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Item 2. Management’s Discussion and Analysis

2022-11-09 compared with 2022-08-08 · 93 added, 82 removed, 227 unchanged (44% 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, 2021 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.

As a result of many factors, including those factors set forth in the “Risk Factors” section of our Quarterly Report on Form 10-Q for the six months ended June 30, 2022, 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 excitation-inhibition imbalance.

Normal brain function requires a delicate balance of excitation and inhibition in neuronal circuits, which, when dysregulated, can lead to abnormal function and disease.

We are applying insights from genetic epilepsies to both rare and more prevalent neurological disorders, using our understanding of shared biological targets and circuits in the brain.

We are applying insights from genetic epilepsies to both rare and more prevalent neurological disorders, using our understanding of shared biological targets and circuits in the brain, to develop patient-guided therapies.

We apply a deliberate and pragmatic precision approach, leveraging a suite of translational tools including novel transgenic and predictive translational animal models and electrophysiology markers, to enable an efficient path to proof-of-concept in patients.

Through this approach, we have established a broad CNS portfolio with multiple programs, including product candidates across movement disorders, epilepsy and psychiatric disorders, with three clinical-stage product candidates.

We expect to announce topline results from the Phase 2b clinical trial in essential tremor, or ET, for our lead clinical-stage movement disorder program, the initiation of two first-in-patient studies for our lead small molecule epilepsy program and our lead antisense oligonucleotide, or ASO, epilepsy program and the launch of an additional clinical development program this year.

Through this approach, we have established a broad CNS portfolio with multiple programs across movement disorders and epilepsy, with four clinical-stage product candidates.

For our lead clinical-stage program, we expect to announce topline results from the Phase 2b clinical trial in essential tremor, or ET, in the first quarter of 2023 and expect to initiate a Phase 2 clinical trial for the treatment of Parkinson's disease, or PD, in the first quarter of 2023.

We expect the initiation of first-in-patient studies for our lead antisense oligonucleotide, or ASO, epilepsy program in the fourth quarter of 2022 and our lead small molecule epilepsy program in the first quarter of 2023, as well as the launch of an additional clinical epilepsy program this year.

In addition, we have established a robust pipeline of preclinical-stage programs through internal research and in-licensing, including one of the largest portfolios of targeted epilepsy programs in the industry.

Within our Movement Disorders franchise, our lead clinical candidate, PRAX-944, is being developed for the treatment of ET and Parkinson's Disease, or PD.

In May 2022, we reported positive topline results from the second cohort of our Phase 2a trial evaluating PRAX-944 for the treatment of ET.

We expect to report topline results from the Phase 2b placebo-controlled Essential1 Study for daytime treatment of ET in the fourth quarter of 2022.

Following the positive Phase 2a topline results announced in May 2022, the primary endpoint of the Essential1 Study was revised to change from baseline to Day 56 on modified Activities of Daily Living and we plan to randomize approximately 130 participants.

We intend to initiate a Phase 2, placebo-controlled trial to evaluate the safety, pharmacokinetics, or PK, and efficacy of PRAX-944 as a non-dopaminergic treatment for the motor symptoms of PD in the second half of 2022, and expect to report topline results in 2023.

Within our Epilepsy franchise, we completed a Phase 1, two-part, placebo controlled study evaluating the safety, tolerability, PK and pharmacodynamics of our lead small molecule epilepsy candidate, PRAX-562.

We are expecting to initiate a Phase 2, placebo-controlled study with PRAX-562 in the second half of 2022 for the treatment of rare pediatric Developmental and Epileptic Encephalopathies, or DEEs, and expect to report topline results in mid-2023.

Our most advanced preclinical stage product candidate within our Epilepsy franchise, PRAX-222, is an ASO designed to decrease the expression levels of the protein encoded by the gene SCN2A in patients with gain-of-function SCN2A mutations.

In April 2022, we announced that we received an email communication from the U.S.

Food and Drug Administration, or FDA, that our Investigational New Drug, or IND, application for the first-in-patient study of PRAX-222 was place on clinical hold.

In June 2022, we announced that additional communication from the FDA indicated that the IND could be cleared upon submission of additional documentation related to the completed 13-week non-human primate toxicology study supporting the starting dose proposed by us.

We have submitted the requested documentation for the 13-week non-human primate toxicology study and will engage with the FDA on the study design as needed, upon completion of their review of these data.

We expect to start a first-in-patient study with PRAX-222 in the second half of 2022.

In addition, we expect to initiate a Phase 1 study with our preclinical candidate, PRAX-628, in the fourth quarter of 2022 and subsequently initiate a Phase 2 study in focal epilepsy in 2023.

respectively, and two additional discovery programs for undisclosed targets in movement disorders and epilepsy.

We plan to advance ASO candidates, PRAX-080 for PCDH19 and PRAX-090 for SYNGAP1 into preclinical development in 2023.

Within Psychiatry, in June 2022, we announced that the Phase 2/3 Aria Study, evaluating the efficacy and safety of PRAX-114 for monotherapy treatment of major depressive disorder, or MDD, did not achieve statistical significance on the primary endpoint of change from baseline in the 17-item Hamilton Depression Rating Scale total score at Day 15, or on any secondary endpoints.

As a result, we closed screening and enrollment in the Phase 2 Acapella Study which is evaluating the presence of a dose response signal for PRAX-114 in MDD at doses up to 60 mg, and we intend to read out results from approximately 100 patients in the third quarter of 2022.

We also stopped enrollment in the Phase 2 study evaluating PRAX-114 for the treatment of post-traumatic stress disorder and discontinued the Phase 2 crossover study to evaluate the safety, pharmacokinetics and efficacy of daytime dosing of PRAX-114 for the treatment of ET.

Within Movement Disorders, our lead clinical candidate, PRAX-944, is being developed for the treatment of ET and PD.

We expect to report topline results from the Phase 2b placebo-controlled Essential1 Study for daytime treatment of ET in the first quarter of 2023.

Following topline results, we intend to meet with the U.S.

Food and Drug Administration, or the FDA, for an end-of-Phase 2 meeting in the first half of 2023 and initiate our Phase 3 development program in ET in mid-2023.

We plan to initiate a Phase 2, placebo-controlled trial to evaluate the efficacy, safety, and tolerability of PRAX-944 as a non-dopaminergic treatment for the motor symptoms of PD in the first quarter of 2023, and expect to report topline results in the second half of 2023.

Within Epilepsy, we plan to initiate the first dose cohort of the EMBRAVE study for PRAX-222, an ASO designed to decrease the expression levels of the protein encoded by the gene SCN2A in pediatric patients with early-seizure-onset SCN2A Developmental and Epileptic Encephalopathy, or DEE, in the fourth quarter of 2022.

Following collection of the safety and efficacy data from the first cohort of patients in the EMBRAVE study, the data will be evaluated and submitted to the FDA to seek authorization for dose escalation.

Topline results from the initial dose cohort are expected in 2023.

We plan to initiate a Phase 2, placebo-controlled study with PRAX-562 in the first quarter of 2023 for the treatment of rare pediatric DEEs, with initial cohorts in SCN2A and SCN8A DEEs, and expect to report topline results in 2023.

In October 2022, we received additional detail from the FDA regarding the clinical hold for our Investigational New Drug application for PRAX-562 for the treatment of pediatric patients with SCN2A and SCN8A DEEs.

Based on the feedback from the FDA, we expect that no new preclinical or clinical studies will be required to clear the clinical hold.

In addition, we expect to initiate a Phase 1 study with PRAX-628 in the fourth quarter of 2022 and subsequently initiate a Phase 2 study in focal epilepsy in 2023.

Our disclosed preclinical pipeline also consists of discovery programs in development for KCNT1 related epilepsy, three ASOs targeting SCN2A in patients with loss-of-function mutations, PCDH19 and SYNGAP1, respectively, and two additional discovery programs for undisclosed targets in movement disorders and epilepsy.

We plan to advance ASO candidate PRAX-080 for PCDH19 into preclinical development in 2023.

Following the completion of the PRAX-114 Phase 2 Acapella Study for the treatment of Major Depressive Disorder in the third quarter of 2022, we do not currently plan to pursue further development of PRAX-114 for psychiatric disorders.

The PRAX-114 Phase 2 Acapella study (N=110) was intended to provide additional understanding of the dose range and to evaluate the safety and efficacy of PRAX-114 at doses of 10, 20, 40 and 60 mg.

Topline data indicated a linear dose response trend on the primary endpoint of change from baseline in the 17-item Hamilton Depression Rating Scale total score at Day 15, but were not statistically significant.

In multiple secondary endpoints evaluating 40 mg of PRAX-114 relative to placebo, nominal statistical significance was achieved at Day 4, but not maintained at subsequent timepoints.

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 $128.9 million for the six months ended June 30, 2022.

As of June 30, 2022, we had an accumulated deficit of $445.5 million.

We have incurred recurring operating losses since inception, including a net loss of $172.9 million for the nine months ended September 30, 2022.

As of September 30, 2022, we had an accumulated deficit of $489.5 million.

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

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• advance our lead product candidate, PRAX-944, to a late stage clinical trial;

• advance our PRAX-562 product candidate to Phase 2 clinical trial;

• advance our PRAX-222 product candidate to clinical trials;

• advance our PRAX-562 product candidate in the Phase 2 clinical trial;

• advance our PRAX-222 product candidate in the EMBRAVE clinical trial;

• advance our PRAX-628 product candidate in the Phase 1 clinical trial;

• advance our preclinical candidates to clinical trials;

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• establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

• take precautionary measures to help minimize the risk of COVID-19 to our employees;

• when needed, increase our headcount to support our development efforts and any future commercialization efforts.

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As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy.

Until such time as we can generate significant revenue from product sales, if ever, we expect to

finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions.

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

If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or

discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.

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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, 2022, we had cash, cash equivalents and marketable securities of $165.4 million.

We believe that our cash, cash equivalents and marketable securities as of June 30, 2022 will enable us to fund our operating expenses and capital expenditures into the first quarter of 2024.

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

As of September 30, 2022, we had cash, cash equivalents and marketable securities of $123.7 million.

We believe that our cash, cash equivalents and marketable securities as of September 30, 2022 will enable us to fund our operating expenses and capital expenditures into the first quarter of 2024.

We have based this analysis on our current cash needs, ongoing research and development plans which are limited to advancing product candidates through, but not beyond their current clinical trial phases, anticipated cost savings resulting from our operational cost reduction plans, including ongoing efforts to eliminate costs not related to our strategic focus.

Such estimates contain significant judgement as our ongoing efforts to eliminate costs not related to our strategic focus contains uncertainties as to whether we can attain such benefits.

Our current operating plan is based on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect, in which case we would evaluate further reductions in our expenses or obtaining additional financing sooner than we otherwise would, which additional financing may not be available or may only be available on terms that are not acceptable to us.

See “—Liquidity and Capital Resources.”

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In June 2022, we began a strategic realignment to focus resources on our Movement Disorders and Epilepsy franchises, which resulted in a reduction of our workforce.

We incurred $1.0 million of costs related to the realignment, of which $0.6 million has been recognized in research and development expenses and $0.4 million has been recognized in general and administrative expenses in the condensed consolidated statement of operations during the three and six months ended June 30, 2022.

These costs relate to employee severance, benefits and related costs.

We do not expect to incur any additional significant costs related to the strategic realignment.

As of June 30, 2022, $0.5 million of the $1.0 million costs were paid.

The remaining $0.5 million of costs are included within accrued expenses on the condensed consolidated balance sheet as of June 30, 2022 and are expected to be disbursed during the period from July 1, 2022 through December 31, 2022.

As of September 30, 2022, all of the $1.0 million costs were paid.

COVID-19 Business Update

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The following table reflects our research and development expenses, including direct expenses summarized by major franchise and other exploratory CNS indications and indirect or shared operating costs recognized as research and development expenses during each period presented (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Movement disorders

$ 9,262 $ 6,735 $ 26,777 $ 12,107

7,630 4,942 32,579 15,707

Movement disorders

2,642 9,188 28,394 19,029

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Research and development activities are central to our business model.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development,

primarily due to the increased size and duration of later-stage clinical trials.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We expect that our research and development expenses will be maintained or increase in the foreseeable future as we advance our product candidates through the development phase, and as we continue to discover and develop additional product candidates, build manufacturing capabilities and expand into additional therapeutic areas.

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administrative travel expenses;

and facility-related expenses, which include direct depreciation costs and allocated expenses for office rent and other operating costs.

and facility-related expenses,

which include direct depreciation costs and allocated expenses for office rent and other operating costs.

Costs to secure and defend our IP are expensed as incurred and are classified as general and administrative expenses.

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

The income tax benefit (provision) for the three and six months ended June 30, 2022 and 2021 was not material.

The income tax provision for the three and nine months ended September 30, 2022 and 2021 was not material.

Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

Comparison of the Three Months Ended September 30, 2022 and 2021

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

Three Months Ended June 30, Change

Three Months Ended

September 30, Change

Operating expenses:

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Total other income 345 73 272

Loss before income taxes $ (43,945) $ (44,700) $ 755

Provision for income taxes — (5) 5

Net loss $ (43,945) $ (44,705) $ 760

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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):

Three Months Ended June 30, Change

Three Months Ended

September 30, Change

Movement disorders

$ 9,262 $ 6,735 $ 2,527

7,630 4,942 2,688

Movement disorders

2,642 9,188 (6,546)

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Total research and development expenses $ 30,439 $ 33,139 $ (2,700)

The $17.9 million increase in research and development expenses was primarily attributable to the following:

• $4.8 million increase in expense related to our epilepsy franchise, driven primarily by an increase in clinical-related spend for our PRAX-562 Phase 1 clinical trial, an increase in preclinical activities for our earlier stage assets and an increase in clinical-related spend to support the initiation of our anticipated PRAX-222 seamless clinical trial and our PRAX-562 Phase 2 DEEs clinical trial;

• $4.7 million increase in expense related to our psychiatry franchise, driven primarily by an increase in clinical-related spend for our PRAX-114 Phase 2 Acapella clinical trial which was initiated in the second quarter of 2021 and our Phase 2 placebo-controlled study evaluating PRAX-114 for the treatment of PTSD which was initiated in the fourth quarter of 2021;

• $4.6 million increase in expense related to our movement disorders franchise, driven primarily by an increase in clinical-related spend for our PRAX-944 Phase 2 Essential1 clinical trial;

• $4.0 million increase in personnel-related costs due to increased headcount.

The $2.7 million decrease in research and development expenses was primarily attributable to the following:

• $6.5 million decrease in expense related to our psychiatry franchise, driven primarily by a decrease in clinical-related spend for our PRAX-114 Phase 2/3 Aria clinical trial for which we announced topline results in the second quarter of 2022;

• $2.7 million increase in expense related to our epilepsy franchise, driven primarily by an increase in preclinical activities for PRAX-628 and our earlier stage assets and an increase in clinical-related spend to support the initiation of the PRAX-222 EMBRAVE clinical trial;

• $2.5 million increase in expense related to our movement disorders franchise, driven primarily by an increase in clinical-related spend for our PRAX-944 Phase 2b Essential1 clinical trial and our Phase 1 healthy volunteers trial.

General and Administrative Expense

The $6.0 million increase in general and administrative expenses was primarily attributable to the following:

• $3.4 million increase in personnel-related costs due to increased headcount;

• $2.6 million increase in other general and administrative expenses, none of which were individually significant.

Other income for the three months ended June 30, 2022 and 2021 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

Comparison of the Six Months Ended June 30, 2022 and 2021

The $2.2 million increase in general and administrative expenses was primarily due to an increase in personnel-related costs due to increased headcount.

Other income for the three months ended September 30, 2022 and 2021 was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

Comparison of the Nine Months Ended September 30, 2022 and 2021

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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Total other income 677 201 476

Loss before income taxes $ (172,856) $ (108,474) $ (64,382)

Provision for income taxes — (5) 5

Net loss $ (172,856) $ (108,479) $ (64,377)

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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

Psychiatry $ 25,752 $ 9,841 $ 15,911

Epilepsy 24,949 10,765 14,184

Nine Months Ended

September 30, Change

Movement disorders $ 26,777 $ 12,107 $ 14,670

Epilepsy 32,579 15,707 16,872

Psychiatry 28,394 19,029 9,365

Other exploratory CNS indications 2,853 2,957 (104)

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The $50.0 million increase in research and development expenses was primarily attributable to the following:

• $15.9 million increase in expense related to our psychiatry franchise, driven primarily by an increase in clinical-related spend for our PRAX-114 Phase 2/3 Aria and Phase 2 Acapella clinical trials which were initiated in the first quarter and second quarter of 2021, respectively;

• $14.2 million increase in expense related to our epilepsy franchise, driven primarily by an increase in clinical-related spend to support the initiation of our anticipated PRAX-222 seamless clinical trial and our PRAX-562 Phase 2 developmental epileptic encephalopathies clinical trial, an increase in clinical-related spend for our PRAX-562 Phase 1 clinical trial, an increase in preclinical activities for our earlier stage assets, and the payment of a $2.0 million license fee to Ionis Pharmaceuticals, Inc.

• $16.9 million increase in expense related to our epilepsy franchise, driven primarily by an increase in preclinical activities for PRAX-628 and our earlier stage assets, an increase in clinical-related spend for our PRAX-562 Phase 1 trials in healthy volunteers, an increase in clinical-related spend to support the initiation of the PRAX-222 EMBRAVE clinical trial, and the payment of a $2.0 million license fee to Ionis Pharmaceuticals, Inc.

in January of 2022 upon exercise of our exclusive option to obtain the rights and license to further develop and commercialize PRAX-222;

• $12.1 million increase in expense related to our movement disorders franchise, driven primarily by an increase in clinical-related spend for our PRAX-944 Phase 2 Essential1 clinical trial;

• $14.7 million increase in expense related to our movement disorders franchise, driven primarily by an increase in clinical-related spend for our PRAX-944 Phase 2b Essential1 clinical trial, an increase in clinical-related spend for our PRAX-114 Phase 2 clinical trial evaluating PRAX-114 for the treatment of ET, and an increase in clinical-related spend for our PRAX-944 Phase 1 healthy volunteer trials;

• $9.4 million increase in expense related to our psychiatry franchise, driven primarily by an increase in clinical-related spend for our PRAX-114 Phase 2 Acapella clinical trial which was initiated in the second quarter of 2021 and our Phase 2 placebo-controlled study evaluating PRAX-114 for the treatment of post-traumatic stress disorder which was initiated in the fourth quarter of 2021;

• $9.0 million increase in personnel-related costs due to increased headcount.

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• $3.4 million increase in professional fees, including a $1.6 million increase in legal fees due to increased corporate activity and patent-related work.

Other income for the six months ended June 30, 2022 and 2021, was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

Other income for the nine months ended September 30, 2022 and 2021, was comprised of interest income on our cash, cash equivalents and marketable securities and investment premium and discount amortization.

Liquidity and Capital Resources

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To date, we have financed our operations primarily with proceeds from the issuance of redeemable convertible preferred stock and from the sale of common stock through an initial public offering, a follow-on public offering and at-the-market offerings under our shelf registration statement.

From inception through June 30, 2022, we have raised $517.8 million in aggregate cash proceeds from such transactions, net of issuance costs.

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $165.4 million.

From inception through September 30, 2022, we

have raised $520.8 million in aggregate cash proceeds from such transactions, net of issuance costs.

As of September 30, 2022, we had cash, cash equivalents and marketable securities of $123.7 million.

On November 3, 2021, we entered into an Open Market Sale Agreement, or the sales agreement, with Jefferies LLC, or Jefferies, to provide for the offering, issuance and sale of up to an aggregate amount of $125.0 million of common stock from time to time in at-the-market offerings for which Jefferies acts as sales agent.

During the three months ended June 30, 2022, we did not sell any shares under the sales agreement.

During the six

months ended June 30, 2022, we issued and sold 70,410 shares under the sales agreement for aggregate net proceeds of $1.4 million.

During the three months ended September 30, 2022, we issued and sold 1,105,006 shares under the sales agreement for aggregate net proceeds of $3.0 million after deducting commissions and offering expenses payable by us.

During the nine months ended September 30, 2022, we issued and sold 1,175,416 shares under the sales agreement for aggregate net proceeds of $4.3 million after deducting commissions and offering expenses payable by us.

We have issued and sold a total of 1,567,413 shares under the sales agreement for aggregate net proceeds of $11.4 million after deducting commissions and offering expenses payable by us.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash (used in) provided by:

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

During the six months ended June 30, 2022, net cash used in operating activities of $111.3 million was primarily due to our $128.9 million net loss, partially offset by $16.7 million of non-cash charges primarily related to stock-based compensation and $0.9 million in changes in operating assets and liabilities primarily related to an increase in accounts payable and a decrease in prepaid expenses and other current assets.

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 primarily related to a decrease in accrued expenses and an increase in prepaid expenses and other current assets, partially offset by $11.4 million of non-cash charges primarily related to stock-based compensation.

During the nine months ended September 30, 2022, net cash used in operating activities of $156.2 million was primarily due to our $172.9 million net loss and $7.3 million in changes in operating assets and liabilities primarily related to a decrease in accrued expenses, partially offset by $23.9 million of non-cash charges primarily related to stock-based compensation.

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 $19.1 million of non-cash charges primarily related to stock-based compensation and $9.7 million in changes in operating assets and liabilities primarily related to an increase in accrued expenses and accounts payable.

Investing Activities

During the six months ended June 30, 2022, net cash provided by investing activities of $26.3 million was primarily related to maturities of marketable securities, partially offset by purchases of marketable securities.

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

During the nine months ended September 30, 2022, net cash provided by investing activities of $74.3 million was primarily related to maturities of marketable securities, partially offset by purchases of marketable securities.

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

Financing Activities

During the six months ended June 30, 2022, net cash provided by financing activities of $1.7 million consisted of net proceeds from at-the-market offerings of $1.4 million and proceeds from purchases of common stock under our employee stock purchase plan and from the exercise of stock options, partially offset by the payment of issuance costs for our at-the-market offerings and the payment of taxes related to the vesting of restricted stock units.

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, partially offset by the payment of issuance costs for our initial public offering..

During the nine months ended September 30, 2022, net cash provided by financing activities of $5.1 million consisted of net proceeds from at-the-market offerings of $4.3 million and proceeds from purchases of common stock under our employee stock purchase plan and from the exercise of stock options, partially offset by the

payment of issuance costs for our at-the-market offerings and the payment of taxes related to the vesting of restricted stock units.

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, partially offset by the payment of issuance costs for our initial public offering.

Plan of Operation and Future Funding Requirements

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In June 2022, following the Aria Study topline results, we announced a strategic realignment to focus resources on our Movement Disorders and Epilepsy franchises, which resulted in a reduction of our workforce and future operating expenses and extended our cash runway .

We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of June 30, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2024.

However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.

We are unable to estimate the exact amount of our working capital requirements, but based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of September 30, 2022 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2024.

Such estimates contain significant judgement as our ongoing efforts to eliminate costs not related to our strategic focus contains uncertainties as to whether we can attain such benefits.

Because of the numerous risks and uncertainties associated with product development and potential collaborations with third parties for the development of our product candidates, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

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We do not currently have any committed external source of funds.

Market volatility resulting from the COVID-19 pandemic or other factors could also adversely impact our ability to access capital as and when needed.

Market volatility could also adversely impact our ability to access capital as and when needed.

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

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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.

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.

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.

Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

4 unchanged sentences

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