What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-06 · 72 added, 76 removed, 157 unchanged (49% of the section changed)

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This discussion and other parts of this report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions.

Our actual results could differ materially from those discussed in these forward-looking statements.

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

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

Our actual results could differ materially from those discussed in these forward-looking and other statements.

Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report entitled “Risk Factors.”

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Gilead Collaboration

On May 27, 2020, we entered into an Option, License and Collaboration Agreement (Gilead Collaboration Agreement), Common Stock Purchase Agreement (the Purchase Agreement), and Investor Rights Agreement, each with Gilead Sciences, Inc.

On May 27, 2020, we entered into the Gilead Collaboration Agreement, a Common Stock Purchase Agreement (the Stock Purchase Agreement), and an Investor Rights Agreement, (collectively, the Gilead Agreements), each with Gilead.

The transaction closed on July 13, 2020 following expiration of the antitrust waiting period.

Upon closing, Gilead made an upfront payment of $175 million pursuant to the Gilead Collaboration Agreement, Gilead made an equity investment of approximately $200 million in us by purchasing 5,963,029 shares of our common stock at a per share price of $33.54 pursuant to the Purchase Agreement, and we appointed Gilead’s designee, Merdad Parsey, M.D., Ph.D., to our Board of Directors pursuant to the Investor Rights Agreement.

Pursuant to the terms of the Gilead Collaboration Agreement, Gilead has an exclusive license to develop and commercialize zimberelimab (formerly referred to as AB122) in certain markets and obtained exclusive options to acquire an exclusive license to develop and commercialize all of our current and future clinical programs during the 10-year collaboration term and, for those programs that enter clinical development prior to the end of the collaboration term, for up to an additional three years thereafter.

Gilead may exercise its option, on a program-by-program basis, upon payment of an option fee that ranges from $200 million to $275

million per program for our current clinical programs, and $150 million per program for all other programs that enter clinical development.

Upon closing, Gilead made an upfront payment of $175 million pursuant to the Gilead Collaboration Agreement, Gilead made an equity investment of approximately $200 million in us by purchasing 5,963,029 shares of our common stock at a per share price of $33.54 pursuant to the Stock Purchase Agreement, and we appointed Gilead’s designee, Merdad Parsey, M.D., Ph.D., to our Board of Directors pursuant to the Investor Rights Agreement.

develop and commercialize all of our current and future clinical programs during the 10-year collaboration term , contingent upon Gilead’s payment of $400 million, with the first payment of $100.0 million in 2022 and an additional $100.0 million payment due at Gilead’s option on each of the fourth, sixth, and eighth anniversar ies of the agreement .

For those programs that enter clinical development prior to the end of the collaboration term, Gilead’s option rights will extend for up to an additional three years thereafter.

Gilead may exercise its option, on a program-by-program basis, upon payment of an option fee that ranges from $200 million to $275 million per program for our current clinical programs, and $150 million per program for all other programs that enter clinical development.

If Gilead exercises its option with respect to our TIGIT program, we are also eligible to receive up to $500 million in potential U.S.

regulatory approval milestones with respect to domvanalimab (formerly referred to as AB154).

Upon Gilead’s exercise of its option to a program, the two companies will co-develop and equally share global development costs, subject to certain of our opt-out rights, expense caps on our spending and true-up adjustments.

Upon Gilead’s exercise of its option to a program, the two companies will co-develop and equally share global development costs, subject to certain of our opt-out rights, and expense caps on our spending and related subsequent adjustments.

For each optioned program, provided we have not exercised our opt-out rights, we have an option to co-promote in the United States with equal sharing of related profits and losses.

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Gilead will further provide ongoing research and development support of up to $400 million over the collaboration term.

Pursuant to the Purchase Agreement and the Investor Rights Agreement, Gilead has the right, at its option, to purchase additional shares from us, up to a maximum of 35% of our then-outstanding voting common stock, from time to time over the next five years, at a purchase price equal to the greater of a 20% premium to market (based on a trailing five-day average closing price) at the time Gilead exercises such option, and the $33.54 initial purchase price.

Pursuant to the Stock Purchase Agreement and the Investor Rights Agreement, Gilead has the right, at its option, to purchase additional shares from us, up to a maximum of 35% of our then-outstanding voting common stock, from time to time over the next five years, at a purchase price equal to the greater of a 20% premium to market (based on a trailing five-day average closing price) at the time Gilead exercises such option, and the $33.54 initial purchase price.

The Investor Rights Agreement also includes a three-year standstill and a two-year lockup and provides Gilead with registration rights commencing at the end of the lockup period, pro rata participation rights in certain future financings and the right to designate two individuals to be appointed to our Board of Directors.

COVID-19 Pandemic

The degree to which COVID-19 impacts our business operations, research and development programs and financial condition will depend on future developments, including new information which may emerge concerning the duration and/or severity of the outbreak and any resurgences, actions by government authorities to contain the spread of the virus, and when and to what extent normal economic and operating conditions can resume.

Our management is actively monitoring this health crisis and its effects on our operations, key vendors and workforce.

In mid-March, we voluntarily transitioned our employees, including our laboratory-based personnel, to work-from-home prior to the institution of state and local shelter-in-place orders.

Most of our non-laboratory operations, including the conduct and management of our clinical trials and the contract manufacturing organizations engaged in CMC activities on our behalf, were easily and quickly transitioned to remote work arrangements.

However, we were not able to transition our laboratory operations to work-from-home and only arranged for limited outsourcing of our discovery activities to third-party research organizations.

In late June, we began to transition our laboratory-based personnel back into our facilities;

however, our laboratories are operating at reduced capacity due to employee safety measures, such as social distancing requirements and shift work.

Our non-laboratory-based personnel continue to work remotely.

Entering 2020, we anticipated that our discovery-stage programs would lead to the advancement of two new molecules into clinical studies in the first quarter of 2021.

Based upon current timelines, the first program that we expect to advance into clinical studies remains on-track to meet this objective.

The suspension of our laboratory operations has delayed the advancement of the second of these two discovery-stage programs into clinical studies;

however, the magnitude of this delay is not yet known.

Despite the public health and mandatory self-quarantine measures in force during the second quarter, we continued to see relatively robust enrollment across our ongoing Arcus-sponsored studies.

However, w e continue to expect that this pandemic will result in delays to some of our clinical programs, particularly in initiating new studies and/or new investigational sites due to diversion of their resources away from necessary start-up activities, and by limiting the ability of investigational sites to conduct all activities associated with our ongoing studies.

For example, the circumstances may hinder their ability to screen patients for enrollment.

We are collaborating with our investigational sites to implement measures to minimize disruptions to patients and ensure continued access to treatment, in accordance with health authority guidance.

The degree to which COVID-19 impacts our business operations, research and development programs and financial condition will depend on future developments, including the ultimate duration and/or severity of the outbreak and any resurgences, actions by government authorities to contain the spread of the virus, the timing, availability and effectiveness of any vaccines, and when and to what extent normal economic and operating conditions can resume.

Our management continues to actively monitor this health crisis and its effects on our operations, key vendors and workforce.

We conduct our clinical trials in the U.S.

and internationally in geographic regions that are impacted by COVID-19 to varying degrees.

While we have seen relatively robust enrollment across our ongoing Arcus-sponsored studies, we expect to see volatility as local governments respond to resurgences and during the upcoming flu season, each of which may result in the prolonged reinstitution, extension or enhancement of shelter-in-place measures.

The American Cancer Society has also reported that the pandemic has led to declines in screening, diagnosis and treatment for cancer patients, which will impact the enrollment of patients in clinical trials targeting early stage cancers and retention of patients overall in our trials.

Patient safety remains our paramount concern and we continue to collaborate with our existing and with new investigational sites to implement measures to minimize disruptions to patients and ensure continued access to treatment, in accordance with health authority guidance.

We are unable to predict the full impact of this pandemic on our clinical programs.

With respect to manufacturing and supply, we believe we currently have sufficient drug supply for our ongoing clinical studies.

Our third-party contract manufacturers continue to operate at or near normal levels and, at this time and subject to further COVID-19 implications, we do not anticipate any disruptions to our drug supply chain.

The full impact of the COVID-19 outbreak continues to evolve and is highly uncertain and subject to change.

Our discovery programs were impacted by the suspension in our laboratory-based operations from mid-March to late June.

Despite the return of our laboratory-based personnel back into our facilities, our laboratories are operating at reduced capacity due to employee safety measures, such as social distancing requirements and shift work.

Entering 2020, we expected to advance two preclinical programs into the clinic in the first quarter of 2021.

The suspension and reduced operating capacity have delayed the advancement of the second program until the second half of 2021.

The full impact of the COVID-19 outbreak remains highly uncertain and subject to change.

In connection with our resumption of laboratory operations, we instituted regular COVID-19 testing services in order to minimize the risk to our employees.

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Collaboration and License Revenue

Under the Taiho Agreement, we recognize revenue from the upfront and annual payments for research and development services performed by us to develop our investigational products and from option exercise payments upon Taiho’s exercise of options during the Option Period.

Our collaboration and license revenue consists of revenue recognized from the upfront and periodic payments received from Taiho and Gilead, for research and development services performed by us to develop our investigational products under the terms of our collaboration agreements, and from any option exercise payments.

Operating Expenses

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We believe that the accounting policies relating to revenue recognition, clinical trial accruals and stock-based compensation reflect the more significant estimates and assumptions used in the preparation of our condensed consolidated financial statements.

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2020, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2019 and more fully described in Note 2 of the accompanying condensed consolidated financial statements.

Except for those updates resulting from our entering into the Gilead Agreements, there have been no significant changes in our critical accounting policies and estimates during the nine months ended September 30, 2020, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2019 and more fully described in Note 2 of the accompanying condensed consolidated financial statements.

Results of Operations

Three Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019 (in thousands):

Three Months Ended June 30,

Three Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30,

Collaboration and license revenue

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General and administrative

Loss from operations

Income (loss) from operations

Non-operating income (expense):

Interest and other income, net

Gain on deemed sale from equity method investee

Share of loss from equity method investee

Total non-operating income, net

Net income (loss)

* Not meaningful

Collaboration and License Revenue

Collaboration and license revenue was $1.8 million for the three months ended June 30, 2020 and 2019 and relates to our license and collaboration agreement with Taiho.

Collaboration and license revenue increased $62.7 million, from $1.8 million for the three months ended September 30, 2019 to $64.5 for the three months ended September 30, 2020.

The increase in collaboration and license revenue was primarily due to the recognition of $55.1 million in revenue for the license to zimberelimab and $7.7 million related to Gilead’s ongoing rights to access our intellectual property in accordance with the Gilead Collaboration Agreement.

Research and Development Expenses

Research and development expenses increased $10.7 million, or 43%, from $25.0 million for the three months ended June 30, 2019 to $35.7 million for the three months ended June 30, 2020.

The increase in research and development expenses was due to a $6.3 million increase in manufacturing costs required to supply our clinical studies, an increase of $3.8 million in clinical costs for our ongoing clinical studies, and an increase of $3.9 million in employee compensation costs primarily due to additional headcount, approximately $1.5 million of which consists of non-cash stock-based compensation.

Those increases were partially offset by a decrease of $2.5 million due to the achievement of certain development milestones which resulted in expenses of $5.0 million pursuant to the terms of our WuXi Agreement, compared to a $7.5 million milestone payment to WuXi that was recorded in the same period in the prior year.

We also saw a decrease of $1.2 million in lab supplies and equipment due to decreased lab activities caused by shelter-in-place orders amid the COVID pandemic.

Research and development expenses increased $34.6 million, or 200%, from $17.2 million for the three months ended September 30, 2019 to $51.8 million for the three months ended September 30, 2020.

The increase in research and development expenses was primarily due to an $11.1 million increase in manufacturing costs required to supply our clinical studies, an increase of $4.5 million in clinical costs for our ongoing clinical studies, and an increase of $5.2 million in employee compensation costs primarily due to additional headcount, approximately $2.1 million of which consists of non-cash stock-based compensation.

We also incurred $13.1 million in expense in the three months ended September 30, 2020, consisting of a $10.1 million sub-license fee due to WuXi for zimberelimab and a $3.0 million payment due to the achievement of a development milestone under Abmuno Agreement, with no corresponding payments in the same period of the prior year.

General and Administrative Expenses

General and administrative expenses increased $5.5 million, or 93%, from $5.9 million for the three months ended June 30, 2019 to $11.4 million for the three months ended June 30, 2020.

The increase in general and administrative expenses was due to $2.0 million in legal and accounting expenses largely incurred as a result of our collaboration agreement with Gilead, as well as $1.9 million in consulting expenses driven largely by corporate development activities.

We also incurred increased expense of $1.3 million in employee compensation costs primarily due to additional headcount, approximately $0.8 million of which consists of non-cash stock-based compensation.

General and administrative expenses increased $3.4 million, or 44%, from $7.8 million for the three months ended September 30, 2019 to $11.2 million for the three months ended September 30, 2020.

The increase in general and administrative expenses was primarily due to $1.3 million in employee compensation costs primarily due to additional headcount, approximately $1.2 million of which consists of non-cash stock-based compensation.

Additional increases in finance and legal expenses were largely driven by expenses incurred as a result of our transaction with Gilead as well as costs incurred to support our growth and ongoing compliance with public company requirements.

Interest and Other Income, Net

Interest and other income, net decreased $1.2 million or 80%, from $1.5 million for the three months ended June 30, 2019 to $0.3 million for the three months ended June 30, 2020.

The decrease was primarily due to lower interest income resulting from lower investment yields on our portfolio of marketable fixed-income securities and lower average cash and investment balances in the three months ended June 30, 2020 as compared to the same period in the prior year.

Gain on Deemed Sale from Equity Method Investee

Gain on deemed sale from equity method investee was $0.1 million for the three months ended June 30, 2020 due to a gain recorded in connection with PACT Pharma’s Series C-1 preferred financing in June 2020 in which we did not participate.

Interest and other income, net decreased $1.0 million or 78%, from $1.3 million for the three months ended September 30, 2019 to $0.3 million for the three months ended September 30, 2020.

The decrease was primarily due to lower interest income resulting from lower investment yields on our portfolio of marketable fixed-income securities in the three months ended September 30, 2020 as compared to the same period in the prior year.

Share of Loss from Equity Method Investee

Share of loss from equity method investee was $0.1 million for each of the three months ended June 30, 2020 and 2019 due to equity method losses resulting from PACT’s expanding operations.

Six Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019 (in thousands):

Six Months Ended June 30,

We recognized no loss on our investment in PACT for the three months ended September 30, 2020 as the carrying value of the investment balance was zero.

We recognized $0.4 million in losses in the same period in 2019 due to equity method losses resulting from PACT’s expanding operations.

Nine Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended September 30,

Collaboration and license revenue

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Collaboration and License Revenue

Collaboration and license revenue was $3.5 million for the six months ended June 30, 2020 and 2019 and relates to our license and collaboration agreement with Taiho.

Collaboration and license revenue increased $62.7 million, from $5.3 million for the nine months ended September 30, 2019 to $68.0 million for the nine months ended September 30, 2020.

Research and Development Expenses

Research and development expenses increased $18.2 million, or 45%, from $40.6 million for the six months ended June 30, 2019 to $58.8 million for the six months ended June 30, 2020.

The increase in research and development expenses was due to an increase of $8.5 million in clinical costs for our ongoing clinical studies, an increase of $6.9 million in employee compensation costs primarily due to additional headcount, approximately $2.4 million of which consists of non-cash stock-based compensation, and a $5.9 million increase in manufacturing costs required to supply our clinical studies.

We also saw a decrease of $1.4 million in lab supplies and equipment due to decreased lab activities caused by shelter-in-place orders amid the COVID pandemic.

Research and development expenses increased $52.8 million, or 91%, from $57.8 million for the nine months ended September 30, 2019 to $110.6 million for the nine months ended September 30, 2020.

The increase in research and development expenses was primarily due to an increase of $17.7 million in manufacturing costs required to supply our clinical studies, an increase of $13.4 million in clinical costs for our ongoing clinical studies, and an increase of $12.2 million in employee compensation costs primarily due to additional headcount, approximately $4.5 million of which consists of non-cash stock-based compensation.

Expenses related to sublicense fees and milestone payments also increased $10.6 million, from $7.5 million for the nine months ended September 30, 2019 to $18.1 million for the nine months ended September 30, 2020 as a result of the sublicense fee paid to WuXi and milestone payments paid to WuXi and Abmuno.

Those increases were partially offset by a decrease of $1.4 million in lab supplies and equipment due to decreased lab activities caused by shelter-in-place orders amid the COVID pandemic.

General and Administrative Expenses

General and administrative expenses increased $7.5 million, or 70%, from $10.9 million for the six months ended June 30, 2019 to $18.4 million for the six months ended June 30, 2020.

The increase in general and administrative expenses was due to $2.3 million in legal and accounting expenses largely incurred as a result of our collaboration agreement with Gilead, as well as $2.4 million in consulting expenses driven largely by corporate development activities.

We also incurred increased expense of $2.4 million in employee compensation costs primarily due to additional headcount, approximately $1.7 million of which consists of non-cash stock-based compensation, and a $0.5 million increase in expenses driven by investments in information technology and network security.

General and administrative expenses increased $11.0 million, or 59%, from $18.6 million for the nine months ended September 30, 2019 to $29.6 million for the nine months ended September 30, 2020.

The increase in general and administrative expenses was due primarily to $2.2 million in consulting expenses incurred in corporate development activities.

We also incurred increased expense of $3.7 million in employee compensation costs primarily due to additional headcount, approximately $2.9 million of which consists of non-cash stock-based compensation, and $3.5 million in legal and accounting expenses incurred to support our expanding operations and ongoing compliance with public company requirements.

Interest and Other Income, Net

Interest and other income, net decreased $2.1 million or 69%, from $3.0 million for the six months ended June 30, 2019 to $0.9 million for the six months ended June 30, 2020.

The decrease was primarily due to lower interest income resulting from lower investment yields on our portfolio of marketable fixed-income securities and lower average cash and investment balances during the six months ended June 30, 2020 as compared to the same period in the prior year.

Interest and other income, net decreased $3.1 million or 71%, from $4.3 million for the nine months ended September 30, 2019 to $1.2 million for the nine months ended September 30, 2020.

The decrease was primarily due to lower interest income resulting from lower investment yields on our portfolio of marketable fixed-income securities during the nine months ended September 30, 2020 as compared to the same period in the prior year.

Gain on Deemed Sale from Equity Method Investee

Gain on deemed sale from equity method investee was $0.6 million for the six months ended June 30, 2020 due to gains recorded in connection with PACT Pharma’s Series C and Series C-1 preferred financings in January 2020 and June 2020, respectively, in which we did not participate.

Gain on deemed sale from equity method investee was $0.6 million for the nine months ended September 30, 2020 due to gains recorded in connection with PACT Pharma’s Series C and Series C-1 preferred financings in January 2020 and June 2020, respectively, in which we did not participate.

Share of Loss from Equity Method Investee

Share of loss from equity method investee was $0.6 million and $0.8 million for the six months ended June 30, 2020 and 2019, respectively, due to equity method losses resulting from PACT’s expanding operations.

Share of loss from equity method investee was $0.6 million and $1.2 million for the nine months ended September 30, 2020 and 2019, respectively, due to equity method losses resulting from PACT’s expanding operations.

Liquidity and Capital Resources

To date, we have financed our operations primarily through net proceeds of $226.2 million from private placements of convertible preferred stock, $46.0 million in proceeds from the Taiho Agreement, net proceeds of $124.7 million from our initial public offering of our common stock in March 2018, and $326.2 million of net proceeds in our May 2020 Public Offering.

As of June 30, 2020, we had $462.5 million of cash, cash equivalents, and investments in marketable securities.

In addition, in July 2020 we received $375.0 million from Gilead upon the closing of the transactions under the Collaboration Agreement and Stock Purchase Agreement with Gilead.

As of September 30, 2020, we had $785.1 million of cash, cash equivalents, and investments in marketable securities, compared to $188.3 million as of December 31, 2019.

Our cash and investments are held in a variety of interest-bearing instruments, including money market funds, U.S.

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government agency securities, and investments in corporate securities.

In addition, in July 2020 we received $375.0 million from Gilead upon the closing of the transactions under the Collaboration Agreement and Purchase Agreement with Gilead.

Based on our existing business plan, we believe that our existing cash, cash investments, and short-term investments will be sufficient to fund our planned level of operations through at least the next 12 months following the filing date of this report.

Based on our existing business plan, we believe that our existing cash, cash equivalents, and investments will be sufficient to fund our planned level of operations through at least the next 12 months following the filing date of this report.

We may require additional capital to complete the development and any commercialization of our investigational products.

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the scope and costs of manufacturing development and commercial manufacturing activities;

the timing and amount of programs Gilead exercises its option to, and the costs associated with our share of the global development plan for such optioned programs;

the timing and amount of programs Gilead exercises its option to obtain an exclusive license to our current and future clinical programs, subject to the rights of our existing partners, and the costs associated with our share of the global development plan for such optioned programs;

the timing and amount of milestone payments we receive under the Taiho Agreement and Gilead Collaboration Agreement, and option fees under the Gilead Collaboration Agreement;

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The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash (used in) provided by:

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Net increase in cash, cash equivalents and restricted cash

Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2020 increased by $18.6 million to $55.2 million as compared to $36.6 million for the same period in the prior year.

The increase in cash used is primarily due to the $27.1 million increase in our net loss to $72.8 million.

The change in our net loss is primarily a result of our expanded clinical development activities and general and administrative costs incurred to support our operations.

The overall increase in cash used is partially offset by year-over-year changes in non-cash items, including $4.1 million of increased expense from stock-based compensation.

Additional increase in cash used resulted from changes in our asset and liability balances due to the timing of payments to or from our vendors and collaborators.

Cash Provided by (Used in) Operating Activities

Net cash provided by (used in) operating activities was $161.1 million provided by operating activities for the nine months ended September 30, 2020, as compared to $64.0 million cash used in operating activities for the same period in the prior year.

The change in cash flow from operating activities is primarily due to cash received at the close of the Gilead Collaboration Agreement in July 2020, year-over-year changes in non-cash items, including $7.4 million of increased expense from stock-based compensation, and changes in our asset and liability balances due to the timing of payments to or from our vendors and collaborators.

Cash Provided by (Used In) Investing Activities

Cash provided by (used in) investing activities was a $47.0 million use of cash for the six months ended June 30, 2020 compared to $41.0 million provided by investing activities for the same period in the prior year.

The change in cash flow from investing activities was primarily due to purchases and maturities of our investments in fixed-income marketable securities, as we invested proceeds from our May 2020 Public Offering.

Cash provided by (used in) investing activities was a $434.1 million use of cash for the nine months ended September 30, 2020 compared to $71.3 million provided by investing activities for the same period in the prior year.

The change in cash flow from investing activities was primarily due to net purchases of our investments in fixed-income marketable securities, as we invested proceeds received from our May 2020 Public Offering, the Gilead Collaboration Agreement, and the Stock Purchase Agreement.

Cash Provided by Financing Activities

Cash provided by financing activities was $329.5 million for the six months ended June 30, 2020 compared to an immaterial amount of cash provided in the same period in the prior year.

The increase in cash provided is primarily due to cash received from our May 2020 Public Offering, net of direct offering costs, as well as funds received during the six months ended June 30, 2020 for issuance of common stock pursuant to equity award plans.

Cash provided by financing activities was $437.0 million for the nine months ended September 30, 2020 compared to an immaterial amount of cash provided in the same period in the prior year.

The increase in cash provided is primarily due to cash received from our May 2020 Public Offering, net of direct offering costs, the Stock Purchase Agreement, and funds received during the nine months ended September 30, 2020 for issuance of common stock pursuant to equity award plans.

Contractual Obligations and Commitments

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The lease amendment provides for one eight-year extension period.

Other than this lease, there have been no material changes outside the ordinary course of business during the six months ended June 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

Other than this lease, there have been no material changes outside the ordinary course of business during the nine months ended September 30, 2020, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019.

JOBS Act Accounting Election

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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