What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-03 compared with 2021-08-16 · 91 added, 67 removed, 261 unchanged (38% of the section changed)

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Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties.

As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

As a result of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020 and set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We are a clinical-stage biopharmaceutical company translating genetic insights into the development of therapies for central nervous system, or CNS, disorders characterized by neuronal imbalance.

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We intend to develop differentiated therapies that can deliver long-term benefits to human health by meaningfully impacting patients and society.

Our most advanced programs, PRAX-114 and PRAX-944, are currently in Phase 2/3 and Phase 2 development, respectively.

PRAX-114 is currently being developed for the treatment of major depressive disorder and perimenopausal depression.

Together, these conditions affect more than 22 million patients in the United States.

We are finalizing the market assessment, including key opinion leader interactions and market research analysis, to inform plans for a Phase 2b trial in women with menopausal and mood symptoms and facilitate discussions with regulatory agencies.

We expect to disclose plans for the Phase 2b study in the second half of 2021.

We plan to initiate a Phase 2 trial of PRAX-114 in post-traumatic stress disorder and a Phase 2 trial of PRAX-114 in essential tremor, or ET, in the second half of 2021.

PRAX-944 is a selective small molecule inhibitor of T-type calcium channels, currently being developed for the treatment of ET, a progressive and debilitating movement disorder affecting up to seven million people in the United States.

We plan to initiate a PRAX-944 Phase 2 trial for the treatment of Parkinson's disease in the first half of 2022.

In addition, we completed a Phase 1 trial of PRAX-562, a persistent sodium current blocker, for the potential treatment of a broad range of rare, devastating CNS disorders, such as severe pediatric epilepsies and rare adult cephalgias and plan to initiate a first-in-patient trial in rare adult cephalgias in the fourth quarter of 2021.

In addition to our clinical programs, we have multiple disclosed preclinical product candidates in development for severe genetic epilepsies.

Our most advanced clinical program, PRAX-114, is an extrasynaptic GABAA receptor preferring positive allosteric modulator, or PAM, for the treatment of patients suffering from major depressive disorder, or MDD, and

for the treatment of women with menopausal and mood symptoms.

We completed a multi-cohort, three-part Phase 2a clinical trial in Australia for PRAX-114, in which Parts A and C of the trial treated patients with MDD while Part B focused on patients with perimenopausal depression, or PMD.

For all parts of the trial, PRAX-114 was generally well-tolerated.

In Parts A and C, we observed marked improvements in depression scores in MDD patients within two weeks of treatment that were maintained throughout the treatment period.

In Part B, we observed improvements in both menopausal and mood symptoms, with mean decreases from baseline at Day 15 of 60% in frequency of moderate-to-severe hot flashes, 68% in the total score of the Perimenopausal Depression Questionnaire, 47% in the Hamilton Depression Rating Scale total score, 65% in the Hamilton Anxiety Rating Scale total score, and 40% in the total score of the Symptoms of Depression Questionnaire, with values trending toward baseline following discontinuation of PRAX-114.

We expect to disclose plans for the Phase 2b study in the fourth quarter of 2021.

Our second clinical program, PRAX-944, is a potentially differentiated selective small molecule inhibitor of T-type calcium channels for the treatment of ET.

We are currently conducting a Phase 2a proof-of-concept, open-label trial in ET patients.

Preliminary site data from six participants in the low dose cohort showed tremor reduction, which compares favorably to the standard of care agents and historical placebo response.

Based on the observed safety profile in the healthy volunteer titration study and the safety and preliminary efficacy data in ET participants administered up to 40mg daily, we added a second cohort to the ongoing ET Phase 2a trial where patients will be titrated to a dose of up to 120mg/day of PRAX-944.

We expect preliminary open-label safety, tolerability and efficacy data from the second dose cohort in the Phase 2a trial in the fourth quarter of 2021, followed by topline data in the first half of 2022, which is expected to include data from the randomized withdrawal phase of the study.

We also completed dosing in a two-part Phase 1 study to explore a faster titration regimen, which is designed to evaluate the safety, tolerability and PK of titrating PRAX-944 up to 120 mg in a 10-day regimen in participants aged 18 to 54 years (Part A) and 55 to 75 years (Part B).

In addition, we initiated the PRAX-944 Phase 2b Essential1 Study for treatment of ET and expect topline results in the second half of 2022.

The Essential1 Study is a placebo-controlled, dose-ranging clinical trial designed to evaluate the safety, tolerability and efficacy of PRAX-944 at 20, 60 or 120 mg per day.

We also intend to initiate a Phase 2 trial to evaluate the safety, PK and efficacy of PRAX-944 as a non-dopaminergic treatment for the motor symptoms of Parkinson’s disease in the first half of 2022.

Our most advanced rare disease product candidate and third clinical program, PRAX-562, is the first selective persistent sodium current blocker in development for the treatment of a broad range of rare, devastating CNS disorders, such as rare adult cephalgias and severe pediatric epilepsies.

We completed the dosing and safety follow-up period for the single ascending dose and multiple ascending dose cohorts up to 150 mg and 120 mg, respectively, in a Phase 1 healthy volunteer study.

PRAX-562 was well-tolerated, with no clinically significant safety findings.

In this study, we used auditory steady state response, or ASSR, as an exploratory electroencephalogram, or EEG, biomarker to determine the doses required to achieve pharmacological blockade of persistent sodium current, which we believe is a potential indicator of efficacy in patients.

We observed dose-related changes and a reduction in ASSR of greater than 50% after 14 days with daily dosing, as compared to baseline.

Based on the observed signal in the ASSR marker in the Phase 1 study, we have started dosing patients in the United States in a Phase 1, placebo-controlled, two-cohort EEG study to validate the observed signal, and we expect topline data in the first half of 2022.

The study is intended to evaluate ASSR as a biomarker for the PRAX-562 program to further support selection of therapeutic dose levels in Phase 2 studies.

We intend to initiate the first proof-of-concept trial of PRAX-562 in patients with rare adult cephalgias, including Short-lasting Unilateral Neuralgiform headache attacks with Conjunctival injection and Tearing, Short-lasting Unilateral Neuralgiform headache with Autonomic symptoms, and Trigeminal Neuralgia in the fourth quarter of 2021.

We also plan to initiate a Phase 2 trial for treatment of developmental epileptic encephalopathies, or DEEs, in the first half of 2022.

The FDA has granted both rare pediatric disease and orphan drug designations for PRAX-562 for the treatment of SCN2A and SCN8A developmental epileptic encephalopathies, or SCN2A-DEE and SCN8A-DEE, respectively.

In addition to our clinical programs, we have multiple disclosed preclinical and discovery product candidates in development for severe genetic epilepsies and multiple undisclosed preclinical and discovery product candidates for a range of CNS disorders.

Our most advanced preclinical stage program is PRAX-222, an antisense oligonucleotide, or ASO, designed to decrease the expression levels of the protein encoded by the gene SCN2A in patients with gain-of-function mutations in SCN2A causing developmental epileptic encephalopathy.

We completed the Investigational New Drug enabling toxicology study for PRAX-222 and plan to initiate regulatory submissions in order to begin a Phase 1/2 trial for treatment of SCN2A-DEE in the first half of 2022.

The FDA has granted both rare pediatric disease and orphan drug designations for PRAX-222 for the treatment of SCN2A-DEE.

We have one disclosed discovery program in development for KCNT1 related epilepsy, and in March 2021 we entered into an innovative research collaboration with The Florey Institute of Neuroscience and Mental Health to develop three additional novel ASOs for the treatment of patients with severe genetic epilepsies, including a novel approach targeting SCN2A loss-of-function mutations.

We were incorporated in 2015 and commenced operations in 2016.

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

We have incurred recurring operating losses since inception, including a net loss of $63.8 million for the six months ended June 30, 2021.

As of June 30, 2021, we had an accumulated deficit of $213.3 million.

We have incurred recurring operating losses since inception, including a net loss of $108.5 million for the nine months ended September 30, 2021.

As of September 30, 2021, we had an accumulated deficit of $258.0 million.

We expect to incur significant expenses and operating losses for the foreseeable future as we expand our research and development activities.

In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and

development activities.

We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

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• incur additional costs and general and administrative headcount growth associated with our continued operations as a public company;

• incur additional costs as a public company as we transition out of emerging growth company status at the end of 2021.

• incur additional costs as a public company as we transition out of emerging growth company and smaller reporting company status at the end of 2021.

In addition, as we progress toward potential marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution.

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

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $339.2 million.

As of September 30, 2021, we had cash, cash equivalents and marketable securities of $314.4 million.

We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2023.

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We are continuing to operate during this period and have taken measures to secure our research and development activities.

While we are experiencing limited financial impacts at this time, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, our business, financial condition and results of operations could be materially adversely affected.

materially adversely affected.

We continue to closely monitor the COVID-19 pandemic as we evolve our business continuity plans, clinical development plans and response strategy.

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We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors and our clinical investigative sites.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated balance sheets as prepaid expenses or accrued research and development expenses.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our consolidated balance sheets as prepaid

expenses or accrued research and development expenses.

Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the expected growth in our research and development activities and the potential commercialization of our product candidates.

We also expect to incur increased expenses associated with being a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs and investor and public relations costs.

We also expect to incur increased expenses associated with being a public company, particularly when we are no longer an emerging growth company or a smaller company, including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs and investor and public relations costs.

We also expect to incur additional IP-related expenses as we file patent applications to protect innovations arising from our research and development activities.

Other Income, Net

Other income, net consists of interest income from our cash, cash equivalents and marketable securities and amortization of investment premiums.

Other income, net consists of interest income from our cash, cash equivalents and marketable securities and amortization of investment premiums and discounts.

Since our inception, we have not recorded any U.S.

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Our income tax provision may be significantly affected by changes to our estimates.

There was no income tax provision or benefit recognized for the three and six months ended June 30, 2021.

The income tax benefit (provision) for the three and six months ended June 30, 2020 was not material.

The income tax benefit (provision) for the three and nine months ended September 30, 2021 and 2020 was not material.

Results of Operations

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

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

The following table summarizes our consolidated statements of operations for each period presented (in thousands):

Three Months Ended

June 30, Change

September 30, Change

Operating expenses:

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Three Months Ended

June 30, Change

September 30, Change

PRAX-114 $ 8,776 $ 4,077 $ 4,699

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Total research and development expenses $ 33,139 $ 12,786 $ 20,353

Research and development expenses increased approximately $16.6 million from approximately $9.0 million for the three months ended June 30, 2020 to $25.7 million for the three months ended June 30, 2021.

Research and development expenses increased approximately $20.4 million from approximately $12.8 million for the three months ended September 30, 2020 to $33.1 million for the three months ended September 30, 2021.

The increase in research and development expenses was primarily attributable to the following:

• $4.4 million increase in personnel-related costs due to increased headcount, including an increase of $1.9 million in stock-based compensation expense due to the increase in fair value of our stock options since becoming a public company;

• $5.2 million increase in personnel-related costs due to increased headcount, including an increase of $2.4 million in stock-based compensation expense;

• $4.7 million increase in expense related to our PRAX-114 program, driven by an increase in clinical-related and toxicology spend for our Phase 2/3 clinical trial for this program;

• $3.0 million increase in expense related to our discovery-stage programs, primarily driven by an increase in preclinical activities for such programs;

• $2.7 million increase in expense related to our PRAX-562 program, primarily driven by an increase toxicology and clinical-related spend;

• $4.0 million increase in expense related to our PRAX-944 program, driven primarily by an increase in toxicology and clinical-related spend;

• $0.8 million increase in other indirect research and development expenses, driven by an increase in technology spend.

• $2.9 million increase in expense related to our discovery-stage programs, primarily driven by an increase in preclinical activities for such programs;

• $2.2 million increase in expense related to our PRAX-562 program, primarily driven by an increase in spend to support our upcoming clinical trails;

• $1.3 million increase in other indirect research and development expenses, driven by an increase in facility and other allocated overhead costs primarily attributable to increased research and development headcount and our new office location, as well as an increase in technology spend.

General and Administrative Expense

General and administrative expenses increased $8.3 million from $2.5 million for the three months ended June 30, 2020 to $10.8 million for the three months ended June 30, 2021.

General and administrative expenses increased $8.2 million from $3.4 million for the three months ended September 30, 2020 to $11.6 million for the three months ended September 30, 2021.

The increase in general and administrative expenses was primarily attributable to the following:

• $4.6 million increase in personnel-related costs, primarily driven by increased headcount, including an increase of $3.2 million in stock-based compensation expense due to the increase in fair value of our stock options since becoming a public company;

• $2.2 million increase in professional fees including legal and consulting services, driven by a $1.9 million increase in consulting costs, including increased commercial-related spend to support assessments of our clinical-stage programs and a $0.2 million increase in audit and legal fees;

• $1.5 million increase in other general and administrative expenses, including a $1.1 million increase in insurance and related costs, primarily due to becoming a public company.

Other income for the three months ended June 30, 2021 and 2020, comprised of interest income on our cash, cash equivalents and marketable securities and investment premium amortization, was not material.

Comparison of the Six Months Ended June 30, 2021 and 2020

• $4.7 million increase in personnel-related costs, primarily driven by increased headcount, including an increase of $3.2 million in stock-based compensation expense;

• $1.8 million increase in professional fees, including $1.0 million of increased commercial-related spend to support assessments of our clinical-stage programs, a $0.3 million increase in general and administrative infrastructure costs and a $0.3 million increase in audit and legal fees;

• $1.7 million increase in other general and administrative expenses, including a $1.1 million increase in insurance and related costs, primarily due to becoming a public company, and a $0.2 million increase in technology related costs.

Other income for the three months ended September 30, 2021 and 2020, comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization, was not material.

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

The following table summarizes our consolidated statements of operations for each period presented (in thousands):

Six Months Ended

June 30, Change

Nine Months Ended

September 30, Change

Operating expenses:

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Loss before income taxes (108,474) (36,122) (72,352)

Benefit from income taxes — 8 (8)

Benefit from (provision for) income taxes (5) 8 (13)

Net loss $ (108,479) $ (36,114) $ (72,365)

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The following table summarizes our research and development expenses for each period presented, along with the changes in those items (in thousands):

Six Months Ended

June 30, Change

Nine Months Ended

September 30, Change

PRAX-114 $ 18,567 $ 9,137 $ 9,430

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Total research and development expenses $ 76,746 $ 28,704 $ 48,042

Research and development expenses increased approximately $27.7 million from $15.9 million for the six months ended June 30, 2020 to $43.6 million for the six months ended June 30, 2021.

Research and development expenses increased approximately $48.0 million from $28.7 million for the nine months ended September 30, 2020 to $76.7 million for the nine months ended September 30, 2021.

The increase in research and development expenses was primarily attributable to the following:

• $8.9 million increase in personnel-related costs primarily due to increased headcount, including an increase of $4.1 million in stock-based compensation expense due to the increase in fair value of our stock options since becoming a public company;

• $5.7 million increase in expense related to our discovery-stage programs, primarily driven by an increase in preclinical activities for such programs;

• $14.1 million increase in personnel-related costs primarily due to increased headcount, including an increase of $6.5 million in stock-based compensation expense;

• $9.4 million increase in expense related to our PRAX-114 program, driven by an increase in toxicology and clinical-related spend for our Phase 2/3 clinical trial for this program;

• $4.5 million increase in expense related to our PRAX-562 program, primarily driven by an increase in toxicology and clinical-related spend;

• $8.6 million increase in expense related to our discovery-stage programs, primarily driven by an increase in preclinical activities for such programs;

• $6.7 million increase in expense related to our PRAX-944 program, driven primarily by an increase in toxicology and clinical-related spend;

• $6.7 million increase in expense related to our PRAX-562 program, primarily driven by an increase in toxicology and clinical-related spend;

• $2.4 million increase in other indirect research and development expenses, driven by an increase in facility and other allocated overhead costs primarily attributable to increased research and development headcount, as well as an increase in technology spend.

General and Administrative Expense

General and administrative expenses increased approximately $16.2 million from $4.1 million for the six months ended June 30, 2020 to $20.3 million for the six months ended June 30, 2021.

General and administrative expenses increased approximately $24.4 million from $7.6 million for the nine months ended September 30, 2020 to $31.9 million for the nine months ended September 30, 2021.

The increase in general and administrative expenses was primarily attributable to the following:

• $8.4 million increase in personnel-related costs, primarily driven by increased headcount, including an increase of $5.5 million in stock-based compensation expense due to the increase in fair value of our stock options since becoming a public company;

• $4.5 million increase in professional fees including legal and consulting services, driven by a $3.7 million increase in consulting costs, including $2.5 million of increased commercial-related spend to support assessments of our clinical-stage programs and $0.8 million for general and administrative infrastructure costs, and a $0.8 million increase in audit and legal fees;

• $13.1 million increase in personnel-related costs, primarily driven by increased headcount, including an increase of $8.7 million in stock-based compensation expense;

• $6.3 million increase in professional fees, including $3.5 million of increased commercial-related spend to support assessments of our clinical-stage programs, a $1.1 million increase in audit and legal fees and a $0.9 million increase in general and administrative infrastructure costs;

• $4.9 million increase in other general and administrative expenses, including a $3.2 million increase in insurance and related costs due to becoming a public company, a $0.7 million increase in donations and sponsorships and a $0.5 million increase in technology spend.

Other income for the six months ended June 30, 2021 and 2020, comprised of interest income on our cash, cash equivalents and marketable securities and investment premium amortization, was not material.

Other income for the nine months ended September 30, 2021 and 2020, comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization, was not material.

Liquidity and Capital Resources

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To date, we have financed our operations primarily with proceeds from the sale and issuance of our redeemable convertible preferred stock, the sale and issuance of convertible debt, and the sale and issuance of common stock in our IPO and follow-on public offering.

From inception through June 30, 2020, we have raised $509.4 million in aggregate cash proceeds from these transactions, net of issuance costs.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of $339.2 million.

From inception through September 30, 2021, we have raised $509.4 million in aggregate cash proceeds from these transactions, net of issuance costs.

As of September 30, 2021, we had cash, cash equivalents and marketable securities of $314.4 million.

Historical Cash Flows

The following table provides information regarding our cash flows for each period presented (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Net cash (used in) provided by:

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Financing activities 99,873 102,352

Net decrease in cash, cash equivalents and restricted cash $ (120,313) $ (25,067)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (130,513) $ 69,957

Operating Activities

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The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital, which are primarily the result of increased expenses and timing of vendor payments.

During the six months ended June 30, 2021, net cash used in operating activities of $55.7 million was primarily due to our $63.8 million net loss and $3.4 million in changes in operating assets and liabilities, partially offset by $11.4 million of non-cash charges primarily related to stock-based compensation.

During the six months ended June 30, 2020, net cash used in operating activities of $18.5 million was primarily due to our $19.9 million net loss, partially offset by $0.6 million in changes in operating assets and liabilities and $0.8 million of non-cash charges.

During the nine months ended September 30, 2021, net cash used in operating activities of $79.7 million was primarily due to our $108.5 million net loss, partially offset by $9.7 million in changes in operating assets and liabilities and $19.1 million of non-cash charges primarily related to stock-based compensation.

During the nine months ended September 30, 2020, net cash used in operating activities of $32.4 million was primarily due to our $36.1 million net loss, partially offset by $1.8 million in changes in operating assets and liabilities and $1.9 million of non-cash charges.

Investing Activities

During the six months ended June 30, 2021, net cash used in investing activities of $164.2 million primarily related to the purchase of marketable securities.

There were no cash flows from investing activities during the six months ended June 30, 2020.

During the nine months ended September 30, 2021, net cash used in investing activities of $150.7 million primarily related to the purchase of marketable securities, partially offset by the maturities of marketable securities.

There were no cash flows from investing activities during the nine months ended September 30, 2020.

Financing Activities

During the six months ended June 30, 2021, net cash provided by financing activities of $99.7 million consisted of net proceeds from our follow-on public offering of $98.6 million and net proceeds from the exercise of stock options of $1.7 million, partially offset by the payment of issuance costs for our IPO and for the issuance of redeemable convertible preferred stock.

During the six months ended June 30, 2020, net cash used in financing activities of $6.6 million consisted of cash paid for the repurchase of our Series C redeemable convertible preferred stock and payment of issuance costs, partially offset by net proceeds from the issuance of Series C redeemable convertible preferred stock.

During the nine months ended September 30, 2021, net cash provided by financing activities of $99.9 million consisted of net proceeds from our follow-on public offering of $98.5 million and net proceeds from the exercise of stock options of $2.0 million, partially offset by the payment of issuance costs for our IPO.

During the nine months ended September 30, 2020, net cash provided by financing activities of $102.4 million consisted of proceeds from the issuance of Series C-1 redeemable convertible preferred stock and exercise of stock options, partially offset by cash paid for the repurchase of our Series C redeemable convertible preferred stock and payment of issuance costs.

Plan of Operation and Future Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we advance the preclinical activities and clinical trials of our product candidates.

In addition, we expect to incur additional costs associated with operating as a public company and as we transition from being an emerging growth company.

In addition, we expect to incur additional costs associated with operating as a public company and as we transition from being an emerging growth company and a smaller reporting company.

As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.

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• potentially establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize any products for which we may obtain regulatory approval;

• add clinical, scientific, operational, financial and management information systems and personnel, including personnel to support our product development and potential future commercialization efforts and to support our transition to a public company;

• experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges.

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

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit or terminate our product

development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves.

If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit or terminate our product development programs or any future commercialization efforts or grant rights to develop and market product candidates to third parties that we would otherwise prefer to develop and market ourselves.

Contractual Obligations

As of June 30, 2021, there have been no significant changes to our contractual obligations from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commitments” included in our Annual Report on Form 10-K filed with the SEC on March 17, 2021, other than our new sublease agreement entered into in May 2021 for office space in Boston, Massachusetts.

The space is to be used as our new corporate headquarters and the sublease expires on January 31, 2026, with no option to renew or terminate early.

As of September 30, 2021, there have been no significant changes to our contractual obligations from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Commitments” included in our Annual Report on Form 10-K filed with the SEC on March 17, 2021, other than our new sublease agreement entered into in May 2021 for office space in Boston, Massachusetts.

The space is being used as our new corporate headquarters as of October 1, 2021 and the sublease expires on January 31, 2026, with no option to renew or terminate early.

The base rent increases by 2% annually.

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Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP.

The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods.

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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