What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-09 compared with 2022-03-01 · 126 added, 118 removed, 180 unchanged (58% of the section changed)

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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject.

These statements are based upon information available to us as of the date of this Annual Report on Form 10-K, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information.

incomplete, and our statements should not be read to indicate we have conducted exhaustive inquiry into, or review of, all potentially available relevant information.

These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

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We have applied our deep understanding of fibrosis biology, along with our medicinal chemistry and translational medicine expertise to develop a set of proprietary tools designed to discover and de-risk product candidates quickly and efficiently.

Our wholly owned lead product candidate, PLN-74809, is an oral, small-molecule, dual selective inhibitor of αvß6 and αvß1 integrins that we are developing for the treatment of idiopathic pulmonary fibrosis, or IPF, and primary sclerosing cholangitis, or PSC.

We have completed a Phase 1a SAD/MAD trial and a Phase 1b proof-of-mechanism trial of PLN-74809 in IPF and are currently recruiting three Phase 2a trials in our lead indications:

Our wholly-owned lead product candidate, bexotegrast (PLN-74809), is an oral, small molecule, dual selective inhibitor of αvß6 and αvß1 integrins that we are developing for the treatment of idiopathic pulmonary fibrosis, or IPF, and primary sclerosing cholangitis, or PSC.

We are currently conducting three Phase 2a trials in our lead indications:

two in IPF and one in PSC.

Our second product candidate, PLN-1474, is a small-molecule selective inhibitor of αvß1 for the treatment of liver fibrosis associated with nonalcoholic steatohepatitis, or NASH, which we have partnered with Novartis.

PLN-1474 successfully completed a Phase 1 SAD/MAD trial in March 2021, and the Investigational New Drug, or IND, application was transferred to Novartis in the first quarter of 2021.

Novartis is responsible for all PLN-1474 development, manufacturing and commercialization activities and we earn research and development services revenue in supporting certain aspects of the development plan.

In addition to our clinical programs, we currently have preclinical integrin-based programs targeting oncology and muscular dystrophies.

We announced positive interim data from our first Phase 2a INTEGRIS-IPF trial in July 2022 and January 2023.

We expect to release final data from the INTEGRIS-IPF trial in the second quarter of 2023.

We have also developed a second product candidate, PLN-1474, a Phase 2-ready oral, small molecule selective inhibitor of αvß1 for the treatment of advanced liver fibrosis associated with nonalcoholic steatohepatitis, or NASH.

PLN-1474 was licensed to Novartis in 2019, and as part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis returned global rights to PLN-1474 to Pliant.

In December 2022, we filed an investigational new drug (IND) application for our third clinical program, PLN-101095, a dual inhibitor of integrins αvß8 and αvß1 for the treatment of solid tumors resistant to immune checkpoint inhibitors.

In January 2023, we received FDA clearance for our IND and expect to initiate a Phase 1 trial of PLN-101095 in the second quarter of 2023.

In addition to our clinical programs, we are currently advancing a preclinical integrin-based program targeting muscular dystrophies.

Recent Highlights

• Results from expanded PLN-74809 Phase 1b proof-of-mechanism trial demonstrated clear evidence of on-target biological activity in the lungs of healthy participants.

Earlier today, the Company announced that positive data from an expanded PLN-74809 Phase 1b proof-of-mechanism trial demonstrated clear evidence of on-target biological activity in the lungs of 36 healthy participants.

Results demonstrated that PLN-74809 inhibited TGF-β activation by up to 92% and 76% at 6- and 24-hours, respectively, following seven days of once-daily dosing.

At all dose levels, PLN-74809 demonstrated

durable pSmad suppression relative to placebo at 6 hours and 24 hours.

PLN-74809 was well tolerated with mostly mild adverse events, and no severe adverse events.

• Enrollment was completed in the PLN-74809 Phase 2a INTEGRIS-IPF trial in idiopathic pulmonary fibrosis.

INTEGRIS-IPF is a 12-week randomized, dose-ranging, double-blind, placebo-controlled trial evaluating the safety, tolerability and pharmacokinetics of PLN-74809 at doses of 40, 80 or 160 mg in approximately 84 IPF patients.

Exploratory endpoints include quantitative lung fibrosis (QLF) imaging, pulmonary function tests as well as select biomarkers.

Topline data is anticipated mid-2022.

Food and Drug Administration (FDA) authorized the evaluation of long-term treatment with PLN-74809 in patients with IPF.

The FDA has authorized evaluation of long-term dosing of PLN-74809 up to 320 mg daily in patients with IPF.

This authorization will facilitate longer-term pivotal trials in IPF.

PLN-74809 has been administered to over 450 study participants, including healthy volunteers and patients, with no drug-related serious adverse events or severe adverse advents reported to date.

• Independent Data Safety Monitoring Board (DSMB) recommended INTEGRIS-IPF Phase 2a Trial continue without modifications.

Following the full enrollment of the INTEGRIS-IPF Phase 2a trial, on February 17, 2022, the DSMB recommended the INTEGRIS-IPF trial continue without modification.

This review included all patients enrolled in all dose cohorts of the trial.

To date, no safety concerns have been identified by the DSMB.

• Commenced enrollment of a Phase 2a trial of PLN-74809 at a dose of 320 mg in patients with IPF.

The Company began enrollment in a randomized, double-blind, placebo-controlled trial evaluating PLN-74809 at doses of 320 mg administered daily over at least six months, and up to 48 weeks, in approximately 28 patients with IPF.

The primary endpoint is the evaluation of PLN-74809 safety and tolerability and the secondary endpoint is the assessment of pharmacokinetics.

Exploratory endpoints will measure QLF imaging and pulmonary function tests as well as select biomarkers over 6 months of treatment.

• PLN-74809 Phase 2a trial in primary sclerosing cholangitis (PSC) enrollment on track to be completed mid-2022.

INTEGRIS-PSC is a 12-week randomized, dose-ranging, double-blind, placebo-controlled trial evaluating the safety, tolerability, and pharmacokinetics of PLN-74809 at doses of 40, 80 or 160 mg in approximately 84 PSC patients.

Exploratory endpoints include fibrosis biomarkers such as Pro-C3 and ELF, changes in ALP and liver imaging.

Topline data is expected in late 2022 or early 2023.

• Oncology and muscular dystrophy programs progressing through Investigational New Drug (IND) enabling studies.

Both programs on track with IND application submissions planned by the end of 2022.

Bexotegrast Highlights

• INTEGRIS-IPF Phase 2a clinical data from bexotegrast 320 mg dose at 12-weeks showed bexotegrast was well tolerated and demonstrated statistically significant forced vital capacity (FVC) increase in patients with idiopathic pulmonary fibrosis (IPF).

Bexotegrast at 320 mg was well tolerated with no drug-related severe or serious adverse events and showed dose-proportional increases in plasma concentrations, consistent with prior studies.

Exploratory efficacy endpoints demonstrated strong treatment effects on FVC, Quantitative Lung Fibrosis (QLF) imaging and biomarkers over 12 weeks.

In addition, no bexotegrast-treated patients experienced disease progression as defined by FVC percent predicted (FVCpp) decline of greater than or equal to 10%, a risk factor associated with increased mortality in IPF patients.

• INTEGRIS-IPF Phase 2a trial on track for final 24-week data readout from the bexotegrast 320 mg dose group in the second quarter of 2023.

This randomized, double-blind, placebo-controlled trial is evaluating bexotegrast at a once-daily dose of 320 mg administered for at least six months and up to 48 weeks in approximately 28 patients with IPF.

The trial will evaluate primary and secondary endpoints of safety, tolerability, and pharmacokinetics.

Exploratory efficacy endpoints will include effect on FVC and QLF, as well as serum biomarkers.

• INTEGRIS-PSC topline Phase 2a data expected in the third quarter of 2023.

This 12-week randomized, dose-ranging, double-blind, placebo-controlled trial is evaluating the safety, tolerability, and pharmacokinetics of bexotegrast in primary sclerosing cholangitis (PSC) patients.

The trial is also evaluating exploratory efficacy endpoints including fibrosis biomarkers such as PRO-C3 and enhanced liver fibrosis (ELF), changes in alkaline phosphatase (ALP), and liver imaging.

• EMA Orphan Drug designation received for bexotegrast for the treatment of IPF.

European Medicines Agency’s (EMA’s) Orphan Drug designation is designed to encourage the development of new treatments for rare conditions.

The benefits of Orphan Drug

designation include trial design assistance, a centralized EU approval process, and 10 years of market exclusivity.

Bexotegrast received Orphan Drug designation from the United States Food and Drug Administration (FDA) in 2018.

Early-Stage Development Programs

• IND open for PLN-101095 for the treatment of solid tumors resistant to immune checkpoint inhibitors.

In January 2023, the U.S.

Food and Drug Administration (FDA) cleared the company’s Investigational New Drug (IND) application for PLN-101095, an oral, small molecule, dual selective inhibitor of αvβ8 and αvβ1 integrins.

Initiation of a Phase 1 trial of PLN-101095 in patients with solid tumors that are resistant to immune checkpoint inhibitors is expected in the second quarter of 2023.

• Muscular dystrophy program progressing through IND enabling activities.

IND submission for this program is expected in 2023.

Corporate Highlights

• Closing of underwritten public offering of $287.5 million in common stock.

The Company closed a public offering in January 2023, yielding $269.9 million in net proceeds to the Company, which included the underwriter’s exercise in full of their option to purchase additional shares.

Pliant intends to use the net proceeds from the offering, together with its existing cash, cash equivalents and investments, to develop its ongoing and future preclinical and clinical programs including bexotegrast and PLN-101095, further develop its integrin targeting platform, to fund working capital, operating expenses and capital expenditures, and for other general corporate purposes.

• Appointment of Lily Cheung as Chief Human Resources Officer.

Cheung brings over 25 years of Human Resources experience across the technology and biopharmaceutical industries, including more than 15 years of commercial-stage experience.

• Appointments of Darren Cline and Thomas McCourt to the Company’s Board of Directors.

Cline and Mr.

McCourt each bring over 30 years of strategic and operational experience in building commercial organizations to the Company.

Cline currently serves as Chief Executive Officer and President of Epygenix Therapeutics.

McCourt currently serves as Chief Executive Officer of Ironwood Pharmaceuticals.

• Work has completed under the Novartis collaboration.

During the three-year term of the collaboration, Pliant achieved successful validation of a novel integrin receptor as a potential next generation target for treatment of fibrotic diseases and is in the process of developing candidates against the target.

As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH.

As a result, Novartis has terminated development of PLN-1474, an inhibitor of αvβ1 targeting NASH-associated advanced liver fibrosis, which they licensed in 2019 and returned global rights to Pliant.

PLN-1474 is a phase 2-ready asset, having shown a favorable safety and pharmacokinetic profile in Phase 1 trials.

2023 Anticipated Milestones

• 24-week data from the 320 mg dose group of the INTEGRIS-IPF Phase 2a trial in patients with IPF is expected in the second quarter of 2023.

• Initiation of a Phase 2b trial of bexotegrast in patients with IPF is expected in mid-2023.

• Initiation of a Phase 1 trial of PLN-101095 in patients with solid tumors resistant to immune checkpoint inhibitors is expected in the second quarter of 2023.

• Topline data from the 40, 80 and 160 mg dose groups of the INTEGRIS-PSC Phase 2a trial in patients with PSC is expected in the third quarter of 2023.

Since inception, we have had significant operating losses.

Our net loss was $123.3 million, $97.3 million and $41.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

As of December 31, 2022, we had an accumulated deficit of $338.4 million and cash, cash equivalents and short-term investments of $331.2 million.

We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses,

general and administrative expenses, and capital expenditures will increase in connection with our ongoing activities, as we:

• perform research and development activities to identify and develop product candidates;

• advance product candidates into and through clinical development;

• require the manufacture of supplies to support research and development, preclinical studies and clinical trials;

• seek regulatory approvals for any product candidates that successfully complete clinical trials;

• expand our operational, financial and management systems and increase personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company;

• maintain, expand and protect our intellectual property portfolio;

• invest in or in-license other technologies or product candidates.

COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of a coronavirus, or COVID-19, as a pandemic, which, to date, continues to spread throughout the United States and worldwide.

The novel coronavirus, or COVID-19, continues to spread throughout the United States and worldwide.

We have been, and in the future could be, materially and adversely affected by the risks, or the public perception of the risks, related to an epidemic, pandemic, outbreak, or other public health crisis, such as the outbreak of COVID-19.

While difficult to predict or quantify the overall impact to our operations, among other things, our clinical trials have experienced delays, and may experience additional delays in the future, extending the timelines and increasing the overall costs to finish the clinical trials, as our fixed costs are not substantially reduced while the clinical trials are delayed.

For example, the clinical site conducting our Phase 2a PET trial of PLN-74809 in IPF was closed to clinical research in March 2020, but resumed enrollment and trial activities in the third quarter of 2020.

While difficult to predict or quantify the overall impact of the pandemic to our operations, among other things, our clinical trials have experienced delays, and may experience additional delays in the future, extending the timelines and increasing the overall costs to finish the clinical trials, as our fixed costs are not substantially reduced while the clinical trials are delayed.

The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our business, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of such epidemic, pandemic, outbreak, or other public health crisis and actions taken to contain or prevent the further spread, among others.

Accordingly, we cannot predict the extent to which our business, financial condition and results of operations have been and will be affected.

We remain focused on maintaining a strong balance sheet, liquidity and financial flexibility and continue to monitor developments as we deal with the disruptions and uncertainties from a business and financial perspective relating to COVID-19.

We remain focused on maintaining a strong balance sheet, liquidity and financial flexibility and continue to monitor developments as we deal with the continued disruptions and uncertainties from a business and financial perspective relating to COVID-19.

Financial Operations Overview

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The Novartis Agreement is for the development and commercialization of PLN-1474 and up to three additional integrin research targets.

Under the terms of the Novartis Agreement, we received an upfront license fee payment of $50.0 million for the worldwide, exclusive license to PLN-1474 and an additional $25.0 million upon first patient dosed in our Phase 1 trial of PLN-1474 in the first quarter of 2020.

We are eligible to receive additional milestone payments of up to $391.0 million in total, if defined developmental, regulatory and commercialization milestones are achieved, and tiered royalties on a product-by-product basis based on annual nets sales of products.

Additionally, Novartis agreed to provide up to $19.6 million and up to $13.4 million in funding for the research and development activities associated with PLN-1474 and integrin research targets, respectively.

As of December 31, 2021 approximately $2.0 million of aggregate research and development funding remains available for use under the arrangement.

Revenues for the years ended December 31, 2021, 2020 and 2019 were $7.6 million, $41.8 million and $57.1 million, respectively.

Under the terms of the Novartis Agreement, we received an upfront license fee payment of $50.0 million for the worldwide, exclusive license to PLN-1474 and an additional $29.0 million upon the achievement of specified research and development milestones.

As part of a broad strategic realignment, Novartis has discontinued clinical development in NASH and, as a result, discontinued development of PLN-1474.

In February 2023, Novartis issued a termination notice for the collaboration and license agreement, and returned global rights to Pliant for PLN-1474.

Upon termination, we are no longer eligible to receive additional milestone or royalty payments under the arrangement, however, we will continue to earn research and development services revenues, up to $20.0 million and up to $18.4 million for the research and development activities associated with PLN-1474 and integrin research targets, respectively.

As of December 31, 2022, we estimate an additional $1.4 million of aggregate research and development funding remains available for use under the arrangement.

Revenues for the years ended December 31, 2022 and 2021 were $9.7 million and $7.6 million, respectively.

Operating Expenses

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Year Ended December 31,

2021 2020 2019

Employee-related expenses $ 30,316 $ 20,730

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We do not allocate our internal costs by product candidates or by preclinical programs as these are in early stages of development.

Additionally,

although external third-party costs are allocable between product candidates and programs, we do not perform this allocation.

Additionally, although external third-party costs are allocable between product candidates and programs, we do not perform this allocation.

We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to developing our product candidates and our preclinical programs and as they advance into later stages of development.

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Our interest and other income (expense), net consists of interest income earned on cash and cash equivalents, money market funds and short-term investments, realized gains and losses on investments.

Interest Expense

Our interest expense is derived from a term loan executed under the Oxford Loan Agreement that we entered into in May 2022.

Borrowings under the Oxford Loan Agreement bear interest at a rate per annum equal to 1-month term Secured Overnight Financing Rate (SOFR) plus 8.5%, subject to an agreed upon floor and cap.

Results of Operations

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Total operating expenses (136,885) (105,107) (31,778) 30.2 %

Loss from operations (97,535) (41,645) (55,890) NM

Loss from operations (127,200) (97,535) (29,665) 30.4 %

Interest and other income (expense), net 4,670 272 4,398 1,616.9 %

Interest expense (791) — (791) NM

Net loss $ (123,321) $ (97,263) $ (26,058) 26.8 %

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Revenue was $9.7 million and $7.6 million for the years ended December 31, 2022 and 2021, respectively.

The decrease of $34.2 million was primarily due to the recognition of a $25.0 million milestone payment in the first quarter of 2020 due to the achievement of first patient dosing in the Phase 1 trial of PLN-1474 as well as decreased research and development services revenues associated with PLN-1474, which were substantially complete in the first quarter of 2021.

We expect our revenue to be derived from the Novartis Agreement for the foreseeable future and may fluctuate significantly based on the amount of research and development services required to further the development of PLN-1474 and integrin research targets as well as the potential achievement of developmental, regulatory and commercial milestones identified in the Novartis Agreement.

The increase of $2.1 million was primarily due to the recognition of a $4.0 million milestone payment in the second quarter of 2022 as Novartis exercised their right to opt-in to a research program and secured an exclusive license to compounds associated with an integrin research target.

This increase was partially offset by a decrease in research and development services revenues associated with PLN-1474 given our most significant contribution to the development plan concluded upon transfer of the IND to Novartis in the first quarter of 2021.

We expect our revenue to be derived from the Novartis Agreement for remainder of the term of our collaboration for which we received a termination notice in February 2023.

Unless we enter into additional contracts with customers, we do not expect to generate revenues beyond the second quarter of 2023.

Research and Development Expenses

Research and development expenses was $77.5 million and $66.2 million for the years ended December 31, 2021 and 2020, respectively.

Research and development expenses were $96.9 million and $77.5 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $19.4 million was primarily due to:

• $9.6 million increase in employee-related costs owing to the increase in our research and development workforce and stock-based compensation;

• $1.0 million increase in outside and consulting services for preclinical studies and research and development activities by third party contract organizations;

• $5.4 million increase in clinical trial expenses largely due to ramping costs in our Phase 2 trials of PLN-74809 and the commencement of several Phase 1 trials, which was partially offset by a decrease in the Phase 1 clinical trial costs for PLN-1474 which was substantially completed in the first quarter of 2021;

• $1.2 million increase in depreciation of lab equipment and costs of equipment and supplies;

• $2.4 million decrease in technology and intellectual property licenses resulting from the payment to the Regents of the University of California in connection with our IPO in the second quarter of 2020;

• $0.8 million increase in facilities and other allocated expenses

General and Administrative Expenses

General and administrative expenses was $27.6 million and $17.3 million for the years ended December 31, 2021 and 2020, respectively.

The increase of $10.3 million was primarily due to a $7.3 million increase in employee-related costs, including stock-based compensation, and a $1.1 million increase in legal, accounting and other professional services largely due to operating as a public company.

Interest and other income (expense), net

Interest and other income (expense), net was $272,000 and $112,000 for the years ended December 31, 2021 and 2020, respectively.

The increase of $160,000 was due to higher average investment balances in 2021 compared to 2020 resulting from significant financing activities occurring mid-year 2020.

Comparison of the Years Ended December 31, 2020 and 2019

(In thousands, except percentages) Year Ended December 31,

2020 2019 $ Change % Change

Revenue $ 41,817 $ 57,052 $ (15,235) (26.7 %)

Operating expenses:

Research and development (66,193) (47,353) (18,840) 39.8 %

General and administrative (17,269) (10,930) (6,339) 58.0 %

Total operating expenses (83,462) (58,283) (25,179) 43.2 %

Loss from operations (41,645) (1,231) (40,414) NM

Interest and other income (expense), net 112 600 (488) (81.3 %)

Net loss $ (41,533) $ (631) $ (40,902) 6,482.1 %

_________________________

Results not meaningful

The decrease of 15.2 million, or 26.7%, in revenue-related party for the year ended December 31, 2020 compared to the year ended December 31, 2019 was primarily due to the recognition of $50.0 million in upfront license fee revenue in 2019, offset by the recognition of $25.0 million milestone payment from the achievement with the first patient dosing under the Novartis agreement in the first quarter of 2020 and the $9.8 million increase in research and development services revenue in 2020.

Research and Development Expenses

Research and development expenses was $66.2 million and $47.4 million for the years ended December 31, 2020 and 2019, respectively.

The increase of $18.8 million was primarily due to:

• $4.9 million increase in employee related costs owing to the increase in our research and development workforce and stock based compensation, including the introduction of our employee stock purchase plan in the third quarter of 2020;

• 7 million decrease in outside and consulting services for preclinical studies and research and development activities by third party contract organizations as our lead programs moved into clinical development stage in 2020;

• $17.2 million increase in clinical trial expenses primarily attributable to our Phase 1 and Phase 2 trials of PLN-74809 and the Phase 1 clinical trial for PLN-1474;

• $2.2 million increase in technology and intellectual property licenses resulting from the payment to the Regents of the University of California in connection with our IPO in the second quarter of 2020;

• $9.7 million increase in outside and consulting services for preclinical studies and research and development activities by third party contract organizations for the advancement of our preclinical programs;

• $3.2 million decrease in clinical trial expenses largely due to decreased expenses associated with Phase 1 clinical trials, partially offset by an increase in expenses for our Phase 2 trials of bexotegrast.

• $0.1 million decrease in depreciation of lab equipment and costs of equipment and supplies;

• $0.1 million increase in technology and intellectual property licenses;

• $3.4 million increase in facilities and other allocated expenses

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General and administrative expenses was $39.9 million and $27.6 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $6.3 million was primarily due to $2.8 million of increased professional and consulting services costs, $1.6 million of increased compensation costs, $0.9 million of increased stock-based compensation expense, $0.5 million of increased charitable contributions and $0.5 million of increased insurance expenses, partially offset by $0.5 million decrease in travel expenses.

Professional and consulting costs increased primarily as a result of increased legal, marketing, investor relations and accounting fees.

Compensation costs and stock-based compensation costs increased as a result of increased headcount and the implementation of the employee stock purchase plan in the third quarter of 2020.

Insurance expenses increased due to additional cost for insurance as a public company.

Travel expenses decreased primarily due to decreased executive travel as a result of the COVID-19 pandemic.

The increase of $12.4 million was primarily due to a $9.1 million increase in employee-related costs, including stock-based compensation, and a $3.3 million increase in legal, accounting and other professional services.

Interest and other income (expense), net

Interest and other income (expense), net was $112,000 and $600,000 for the years ended December 31, 2020 and 2019, respectively.

The decrease of $488,000 was primarily due to lower interest rates in 2020 when compared to 2019.

Interest and other income (expense), net was $4.7 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively.

The increase of $4.4 million was due to higher average investment balances in 2022 compared to 2021 resulting from significant financing activities occurring mid-year 2022 coupled with an increase in the yield on our short-term investment portfolio.

Interest Expense

Interest expense, net was $0.8 million and zero for the years ended December 31, 2022 and 2021, respectively.

The increase of $0.8 million was due to the interest incurred from the Oxford Financing Term Loan, which was issued in the second quarter of 2022.

Liquidity and Capital Resources

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Government agency securities and highly rated, investment-grade corporate debt securities.

Our operations have been financed primarily through the issuance and sale of convertible preferred stock, our collaboration with Novartis and issuance of common stock via our IPO.

We completed our IPO in June 2020 and received $148.3 million, net of underwriting discounts, commissions and offering expenses.

Concurrent with the completion of the IPO, we also issued 625,000 shares of our common stock to Novartis for proceeds of $10.0 million.

During the third quarter of 2021, we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent, pursuant to which we may issue and sell up to $150.0 million of shares of common stock from time to time.

The issuance and sale of these shares pursuant to the Sales Agreement are deemed an “at-the-market” offering and are registered under the Securities Act of 1933, as amended.

We have not issued any shares pursuant to any at-the-market offerings but may do so at a future date.

We believe that our existing capital resources, together with interest thereon, will be sufficient to meet our projected operating requirements for at least the next 12 months from the date of this filing and into the second half 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.

In May 2022, as amended in October 2022, we entered into a Loan and Security Agreement (the “Oxford Loan Agreement”) with Oxford Finance LLC (or "Oxford").

Upon closing of the Oxford Loan Agreement, we drew $10.0 million and decided to forego drawing on the additional $40.0 million currently available to us.

A further $50.0 million may become available to us, $25.0 million upon the achievement of a pre-determined development milestone and $25.0 million at Oxford's discretion.

In July 2022, we completed an underwritten public offering of 12,432,432 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,621,621 additional shares of common stock.

The shares were offered at a price to the public of $18.50 per share, resulting in aggregate proceeds of approximately $215.4 million, net of underwriting discounts, commissions and offering expenses.

In January 2023, we completed an underwritten public offering of 9,583,334 shares of common stock, including the exercise in full of the underwriters' option to purchase 1,250,000 additional shares of common stock.

The shares were offered at a price to the public of $30.00 per share, resulting in aggregate proceeds of approximately $269.9 million, net of underwriting discounts, commissions and offering expenses.

We believe that our existing capital resources, together with the proceeds our January 2023 public offering, will be sufficient to meet our projected operating requirements into the second half of 2026.

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

Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development and commercialization sooner than planned.

We currently have no credit facility or committed sources of capital other than potential milestones receivable under our current collaboration and license agreements.

Our operations have been financed primarily through the issuance and sale of convertible preferred stock, issuance of common stock and our collaboration with Novartis.

In July 2021, we entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co., as sales agent, pursuant to which we may issue and sell up to $150.0 million of shares of common stock from time to time.

On July 2, 2021, we filed a registration statement on Form S-3 (File No.

333-257684), as amended, which included a sales agreement prospectus registering the offer and sale of shares under the Sales Agreement (the “Sales Agreement Prospectus”).

From July 2, 2021 to January 23, 2023, no shares of common stock were sold pursuant to the Sales Agreement or the Sales Agreement Prospectus.

We terminated the Sales Agreement Prospectus on January 23, 2023 in connection with our January 2023 public offering, but the Sales Agreement remains in full force and effect.

We will not make any sales of shares of our common stock pursuant to the Sales Agreement unless and until a new sales agreement prospectus or prospectus supplement is filed.

We have not issued any shares pursuant to any at-the-market offerings, including pursuant to the Sales Agreement, but may do so at a future date.

Funding Requirements

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• the outcome, timing and cost of meeting regulatory requirements established by the U.S.

Food and Drug Administration, or FDA, and other comparable foreign regulatory authorities;

Food and Drug Administration, or FDA, and other comparable foreign regulatory authorities including but not limited to the European Medicines Agency (EMA), the UK Medicines and Healthcare products Regulatory Agency (MHRA);

• whether we enter into any collaboration agreements and the terms of any such agreements;

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• the cost and timing of completion of commercial-scale outsourced manufacturing activities;

• the cost and timing of achieving favorable pricing and reimbursement agreements with the pricing authorities in each market of interest, including of securing a positive recommendation after undergoing a health technology assessment by health technology authorities;

• the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own;

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Year Ended December 31,

2021 2020 2019

Net cash used in operating activities $ (94,631) $ (75,443)

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Net cash used in operating activities was $94.6 million for the year ended December 31, 2022 compared to $75.4 million for the year ended December 31, 2021.

The increase in cash used in operating activities of $38.2 million between the year ended December 31, 2021 and 2020 was primarily due to decreased revenues and related receipts from our collaboration partner, Novartis, during 2021 coupled with an increase in operating expenses of $21.6 million.

Net cash used in operating activities was $37.3 million for the year ended December 31, 2020 compared to $2.8 million for the year ended December 31, 2019.

The increase in cash used in operating activities of $34.5 million between the year ended December 31, 2020 and 2019 was primarily due to an overall increase in operating expenses of $25.2 million plus decreased revenues from Novartis of $15.2 million as the $25.0 million milestone earned in the first quarter of 2020 was more than offset by the $50.0 million upfront license fee earned in 2019 plus.

The increase in cash used in operating activities of $19.2 million between the year ended December 31, 2022 and 2021 was primarily due to an increase in our net loss of $26.1 million which was driven by an increase in operating expenses of $31.8 million.

Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities during the year ended December 31, 2021 was $73.7 million compared to net cash used in investing activities of $210.9 million during the year ended December 31, 2020.

The increase in cash provided by investing activities of $284.6 million between the year ended December 31, 2021 and 2020 is a function of the timing of investment purchases versus maturities between the years.

The significant shift from 2020 to 2021 is a result of significant financing inflows in 2020 compared to 2021 resulting in increased purchases of short-term investments in 2020.

Net cash used in investing activities during the year ended December 31, 2020 was $210.9 million compared to net cash used in investing activities of $17.9 million during the year ended December 31, 2019.

The increase in cash used in investing activities of $192.9 million between the year ended December 31, 2020 and 2019 is a function of the timing of investment purchases versus maturities between the years.

The significant shift from 2019 to 2020 resulted from increased financing activities in 2020 compared to 2019 resulting in increased purchases of short-term investments in 2020.

Net cash used in investing activities during the year ended December 31, 2022 was $150.2 million compared to net cash provided by in investing activities of $73.7 million during the year ended December 31, 2021.

The increase in cash used by investing activities of $223.9 million between the year ended December 31, 2022 and 2021 is primarily due to the investment purchases following our July 2022 public offering plus regular variation year over year regarding the timing of investment purchases versus maturities in our short-term investment portfolio.

Cash Provided by Financing Activities

Net cash provided by financing activities was $226.9 million during the year ended December 31, 2022 as compared to $2.5 million during the year ended December 31, 2021.

The decrease in cash provided by financing activities of $210.7 million between the year ended December 31, 2021 and 2020 was primarily due to 2020 financing activities including the issuance of common stock upon completion of our IPO of $150.8 million, issuance of common stock upon completion of the private placement with Novartis of $10.0 million and the issuance of our Series C convertible preferred stock of $52.0 million.

Net cash provided by financing activities was $213.2 million during the year ended December 31, 2020 as compared to $45.5 million during the year ended December 31, 2019.

The increase in cash provided by financing activities of $167.7 million between the year ended December 31, 2020 and 2019 was primarily due to the above mentioned 2020 financing events, partially offset by net proceeds from the 2019 issuance of our Series C redeemable convertible preferred stock of $47.9 million.

The increase in cash provided by financing activities of $224.3 million between the year ended December 31, 2022 and 2021 is attributable to the July 2022 public offering and term loan entered into under the Oxford Loan Agreement.

Off-Balance Sheet Arrangements

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We enter into contracts in the normal course of business with third-party contract organizations for clinical trials, non-clinical studies and testing, manufacturing and other services and products.

These contracts generally provide for

termination following a certain period after notice and therefore we believe that our cancelable obligations under these agreements are not material and they are not included in the table above.

These contracts generally provide for termination following a certain period after notice and therefore we believe that our cancellable obligations under these agreements are not material and they are not included in the table above.

We have not included milestone or royalty payments or other contractual payment obligations in the table above if the timing and amount of such obligations are unknown or uncertain.

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Accrued and Prepaid Research and Development Expenses

We record accrued expenses for estimated costs of our research and development activities activities which include the conduct of clinical studies and preclinical studies by third-party service providers.

We record accrued expenses for estimated costs of our research and development activities which include the conduct of clinical studies and preclinical studies by third-party service providers.

We record the estimated costs of research and development activities based upon the estimated amount of services provided but not yet invoiced and include these costs in accrued liabilities in the balance sheets and within research and development expenses in the statements of operations and comprehensive loss.

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Emerging Growth Company Status and JOBS Act Accounting Election

Based on the market value of our common stock held by our non-affiliates as of June 30, 2021, we are considered a “large accelerated filer” on December 31, 2021 and thus lost our status as an emerging growth company as of such date.

Accordingly, we can no longer rely upon exemptions and reduced reporting requirements provided by the JOBS Act.

Based on the market value of our common stock held by our non-affiliates as of June 30, 2021, we were considered a “large accelerated filer” on December 31, 2021 and thus lost, and will not regain, our status as an emerging growth company.

Additionally, based on the market value of our common stock held by our non-affiliates as of June 30, 2022, we were considered a "non-accelerated filer" and “smaller reporting company” on December 31, 2022, and thus will not be subject to filing deadlines applicable to "accelerated filers," nor the requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

Recent Accounting Pronouncements

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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-K

Item 7. Management’s Discussion and Analysis