively.

We expect our research and development expenses to increase substantially in absolute dollars for the foreseeable future as we advance OP-1250 or any other future product candidates we may develop into and through nonclinical studies and clinical trials and pursue regulatory approval of our product candidates.

Research and development expenses to advance the development of our lead product candidate and nonclinical program were $18.0 million and $27.1 million for the three months ended June 30, 2023 and 2022, respectively, and $40.8 million and $43.1 million for the six months ended June 30, 2023 and 2022, respectively.

While our research and development expenses may fluctuate from period to period, we generally expect our research and development expenses to increase substantially in absolute dollars for the foreseeable future as we advance palazestrant or any other future product candidates we may develop into and through nonclinical studies and clinical trials and pursue regulatory approval of our product candidates.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming.

The actual probability of success for OP-1250 or any other future product candidates we may develop may be affected by a variety of factors including but not limited to:

The actual probability of success for palazestrant or any other future product candidates we may develop may be affected by a variety of factors including but not limited to:

the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability.

We may never succeed in achieving regulatory approval for our product candidates.

As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our OP-1250 or any other future product candidates we may develop.

As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of palazestrant or any other future product candidates we may develop.

Clinical and nonclinical development timelines, the probability of success and development costs can differ materially from expectations.

We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future nonclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential.

In addition, we cannot forecast whether OP-1250 or any other future product candidates we may develop may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

In addition, we cannot forecast whether palazestrant or any other future product candidates we may develop may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.

We are also unable to predict when, if ever, we will generate revenue from our product candidates to offset these expenses.

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General and administrative expenses also include costs not otherwise included in research and development expenses, including corporate facility costs, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of facilities and insurance, and professional fees for legal, patent and consulting services.

We expect that our general and administrative expenses will increase in the foreseeable future as we increase our headcount to support the continued research and development of our programs and the growth of our business.

We also anticipate incurring additional expenses associated with operating as a public company, including increased expenses related to the building and improving of our IT infrastructure, including cyber security monitoring, legal, other regulatory and compliance, director and officer insurance, investor and public relations and tax-related services associated with maintaining compliance with the rules and regulations of the SEC and standards applicable to companies listed on a national securities exchange, additional insurance expenses, investor relations activities and other administrative and professional services.

While our general and administrative expenses may fluctuate from period to period, we generally expect that our general and administrative expenses will increase in the foreseeable future as we increase our headcount to support the continued research and development of our programs and the growth of our business.

standards applicable to companies listed on a national securities exchange, additional insurance expenses, investor relations activities and other administrative and professional services.

Total other income

Total other income consists of interest income and other expenses.

Total other income consists of interest income and other expense.

Interest income primarily consists of interest income on our cash equivalents and marketable securities.

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Results of operations

Comparison of the three months ended March 31, 2023 and 2022

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

Three Months Ended March 31,

Comparison of the three months ended June 30, 2023 and 2022

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

Three Months Ended June 30,

(in thousands)

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Loss from operations

Other income:

Other income (expense):

Interest income

Other (expense) income

Total other income

Research and development expenses

Research and development expenses for the three months ended March 31, 2023 were $22.8 million, compared to $16.0 million for the three months ended March 31, 2022.

The increase of $6.8 million was primarily due to increased spending in (i) advancing the clinical development for our lead product candidate OP-1250 and the associated contract manufacturing costs, (ii) other nonclinical research and discovery program costs, and (iii) personnel-related costs, including a one-time restructuring charge of $1.8 million, of which $0.1 million relates to non-cash stock-based compensation expense.

Research and development expenses for the three months ended June 30, 2023 were $18.0 million, compared to $27.1 million for the three months ended June 30, 2022.

The decrease of $9.1 million was primarily due to decreased spending on (i) preclinical research programs, which included the $8.0 million upfront payment in connection with the exclusive global license agreement entered into in June 2022 between the Company and Aurigene Discovery Technologies Limited, or the Aurigene Agreement, incurred and paid in June 2022, (ii) clinical pharmacology-related costs, and (iii) personnel-related expenses, which primarily related to lower headcount as a result of the restructuring and portfolio prioritization during the first quarter of 2023, and a decrease of approximately $0.2 million in non-cash stock-based compensation expense.

Total decreases were primarily offset by increased spending on clinical operations-related activities as we continue to advance palazestrant into late-stage clinical trials.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2023 were $6.8 million compared to $7.2 million for the three months ended March 31, 2022.

The decrease of $0.5 million was primarily due to lower corporate costs and personnel-related expenses, including non-cash stock-based compensation expense decrease of $0.4 million, which was offset by a one-time restructuring charge of $1.0 million.

Other income for the three months ended March 31, 2023 was $1.3 million, which primarily consisted of interest income from our marketable securities.

General and administrative expenses for the three months ended June 30, 2023 were $3.6 million compared to $6.2 million for the three months ended June 30, 2022.

The decrease of $2.6 million was primarily due to decreased spending on (i) corporate- and legal-related costs, and (ii) personnel-related expenses, primarily due to lower headcount as a result of the restructuring and portfolio prioritization, and a decrease of approximately $0.3 million in non-cash stock-based compensation expense .

Other income for the three months ended June 30, 2023 was $1.5 million, which primarily consisted of interest income from our marketable securities of $1.6 million, partially offset by unrealized foreign currency remeasurement loss on our foreign-currency-denominated monetary accounts.

Comparison of the six months ended June 30, 2023 and 2022

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

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Other (expense) income

Total other income

Research and development expenses

Research and development expenses for the six months ended June 30, 2023 were $40.8 million, compared to $43.1 million for the six months ended June 30, 2022.

The decrease of $2.2 million was primarily due to decreased spending on (i) preclinical research programs, including the $8.0 million upfront payment in correction with the Aurigene Agreement incurred and paid in June 2022, and (ii) personnel-related expenses, which primarily related to lower headcount as a result of the restructuring and portfolio prioritization, and a decrease of approximately $0.2 million in non-cash stock-based compensation expense.

Total decreases were primarily offset by increased spending on clinical operations-related activities as we continue to advance palazestrant into late-stage clinical trials.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2023 were $10.4 million compared to $13.5 million for the six months ended June 30, 2022.

The decrease of $3.1 million was primarily due to decreased spending on (i) corporate- and legal-related costs, and (ii) personnel-related expenses, which primarily related to lower headcount as a result of the restructuring and portfolio prioritization, and a decrease of approximately $0.7 million in non-cash stock-based compensation expense .

Other income for the six months ended June 30, 2023 was $2.8 million, which primarily consisted of interest income from our marketable securities of $2.9 million, partially offset by unrealized foreign currency remeasurement loss on our foreign-currency denominated monetary accounts.

Liquidity and capital resources

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Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations.

Our net losses were $28.3 million and $23.0 million for the three months ended March 31, 2023 and 2022, respectively.

Through March 31, 2023, we had received aggregate gross proceeds of $393.4 million from sales of our common stock, convertible preferred stock and issuance of convertible promissory notes, stock option exercises, and the sale of stock through the Company’s 2020 Employee Stock Purchase Plan, or ESPP.

As of March 31, 2023, we had $186.0 million in cash, cash equivalents and marketable securities.

As of March 31, 2023, we had accumulated deficit of $237.3 million.

We had no debt outstanding as of March 31, 2023.

We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of OP-1250 and nonclinical studies.

Through June 30, 2023, we had received aggregate gross proceeds of $395.5 million from sales of our common stock, convertible preferred stock and issuance of convertible promissory notes, stock option exercises, and the sale of stock through the Company’s 2020 Employee Stock Purchase Plan, or ESPP.

As of June 30, 2023, we had $167.4 million in cash, cash equivalents and marketable securities and accumulated deficit of $257.4 million.

We had no debt outstanding as of June 30, 2023.

We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of palazestrant and nonclinical studies.

We expect that our research and development and general and administrative costs will increase in connection with conducting additional nonclinical studies and clinical trials for our current and future research programs and product candidates, contracting with CMOs to support nonclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations.

As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.

Our primary uses of cash are to fund our research and development activities, including with respect to OP-1250 and other nonclinical programs, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations.

Our primary uses of cash are to fund our research and development activities, including with respect to palazestrant and other nonclinical programs, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations.

We currently have no financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years.

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We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if at all, that will occur.

We expect our expenses to increase in connection with our ongoing activities, particularly as we initiate and conduct clinical trials of, and seek marketing approval for, OP-1250.

We expect our expenses to increase in connection with our ongoing activities, particularly as we initiate and conduct clinical trials of, and seek marketing approval for, palazestrant.

In addition, if we obtain marketing approval for our product candidates, we expect to incur significant commercialization expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators.

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The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.

We expect our cash, cash equivalents, and marketable securities as of March 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into 2025 at which point we would need to obtain substantial additional funding in connection with our continuing operations.

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

We expect our cash, cash equivalents, and marketable securities as of June 30, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2025.

Total operating expenses of $21.6 million for the three months ended June 30, 2023 reflects a $8.0 million reduction of costs versus the three months ended March 31, 2023 as a result of the restructuring and portfolio prioritization announced in March 2023.

We anticipate our cash, cash equivalents, and marketable securities balance to range between $120.0 to $125.0 million for the year ending December 31, 2023.

If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and

development programs or future commercialization efforts.

Our future capital requirements will depend on many factors, including:

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

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder.

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

Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

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The following table shows a summary of our cash flows for each of the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Operating activities

Net cash used in operating activities during the three months ended March 31, 2023 consisted primarily of our net loss of $28.3 million, offset by non-cash charges of $3.9 million and a net increase in net operating assets and liabilities of $4.0 million.

Net cash used in operating activities in the six months ended June 30, 2023 consisted primarily of our net loss of $48.4 million and a net decrease in operating assets and liabilities of $1.1 million, partially offset by non-cash charges of $7.0 million.

The net loss consisted primarily of $40.8 million in research and development expenses and $10.4 million in general and administrative expenses.

The non-cash charges consisted primarily of stock-based compensation of $4.6 million and depreciation and amortization expenses of $0.1 million, and non-cash lease expense of less than $0.1 million, net of cash payments of $0.3 million.

These non-cash expenses were partially offset by net discount accretion on our marketable securities of $0.9 million.

The net increase in operating assets and liabilities was primarily due to (i) a net increase of $2.7 million in other current

liabilities, (ii) a net increase of $1.0 million in prepaid expenses and other current assets and (iii) a net increase of $0.3 million in accounts payable, which is primarily a result of timing of invoice payment.

Net cash used in operating activities during the three months ended March 31, 2022 consisted primarily of our net loss of $23.0 million, offset by non-cash charges of $5.1 million and a net increase in net operating assets and liabilities of $0.1 million.

The non-cash charges consisted primarily of stock-based compensation expense of $8.8 million and depreciation and amortization expenses of $0.2 million , primarily offset by non-cash interest income on our marketable securities of $2.0 million .

The net decrease in operating assets and liabilities was primarily due to (i) a decrease of $2.7 million in accrued and other current liabilities and (ii) an increase of $0.1 million in other assets and long-term deposits.

The changes were partially offset by (i) an increase of $1.3 million in accounts payable, which is primarily a result of timing of invoice payment, and (ii) a decrease of $0.4 million in prepaid expenses and other current assets.

Net cash used in operating activities in the six months ended June 30, 2022 consisted primarily of our net loss of $55.9 million, partially offset by non-cash charges of $9.9 million and a net increase in operating assets and liabilities of $1.7 million.

The net loss consisted primarily of $43.1 million in research and development expenses and $13.5 million in general and administrative expenses.

The non-cash charges consisted primarily of stock-based compensation of $5.0 million and depreciation and amortization expenses of $0.1 million, and noncash lease expense of less than $0.1 million, net of cash payments of $0.3 million.

The net increase in operating assets and liabilities was primarily due to (i) a net decrease of $0.2 million in prepaid expenses and other current assets and (ii) an increase of $0.2 million in accounts payable, which is primarily a result of timing of invoice payment.

The changes are partially offset by (i) a net increase of $0.2 million in other assets and (ii) a net decrease of $0.1 million in other current liabilities.

The non-cash charges consisted primarily of stock-based compensation expense of $9.7 million and depreciation and amortization expenses of $0.1 million, and non-cash lease expense of less than $0.1 million, net of cash payments of $0.6 million.

The net increase in operating assets and liabilities was primarily due to (i) an increase of $1.9 million in accrued and other current liabilities, (ii) an increase of $0.1 million in accounts payable, which is primarily a result of timing of invoice payment, and (iii) a decrease of $0.2 million in prepaid expenses and other current assets.

The changes were partially offset by a net increase of $0.5 million in other assets and long-term deposits.

Investing Activities

Net cash provided by investing activities during the three months ended March 31, 2023 was predominately due to maturities of marketable securities which was offset by the purchase of marketable securities.

Net cash provided by investing activities during the three months ended March 31, 2022 was predominately due to maturities of marketable securities which was offset by the purchase of marketable securities.

Net cash provided by investing activities in the six months ended June 30, 2023 was predominately due to maturities of marketable securities which was partially offset by purchase of marketable securities.

Net cash provided by investing activities in the six-month ended June 30, 2022 was predominately due to maturities of marketable securities which was partially offset by purchase of marketable securities.

Financing activities

Net cash provided by financing activities during the three months ended March 31, 2023 represents $0.2 million from the exercise of stock options.

Net cash provided by financing activities during the three months ended March 31, 2022 represents less than $0.1 million from the exercise of stock options.

Net cash provided by financing activities during the six months ended June 30, 2023 consists of $1.6 million and $0.7 million in net proceeds from the exercise of stock options and the sale of our common stock under the 2020 ESPP, respectively.

Net cash provided by financing activities during the six months ended June 30, 2022 represents $0.1 million in net proceeds from the sale of our common stock under the 2020 ESPP and exercise of stock options .

Contractual obligations and commitments

Refer to Note 10 of our notes to the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for further information.

There have been no material changes outside the ordinary course of business during the three months ended March 31, 2023 to our commitments and contingencies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 9, 2023 with the SEC.

There have been no material changes outside the ordinary course of business during the six months ended June 30, 2023 to our commitments and contingencies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K.

Critical accounting policies and significant judgements and estimates

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

During the three months ended March 31, 2023, there were no material changes to our critical accounting policies and estimates as reported in our Annual Report on Form 10-K.

During the six months ended June 30, 2023, there were no material changes to our critical accounting policies and estimates as reported in our Annual Report on Form 10-K.

Quantitative and Qualitative Disclosures About Market Risk.

During the three months ended March 31, 2023, there were no material changes to our market risk disclosures reported in our Annual Report on Form 10-K.

During the six months ended June 30, 2023, there were no material changes to our market risk disclosures reported in our Annual Report on Form 10-K.

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