What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-03-08 compared with 2021-03-18 · 86 added, 73 removed, 156 unchanged (50% of the section changed)

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As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

As used in this report, unless the context suggests otherwise, “we,” “us,” “our,” “the Company” or “Aeglea” refer to Aeglea BioTherapeutics, Inc.

As used in this report, unless the context suggests otherwise, “we’, “us’, “our’, “the Company” or “Aeglea” refers to Aeglea BioTherapeutics, Inc.

We are a clinical-stage biotechnology company redefining the potential of human enzyme therapeutics to benefit people with rare metabolic diseases with limited treatment options.

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We engineered pegzilarginase with modifications that enhance the stability and arginine-degrading activity of the enzyme in human plasma.

For Arginase 1 Deficiency, which is a rare genetic progressive disease, that presents in early childhood and results in severe complications and early mortality, we believe pegzilarginase may reduce the harmful metabolic effects caused by the accumulation of high levels of arginine and other arginine-derived metabolites.

We are currently evaluating pegzilarginase in a global pivotal Phase 3 PEACE (Pegzilarginase Effect on Arginase 1 Deficiency Clinical Endpoints) trial and in a Phase 2 open-label extension study for patients with Arginase 1 Deficiency.

Our product candidate, AGLE-177, is a novel PEGylated, or polyethylene glycol modified, human enzyme engineered to degrade free homocysteine and homocystine in patients with Homocystinuria, a serious metabolic disorder characterized by elevated plasma homocysteine which leads to a wide range of life-altering complications and reduced life expectancy.

We engineered AGLE-177 by directed mutagenesis of amino acid residues within the active site of human cystathionine γ-lyase, resulting in a molecule that has high substrate specificity for homocysteine and homocystine but not for the native substrate, cystathionine.

For Arginase 1 Deficiency, which is a rare progressive disease, that presents in early childhood and results in severe complications and early mortality, we believe pegzilarginase may reduce the harmful metabolic effects caused by the accumulation of high levels of arginine and other arginine-derived metabolites.

We are currently evaluating pegzilarginase in the open-label extension portion of the global pivotal PEACE Phase 3 trial and in a Phase 2 open-label extension study for patients with Arginase 1 Deficiency.

Our second product candidate, AGLE-177, is a novel PEGylated, or polyethylene glycol modified, human enzyme engineered to degrade free homocysteine and homocystine in patients with Homocystinuria , a serious metabolic disorder characterized by elevated plasma homocysteine which leads to a wide range of life-altering complications and reduced life expectancy.

We engineered AGLE-177 by directed mutagenesis of amino acids within cystathionine γ-lyase, resulting in a molecule that has high substrate specificity for homocysteine and homocystine but not for the native substrate, cystathionine.

For Homocystinuria due to cystathionine β-synthase, or CBS, enzyme deficiency, which is the most common form of an inherited disorder of methionine metabolism that results in elevated homocysteine and homocystine, we believe AGLE-177 may reduce the adverse impact of CBS enzyme deficiency in the transsulfuration pathway by providing an alternate pathway for enzymatic degradation of high plasma total homocysteine levels.

We have initiated a Phase 1/2 clinical trial for the treatment of patients with Homocystinuria.

We are currently conducting a Phase 1/2 clinical trial for the treatment of patients with Homocystinuria.

Cystinuria is a rare genetic disease characterized by frequent and recurrent kidney stone formation requiring multiple procedural interventions, and by an increased risk of chronic kidney disease.

Cystinuria occurs due to genetic mutations in amino acid transporters that lead to increased amounts of cystine in the urine.

Cystinuria occurs due to genetic mutations in an amino acid transporter that leads to increased amounts of cystine in the urine.

This results in high cystine concentrations in the urine and formation of kidney stones.

As such, we engineered our Cystinuria program candidate to reduce plasma cystine and cysteine levels with accompanying reductions in urine cystine concentrations as an approach

to inhibit both cystine crystal and kidney stone formation.

Due to the impact of COVID-19 on laboratory work schedules, we have not provided a timeline for advancement of a therapeutic candidate into the clinic.

Since inception, we have devoted substantially all of our efforts and resources to identifying and developing product candidates, conducting nonclinical studies, initiating and conducting clinical trials, recruiting personnel and raising capital.

To date, we have financed our operations primarily through private placements of our preferred stock, the initial public offering of our common stock, follow-on public offerings of our common stock, and collection of a research grant.

As such, we engineered our Cystinuria program candidate to reduce plasma cystine and cysteine levels with accompanying reductions in urine cystine concentrations as an approach to inhibit both cystine crystal and kidney stone formation.

We have incurred net losses in each year since inception.

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Our net losses may fluctuate significantly from quarter to quarter and from year to year.

We anticipate that our expenses will increase as we continue our clinical development activities for our product candidates and prepare for the potential commercialization of our lead product candidate, pegzilarginase;

We anticipate that our expenses will increase as we continue our clinical development activities for our product candidate s and prepare for the potential commercialization of our lead product candidate, pegzilarginase ;

concurrently develop our pipeline product candidates;

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Components of Operating Results

To date, we recognized revenue solely from a research grant from the Cancer Prevention and Research Institute of Texas, or CPRIT, and have not generated any revenue from the sale of any of our product candidates.

Our ability to generate product revenues in the future will depend heavily on the successful development, regulatory approval, and eventual commercialization of our product candidates.

In June 2015, we entered into a grant agreement with CPRIT, or the Grant Contract, for $19.8 million for use in developing cancer treatments by exploiting the metabolism of cancer cells.

The Grant Contract covered a four-year period from June 1, 2014 through May 31, 2018.

We recorded the revenue as qualifying costs were incurred and there was reasonable assurance that the conditions of the award had been met for collection.

The contract ended in 2018 with the full $19.8 million grant received and recognized as revenue over the life of the award.

We have recognized license and development revenue from a license and supply agreement, or Immedica Agreement, with Immedica, and expect to continue to recognize revenue as we satisfy our performance obligations under the agreement.

We may also be entitled to receive additional milestone payments pursuant to the Immedica Agreement upon achievement of specified milestones.

As the recognition of future license and development revenue will be based on costs incurred to date relative to total estimated costs at completion and the uncertainty of when the events underlying various milestones are resolved, we expect our license and development revenue will fluctuate from period to period.

We have not generated any revenue from commercial product sales.

Our ability to generate product revenues in the future will depend on the successful development, regulatory approval, and commercialization of our product candidates.

In the future, we may also seek to generate revenue from a combination of research and development payments, license fees and other upfront or milestone payments, including under the Immedica Agreement.

Research and development expenses

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Our research and development expenses include:

costs from acquiring clinical trial materials and services performed for contracted services with contract manufacturing organizations;

fees paid to clinical trial sites, clinical research organizations, contract research organizations, contract manufacturing organizations, nonclinical research companies, and academic institutions;

costs from acquiring clinical trial materials and services performed for contracted services with contract manufacturing organizations, or CMOs;

fees paid to clinical trial sites, clinical research organizations, or CROs, CMOs, nonclinical research companies, and academic institutions;

employee and consultant-related expenses incurred, which include salaries, benefits, travel and stock-based compensation.

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General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, commercial development, operations, and human resources functions.

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, legal, commercial development, operations, and human resources functions.

Other significant costs include legal fees relating to corporate matters and fees for insurance, accounting, consulting, facilities, and recruiting services.

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Interest income consists of interest earned on our cash, cash equivalents, marketable securities, and restricted cash.

We serve as a holding company for our nine wholly owned subsidiary corporations in the United States, United Kingdom, and European Union.

We serve as a holding company for our ten wholly owned subsidiary corporations in the United States, United Kingdom, and European Union.

We file a consolidated U.S.

corporate federal income tax return for seven subsidiaries.

corporate federal income tax return with our eight United States subsidiaries.

Additionally, we operate in the U.K.

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Our policy is to recognize interest and penalties related to the unrecognized tax benefits as a component of income tax expense.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security, or CARES, Act was enacted and signed into law in response to COVID-19.

The CARES Act includes changes to the tax provisions that benefit business entities and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act.

The tax relief measures for businesses include a five-year net operating loss carryback, suspension of annual deduction limitation of 80% of taxable income from net operating losses generated in a tax year beginning after December 31, 2017, changes in the deductibility of interest, acceleration of alternative minimum tax credit refunds, payroll tax relief, technical corrections on net operating loss carryforwards for fiscal year taxpayers and allowing accelerated deductions for qualified improvement property.

The CARES Act also provides other non-tax benefits to assist those impacted by the pandemic.

We have evaluated the impact and determined the CARES Act did not have a material impact on our consolidated financial condition or results of operations as of and for the year ended December 31, 2020 .

Critical Accounting Policies and Estimates

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The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures.

These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources.

These estimates form the basis for judgments we make about the carrying values of our assets, liabilities and equity and the amount of revenues and expenses, which are not readily apparent from other sources.

We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances.

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Our significant accounting policies are more fully described in Note 2 to our audited consolidated financial statements appearing elsewhere in this annual report.

Revenue recognition

We enter into license agreements related to our technologies that we have determined are within the scope of Accounting Standards Codification 606.

Based on the terms and conditions of our agreements, we identify the goods and services that we promise to transfer to the customer, which may consist of the licensing of technologies, the performance of research and development activities, and/or the supply of products related to our technologies.

Based on the nature of the goods and services provided and the customer’s intended benefit of the arrangement, we evaluate which of the promised goods and services are distinct and, therefore, represent a performance obligation, which may require us to combine certain promised goods and services that are determined to not be distinct from one another.

We also evaluate whether an agreement provides the customer an option to purchase future goods or services at a discounted price, or a material right, which would also represent a performance obligation.

In exchange for the performance obligations, we estimate the amount of consideration promised by the customer, or transaction price, which may include both fixed and variable consideration.

Variable consideration, which may consist of various milestone payments based upon the achievement of certain events or conditions, sales-based royalties, or payments contingent on the performance of research and development services, are included in the transaction price only if we expect to receive such consideration and determine it is probable that the inclusion of the variable consideration will not result in a significant reversal in the cumulative amount of revenue recognized under the arrangement.

Sales-based royalty and milestone payments that we determine are predominantly related to the license of our intellectual property are excluded from the transaction price we expect to receive until the underlying sales occur.

We allocate the estimated transaction price to the identified performance obligations based on the relative estimated stand-alone selling price, or SSP, of each performance.

SSP is based on the observable price of our goods and services, or when SSP is not directly observable, we estimate SSP based on factors such as forecasted revenues or costs, development timelines, discount rates, probabilities of technical and regulatory success, and considerations such as market conditions and entity-specific factors.

We recognize revenue allocated to each performance obligation either at a point-in-time or over time in a manner that depicts the transfer of control of the promised goods and services to the customer.

For performance obligations that are recognized over time, we estimate the measure of progress associated with the satisfaction of the performance obligation based on an input or output method, which may be based on factors such as costs incurred, labor hours expended, time elapsed, among other measures based on the nature of the performance obligation.

The estimates made on an input or output method are subject to change and may result in material changes to revenue that could materially affect our results of operations.

Please refer to Note 9, Strategic License Agreements, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Accrued research and development costs

We record the costs associated with research nonclinical studies, clinical trials, and manufacturing development as incurred.

These costs are a significant component of our research and development expenses, with a substantial portion of our on-going research and development activities conducted by third-party service providers, including contract research organizations, or CROs, and contract manufacturing organizations, or CMOs.

We accrue for expenses resulting from obligations under agreements with CROs, CMOs, and other outside service providers for which payment flows do not match the periods over which materials or services are provided to us.

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As actual costs become known, we adjust our accruals.

Inputs, such as the services performed, the number of patients enrolled, or the study duration, may vary from our estimates, resulting in adjustments to research and development expense in future periods.

Inputs, such as the services performed, the number of patients enrolled, or the study duration, may vary from our estimates, resulting in adjustments to research and

development expense in future periods.

Changes in these estimates that result in material changes to our accruals could materially affect our results of operations.

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Comparison of the Years Ended December 31, 2021 and 2020

A discussion and analysis of our financial condition and results of operations for the year ended December 31, 2018 is included in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 24, 2020.

A discussion and analysis of our financial condition and results of operations for the year ended December 31, 2019 is included in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 18, 2021.

The following table summarizes our results of operations for the years ended December 31, 2021 and 2020, together with the changes in those items in dollars and as a percentage:

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(dollars in thousands)

Development fee

Total revenue

Operating expenses:

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Other expense, net

Loss before income tax expense

Income tax expense

Percentage not meaningful

License and Development Fee Revenue.

For the year ended December 31, 2021, we recognized $18.7 million of license and development fee revenue in connection with the Immedica Agreement.

The total revenue generated of $18.7 million was attributable to $12.0 million allocated to the license and $6.7 million allocated to the PEACE Phase 3 trial and BLA package.

We did not recognize any revenue for the year ended December 31, 2020.

Please refer to Note 9, Strategic License Agreements, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional disclosures around revenue recognition.

Research and Development Expenses .

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The change in research and development expenses was due to:

lower clinical and nonclinical development expenses, which decreased by $6.9 million as a result of completing our Phase 1/2 clinical trial for pegzilarginase in patients with Arginase 1 Deficiency and cancer related trials, along with completing supporting toxicology studies for the Homocystinuria program;

lower manufacturing expenses, which decreased by $0.6 million as a result of completing certain manufacturing and pre-commercial activities for pegzilarginase, which was partially offset by a ramp-up in manufacturing activities for our Homocystinuria program;

higher personnel-related expenses, which increased by $2.5 million as a result of additional headcount to expand our medical and biometrics support.

lower manufacturing expenses, which decreased by $12.4 million as a result of completing certain pre-commercial manufacturing activities for pegzilarginase and formulation, characterization, and stability studies for AGLE-177;

higher clinical development expenses, which increased by $5.1 million as a result of ramping-up and completing enrollment in our PEACE Phase 3 trial of pegzilarginase for the treatment of patients with Arginase 1 Deficiency, and preparing and initiating dosing in our Phase 1/2 trial of AGLE-177 for the treatment of Homocystinuria;

higher nonclinical development expenses, which increased by $2.5 million as a result of additional laboratory costs, BLA development activities, and toxicology costs incurred to support our Phase 1/2 trial of AGLE-177 for the treatment of patients with Homocystinuria;

higher personnel-related expenses, which increased by $2.2 million as a result of changes to employee headcount and additional compensation to support our clinical and research development capabilities.

General and Administrative Expenses .

General and administrative expenses increased by $ 5.5 million, or 25% , to $ 27.3 million for the year ended December 31, 2021 from $ 21.8 million for the year ended December 31, 2020 .

The increase in general and administrative expenses was primarily due to a $2.6 million increase in compensation and other personnel expenses, including $1.0 million in non-cash stock compensation, driven by additional headcount to develop our commercial team and support, $2.5 million of expenses related to professional service and legal costs primarily to support the ramp up of our commercial capabilities, and $0.8 million in facility-related expenses driven by additional office space to support company growth.

Interest Income .

The decrease in interest income to $0.6 million for the year ended December 31, 2020 from $2.1 million for the year ended December 31, 2019 was primarily due to decreasing yield rates during the year ended December 31, 2020 as compared to the prior year.

The increase in general and administrative expenses was primarily due to a $ 3 .

6 million increase in compensation and other personnel expenses, including $ 1 .

3 million in non-cash stock compensation, driven by additional headcount to establish and execute our commercial planning activities, and $ 1 .

9 million of expenses to ramp-up our commercial infrastructure and capabilities .

Liquidity and Capital Resources

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We are a clinical-stage biotechnology company with a limited operating history, and due to our significant research and development expenditures, we have generated operating losses since our inception and have not generated any revenue from the sale of any products.

Since our inception and through December 31, 2020, we have funded our operations primarily by raising an aggregate of $437.6 million of gross proceeds from the sale and issuance of convertible preferred and common equity securities, pre-funded stock warrants, and the collection of grant proceeds.

Since our inception and through December 31, 2021, we have funded our operations primarily by raising an aggregate of $461.0 million of gross proceeds from the sale and issuance of convertible preferred and common equity securities, pre-funded stock warrants, the collection of grant proceeds, and the licensing of our product rights for the commercialization of pegzilarginase in Europe and certain countries in the Middle East.

In March 2021, we entered into the Immedica Agreement, pursuant to which Immedica licensed the product rights for commercialization of pegzilarginase in the European Economic Area, United Kingdom, Switzerland, Andorra, Monaco, San Marino, Vatican City, Turkey, Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, and Oman.

In April 2021, we received an upfront payment of $21.5 million from Immedica.

Under the terms of the Immedica Agreement, we are also eligible to receive additional payments of up to approximately $125.0 million in regulatory and commercial milestone payments, assuming an exchange rate of $1.13 to €1.00.

Additionally, we are entitled to receive royalties in the mid-20 percent range on the net sales of the product in countries included in the Immedica Agreement.

In July 2021, the Immedica Agreement was modified to include additional development services, up to $3.0 million, to support the PEACE Phase 3 trial and BLA package performance obligation.

During the year ended December 31, 2020, we raised $163.3 million of gross proceeds through an underwritten public offering and an at-the-market offering program.

We sold 15,442,303 shares of common stock and pre-funded

warrants to purchase up to 13,610,328 shares of common stock in an underwritten public offering , or the 2020 Public Offering, for gross proceeds of $138.0 million , resulting in net proceeds of $129.0 million after deducting underwriting discounts, commissions, and offering costs.

We sold 15,442,303 shares of common stock and pre-funded warrants to purchase up to 13,610,328 shares of common stock in an underwritten public offering, or the 2020 Public Offering, for gross proceeds of $138.0 million, resulting in net proceeds of $129.0 million after deducting underwriting discounts, commissions, and offering costs.

Additionally, we sold an aggregate of 3,245,077 shares of common stock under an at-the-market offering program, or the 2020 ATM, for gross proceeds of $25.3 million, resulting in net proceeds of $24.6 million, after deducting underwriting discounts, commissions, and offering costs.

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The shares of common stock sold under the 2020 ATM were pursuant to an April 2020 sales agreement with JonesTrading Institutional Services LLC, as sales agent, to issue and sell shares of our common stock for an aggregate offering price of $60.0 million.

As of the date of the filing of this report, $34.7 million of our common stock remained available for sale under the sales agreement.

In July 2020, we filed a new shelf registration statement on Form S-3 that was declared effective by the SEC for the potential offering, issuance and sale by us of up to $400.0 million of our common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock and debt securities, subscription rights to purchase common stock and units consisting of all or some of these securities.

During the year ended December 31, 2019, we raised $69.0 million of gross proceeds from the sale of 4,625,000 shares of common stock and pre-funded warrants to purchase up to 4,000,000 shares of common stock in an underwritten public offering, resulting in net proceeds of $64.5 million after deducing underwriting discounts, commissions, and offering costs.

In February 2022, the shelf registration statement the 2020 ATM was registered under expired and no sales under this registration statement will occur going forward.

In July 2020, we filed a shelf registration statement on Form S-3 that was declared effective by the SEC for the potential offering, issuance and sale by us of up to $400.0 million of our common stock, preferred stock, debt securities, warrants to purchase common stock, preferred stock and debt securities, subscription rights to purchase common stock and units consisting of all or some of these securities.

Our primary use of cash is to fund the development of our product candidates, prepare for the potential commercialization of our lead product candidate, pegzilarginase and advance our pipeline .

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funding the continuing development of pegzilarginase and AGLE-177 ;

funding the establishment of commercial operations;

funding the advancement of additional product candidates;

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We anticipate that we will continue to generate losses into the foreseeable future as we develop our product candidates, seek regulatory approval of those candidates and begin to commercialize any approved products.

Until such time as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings, research grants, collaborations, or other sources.

Until such time as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity or debt financings, collaborations, license and development agreements, or other sources.

We currently have no debt, credit facility or additional committed capital.

To the extent that we raise additional equity, the ownership interest of our stockholders will be diluted.

Based on our available cash, cash equivalents, marketable securities, and restricted cash of $148.1 million as of December 31, 2020, we believe that we have sufficient resources to fund our operations into 2023.

We have based this estimate on assumptions that may prove to be incorrect, however, and we could deplete our capital resources sooner than we expect.

A discussion and analysis of our financial condition and cash flows for the year ended December 31, 2018 is included in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 24, 2020.

Based on our available cash, cash equivalents, marketable securities, and restricted cash of $95.0 million as of December 31, 2021, we believe that we have sufficient resources to fund our operations into the first quarter of 2023.

Accordingly, based on recurring losses from operations incurred since inception, the expectation of continued operating losses, and the need to raise additional capital to finance our future operations, we determined that there is substantial doubt about our ability to continue as a going concern within one year after the date that these financial statements are issued.

As a result, in order to continue to operate our business beyond that time, we will need to raise additional funds.

However, there can be no assurance that we will be able to generate funds on terms acceptable to us, on a timely basis, or at all.

In addition, we have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we currently anticipate.

A discussion and analysis of our financial condition and cash flows for the year ended December 31, 2019 is included in Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 18, 2021.

The following table summarizes our cash flows for the periods indicated (in thousands):

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restricted cash

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash used in operating activities

Cash used in operating activities for the year ended December 31, 2021 was $53.7 million and reflected a net loss of $65.8 million.

The cash impact of our net loss was offset by non-cash expenses of $8.0 million for stock-based compensation, $1.6 million for depreciation and amortization, $0.4 million for operating lease expense, and $0.2 million for net premium purchase and amortization on marketable securities.

The net change in operating assets and liabilities of $1.8 million was primarily related to a $3.6 million increase in deferred revenue due to receiving a $21.5 million upfront payment under the Immedica Agreement offset by the recognition of revenue allocated to the license, PEACE Phase 3 trial and BLA filing.

Additional offsets included a $1.2 million increase in prepaid expenses and other assets due to advance payments for the Phase 1/2 trial of AGLE-177 and manufacturing activities for the Arginase 1 Deficiency program, a $0.8 million increase in license and development receivable for incremental services provided to Immedica and not yet paid, and a $0.4 million decrease in operating lease liabilities due to lease payments made during the year.

Cash used in operating activities for the year ended December 31, 2020 was $75.8 million and reflected a net loss of $80.9 million.

The cash impact of our net loss was offset by non-cash expenses of $6.3 million for stock-based compensation, $1.0 million for depreciation and amortization, and $0.6 million for operating lease expense.

The net change in operating assets and liabilities of $2.5 million was primarily related to a $1.7 million decrease in accrued liabilities and accounts payable due to payments for manufacturing and a $1.1 million increase in prepaid expenses and other assets due to advanced payments associated with manufacturing for Arginase 1 Deficiency and nonclinical studies for Homocystinuria.

Cash used in operating activities for the year ended December 31, 2019 was $65.7 million and reflected a net loss of $78.3 million.

The cash impact of our net loss was offset by non-cash expenses of $4.9 million for stock-based compensation, $0.5 million for operating lease expense, $0.4 million for depreciation and amortization, and $0.3 million for net accretion of discounts on marketable securities exceeding the purchased discounts for the period.

The net change in operating assets and liabilities of $7.1 million was related to a $7.7 million increase in accounts payable and accrued liabilities due to additional research and development costs associated with the clinical trials and manufacturing activities for pegzilarginase in patients with Arginase 1 Deficiency, which was partially offset by a $0.3 million increase in prepaid expenses and other assets due to advanced payments associated with our on-going clinical trials to treat Arginase 1 Deficiency and a $0.3 million decrease in operating lease liabilities.

Cash used in investing activities

Cash used in investing activities for the year ended December 31, 2021 was $22.6 million and consisted of $133.1 million in purchases of marketable securities and $0.5 million in purchases of property and equipment offset by $111.0 million in maturities of marketable securities.

Cash used in investing activities for the year ended December 31, 2019 was $1.7 million and consisted of $91.9 million in purchases of marketable securities and $1.5 million in purchases of property and equipment offset by $91.7 million in maturities and sales of marketable securities.

Cash used in investing activities for the year ended December 31, 2020 was $7.6 million and consisted of $129.0 million in purchases of marketable securities and $4.3 million in purchases of property and equipment offset by $125.7 million in maturities of marketable securities.

Cash provided by financing activities

Cash provided by financing activities for the year ended December 31, 2021 was $1.4 million, which consisted of $1.9 million in stock option exercises and sale of common stock under our 2016 Employee Stock Purchase Plan offset by $0.5 million in principal payments made on finance lease obligations.

Cash provided by financing activities for the year ended December 31, 2020 was $154.5 million, which consisted of $138.0 million from the public offering of our common stock, offset by $9.0 million in paid underwriting and offering costs, $25.3 million from the sale of our common stock under an at-the-market program, offset by $0.7 million in paid underwriting and offering costs, and $0.8 million in proceeds received from stock option exercises and sale of common stock under our 2016 Employee Stock Purchase Plan.

Cash provided by financing activities for the year ended December 31, 2019 was $ 65.7 million, which consisted of $ 69 .

0 million from the public offering of our common stock in February 2019 , offset by $ 4 .

1 million in underwriting discounts and commissions and $0.

6 million in paid offering costs related to the offering and Form S-3 registration statement , and $ 1 .

4 million in proceeds received from stock option exercises and sale of common stock under our 2016 Employee Stock Purchase Plan.

Contractual Obligations

The following table summarizes our contractual obligations as of December 31, 2020 (in thousands):

Payments Due by Period

Operating leases

Finance lease

We have entered into agreements in the normal course of business with contract research organizations for clinical trials and contract manufacturing organizations, and with vendors for preclinical research studies and other services and products for operating purposes.

Contractual Obligations and Other Commitments

In April 2019, the Company entered into a lease agreement, or the Las Cimas Lease, for its corproate headquarters and laboratory space located in Austin, TX.

Future minimum lease commitments under the Las Cimas Lease through April 2028 are $7.0 million.

Please refer to Note 7, Leases, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional disclosures.

We have entered into agreements in the normal course of business with contract research organizations for clinical trials and contract manufacturing organizations, and with vendors for nonclinical research studies and other services and products for operating purposes.

These contractual obligations are cancelable at any time by us, generally upon 30 to 60 days’ prior written notice to the vendor.

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The University may terminate the agreement under certain circumstances, including for a breach by us that is not cured within 30 or 60 days of notice (depending on the type of breach), or if we or any of our affiliates or sublicensees participate in any proceeding to challenge the licensed patent rights (unless, with respect to sublicensees, we terminate the applicable sublicense).

Off Balance Sheet Arrangements

Through December 31, 2020, we do not have any off-balance sheet arrangements, as defined by applicable SEC regulations.

JOBS Act Accounting Election

We are an “emerging growth company,” as defined in the JOBS Act.

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards, and, therefore, are subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Recently Adopted Accounting Pronouncements

Please refer to Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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What changed 10-K

Item 7. Management’s Discussion and Analysis