What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-02-03 compared with 2021-11-04 · 98 added, 89 removed, 363 unchanged (34% of the section changed)

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We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

We are a clinical-stage biotechnology company committed to applying our leading expertise in the field of oncolytic immunotherapy to transform the lives of cancer patients.

We use our proprietary Immulytic platform to design and develop product candidates that are intended to maximally activate the immune system against cancer.

We are a clinical-stage biotechnology company committed to applying our leading expertise in the field of oncolytic immunotherapy to transform the lives of cancer patients through our novel tumor-directed oncolytic immunotherapies.

Our proprietary tumor-directed oncolytic immunotherapy product candidates are designed and intended to maximally activate the immune system against cancer.

Oncolytic immunotherapy is an emerging drug class, which we intend to establish as the second cornerstone of immune-based cancer treatments, alongside checkpoint blockade.

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We believe that the bundling of multiple approaches for the treatment of cancer into single therapies will simplify the development path of our product candidates, while also improving patient outcomes at a lower cost to the healthcare system than the use of multiple different drugs.

The foundation of our Immulytic platform consists of a proprietary, engineered strain of herpes simplex virus 1, or HSV-1, that has been “armed” with a fusogenic glycoprotein intended to substantially increase anti-tumor activity.

Our Immulytic platform enables us to incorporate various genes into HSV-1 that are intended to further augment the inherent properties of HSV-1 in order to both directly destroy tumor cells and induce an anti-tumor immune response.

We currently have three product candidates in our development pipeline, RP1 (vusolimogene oderparepvec), our lead product candidate, RP2 and RP3.

Our proprietary RPx platform is based on a proprietary, engineered strain of herpes simplex virus 1, or HSV-1, backbone with payloads added to maximize immunogenic cell death and the induction of a systemic anti-tumor immune response.

The RPx platform has a unique dual local and systemic mechanism of action, or MOA, consisting of direct selective virus-mediated killing of the tumor resulting in the release of tumor derived antigens and altering of the tumor microenvironment, or TME, to ignite a strong and durable systemic response.

This MOA is expected to be synergistic with most established and experimental cancer treatment modalities, and, with an attractive safety profile the RPx platform is expected to have the versatility to be developed alone or combined with a variety of other treatment options.

We currently have three RPx product candidates in our development pipeline, RP1 (vusolimogene oderparepvec), our lead product candidate, RP2 and RP3.

Although our fiscal year runs from April 1 st - March 31 st , our programs and program updates are reported on a calendar year basis.

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If this clinical trial generates compelling clinical data demonstrating the benefits of the combined treatment, we believe the data could support a filing with regulatory authorities seeking marketing approval.

We expect to complete enrollment in mid-year 2022 and for the primary data read-out to be triggered in late 2022.

We currently expect to complete enrollment in mid-year 2022 and for the primary data analysis to be triggered six months thereafter.

We continue our collaboration with BMS under which it has granted us a non-exclusive, royalty-free license to, and is supplying at no cost, its anti-PD-1 therapy, nivolumab, for use in combination with RP1 in our multi-cohort Phase 1/2 IGNYTE clinical trial.

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We initiated this cohort after completing enrollment in a prior Phase 2 cohort in the same clinical trial of approximately 30 patients with melanoma, which demonstrated the safety and clinical activity of the combination of RP1 and nivolumab in patients with melanoma who failed prior anti-PD-1 when given alone or in combination with CTLA-4 blockade.

In March 2021 we held a Type B meeting with the United States Federal Drug Administration (the "FDA") to discuss the design of this cohort in the IGNYTE trial.

In March 2021 we held a Type B meeting with the United States Federal Drug Administration, or FDA, to discuss the design of this cohort in the IGNYTE trial.

In this meeting, the FDA expressed its view that while a randomized controlled clinical trial would always be preferred for registration purposes, in this patient population with no clear standard of care, if the clinical data is sufficiently compelling then the data could be considered for submission by the FDA under the accelerated approval pathway.

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We intend to discuss the design of the confirmatory trial with the FDA prior to a BLA submission.

We expect to complete enrollment in mid-year 2022 and release initial interim data from this cohort in late 2022.

In order to document sufficient durability of response, an important secondary endpoint of the study, the timing of the primary analysis upon which a filing is intended to be made is expected to be triggered in mid-year 2023.

We expect to release initial directional data from this cohort in late 2022.

In order to document sufficient durability of response, an important secondary endpoint of the study, the primary analysis upon which a filing is intended to be made, is expected to be triggered 12 months following the last patient being enrolled.

In connection with a presentation at SITC in October 2020 we announced updated clinical data from the IGNYTE Phase 1/2 clinical trial evaluating RP1 in combination with nivolumab from the cohorts of patients with melanoma and non-melanoma skin cancers.

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We continue to enroll patients in other IGNYTE Phase 2 cohorts under our collaboration with BMS in which we are evaluating RP1 in combination with nivolumab.

Currently, enrollment is ongoing in a 60 patient cohort with non-melanoma

skin cancer, or NMSC, (including the recent addition of 30 patients who have failed prior anti-PD-1 therapy);

Currently, enrollment is ongoing in a 60 patient cohort with non-melanoma skin cancer, or NMSC, (including the recent addition of 30 patients who have failed prior anti-PD-1 therapy);

a 30 patient anti-PD-1 failed cohort with MSI-H/dMMR tumors and a 30 patient cohort with anti-PD(L)-1 failed non-small cell lung cancer, or NSCLC.

We have completed enrollment in the original 30 NMSC patient cohort (anti-PD-1 naïve) of RP1 in combination with nivolumab and continue to enroll patients with anti-PD-1 failed NMSC.

We expect to provide updated data from the NMSC anti-PD-1 naïve patients and initial data from the NMSC anti-PD-1 failed patients in the first quarter of 2022.

We expect to provide updated data from the NMSC anti-PD-1 naïve patients and initial data from the NMSC anti-PD-1 failed patients late in the first quarter of 2022.

Due to development challenges in the anti-PD-1 naïve setting for our cohort with MSI-H/dMMR tumors we have decided to not pursue RP1 in combination with nivolumab for this cohort but instead enroll patients with anti-PD-1 failed disease, for which a protocol amendment was made in the third quarter of 2021.

As previously reported, dosing is underway in our 30 patient cohort of RP1 in combination with nivolumab in anti-PD(L)-1 failed NSCLC.

As previously reported, enrollment is open in our 30 patient cohort of RP1 in combination with nivolumab in anti-PD(L)-1 failed NSCLC.

A recently filed amendment to the IGNYTE protocol includes modifications to the patient eligibility criteria for this NSCLC cohort which are expected to enhance enrollment into this cohort of the clinical trial.

We had expected to provide initial data from our NSCLC cohort of RP1 in combination with nivolumab in the first quarter of 2022, however, the changes we have made to facilitate enrollment are not expected to take effect in time to meet prior guidance and initial data is now expected to be released later in 2022.

We also have open for enrollment a Phase 1b/2 clinical trial of single agent RP1 in solid organ transplant recipients with skin cancers, including CSCC, or ARTACUS or the ARTACUS trial, which we believe to be potentially registrational (in its own right or, subject to discussion with regulatory authorities, following enrollment of additional patients, including as a potential label expansion after an initial approval of RP1 in a different indication).

We are currently enrolling patients in this clinical trial to assess the safety and efficacy of RP1 in liver and kidney transplant recipients with recurrent skin cancers.

We are currently enrolling patients in this clinical trial to assess the safety and efficacy of RP1 in liver and kidney transplant recipients with skin cancers.

The protocol has been amended to enroll up to 65 patients with potentially registrational intent.

While enrollment in this clinical trial has been impacted by COVID-19, as the patient population is severely immune-compromised and considered very high risk, we expect to present initial data from this clinical trial in the first quarter of 2022.

We are also developing additional product candidates, RP2 and RP3, that have been further engineered to enhance anti-tumor immune responses and are intended to address additional tumor types, including traditionally less immune responsive tumor types.

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In June 2021 we presented a data update from both the RP2 single agent and combination portions of this clinical trial that showed compelling activity in patients with immune insensitive tumors and with anti-PD-1 failed disease.

We have fully enrolled the initial 30 patient Phase 1 clinical trial evaluating RP2 in combination with nivolumab in difficult to treat cancers and we expect to provide updated data from this program in the second half of 2021.

We have filed a protocol amendment to expand this clinical trial with the intent to enroll patients with liver metastases from various prevalent tumor types, including patients with lung cancers and breast and gastrointestinal cancers including colorectal cancer.

We have fully enrolled the initial 30 patient Phase 1 clinical trial evaluating RP2 in combination with nivolumab in difficult to treat cancers and provided updated data from this program in the second half of 2021.

Also in the second half of 2021, we filed a protocol amendment to expand this clinical trial with the intent to enroll patients with liver metastases from various prevalent tumor types, including patients with lung cancers, breast and gastrointestinal cancers including colorectal cancer, and also additional patients with uveal melanoma.

We expect to release initial data from this expanded clinical trial in late 2022.

In November 2021, we presented further updated data from this RP2 clinical trial, with RP2 as single agent and in combination with nivolumab that demonstrated the potential clinical utility of RP2 in patients with hard-to-treat, anti-PD1 failed cancers, including durability of response, together with biomarker data demonstrating the ability of RP2 to turn immunologically ‘cold’ tumors ‘hot'.

We have obtained clearance from the Medicines and Healthcare Products Regulatory Agency in the United Kingdom to begin clinical development with RP3 and in December 2020 we initiated dosing in this clinical trial.

This Phase 1 clinical trial is designed to evaluate RP3 alone and combined with anti-PD-1 therapy in advanced solid tumor patients.

Initial data from the RP3 single agent cohort is expected to be presented in the first quarter of 2022.

In addition to this cohort, we expect to begin enrolling a cohort evaluating RP3 in combination with anti-PD-1 therapy in solid tumor patients early in 2022, including patients with liver metastases from various prevalent tumor types such as lung cancer, breast cancer, head and neck cancer and gastrointestinal cancers including colorectal cancer.

Based on the observation of clinical responses in patients with liver metastases from a range of difficult to treat tumor types following treatment with RP1 in combination with nivolumab and/or with RP2 alone or in combination with nivolumab, and the fact that treating liver metastases is a considerable unmet need in patients with advanced cancer, we plan to initiate a broad clinical development program with RP2 and/or RP3 intended to include a range of prevalent tumor types around mid-year 2022.

We expect to announce the details of this program in the first quarter of 2022.

Initial data from the initial six patient RP3 single agent cohort is expected to be presented late in the first quarter of 2022.

In addition to this cohort, we plan to open a cohort to evaluate RP3 in combination with nivolumab in solid tumor patients by the end of the first quarter of 2022, with the nivolumab being supplied under agreement with BMS.

We plan to include, in this new expansion cohort, patients with various prevalent tumor types such as lung cancer, breast cancer, head and neck cancer and gastrointestinal

cancers including colorectal cancer, following the recent determination of the recommended phase 2 dose, or RP2D.

We expect to present initial data from these expansion patients in late 2022.

We plan to initiate a broad clinical development program with RP2 and/or RP3 intended to include a range of prevalent tumor types around mid-year 2022.

Based on the observation of clinical responses in patients with liver metastases from a range of difficult to treat tumor types following treatment with RP1 in combination with nivolumab and/or with RP2 alone or in combination with nivolumab, and the fact that treating liver metastases is a considerable unmet need in patients with advanced cancer, this development plan will have a focus on tumor types where liver metastases are particularly common.

We expect to announce the details of this program late in the first quarter of 2022.

RP1, RP2 and RP3 are administered by direct injection into solid tumors, guided either visually or by ultrasound, computerized tomography, or CT, or other imaging methods.

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Activation of systemic immunity through local administration is intended to lead to the induction of anti-tumor immune responses leading to clinical response of tumors that have not themselves been injected.

Since our inception, we have devoted substantially all of our resources to developing our Immulytic platform building our intellectual property portfolio, conducting research and development of our product candidates, business planning, raising capital and providing general and administrative support for our operations.

Since our inception, we have devoted substantially all of our resources to developing our proprietary RPx platform, building our intellectual property portfolio, conducting research and development of our product candidates, business planning, raising capital and providing general and administrative support for our operations.

To date, we have financed our operations primarily with proceeds from the sale of equity securities and to a lesser extent the proceeds from the issuance of debt securities.

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

Our net losses were $29.4 million and $20.1 million for the three months ended September 30, 2021 and 2020, respectively, and $56.7 million and $37.6 million for the six months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, we had an accumulated deficit of $249.8 million.

Our net losses were $29.7 million and $21.8 million for the three months ended December 31, 2021 and 2020, respectively, and $86.3 million and $59.4 million for the nine months ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, we had an accumulated deficit of $279.5 million.

These losses have resulted primarily from costs incurred in connection with research and development activities and general and administrative costs associated with our operations.

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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, 2021, we had cash and cash equivalents and short-term investments of $435.8 million.

As of December 31, 2021, we had cash and cash equivalents and short-term investments of $420.2 million.

We believe that our existing cash and cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements through at least 12 months from the issuance of the consolidated financial statements included in this Quarterly Report.

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The COVID-19 pandemic

We are continuing to monitor the global outbreak and spread of COVID-19, including evolving COVID-19 viral strains, and have taken steps to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and actions taken by governmental and health authorities to address the COVID-19 pandemic.

We are continuing to monitor the global outbreak and spread of COVID-19, including evolving COVID-19 variants, most notably to date being the Delta variant and the Omicron variant, and have taken steps to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and actions taken by governmental and health authorities to address the COVID-19 pandemic.

For example, we have implemented a global work-from-home policy for certain employees who are able to perform their duties remotely.

For those employees working from our facilities, including certain essential employees in our laboratory and who perform manufacturing functions, and certain other employees we deem essential from time to time, we have implemented stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID-19 pandemic.

The Company continues to evolve its work-from-home policies toward return-to-office policies, as applicable under the circumstances while following local, state and federal guidelines and safety practices.

The COVID-19 pandemic is affecting the United States and global economies and has affected and may continue to affect our operations and those of third parties on which we rely, including by causing disruptions in our raw material and anti-PD-1 supply, the manufacturing of our product candidates and our commercialization processes.

In addition, timing of patient enrollment and treatment in certain of our ongoing clinical studies has been impacted by the pandemic.

For those employees working from our facilities, including certain essential employees in our laboratory and who perform manufacturing functions, and certain other employees who we may deem essential from time to time, we have implemented stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID-19 pandemic.

We continue to evolve our work-from-home policies toward return-to-office policies, as applicable under the circumstances while following local, state and federal guidelines and safety practices.

COVID-19 pandemic is affecting the United States and global economies and has affected and may continue to affect our operations and those of third parties on which we rely, including by causing disruptions in our raw material and anti-PD-1 supply, the manufacturing of our product candidates and our commercialization processes.

In addition, timing of patient enrollment and treatment in certain of our ongoing clinical studies has been, and may continue to be, impacted by the pandemic, which in turn has caused a delay to our development times for certain of our clinical trials.

For example, the enrollment of our clinical trial of RP1 in liver and kidney transplant patients with CSCC, representing highly immunocompromised patient populations, has been slower than expected for reasons we attribute to the COVID-19 pandemic.

Many of the clinical investigators with whom we work have encountered resource constraints, including limited labor resources, scheduling difficulties, and reduced access to equipment and supplies, which has impacted and may continue to impact the timely execution of their clinical studies, including our clinical studies being conducted at these sites.

We continue to evolve our business to be reactive and supportive to our clinical investigation site needs and work collaboratively to continue to advance our clinical trials.

However, the extent of these delays is currently unknown and has and will likely continue to vary by clinical study.

In addition, we may incur unforeseen costs as a result of disruptions in clinical supply or preclinical study or clinical trial delays.

COVID-19, the actions taken in an effort to contain it or to potentially treat or continue to vaccinate against COVID-19 and the economic impact on local, regional, national and international markets.

The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, including new viral strains of COVID-19, the actions taken in an effort to contain it or to potentially treat or continue to vaccinate against COVID-19 and the economic impact on local, regional, national and international markets.

We continue to actively monitor this situation and the possible effects on our financial condition, liquidity, operations, suppliers, industry and workforce.

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The table below summarizes our research and development expenses by product candidate or development program for each of the periods presented:

Three months ended September 30,

Six months ended September 30,

Three months ended December 31,

Nine months ended December 31,

(Amounts in thousands)

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Interest expense on debt obligations consists of the amortization of debt discount and cash paid for interest under the term loan facility with Hercules.

Loss on extinguishment of debt

Loss on extinguishment of debt consists of the loss from extinguishment of debt obligations under the term loan facility with Hercules.

Other income (expense), net

Other income (expense), net consists primarily of realized and unrealized foreign currency transaction gains and losses.

Since our inception and through September 30, 2021, we have not recorded any income tax benefits for the net losses we incurred in each jurisdiction in which we operate, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards will not be realized.

Since our inception and through December 31, 2021, we have not recorded any income tax benefits for the net losses we incurred in each jurisdiction in which we operate, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards will not be realized.

Results of operations

Comparison of the three months ended September 30, 2021 and 2020

The following chart summarizes our results of operations for the three months ended September 30, 2021 and 2020:

Comparison of the three months ended December 31, 2021 and 2020

The following chart summarizes our results of operations for the three months ended December 31, 2021 and 2020:

Three Months Ended

September 30,

2021 2020 Change

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Interest expense on finance lease liability (555) (560) 5

Loss on extinguishment of debt — (913) 913

Interest expense on debt obligations — (247) 247

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Three Months Ended

September 30,

2021 2020 Change

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Total research and development expenses $ 19,353 $ 14,322 $ 5,031

Research and development expenses for the three months ended September 30, 2021 were $19.9 million, compared to $14.1 million for the three months ended September 30, 2020.

The change in our research and development expense between our product candidates is associated with technology transfer and process development underway in readiness for bringing our manufacturing facility online to support all of our clinical development activities, as our facility focused on the manufacturing of RP2 during the three months ended September 30, 2021, as well as continued clinical trial development of these product candidates.

Furthermore, the increase of $5.9 million was due primarily to an increase of approximately $5.7 million in unallocated research and development costs.

The increase in unallocated research and development costs is mainly attributable to a $3.8 million in personnel-related costs, including a $2.9 million increase in payroll and fringe benefits and a stock-based compensation increase of $0.9 million.

Research and development expenses for the three months ended December 31, 2021 were $19.4 million, compared to $14.3 million for the three months ended December 31, 2020.

The change in our direct research and development expense between our product candidates is associated with technology transfer and process development underway in readiness for bringing our manufacturing facility online to support our clinical development and prepare for commercial launch.

Manufacturing continued to focus on RP2 and RP3 technology transfers during the three months ended December 31, 2021, as well as continued clinical trial development of these product candidates.

Furthermore, the increase of $5.0 million in our unallocated expenses was due primarily to a $3.5 million increase in personnel-related costs, including a $3.0 million increase in payroll and fringe benefits and a stock-based compensation increase of $0.4 million.

The increase in personnel-related costs largely reflected the hiring of additional personnel in our research and development functions as we expand the development plan in multiple indications.

Personnel related costs for the three months ended September 30, 2021 and 2020 included stock-based compensation expense of $2.2 million and $1.3 million, respectively.

Personnel related costs for the three months ended December 31, 2021 and 2020 included stock-based compensation expense of $1.8 million and $1.5 million, respectively.

General and administrative expenses

General and administrative expenses were $9.3 million for the three months ended September 30, 2021, compared to $5.6 million for the three months ended September 30, 2020.

The increase of $3.7 million is primarily the result of an increase of $3.4 million in personnel related costs, including stock-based compensation of $2.6 million, and $0.8 million in payroll and fringe.

The increase in personnel related costs was driven by the continued hiring of additional personnel in our general and administrative functions as we expand our operations.

General and administrative expenses were $10.3 million for the three months ended December 31, 2021, compared to $6.0 million for the three months ended December 31, 2020.

The increase of $4.4 million is primarily the result of an increase of $3.4 million in personnel related costs, including a stock-based compensation increase of $2.5 million, and an increase of $0.8 million in payroll and fringe benefits.

The increase in personnel related costs was driven by the continued hiring of additional personnel in our general and administrative functions, including the addition of commercial personnel associated with pre-launch commercial planning and initial build of the Company's commercial infrastructure, which accounts for approximately $0.5 million of the increase compared to prior year, as we expand our operations.

Total other income (expense), net

Other income (expense) was $(0.1) million for the three months ended September 30, 2021, compared to $(0.4) million for the three months ended September 30, 2020.

The net change of $0.3 million is primarily attributable to an increase of $0.3 million in other income as a result of payments made for interest expense on debt obligations in the prior year which were not incurred during the current quarter, as well as an increase of $0.2 million in other income due to the changes in foreign exchange rates of the Great British Pound to United States Dollar.

These increases in other income were partially offset by a $0.1 million decrease in investment income as a result of declining market conditions, which have decreased the rate of return on investments.

Comparison of the six months ended September 30, 2021 and 2020

The following chart summarizes our results of operations for the six months ended September 30, 2021 and 2020:

Six Months Ended

September 30,

Other income (expense) was $24 thousand for the three months ended December 31, 2021, compared to $(1.5) million for the three months ended December 31, 2020.

The net change of $1.5 million is primarily attributable to a decrease in expense of $0.9 million as a result of a loss related to the extinguishment of debt in the prior year which did not recur in the current year, as well as a decrease in expense of $0.2 million as a result of interest expense on the aforementioned debt obligations in the prior year which did not recur during the current year.

Furthermore, there is a decrease in expense of $0.2 million in the current year compared to the prior year due to the changes in foreign exchange rates of the Great British Pound to United States Dollar.

Comparison of the nine months ended December 31, 2021 and 2020

The following chart summarizes our results of operations for the nine months ended December 31, 2021 and 2020:

Nine Months Ended

2021 2020 Change

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Interest expense on finance lease liability (1,670) (1,683) 13

Loss on extinguishment of debt — (913) 913

Interest expense on debt obligations — (817) 817

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Research and development expenses

Six Months Ended September 30,

Nine Months Ended December 31,

2021 2020 Change

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Total research and development expenses $ 57,809 $ 40,529 $ 17,280

Research and development expenses for the six months ended September 30, 2021 were $38.5 million, compared to $26.2 million for the six months ended September 30, 2020.

Research and development expenses for the nine months ended December 31, 2021 were $57.8 million, compared to $40.5 million for the nine months ended December 31, 2020.

The increase of $17.3 million was due primarily to an increase of approximately 16.3 million in unallocated research and development costs, as well as a net increase of approximately $1.0 million in direct research costs related to our ongoing clinical trials for RP1, RP2 and RP3.

The change in our research and development expense between our product candidates is associated with technology transfer and process development underway in readiness for bringing our manufacturing facility online to support all of our clinical development activities, as our facility focused on the manufacturing of RP2 during the six months ended September 30, 2021, as well as continued clinical trial development of these product candidates.

Manufacturing continued to focus on the RP2 and RP3 technology transfer during the nine months ended December 31, 2021, as well as continued clinical trial development of these product candidates.

The increase in unallocated research and development costs is mainly attributable to a $11.5 million in personnel-related costs, including a $8.6 million increase in payroll and fringe benefits and a stock-based compensation increase of $2.8 million.

The increase in personnel-related costs largely reflected the hiring of additional personnel in our research and development functions as we expand the development plan in multiple indications during the first half of the year.

Personnel related costs for the six months ended September 30, 2021 and 2020 included stock-based compensation expense of $4.7 million and $2.3 million, respectively.

The increase in personnel-related costs largely reflected the hiring of additional personnel in our research and development functions as we expanded the development plan in multiple indications.

Personnel related costs for the nine months ended December 31, 2021 and 2020 included stock-based compensation expense of $6.5 million and $3.8 million, respectively.

General and administrative expenses

General and administrative expenses were $18.2 million for the six months ended September 30, 2021, compared to $11.3 million for the six months ended September 30, 2020.

The increase of $6.9 million is primarily the result of an increase of $6.6 million in personnel related costs, including stock-based compensation of $4.9 million, and an increase of $1.6 million in payroll and fringe.

The increase in personnel related costs was driven by the hiring of additional personnel, including the Company's initial expenses related to commercial personnel associated with pre-launch commercial planning and initial build of the Company's commercial infrastructure.

Personnel related costs for the six months ended September 30, 2021 and 2020 included stock-based compensation expense of $7.9 million and $3.0 million, respectively.

General and administrative expenses were $28.5 million for the nine months ended December 31, 2021, compared to $17.2 million for the nine months ended December 31, 2020.

The increase of $11.3 million is primarily the result of an increase of $10.0 million in personnel related costs, including a stock-based compensation increase of $7.4 million, and an increase of $2.6 million in payroll and fringe benefits.

The increase in personnel related costs was driven by the hiring of additional personnel, including the initial expenses related to commercial personnel associated with pre-launch commercial planning and initial build of our commercial infrastructure.

Personnel related costs for the nine months ended December 31, 2021 and 2020 included stock-based compensation expense of $12.0 million and $4.6 million, respectively.

Total other income (expense), net

Other income (expense) was $(38.0) thousand for the six months ended September 30, 2021, compared to $(0.1) million for the six months ended September 30, 2020.

The net change in expense of $0.1 million is primarily attributable to an increase of $0.6 million in other income as a result of payments made for interest expense on debt obligations in the prior year which were not incurred during the current year.

This increase is offset by a $0.5 million decrease in investment income as a result of declining market conditions, which have decreased the rate of return on investments during the first six months of the year, as well as a decrease of 0.1 million in other income due to the changes in foreign exchange rates of the Great British Pound to United States Dollar.

Other income (expense) was $(14) thousand for the nine months ended December 31, 2021, compared to $(1.6) million for the nine months ended December 31, 2020.

The net change of $1.6 million is primarily attributable to a decrease in expense of $0.9 million as a result of a loss related to the extinguishment of debt in the prior year which did not recur in the current year, as well as a decrease in expense of $0.8 million as a result of interest expense on the aforementioned debt obligations in the prior year which did not recur during the current year.

Additionally, there is an increase in income of $0.3 million in the current year compared to the prior year due to an increase in research and development incentives.

These were partially offset by a $0.6 million decrease in investment income as a result of declining market conditions, which have decreased the rate of return on investments during the first nine months of the year as compared to the prior year.

Liquidity and capital resources

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To date, we have financed our operations primarily with proceeds from the sale of equity securities and, to a lesser extent, proceeds from the incurrence of debt.

Through September 30, 2021, we had received gross proceeds of $655.8 million from our sales of equity instruments and $10.0 million from our incurrence of debt under the term loan facility with Hercules, which was repaid in full in December 2020.

As of September 30, 2021, we had cash and cash equivalents and short-term investments of $435.8 million.

Through December 31, 2021, we had received net proceeds of $655.8 million from our sales of equity instruments and $10.0 million from our incurrence of debt under the term loan facility with Hercules, which was repaid in full in December 2020.

As of December 31, 2021, we had cash and cash equivalents and short-term investments of $420.2 million.

In July 2018, we completed our IPO and issued and sold 7,407,936 shares of our common stock at a public offering price of $15.00 per share, resulting in net proceeds of $101.2 million after deducting underwriting discounts, commissions and other offering expenses of approximately $9.9 million.

In the fourth calendar quarter of 2019, we closed a registered public offering for the issuance and sale of 4,516,561 shares of our common stock at a public offering price of $13.61 per share and pre-funded warrants to purchase 2,200,000 shares of our common stock at a purchase price of $13.6099 per pre-funded warrant, which was equal to the public offering price per share of the common stock less the $0.0001 per share exercise price of each pre-funded warrant.

We received aggregate net proceeds from the offering of approximately $85.6 million after deducting underwriting

discounts, commissions and other offering expenses of approximately $5.8 million.

We received aggregate net proceeds from the offering of approximately $85.6 million after deducting underwriting discounts, commissions and other offering expenses of approximately $5.8 million.

In June 2020, we closed a second registered public offering for the issuance and sale of 3,478,261 shares of our common stock at a public offering price of $23.00 per share and pre-funded warrants to purchase 1,521,738 shares of our common stock at a purchase price of $22.9999 per pre-funded warrant, which was equal to the public offering price per share of the common stock less the $0.0001 per share exercise price of each pre-funded warrant.

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Under the 2019 Sales Agreement, and prior to its amendment in June 2020, we could sell from time to time, at our option, up to an aggregate of $75.0 million of shares of our common stock.

In June 2020, we amended the 2019 Sales Agreement to reduce the aggregate offering amount thereunder from $75.0 million to $30.0 million.

In June 2020, we amended the 2019 Sales Agreement to reduce

the aggregate offering amount thereunder from $75.0 million to $30.0 million.

We sold 287,559 shares of our common stock under the 2019 Sales Agreement for net proceeds of approximately $4.4 million.

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The following table summarizes our cash flows for each of the periods presented:

Six Months Ended September 30, 2021

Nine Months Ended December 31, 2021

(Amounts in thousands)

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Operating activities

During the six months ended September 30, 2021, net cash used in operating activities was $41.3 million, primarily resulting from our net loss of $56.7 million, partially offset by an increase in non-cash charges of $14.9 million, primarily consisting of an increase in stock-based compensation expense of $7.3 million, and an increase in cash of $0.5 million related to changes in our operating assets and liabilities.

Net cash used by our changes in our operating assets and liabilities for the six months ended September 30, 2021 consisted primarily of a $1.5 million increase in research and development incentives receivable from the United Kingdom government due to the timing of vendor invoicing and payments, a $1.3 million increase in prepaid expenses and other current assets, a $1.3 million increase in accrued expenses and other current liabilities, and net $1.2 million change in operating and financing right-of-use assets and lease liabilities.

During the six months ended September 30, 2020, net cash used in operating activities was $32.3 million, primarily resulting from our net loss of $37.6 million and net cash used by changes in our operating assets and liabilities of $1.3 million,

partially offset by non-cash charges of $6.6 million.

Net cash used by our changes in our operating assets and liabilities for the six months ended September 30, 2020 consisted primarily of a $1.4 million increase in research and development incentive receivables, partially from the United Kingdom government due to the timing and amount of our qualifying expenditures, $1.9 million increase in prepaid expenses and other current assets and $1.2 million decrease in accounts payable, partially offset by $2.0 million net decrease related to ASC 842 (including changes in operating lease liabilities, operating lease, right-of-use asset and financing lease, right-of-use asset).

During the nine months ended December 31, 2021, net cash used in operating activities was $59.6 million, primarily resulting from our net loss of $86.3 million, partially offset by non-cash charges of $21.9 million, primarily consisting of stock-based compensation expense of $18.5 million, and an increase in cash of $4.8 million related to changes in our operating assets and liabilities.

Changes in our operating assets and liabilities for the nine months ended December 31, 2021 consisted primarily of a $2.0 million increase in accrued expenses and other current liabilities, a net $1.8 million change in operating and financing right-of-use assets and lease liabilities, a $1.2 million increase in accounts payable and a $0.7 million decrease in research and development incentives receivable from the United Kingdom government due to the timing of vendor invoicing and payments, as well as a $0.9 million increase in prepaid expenses and other current assets.

During the nine months ended December 31, 2020, net cash used in operating activities was $45.3 million, primarily resulting from our net loss of $59.4 million and net cash used by changes in our operating assets and liabilities of $2.6 million, partially offset by non-cash charges of $11.5 million.

Changes in our operating assets and liabilities for the nine months ended December 31, 2020 consisted primarily of a $1.1 million decrease in research and development incentive receivables, partially from the United Kingdom government due to the timing and amount of our qualifying expenditures, $1.2 million increase in prepaid expenses and other current assets and $1.0 million decrease in accounts payable, partially offset by $1.9 million increase in accrued expenses and other current liabilities and $1.9 million net decrease related to ASC 842 (including changes in operating lease liabilities, operating lease, right-of-use asset and financing lease, right-of-use asset).

The changes in accounts payable were primarily due to the timing of vendor invoicing and payments.

Investing activities

During the six months ended September 30, 2021, net cash used in investing activities was $15.9 million, consisting of $128.0 million in proceeds from sales and maturities of short-term investments, partially offset by $111.4 million in purchases of available for sale securities and $0.7 million in purchases of property, plant and equipment.

During the six months ended September 30, 2020, net cash used in investing activities was $93.9 million, consisting of $196.5 million in purchases of available for sale securities and $1.0 million in purchases of property, plant and equipment, partially offset by $103.6 million in proceeds from sales and maturities of short-term investments.

During the nine months ended December 31, 2021, net cash provided by investing activities was $2.5 million, consisting of $196.3 million in proceeds from sales and maturities of short-term investments, partially offset by $192.5 million in purchases of available for sale securities and $1.2 million in purchases of property, plant and equipment.

During the nine months ended December 31, 2020, net cash used in investing activities was $62.5 million, consisting of $225.0 million in purchases of available for sale securities and $1.6 million in purchases of property, plant and equipment, partially offset by $164.1 million in proceeds from sales and maturities of short-term investments.

Financing Activities

During the six months ended September 30, 2021, net cash provided by financing activities was $2.3 million, consisting of primarily $2.4 million in proceeds from the exercise of stock options.

During the six months ended September 30, 2020, net cash provided by financing activities was $109.5 million, consisting of $74.9 million from the issuance of common stock and $32.9 million in net proceeds from the issuance of pre-funded warrants to purchase common stock in connection with our follow-on public offering in June 2020, and $1.8 million in proceeds from the exercise of stock options.

During the nine months ended December 31, 2021, net cash provided by financing activities was $6.2 million, consisting primarily of $6.4 million in proceeds from the exercise of stock options.

During the nine months ended December 31, 2020, net cash provided by financing activities was $371.7 million, consisting of $286.1 million from the issuance of common stock, $91.7 million from the issuance of pre-funded warrants to purchase common stock, $4.9 million in proceeds from the exercise of stock options, partially offset by $10.0 million in debt payments under the Hercules Loan Agreement and $0.8 million of fees associated with the extinguishment of the obligations under the Hercules Loan Agreement.

Hercules Loan Agreement

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Under the Hercules Loan Agreement, we were required to make monthly interest-only payments through September 1, 2022.

As of September 30, 2021, there was no amount of outstanding principal under the Hercules Loan Agreement due and owing.

As of December 31, 2021, there was no amount of outstanding principal under the Hercules Loan Agreement due and owing.

The term loan facility with Hercules was secured by substantially all of our assets, excluding our intellectual property, and subject to certain exceptions and exclusions.

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• add operational, financial and management information systems and personnel, including personnel to support our research and development programs, any future commercialization efforts and operations as a public company.

As of September 30, 2021, we had cash and cash equivalents and short-term investments of $435.8 million.

We believe that our existing cash, cash equivalents and short-term investments as of September 30, 2021, will enable us to fund our overall operations into the second half of 2024, excluding any confirmatory trial required by the FDA or other regulatory body.

As of December 31, 2021, we had cash and cash equivalents and short-term investments of $420.2 million.

We believe that our existing cash, cash equivalents and short-term investments as of December 31, 2021, will enable us to fund our operations into the second half of 2024, excluding any confirmatory trial required by the FDA or other regulatory body.

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

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Contractual obligations and commitments

During the six months ended September 30, 2021, there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the year ended March 31, 2021, which was filed with the SEC on May 20, 2021.

During the nine months ended December 31, 2021, there were no material changes to our contractual obligations and commitments from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations and Commitments” in our Annual Report on Form 10-K for the year ended March 31, 2021, which was filed with the SEC on May 20, 2021.

Collaborations

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Under the agreement, we will sponsor, fund and conduct the clinical trial in accordance with an agreed-upon protocol.

BMS granted us a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to use nivolumab in the clinical trial and has agreed to supply nivolumab, at no cost to us, for use in the clinical trial.

BMS granted us a non-exclusive, non-transferrable, royalty-free license (with a right to sublicense) under its intellectual property to use nivolumab in the clinical trial and has agreed to supply

nivolumab, at no cost to us, for use in the clinical trial.

Both parties will own the study data produced in the clinical trial, other than study data related solely to nivolumab, which will belong solely to BMS, or study data related solely to RP1, which will belong solely to us.

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We measure such stock-based awards in accordance with ASC 718, Compensation — Stock Compensation, which requires all stock-based awards to be recognized in the consolidated statements of operations and comprehensive loss based on their fair value on the date of the grant and the related compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period of the respective award.

We have, to date, only issued stock-based awards with service-based vesting conditions and record the expense for these awards using the

straight-line method.

We have, to date, only issued stock-based awards with service-based vesting conditions and record the expense for these awards using the straight-line method.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield.

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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