What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-14 compared with 2023-05-09 · 123 added, 63 removed, 180 unchanged (51% of the section changed)

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Our molecules are engineered to localize activity within the tumor microenvironment with minimal systemic effects, resulting in the potential to achieve enhanced anti-tumor activity and increasing the population of patients who may be eligible to receive our medicines.

Our most advanced tumor-activated, clinical-stage product candidates are XTX101, an Fc-enhanced, anti-CTLA-4 monoclonal antibody, or mAb, XTX202, an interleukin 2, or IL-2, therapy, XTX301, an interleukin 12, or IL-12, therapy.

In addition to our clinical-stage product candidates, we are continuing to leverage our GPS platform and expertise in developing tumor-activated I-O therapies as we seek to expand our pipeline of discovery-stage programs and develop additional tumor-activated immunotherapies, including product candidates with a range of tumor targeting approaches.

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

Since inception, we have incurred significant operating losses, including net losses of $22.6 million and $21.4 million for the three months ended March 31, 2023 and 2022, respectively.

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

Even if we are able to generate revenue from product sales, we may not become profitable.

Since inception, we have incurred significant operating losses, including net losses of $42.0 million and $46.0 million for the six months ended June 30, 2023 and 2022, respectively.

Our net loss for the year ended December 31, 2022 was $88.2 million.

As of March 31, 2023, we had an accumulated deficit of $271.8 million.

We expect to incur significant expenses and operating losses for the foreseeable future.

We anticipate that our expenses will continue to increase significantly in connection with our ongoing activities, particularly as we:

As of June 30, 2023, we had an accumulated deficit of $291.1 million.

We expect to continue to incur significant expenses and operating losses for the foreseeable future, particularly to the extent we:

● continue to advance our current research programs and conduct additional research programs;

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● obtain, expand, maintain, defend and enforce our intellectual property;

● hire additional research, clinical, regulatory, quality, manufacturing and general and administrative personnel;

● hire additional clinical, regulatory, quality, manufacturing and general and administrative personnel;

● establish a commercial and distribution infrastructure to commercialize products for which we may obtain marketing approval, if any;

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

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings and other sources of funding, such as collaborations, licensing arrangements or other strategic transactions.

We may be unable to raise additional capital or enter into such other agreements or arrangements on acceptable terms, or at all.

Our failure to raise capital or enter into such agreements could have a material adverse effect on our business, results of operations and financial condition.

Even if we are able to generate revenue from product sales, we may not become profitable.

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 March 31, 2023, we had cash and cash equivalents of $93.3 million.

As of June 30, 2023, we had cash and cash equivalents of $75.4 million.

We believe that our existing cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the end of the second quarter of 2024.

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

Since our cash and cash equivalents as of June 30, 2023 are not expected to be sufficient to fund our operations for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

To continue to fund our operations, our management has developed plans, which primarily consist of raising additional capital through one or more of the following:

equity or debt financings;

collaborations, partnerships or licensing transactions;

or other sources.

However, there can be no assurance that we will be able to complete any such transaction on acceptable terms or otherwise, and we may be unable to obtain additional capital.

As a result, we may need to implement cost reduction strategies, which could include delaying, limiting, reducing or eliminating certain costs related to our operations and research and development programs.

For more information, refer to “—Liquidity and Capital Resources” below and Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Financial Operations Overview

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

We expect that our research and development expenses will continue to increase for the foreseeable future as we advance our programs and product candidates into and through clinical development, and as we continue to develop additional product candidates.

We also expect our discovery research efforts and our related personnel costs will continue to increase and, as a result, we expect our research and development expenses, including costs associated with stock-based compensation, will continue to increase above historical levels.

In addition, we may incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into, or may enter into license, acquisition, option or other agreements to acquire the rights to future products and product candidates.

We expect that our research and development expenses will remain approximately the same or will continue to increase for the foreseeable future as we advance our programs and our current or future product candidates into and through the development phase.

We expect our discovery research efforts and our related personnel costs to remain consistent with historical levels.

In addition, as we progress our most advanced product candidates in clinical development, we may incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into, or may enter into, license, acquisition, option or other agreements to acquire the rights to future products and product candidates.

In the event we are unable to raise additional capital to fund our operations, we may be required to adopt cost reduction strategies that seek to maintain our ability to continue the development of our most advanced product candidates in clinical development while otherwise reducing our overall research and development expenses.

At this time, we cannot reasonably estimate or know the nature, timing and projected costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates or programs.

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● the number and scope of preclinical and clinical programs we decide to pursue;

● our ability to maintain our current research and development programs and to establish new ones;

● our ability to implement and maintain cost reduction strategies, as well as the timing of such cost reductions;

● our ability to maintain our current research and development programs;

● our ability to establish an appropriate safety profile for our product candidates with IND-enabling studies;

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General and administrative expenses also include legal fees relating to corporate matters;

professional and consulting fees for accounting, auditing, tax, human resources and administrative consulting services;

professional and consulting fees for accounting, auditing, tax, human resources and administrative

consulting services;

board of directors’ fees;

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

We anticipate that our general and administrative expenses will increase in the future as we increase infrastructure to support the expected growth in our research and development activities.

We also expect to continue to incur increased expenses associated with operating as a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services attributable to maintaining compliance with exchange listing standards and U.S.

We anticipate that our general and administrative expenses will remain consistent with historical levels as we maintain our infrastructure to support our research and development activities.

We expect to continue to incur significant expenses associated with operating as a public company, including costs for accounting, audit, legal, regulatory and tax-related services attributable to maintaining compliance with exchange listing standards and U.S.

Securities and Exchange Commission, or SEC, requirements, directors’ and officers’ liability insurance costs and investor and public relations costs.

We also expect to incur additional intellectual property-related expenses as we file patent applications to protect intellectual property arising from our research and development activities.

We also expect to continue to incur additional intellectual property-related expenses as we file patent applications to protect intellectual property arising from our research and development activities.

In the event we are unable to raise additional capital, we may implement cost reduction strategies that seek to reduce our general and administrative expenses while maintaining sufficient infrastructure to support our planned research and development activities and operations as a public company.

Other Income (Expense), Net

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Results of Operations

Comparison of the three months ended March 31, 2023 and 2022

The following table summarizes our results of operations for the three months ended March 31, 2023 and 2022 (in thousands):

Comparison of the three months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

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Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022 (in thousands):

The following table summarizes our research and development expenses for the three months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

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Total research and development expenses

Research and development expenses increased by $1.2 million from $14.9 million for the three months ended March 31, 2022 to $16.1 million for the three months ended March 31, 2023.

Research and development expenses decreased by $3.0 million from $16.2 million for the three months ended June 30, 2022 to $13.2 million for the three months ended June 30, 2023.

The changes in research and development expenses were primarily due to the following:

● XTX101 costs decreased by $0.5 million, primarily driven by a $0.3 million decrease in clinical development activities and a $0.2 million decrease in manufacturing activities;

● XTX202 costs increased by $0.2 million, primarily driven by a $0.8 million increase in clinical development activities related to our Phase 1 clinical trial, partially offset by a $0.5 million decrease in manufacturing activities;

● XTX301 costs were relatively unchanged, as increases of $0.9 million in clinical development activities related to our Phase 1 clinical trial and $0.5 million in manufacturing activities were offset by a $1.4 million decrease in preclinical activities;

● XTX101 costs decreased by $2.0 million, primarily driven by a $1.7 million decrease due to the timing of manufacturing activities in the comparable period and a $0.3 million decrease in clinical development activities related to our ongoing Phase 1 clinical trial;

● XTX202 costs increased by $1.8 million, primarily driven by an increase in clinical development activities related to our ongoing Phase 1/2 clinical trial;

● XTX301 costs decreased by $2.9 million, primarily driven by a $2.5 million decrease due to the timing of manufacturing activities in the comparable period and a $0.9 million decrease in preclinical activities, partially offset by a $0.5 million increase in clinical development activities related to our Phase 1 clinical trial;

● other early programs and indirect research and development expenses increased by $0.3 million, primarily driven by an increase in external expenses related to preclinical research and development activities;

● personnel-related costs increased by $1.3 million, primarily driven by an increase in salaries, bonuses and benefits due to higher research and development headcount.

● personnel-related costs were relatively unchanged, primarily driven by consistent research and development headcount.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended March 31, 2023 and 2022 (in thousands):

The following table summarizes our general and administrative expenses for the three months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

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Total general and administrative expenses

General and administrative expenses increased by $1.1 million from $6.3 million for the three months ended March 31, 2022 to $7.4 million for the three months ended March 31, 2023.

General and administrative expenses decreased by $1.4 million from $8.3 million for the three months ended June 30, 2022 to $6.9 million for the three months ended June 30, 2023.

The changes in general and administrative expenses were primarily due to the following:

● personnel-related costs increased by $0.6 million, primarily driven by a $0.7 million increase in salaries, bonuses and benefits due to higher general and administrative headcount, partially offset by a $0.2 million decrease in stock-based compensation;

● professional and consulting fees increased by $0.6 million, primarily driven by an increase in consulting fees;

● facility-related and other general and administrative expenses decreased by $0.1 million, primarily driven by lower costs related to directors’ and officers’ liability insurance.

● personnel-related costs decreased by $1.2 million, primarily driven by a $0.8 million decrease in stock-based compensation, as the prior year period included $0.6 million in non-recurring compensation expense resulting from the modification of previously issued stock options, and a $0.4 million decrease in salaries, bonuses and benefits;

● professional and consulting fees increased by $0.2 million, primarily driven by a $0.4 million increase in legal fees partially offset by a $0.2 million decrease in consulting fees;

● facility-related and other general and administrative expenses decreased by $0.4 million, primarily driven by lower costs related to directors’ and officers’ liability insurance and a reduction in other general and administrative expenses.

Other Income (Expense), Net

Other income (expense), net, changed by $1.0 million from other expense of $0.1 million for the three months ended March 31, 2022 to other income of $0.9 million for the three months ended March 31, 2023.

The change in other income (expense), net was primarily due to an increase in interest income earned from higher interest rates.

Other income (expense), net, was other income of $0.8 million for the three months ended June 30, 2023 and other expense of $0.1 million for the three months ended June 30, 2022.

The change in other income (expense), net was primarily due to an increase in interest income earned on our cash and cash equivalents due to higher interest rates.

Comparison of the six months ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended

Operating expenses

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense), net

Total other income (expense), net

Research and Development Expenses

The following table summarizes our research and development expenses for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended

Other early programs and indirect research and development

Personnel-related (including stock-based compensation)

Total research and development expenses

Research and development expenses decreased by $1.8 million from $31.2 million for the six months ended June 30, 2022 to $29.3 million for the six months ended June 30, 2023.

The changes in research and development expenses were primarily due to the following:

● XTX101 costs decreased by $2.6 million, primarily driven by a $1.9 million decrease due to the timing of manufacturing activities in the comparable period and a $0.6 million decrease in clinical development activities related to our ongoing Phase 1 clinical trial;

● XTX202 costs increased by $1.9 million, primarily driven by a $2.6 million increase in clinical development activities related to our ongoing Phase 1/2 clinical trial, partially offset by a $0.5 million decrease in manufacturing activities;

● XTX301 costs decreased by $3.0 million, primarily driven by a $2.3 million decrease in preclinical activities and a $1.9 million decrease due to the timing of manufacturing activities in the comparable period, partially offset by a $1.5 million increase in clinical development activities related to our Phase 1 clinical trial;

● other early programs and indirect research and development expenses increased by $0.6 million, primarily driven by an increase in external expenses related to preclinical research and development activities;

● personnel-related costs increased by $1.1 million, primarily driven by an increase in salaries, bonuses and benefits due to higher research and development headcount.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended

Personnel-related (including stock-based compensation)

Professional and consulting fees

Facility-related and other general and administrative expenses

Total general and administrative expenses

General and administrative expenses decreased by $0.3 million from $14.6 million for the six months ended June 30, 2022 to $14.3 million for the six months ended June 30, 2023.

The changes in general and administrative expenses were primarily due to the following:

● personnel-related costs decreased by $0.6 million, primarily driven by a $1.0 million decrease in stock-based compensation, as the prior year period included $0.6 million in non-recurring compensation expense resulting from the modification of previously issued stock options, partially offset by a $0.4 million increase in salaries, bonuses and benefits due to higher general and administrative headcount;

● professional and consulting fees increased by $0.9 million, primarily driven by a $0.6 million increase in legal fees and a $0.3 million increase in accounting and other professional fees;

● facility-related and other general and administrative expenses decreased by $0.6 million, primarily driven by lower costs related to directors’ and officers’ liability insurance and a reduction in other general and administrative expenses.

Other Income (Expense), Net

Other income (expense), net, was other income of $1.6 million for the six months ended June 30, 2023 and other expense of $0.2 million for the six months ended June 30, 2022.

The change in other income (expense), net was primarily due to an increase in interest income earned on our cash and cash equivalents due to higher interest rates.

Liquidity and Capital Resources

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To date, we have financed our operations primarily from proceeds raised through private placements of preferred units and convertible preferred stock, a debt financing and our IPO.

Through March 31, 2023, we have received an aggregate of $350.9 million in net proceeds from such transactions, including aggregate net proceeds of $116.4 million from our IPO, an aggregate of $224.5 million in net proceeds from the sale and issuance of preferred units and convertible preferred stock, and $10.0 million in net proceeds from our debt financing with PacWest.

As of March 31, 2023, we had cash and cash equivalents of $93.3 million.

In November 2022, we filed a universal shelf registration statement on Form S-3 with the SEC, or the 2022 Form S-3, to register for sale up to $250,000,000 of our common stock, preferred stock, debt securities, units and warrants, which we may issue and sell from time to time in one or more offerings, which became effective on November 18, 2022 (333-268264).

Through June 30, 2023, we have received an aggregate of $350.9 million in net proceeds from such transactions, including $116.4 million in net proceeds from our IPO, $224.5 million in net proceeds from the sale and issuance of preferred units and convertible preferred stock, and $10.0 million in net proceeds from our debt financing with PacWest.

As of June 30, 2023, we had cash and cash equivalents of $75.4 million.

In November 2022, we filed a universal shelf registration statement on Form S-3 with the SEC, or Form S-3, to register for sale up to $250,000,000 of our common stock, preferred stock, debt securities, units and warrants, which we may issue and sell from time to time in one or more offerings, which became effective on November 18, 2022 (333-268264).

In November 2022, we also entered into a sales agreement, or the Sales Agreement, with Cowen and Company LLC, under which we may issue and sell shares of our common stock, from time to time, having an aggregate offering price of up to $75.0 million, subject to the terms and conditions of the Sales Agreement.

Through the filing date of this Quarterly Report on Form 10-Q, we have not issued or sold any shares of our common stock pursuant to the Sales Agreement.

Through the filing date of this Quarterly Report

on Form 10-Q, we have not issued or sold any shares of our common stock pursuant to the Sales Agreement.

Issuances or sales of common stock pursuant to the Sales Agreement, if any, would be made under the Form S-3 and the corresponding prospectus related to the issuance and sale of shares of our common stock pursuant to the Sales Agreement.

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

Three Months Ended

Six Months Ended

Net cash used in:

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The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges, which are generally due to stock-based compensation, depreciation and amortization, as well as changes in components of operating assets and liabilities, which are generally due to increased expenses and timing of vendor payments.

During the three months ended March 31, 2023, net cash used in operating activities of $25.3 million was primarily driven by our net loss of $22.6 million and changes in operating assets and liabilities of $4.9 million, partially offset by net non-cash expenses of $2.3 million.

During the three months ended March 31, 2022, net cash used in operating activities of $20.8 million was primarily driven by our net loss of $21.4 million and changes in operating assets and liabilities of $2.0 million, partially offset by net non-cash expenses of $2.5 million.

During the six months ended June 30, 2023, net cash used in operating activities of $41.8 million was primarily driven by our net loss of $42.0 million and changes in operating assets and liabilities of $4.5 million, partially offset by net non-cash expenses of $4.7 million.

During the six months ended June 30, 2022, net cash used in operating activities of $37.6 million was primarily driven by our net loss of $46.0 million, partially offset by changes in operating assets and liabilities of $2.6 million and net non-cash expenses of $5.7 million.

Investing Activities

During the three months ended March 31, 2023 and 2022, net cash used in investing activities of $0.2 million and $0.3 million, respectively, consisted of purchases of property and equipment.

During the six months ended June 30, 2023 and 2022, net cash used in investing activities of $0.5 million and $1.0 million, respectively, consisted of purchases of property and equipment.

Financing Activities

During the three months ended March 31, 2023, net cash used in financing activities of $1.7 million consisted of repayments of debt principal and payments on our finance lease for certain lab equipment.

During the three months ended March 31, 2022, net cash used in financing activities of less than $0.1 million consisted of payments on our finance lease for certain lab equipment partially offset by proceeds received from the exercise of stock options.

During the six months ended June 30, 2023, net cash used in financing activities of $2.7 million consisted of repayments of debt principal and payments on our finance lease for certain lab equipment, partially offset by proceeds from the issuance of common stock under our employee stock purchase plan.

During the six months ended June 30, 2022, net cash used in financing activities of less than $0.1 million consisted of payments on our finance lease for certain lab equipment partially offset by proceeds received from the exercise of stock options.

Loan and Security Agreement

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Interest on amounts outstanding accrues at a variable annual rate equal to the greater of (i) the prime rate plus 0.25% or (ii) 4.75%.

As of March 31, 2023, the interest rate on the term loan was 8.25%.

We were required to make interest-only payments on any outstanding balances through December 31, 2022.

As of June 30, 2023, the interest rate on the term loan was 8.50%.

We made interest-only payments on the outstanding balance through December 31, 2022.

We commenced making equal monthly payments of principal plus interest in January 2023, and we will be required to make such payments until the term loan matures on June 30, 2024.

As of March 31, 2023, the outstanding principal balance under the loan agreement was $8.3 million.

As of June 30, 2023, the outstanding principal balance under the loan agreement was $7.2 million.

The loan agreement contains customary representations, warranties and covenants and also includes customary events of default, including payment defaults, breaches of covenants, a change of control and occurrence of a material adverse effect.

Capital Requirements

Capital Requirements and Going Concern

We expect our future capital requirements to increase substantially over time in connection with our ongoing research and development activities, particularly as we advance our current and planned clinical development of our product candidates and expand the research efforts and preclinical activities associated with our other existing programs and discovery platform.

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Inflation generally affects us by increasing our cost of labor and certain services.

We do not believe that inflation had a material effect on our financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We do not believe that inflation had a material effect on our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

However, the United States has recently experienced historically high levels of inflation.

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Additionally, the United States is experiencing a workforce shortage, which in turn has created a competitive wage environment that may also increase our operating costs in the future.

As of March 31, 2023, we had cash and cash equivalents of $93.3 million.

We believe that our existing cash and cash equivalents will be sufficient to enable us to fund our operating expenses and capital expenditure requirements into the end of the second quarter of 2024.

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

As of June 30, 2023, we had cash and cash equivalents of $75.4 million.

We believe that our existing cash and cash equivalents will be sufficient to enable us to fund our planned operating expenses and capital expenditure requirements into the end of the second quarter of 2024.

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

In addition, since our cash and cash equivalents as of June 30, 2023 are not expected to be sufficient to fund our operating expenses and capital expenditures for at least twelve months from the date of issuance of the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt about our ability to continue as a going concern.

We will require substantial additional capital to fund our operations as we continue to advance our product candidates through clinical trials and maintain the infrastructure necessary to support these activities.

To continue to fund our operations, our management has developed plans, which primarily consist of raising additional capital through one or more of the following:

equity or debt financings;

partnerships or licensing transactions;

or other sources.

However, there can be no assurance that we will be able to complete any such transaction on acceptable terms or otherwise, and we may be unable to obtain additional capital.

As a result, we may need to implement cost reduction strategies, which could include delaying, reducing or eliminating certain costs related to our operations and research and development programs.

The accompanying condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business for the foreseeable future.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Because of the numerous risks and uncertainties associated with product development, and because the extent to which we may enter into collaborations with third parties for the development of our product candidates is unknown, we may incorrectly estimate the timing and amounts of increased capital outlays and operating expenses associated with advancing

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● the scope, progress, results and costs of research and development for our current and future product candidates, including our current and planned clinical trials for our clinical-stage cytokine product candidates, XTX202 and XTX301, and ongoing preclinical development for our current and future product candidates;

● our ability to implement and maintain cost reduction strategies, as well as the timing of such cost reductions;

● the scope, prioritization and number of our research and development programs;

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● the extent to which we may acquire or in-license other products, product candidates, technologies or intellectual property, as well as the terms of any such arrangements;

● our ability to seek, establish and maintain a collaboration to further develop XTX101, our Fc-enhanced tumor-activated anti-CTLA-4, with a collaborator, including the financial terms and any cost-sharing arrangements of any such collaboration;

● the impacts of the COVID-19 pandemic;

● the costs of continuing to expand our operations and operating as a public company.

● our ability to maintain our clinical collaboration to further develop XTX101, our Fc-enhanced tumor-activated anti-CTLA-4, in combination with atezolizumab, including the cost-sharing arrangements of such collaboration;

● the impact of public health crises, including epidemics and pandemics such as the COVID-19 pandemic, on our business, operations, strategy, goals and anticipated milestones, as well as our response to such epidemics or pandemics;

● the costs of maintaining or expanding our operations and continuing to operate as a public company;

● our ability to continue as a going concern.

Identifying potential product candidates and conducting preclinical studies and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales.

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Our expectation with respect to our ability to fund our currently planned operations is based on estimates that are subject to various risks and uncertainties.

Our operating plan may change as a result of many factors currently unknown to management and there can be no assurance that our current operating plan will be achieved in the time frame anticipated by us, and we may need to seek additional capital sooner than anticipated.

Our operating plan may change as a result of many factors currently unknown to management and there can be no assurance that our current operating plan will be achieved in the time frame anticipated by us, and we may exhaust our available capital resources sooner than we expect.

Adequate additional capital may not be available to us on acceptable terms, or at all.

Market volatility resulting from the COVID-19 pandemic, adverse changes in domestic and international fiscal, monetary and other policies and political relations, regional or global conflicts, uncertainty around global economic conditions, instability in the financial markets, or other factors could also adversely impact our ability to access capital.

Market volatility resulting from the COVID-19 pandemic, adverse changes in domestic and international fiscal, monetary and other policies and political

relations, regional or global conflicts, uncertainty around global economic conditions, instability in the financial markets, or other factors could also adversely impact our ability to access capital.

To the extent that we raise additional capital through the sale of equity or securities convertible into or exchangeable for equity, the ownership interest of our existing stockholders may be diluted, and the terms of such securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders.

Additional debt and preferred equity, if available, may also involve

agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require that we issue warrants, which could potentially dilute the ownership interest of our existing stockholders.

Additional debt and preferred equity, if available, may also involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require that we issue warrants, which could potentially dilute the ownership interest of our existing stockholders.

If we raise additional capital through collaborations, partnerships, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs or product candidates or products, and we may be required to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional capital through equity or debt offerings, we may have to significantly delay, reduce or eliminate some or all of our product development or future commercialization efforts, or grant rights to develop and market product candidates or products that we would have otherwise preferred to develop and market ourselves.

If we are unable to raise additional capital, we may have to significantly delay, reduce or eliminate some or all of our product development or grant rights to develop and market product candidates or products that we would have otherwise preferred to develop and market ourselves.

Critical Accounting Policies and Use of Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements during the reporting periods.

The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements during the reporting periods.

These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future.

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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