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Item 2. Management’s Discussion and Analysis

2023-05-11 compared with 2022-11-09 · 95 added, 150 removed, 170 unchanged (59% 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 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, 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 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 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.

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, 2022 and set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q for the three months ended March 31, 2023, 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 insights from genetic epilepsies 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 both rare and more prevalent neurological disorders.

We are applying genetic insights to the discovery and development of therapies for neurological disorders through two proprietary platforms, using our understanding of shared biological targets and circuits in the brain.

Each platform currently has multiple programs, with significant potential for additional program and indication expansion:

• Cerebrum ™, our small molecule platform, utilizes deep understanding of neuronal excitability and neuronal networks and applies a series of computational and experimental tools to develop orally available precision therapies

• Solidus ™, our antisense oligonucleotide, or ASO, platform, is an efficient, targeted precision medicine discovery and development engine anchored on a proprietary, computational methodology

Our platforms utilize a deliberate, pragmatic and patient-guided 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 diversified, multimodal CNS portfolio with four clinical-stage product candidates across movement disorders and epilepsy.

For our most advanced product candidate under the Cerebrum™ platform, ulixacaltamide (also known as PRAX-944), topline results from the Phase 2b Essential1 clinical trial in essential tremor, or ET, were announced in the first quarter of 2023.

An end-of-Phase 2 meeting is scheduled with the U.S.

Food and Drug Administration, or FDA, in June 2023 and we intend to initiate a Phase 3 study in ET in the second half of 2023.

We initiated the PRAX-562 Phase 2 EMBOLD study in the first quarter of 2023 and expect to announce topline results in the fourth quarter of 2023.

We also announced positive results from our PRAX-628 Phase 1 study in May 2023 and expect to initiate a Phase 2 study in focal epilepsy in the fourth quarter of 2023.

For our most advanced product candidate under the Solidus™ platform, PRAX-222, we expect to announce topline results from the first dose cohort of our EMBRAVE study in the second half of 2023.

We were incorporated in 2015 and commenced operations in 2016.

Since inception, we have devoted substantially all of our resources to developing our preclinical and clinical product candidates, building our intellectual property, or IP, portfolio, business planning, raising capital and providing general and administrative support for these operations.

We employ a “virtual” research and development model, relying heavily upon external consultants, collaborators and contract research organizations, or CROs, to conduct our preclinical and clinical activities.

We employ a “virtual” research and development model, relying heavily upon external consultants, collaborators, contract development and manufacturing organizations and contract research organizations, or CROs, to conduct our preclinical and clinical activities.

Since inception, we have financed our operations primarily with proceeds from the sale and issuance of equity securities.

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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 $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 have incurred recurring operating losses since inception, including a net loss of $37.5 million for the three months

ended March 31, 2023.

As of March 31, 2023, we had an accumulated deficit of $568.1 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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We anticipate that our expenses will be maintained or increased in connection with our ongoing activities, as we:

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

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

• advance our lead product candidate, ulixacaltamide, to a late stage clinical trial for the treatment of ET;

• advance our PRAX-562 product candidate in the EMBOLD 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 PRAX-628 product candidate;

• advance our preclinical candidates to clinical trials;

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

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.

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

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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 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.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $85.8 million, which we expect will enable us to fund our operating expenses and capital expenditures into the second quarter of 2024.

Since our cash, cash equivalents and marketable securities as of March 31, 2023 may not be sufficient to fund our operations for at least the next twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

Our future viability is dependent on our ability to raise additional capital to finance our operations.

We expect to finance our operations through potential public or private equity financings, debt financings, collaboration agreements or other capital sources.

Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

We have based our assessment on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

See “—Liquidity and Capital Resources.”

Restructuring

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 nine months ended September 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 September 30, 2022, all of the $1.0 million costs were paid.

COVID-19 Business Update

In light of the ongoing COVID-19 pandemic, we continue to experience some disruptions and increased risk in our operations and those third parties upon whom we rely.

These include disruptions and risks related to the conduct of our clinical trials and preclinical studies as policies at various clinical sites and federal, state, local and foreign laws, rules and regulations continue to evolve, including quarantines, travel restrictions and redirection of healthcare resources toward pandemic response efforts.

The COVID-19 pandemic has impacted the enrollment of some of our ongoing clinical trials, including slower patient enrollment and treatment in some of our clinical studies, the impact of which has varied by clinical study and program, but none of which have significantly impacted our overall clinical trial timelines.

While we have experienced limited financial impacts to date, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic such as increased inflation, our business, financial condition and results of operations could be 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.

Financial Operations Overview

We have not generated any revenue since inception and do not expect to generate any revenue from the sale of products for several years, if at all.

If our development efforts for our current or future product candidates are successful and result in marketing approval or collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.

We have not generated any revenue from the sale of products since inception and do not expect to generate any revenue from the sale of products for several years, if at all.

As discussed in Note 7 to our condensed consolidated financial statements, we entered into an Option and License Agreement, or the Collaboration Agreement, with UCB Biopharma SRL, or UCB, in December 2022.

During the three months ended March 31, 2023, we recognized $0.7 million of collaboration revenue from the Collaboration Agreement.

Operating Expenses

Research and Development Expense

Research and Development Expenses

The nature of our business and primary focus of our activities generate a significant amount of research and development costs.

Research and development expenses represent costs incurred by us for the following:

• costs to develop our portfolio;

• costs to develop our IP portfolio;

• discovery efforts leading to development candidates;

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• costs incurred with third-party contract development and manufacturing organizations to acquire, develop and manufacture materials for preclinical and clinical studies;

• depreciation, amortization and other direct and allocated expenses, including rent and other operating costs, incurred as a result of our research and development activities.

• depreciation, amortization and other direct and allocated expenses, including rent and other operating costs, such as information technology, incurred as a result of our research and development activities.

We expense research and development costs as incurred.

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 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 condensed consolidated balance sheets as prepaid expenses or accrued 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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As a company operating in a virtual environment, a significant portion of our research and development costs have been external costs.

We track direct external research and development expenses to specific franchises and product candidates upon commencement.

Due to the number of ongoing studies and our ability to use resources across several projects, indirect or shared operating costs incurred for our research and development franchises, such as personnel, facility costs and certain consulting costs, are not recorded or maintained on a franchise-specific basis.

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):

We track direct external research and development expenses to specific platforms and product candidates upon commencement.

Due to the number of ongoing studies and our ability to use resources across platforms, indirect or shared operating costs incurred for our research and development platforms, such as personnel, facility costs and certain consulting costs, are not recorded or maintained on a platform-specific basis.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

$ 11,135 $ 33,955

Movement disorders

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

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

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

Other exploratory CNS indications 414 1,475 2,853 2,957

Personnel-related (including stock-based compensation) 8,126 11,141

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• our ability to commercialize products, if approved, whether alone or in collaboration with others;

• the continued acceptable safety profiles of the product candidates following approval.

• the continued acceptable safety profiles of our product candidates.

A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete our clinical development activities.

enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete our clinical development activities.

We may never obtain regulatory approval for any of our product candidates.

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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, such as information technology.

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

These costs relate to the operation of the business and are unrelated to the research and development function or any individual franchise or product candidate.

These costs relate to the operation of the business and are unrelated to the research and development function or any individual platform or product candidate.

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

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

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

There was no income tax provision recognized for the three months ended March 31, 2023 and 2022.

Results of Operations

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):

Comparison of the Three Months Ended March 31, 2023 and 2022

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

Three Months Ended

September 30, Change

March 31, Change

Collaboration revenue $ 683 $ — $ 683

Operating expenses:

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Total other income 636 132 504

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

Provision for income taxes — (5) 5

Net loss $ (37,455) $ (68,717) $ 31,262

Collaboration Revenue

The $0.7 million increase in collaboration revenue is associated with the revenue recorded as research services are provided and costs are incurred under the Collaboration Agreement with UCB that was executed in December 2022.

Research and Development Expense

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Three Months Ended

September 30, Change

Movement disorders

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

March 31, Change

$ 11,135 $ 33,955 $ (22,820)

3,602 6,042 (2,440)

Other exploratory CNS indications 414 1,475 (1,061)

Personnel-related (including stock-based compensation) 8,126 11,141 (3,015)

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The $27.1 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 $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):

Nine Months Ended

September 30, Change

Operating expenses:

Research and development $ 126,711 $ 76,746 $ 49,965

General and administrative 46,822 31,929 14,893

Total operating expenses 173,533 108,675 64,858

Loss from operations (173,533) (108,675) (64,858)

Other income:

Other income, net 677 201 476

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)

Research and Development Expense

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

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)

Personnel-related (including stock-based compensation) 30,590 21,584 9,006

Other indirect research and development expenses 5,518 5,362 156

Total research and development expenses $ 126,711 $ 76,746 $ 49,965

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

• $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.

• $22.8 million decrease in expense related to our Cerebrum™ platform, driven primarily by:

◦ a $14.6 million decrease in clinical-related spend for our PRAX-114 program due to our strategic realignment in the second quarter of 2022;

◦ a $6.7 million decrease in spend for our PRAX-562 program, primarily related to the prior year completion of our Phase 1 clinical trial and prior year manufacturing campaign purchases, partially offset by startup costs related to the EMBOLD Phase 2 clinical trial in the first quarter of 2023;

◦ a $2.3 million decrease in activities for our earlier stage assets;

◦ a $1.3 million decrease in spend for our ulixacaltamide program, primarily due to the completion of a manufacturing campaign in the prior year;

◦ an $2.0 million increase in clinical-related spend for our PRAX-628 Phase 1 clinical trial.

• $2.4 million decrease in expense related to our Solidus™ platform, driven primarily by 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;

• $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.

• $3.0 million decrease in personnel-related costs due to decreased headcount;

• $1.1 million increase in indirect expenses, none of which were individually significant.

General and Administrative Expense

The $14.9 million increase in general and administrative expenses was primarily attributable to the following:

• $10.9 million increase in personnel-related costs due to increased headcount;

• $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 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.

The $2.9 million decrease in general and administrative expenses was primarily attributable to the following:

• $1.2 million decrease in consulting expenses;

• $1.7 million decrease in other general and administrative expenses, including decreased personnel costs.

Other income for the three months ended March 31, 2023 and 2022 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 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.

From inception through March 31, 2023, we have raised $544.1 million in aggregate cash proceeds from such transactions, net of issuance costs.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $85.8 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 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.

Historical Cash Flows

During the three months ended March 31, 2023, we issued and sold 8,403,809 shares under the Sales Agreement for aggregate net proceeds of $18.1 million after deducting commissions and offering expenses payable by us.

As of March 31, 2023, we have issued and sold a total of 12,391,079 shares under the Sales Agreement for aggregate net proceeds of $34.7 million after deducting commissions and offering expenses payable by us.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash (used in) provided by:

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Financing activities 18,070 1,209

Net decrease in cash, cash equivalents and restricted cash $ (76,864) $ (130,513)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 19,224 $ (61,450)

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 operating assets and liabilities, which are primarily the result of increased expenses and timing of vendor payments.

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.

During the three months ended March 31, 2023, net cash used in operating activities of $32.8 million was primarily due to our $37.5 million net loss and $3.3 million in changes in operating assets and liabilities primarily related to a decrease in accrued expenses, partially offset by $7.9 million of non-cash charges primarily related to stock-based compensation.

During the three months ended March 31, 2022, net cash used in operating activities of $54.1 million was primarily due to our $68.7 million net loss, partially offset by $8.5 million of non-cash charges primarily related to stock-based compensation, and $6.1 million in changes in operating assets and liabilities primarily related to increases in accounts payable and accrued expenses.

Investing Activities

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.

During the three months ended March 31, 2023, net cash provided by investing activities of $34.0 million was related to maturities of marketable securities.

During the three months ended March 31, 2022, net cash used in investing activities of $8.6 million was primarily related to the purchase of marketable securities, partially offset by the maturity of marketable securities.

Financing Activities

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.

During the three months ended March 31, 2023, net cash provided by financing activities of $18.1 million consisted of net proceeds from at-the-market offerings.

During the three months ended March 31, 2022, net cash provided by financing activities of $1.2 million consisted of net proceeds from at-the-market offerings of $1.4 million and proceeds 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.

Plan of Operation and Future Funding Requirements

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We anticipate that our expenses will increase substantially if and as we:

• advance the clinical development of our clinical-stage product candidates within our movement disorders and epilepsy franchises;

• advance the clinical development of our clinical-stage product candidates within our Cerebrum™ and Solidus™ platforms;

• advance the development of any additional product candidates;

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• 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.

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 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.

As of March 31, 2023, we had cash, cash equivalents and marketable securities of $85.8 million.

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 March 31, 2023 will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024.

We have incurred recurring losses since our inception, including a net loss of $37.5 million for the three months ended March 31, 2023.

In addition, as of March 31, 2023, we had an accumulated deficit of $568.1 million.

We expect to continue to generate operating losses for the foreseeable future.

We have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year of the issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Since we expect that our cash, cash equivalents and marketable securities as of March 31, 2023 may not be sufficient to fund operations for at least the next twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

Our future viability is dependent on our ability to raise additional capital to finance our operations.

We expect to finance our operations through potential public or private equity financings, debt financings, collaboration agreements or other capital sources.

Our inability to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

There can be no assurance that the current operating plan will be achieved or that additional funding will be available on terms acceptable to us, or at all.

We have based our assessment on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.

and development of our product candidates.

Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including, but not limited to:

• the scope, progress, results and costs of preclinical studies and clinical trials for our franchises and product candidates;

• the scope, progress, results and costs of preclinical studies and clinical trials for our platforms and product candidates;

• the number and characteristics of product candidates and technologies that we develop or may in-license;

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• the effect of competing technological and market developments;

• the impact of any business interruptions to our operations or to those of our manufacturers, suppliers or other vendors resulting from the COVID-19 pandemic or similar public health crisis;

• the extent to which we acquire or invest in businesses, products and technologies, including entering into licensing or collaboration arrangements for product candidates, although we currently have no commitments or agreements to complete any such acquisitions or investments in businesses.

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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