This discussion and analysis should be read in conjunction with Cassava
Sciences, Inc.'s (the "Company,", "we," "us," or "our") financial statements and
accompanying notes included elsewhere in this Quarterly Report on Form 10-Q.
Operating results are not necessarily indicative of results that may occur in
This Quarterly Report on Form 10-Q contains certain statements that are
considered forward-looking statements within the meaning of the Private
Securities Reform Act of 1995. We intend that such statements be protected by
the safe harbor created thereby. Forward-looking statements relate to
expectations, beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that are not
historical facts. In some cases, you can identify forward-looking statements by
terms such as "anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "plan," "potential," "should," "will" and "would" or the negatives of
these terms or other comparable terminology.
The forward-looking statements are based on our beliefs, assumptions and
expectations of our future performance, taking into account all information
currently available to us. Forward-looking statements involve risks and
uncertainties and our actual results and the timing of events may differ
significantly from the results discussed in the forward-looking statements.
Examples of such forward-looking statements include, but are not limited to
· Our ability to initiate, conduct or complete clinical studies with PTI-125 or
PTI-125Dx, our product candidates targeted at Alzheimer's disease and other
neurodegenerative diseases, including our anticipated timeline for initiating a
Phase IIb study of PTI-125;
· any potential benefits of our product candidates, such as PTI-125 or PTI-125Dx,
including the potential ability of PTI-125 to prevent or reverse
amyloid-related damage or PTI-125Dx to diagnose Alzheimer's disease;
· discussions with potential strategic partners for the development and
commercialization of our product candidates;
· the utility of protection, or the sufficiency, of our intellectual property;
· potential competitors or competitive products;
· expected future sources of revenue and capital and increasing cash needs;
· market acceptance of our potential product candidates;
· expectations regarding trade secrets, technological innovations, licensing
agreements and outsourcing of certain business functions;
· expenses increasing or fluctuations in our financial or operating results;
· operating losses and anticipated operating and capital expenditures;
· expectations regarding the issuance of shares of common stock to employees
pursuant to equity compensation awards, net of employment taxes;
· our ability to maintain compliance with the ongoing listing requirements for
the Nasdaq Capital Market;
· anticipated hiring and development of our internal systems and infrastructure;
· the sufficiency of our current resources to fund our operations over the next
12 months; and
· assumptions and estimates used for our disclosures regarding stock-based
Such forward-looking statements and our business involve risks and
uncertainties, including, but not limited to the following:
· We are in the early stages of clinical drug development and have a limited
operating history in our business targeting Alzheimer's disease and no products
approved for commercial sale.
· We have incurred significant net losses in each period since our inception and
anticipate that we will continue to incur net losses for the foreseeable
· Research and development of biopharmaceutical products is a highly uncertain
undertaking and involves a substantial degree of risk and our business is
heavily dependent on the successful development of our product candidates.
· We will need to obtain substantial additional financing to complete the
development and any commercialization of our product candidates.
· We may not be successful in our efforts to continue to develop product
candidates or commercially successful products.
· We may not be successful in our efforts to expand indications for product
· We are concentrating a substantial portion of our research and development
efforts on the diagnosis and treatment of Alzheimer's disease, an area of
research that has recorded many clinical failures.
· We may encounter substantial delays in our clinical trials or may not be able
to conduct or complete our clinical trials on the timelines we expect, if at
· Our clinical trials may fail to demonstrate evidence of the safety and efficacy
of our product candidates, which would prevent, delay, or limit the scope of
regulatory approval and the commercialization of our product candidates.
· We may be unable to protect our intellectual property rights or trade secrets.
· We may be subject to third-party claims of intellectual property infringement.
· We may not succeed in our maintenance or pursuit of licensing rights or
third-party intellectual property necessary for the development of our product
· Enacted or future legislation or regulatory actions may adversely affect our
product pricing, or limit the reimbursement we may receive for our products.
· A significant breakdown, security breach or interruption affecting our internal
computer systems, or those used by our third-party research collaborators, may
compromise the confidentiality of our financial or proprietary information,
result in material disruptions of our products and operations and adversely
affect our reputation.
· We may be unsuccessful at hiring and retaining qualified personnel.
· We may not be successful in transitioning our business operations from our
prior focus on analgesic drug development to a new focus on neurodegeneration
drug development, including for drugs targeting Alzheimer's disease.
Please also refer to the section entitled "Risk Factors" in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2018, as such risk factors may
be amended, updated or modified periodically in our reports filed with the SEC
for further information on these and other risks affecting us.
We caution you not to place undue reliance on forward-looking statements because
our future results may differ materially from those expressed or implied by
them. We do not intend to update any forward-looking statement, whether written
or oral, relating to the matters discussed in this prospectus, except as
required by law.
Cassava Sciences, Inc. is a clinical-stage drug development company. Our
expertise is to develop new product candidates and guide such candidates through
various regulatory and development pathways in preparation for their potential
commercialization. Since our inception, we have generally focused our drug
development efforts on disorders of the central nervous system. We are currently
conducting a Phase II clinical program for patients with Alzheimer's disease. By
necessity, the conduct of drug development is complex, lengthy, expensive and
risky. The U.S. Food and Drug Administration (the "FDA") has not yet established
the safety or efficacy of our product candidates.
Our overall strategy is to leverage our unique scientific/clinical platform to
develop a first-in-class program for treating neurodegeneration. Our goal is to
address Alzheimer's disease and other neurodegenerative diseases, particularly
those with a strong neuroinflammation component, with PTI-125, our drug product
candidate to treat Alzheimer's disease, and PTI-125Dx, our diagnostic product
candidate to detect Alzheimer's disease.
We seek to develop and gain regulatory approval for PTI-125 for the treatment of
Alzheimer's disease and PTI-125Dx for the diagnosis of Alzheimer's disease. The
following is a summary of our clinical-stage biopharmaceutical assets:
PTI-125 - PTI-125 is the name of our product candidate for the treatment of
Alzheimer's disease. This proprietary small molecule drug represents an entirely
new target to treat Alzheimer's disease. PTI-125 benefits from a strong
scientific rationale, peer-reviewed publications in prestigious academic
journals and multiple peer-reviewed research grant awards from the National
Institutes of Health ("NIH"), the primary agency of the U.S. government for
In 2018, we initiated a Phase II clinical program for patients with Alzheimer's
disease using PTI-125. On April 15, 2019, we announced completion of patient
enrollment for a Phase IIa study for PTI-125. We expect to announce top-line
results of our Phase IIa study in the second half of 2019. Our Phase II clinical
program with PTI-125 is substantially funded by research grant awards from
NIH. PTI-125 was discovered and designed in-house and was characterized by our
academic collaborators during research activities that were conducted from
approximately 2008 to date. We own exclusive, worldwide rights to PTI-125,
without royalty obligations to any third party.
PTI-125Dx - We are developing PTI-125Dx as a blood-based biomarker/diagnostic to
detect Alzheimer's disease. The goal of PTI-125Dx is to make the detection of
Alzheimer's disease as simple as getting a blood test. This clinical-stage
program is substantially funded by research grant awards from NIH. PTI-125Dx was
discovered and designed in-house and was characterized by our academic
collaborators during research activities that were conducted from approximately
2008 to date. We own exclusive, worldwide rights to PTI-125Dx, without royalty
obligations to any third party.
Our scientific approach is different.
For over 100 years, scientists have ascribed various neurodegenerative diseases
to pathological proteins that misfold. Misfolded proteins are also altered or
they aggregate, such as amyloid and tau in the case of Alzheimer's disease.
Destruction of neuronal synapses, accelerated nerve cell death, and dysfunction
of the brain support cells, are all widely believed to be a direct consequence
of misfolded proteins.
Historically, the drug industry has attempted to treat Alzheimer's disease by
developing drugs that block the synthesis of, or remove or dis-aggregate, beta
amyloid and, more recently, tau. Essentially, the prevailing doctrine said that
amyloid must be cleared out of the brain. This scientific approach - known as
the amyloid hypothesis - has been repeatedly tested by our competitors in late
stage clinical trials using a variety of antibody backbones, epitopes, target
conformations, biomarkers and in various stages of disease. Such studies have
all failed to yield therapeutic benefit for patients with Alzheimer's
disease. More recently, experimental efforts have been proposed to ramp up the
brain's immune system in people with Alzheimer's disease to remove amyloid or
tau, an approach known as immunotherapy. Current attempts to use immunotherapy
to treat Alzheimer's disease may yet work, but for over 20 years this approach
has also consistently failed due to lack of efficacy and/or for safety reasons.
For example, older adults who receive active immunotherapy treatment often show
reduced responsiveness of the immune system, and patients who do improve
sometimes develop a life-threatening brain inflammation called aseptic
meningitis. More generally, even when active or passive immunization against
amyloid beta has reduced the brain's amyloid load, such effects resulted in no
therapeutic benefit to patients with Alzheimer's disease.
Since drug innovation is a trial-and-error process, clinical failures represent
important learning opportunities. In the case of Alzheimer's disease, we believe
the biopharmaceutical industry's track record of persistent failure reflects a
need to consider more recent and innovative approaches regarding the
neurobiology of Alzheimer's disease. We believe such scientific approaches may
broaden the range of possible treatment approaches.
Over the last ten years, we have developed a new and promising scientific
approach for the treatment and diagnosis of neurodegeneration, particularly
Importantly, we do not seek to clear amyloid out of the brain. Our approach is
to stabilize a critical protein in the brain.
"Proteopathy" refers to a disease in which a protein becomes structurally
abnormal, assembles and aggregates, and therefore loses its normal function and
disrupts or injures the function of surrounding cells, tissues and
organs. Through years of basic research, we have identified a structurally
altered protein in the brain. We believe our experimental evidence demonstrates
that this proteopathy plays a critical role in the development of
neurodegenerative diseases, including the neurodegeneration observed in
Alzheimer's disease. Using scientific insight and advanced tools in
biochemistry, bioinformatics and imaging, we have elucidated this protein
dysfunction. We have engineered a family of high-affinity small molecules to
target the structurally altered protein and restore the protein to its normal
shape and function. This family of small molecules, including PTI-125, was
designed in-house and characterized by our academic collaborators.
The target of PTI-125 is an altered form of a scaffolding protein called filamin
A ("FLNA"). Altered FLNA causes a cascade of toxic effects in the brain. Altered
FLNA is a proteopathy, which means that this protein is no longer capable of
executing a stable, beneficial and protective role and instead becomes harmful
and destructive to the brain. By reversing the alteration of FLNA, its pathology
ceases to adversely affect surrounding cells in the brain. In animal models of
disease, restoring normal FLNA resulted in a multitude of therapeutic effects,
including normalizing neurotransmission, decreasing neuroinflammation and
restoring memory and cognition. By restoring function to multiple receptors and
exerting powerful anti-inflammatory effects, we believe our approach
has potential to slow the progression of neurodegeneration in humans. Thus, we
have designed product candidates, such as PTI-125, with the goal of slowing or,
potentially, even reversing the deterioration of brain cells. We believe the
ability to simultaneously improve many vital functions in the brain represents a
new, different and crucial approach to address neurodegeneration.
Importantly, since PTI-125 has a unique mechanism of action, we believe its
potential therapeutic effects may be additive or synergistic with that of other
therapeutic candidates aimed at the treatment of neurodegeneration.
Our mission is to detect and treat Alzheimer's disease.
Our lead therapeutic product candidate, called PTI-125, is initially aimed at
Alzheimer's disease. PTI-125 is a small molecule drug with a novel mechanism of
action. This drug candidate has demonstrated both cognitive improvement and
slowing of disease progression in animal models of disease. PTI-125 is in Phase
II clinical stage of development, with substantial support from the National
Institute on Aging ("NIA"), a division of NIH.
The target of PTI-125 is an altered form of filamin A ("FLNA"). FLNA is a
scaffold protein that is widely found throughout the body. The function of a
scaffold protein is to bring multiple other proteins together for them to
interact. However, an altered, and highly toxic, form of FLNA is found in the
Alzheimer's brain. Altered FLNA contributes to Alzheimer's disease by disrupting
the normal function of neurons, leading to neurodegeneration and brain
inflammation. Our product candidate, PTI-125, is aimed at countering the altered
and toxic form of FLNA in the brain, thus restoring the normal function of this
PTI-125 binds to altered FLNA with very high affinity. In doing so, PTI-125
restores the normal shape of FLNA and the normal function of three brain
receptors: the alpha-7 nicotinic acetylcholine receptor; the
N-methyl-D-aspartate ("NMDA") receptor; and the insulin receptor. These
receptors have pivotal roles in brain cell survival, cognition and memory. In
animal models, treatment with PTI-125 resulted in dramatic improvements in brain
health, such as reduced amyloid and tau deposits, improved insulin receptor
signaling and improved learning and memory. In addition, PTI-125 has another
beneficial treatment effect of significantly reducing inflammatory cytokines in
the brain. In animal models of disease, treatment with PTI-125 abolished IL-6
production and suppressed TNF-alpha and IL-1beta levels by 86% and 80%,
respectively, illustrating a powerful anti-neuroinflammatory effect.
Our science is published in peer-reviewed academic journals. In addition, our
research has been supported by NIH under multiple research grant awards. Each
grant was awarded following an in-depth, competitive, peer-reviewed evaluation
of our approach for scientific and technical merit by a panel of outside experts
in the field. Strong, long-term support from NIH has allowed us to advance our
two product candidates for neurodegeneration, PTI-125 and PTI-125Dx, into
Our science is based on stabilizing a critical protein in the brain.
Our scientific approach is to treat neurodegeneration by targeting an altered
form of a scaffolding protein called filamin A ("FLNA"). Scaffolding proteins
are essential for cell function because they participate in virtually every
process within the cell. If their function is impaired, the consequences can be
devastating. Technological advances in medicine and improvements in lifestyle
are making our lives longer. But with age, genetic mutations and other factors
conspire against healthy cells, resulting in altered proteins. Sometimes a cell
can rid itself of altered proteins. However, when disease changes the shape and
function of critical proteins, multiple downstream processes are impaired. There
are many clinical conditions in which proteins become structurally altered and
impair the normal function of cells, tissues and organs, leading to
disease. Conversely, restoring altered proteins back to health - which is
called proteostasis - is a well-accepted therapeutic strategy in clinical
Accumulation of altered proteins is common in age-related brain disorders. The
most common is Alzheimer's disease. Altered proteins observed in the aging
brain include hyperphosphorylated tau and beta amyloid, both hallmarks of
Alzheimer's disease. Our scientists and outside collaborators have demonstrated
that an altered, and highly toxic, form of the scaffolding protein FLNA exists
in the Alzheimer's brain. Critically, altered FLNA enables the toxicity of both
beta amyloid and tau proteins. This toxic cascade impairs brain health, leading
to worsening symptoms of Alzheimer's disease over time. In addition to impairing
brain cell function, altered FLNA enables persistent inflammation in the
Alzheimer's brain. We have shown that altered FLNA also promotes
neuroinflammation via toll-like receptor 4 ("TLR4"), an immune receptor that
causes release of pro-inflammatory cytokines. Our therapeutic approach is
designed to counteract these brain pathologies by restoring altered FLNA protein
back to its normal, non-diseased conformation with PTI-125. Treatment with
PTI-125 has been shown to restore the normal function of three brain receptors
critical to brain cell survival, cognition and memory, i.e., the alpha-7
nicotinic acetylcholine receptor; the NMDA receptor; and the insulin receptor.
Treatment with PTI-125 has also been shown to dramatically reduce inflammatory
cytokine levels in brains of mice with Alzheimer's disease mutations, thus
reducing the neuroinflammation that also characterizes Alzheimer's disease.
We have yet to generate any revenues from product sales. We have an accumulated
deficit of $165.3 million at March 31, 2019. These losses have resulted
principally from costs incurred in connection with research and development
activities, salaries and other personnel-related costs and general corporate
expenses. Research and development activities include costs of preclinical and
clinical trials as well as clinical supplies associated with our drug
candidates. Salaries and other personnel-related costs include non-cash
stock-based compensation associated with options and other equity awards granted
to employees and non-employees. Our operating results may fluctuate
substantially from period to period as a result of the timing of preclinical
activities, enrollment rates of clinical trials for our drug candidates and our
need for clinical supplies.
We expect to continue to use significant cash resources in our operations for
the next several years. Our cash requirements for operating activities and
capital expenditures may increase substantially in the future as we:
· conduct preclinical and clinical trials for our drug candidates;
· seek regulatory approvals for our drug candidates;
· develop, formulate, manufacture and commercialize our drug candidates;
· implement additional internal systems and develop new infrastructure;
· acquire or in-license additional products or technologies, or expand the use of
· maintain, defend and expand the scope of our intellectual property; and
· hire additional personnel.
Product revenue will depend on our ability to receive regulatory approvals for,
and successfully market, our product candidates. If our development efforts
result in regulatory approval and successful commercialization of our product
candidates, we will generate revenue from direct sales of our products and/or,
if we license our products to future collaborators, from the receipt of license
fees and royalties from sales of licensed products. We conduct our research and
development programs through a combination of internal and collaborative
programs. We rely on arrangements with universities, our collaborators, contract
research organizations and clinical research sites for a significant portion of
our product development efforts.
We focus substantially all of our research and development efforts in the area
of neurology. The following table summarizes expenses which have been reduced
for reimbursements received for NIH grants (in thousands):
Three months ended
Research and development expenses - gross $ 1,374$ 1,442
Less: Reimbursement from NIH grants
Research and development expenses - net $ 574$ 1,068
Research and development expenses include compensation, contractor fees and
supplies as well as allocated common costs. Contractor fees and supplies
generally include expenses for preclinical studies and clinical trials and costs
for formulation and manufacturing activities. Other common costs include the
allocation of common costs such as facilities. During the three months ended
March 31, 2019 and 2018, we received $0.8 million and $0.4 million from research
grants from NIH, respectively. These reimbursements were recorded as a reduction
to our research and development expenses.
Our technology has been applied across certain of our drug candidates. Data,
know-how, personnel, clinical results, research results and other matters
related to the research and development of any one of our drug candidates also
relate to, and further the development of, our other drug candidates. As a
result, costs allocated to a specific drug candidate may not necessarily reflect
the actual costs surrounding research and development of that drug candidate due
to cross application of the foregoing.
Estimating the dates of completion of clinical development, and the costs to
complete development, of our drug candidates would be highly speculative,
subjective and potentially misleading. Pharmaceutical products take a
significant amount of time to research, develop and commercialize. The clinical
trial portion of the development of a new drug alone usually spans several
years. We expect to reassess our future research and development plans based on
our review of data we receive from our current research and development
activities. The cost and pace of our future research and development activities
are linked and subject to change.
Critical Accounting Policies
The preparation of our financial statements in accordance with U.S. GAAP
requires us to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues, expenses and interest income in our financial
statements and accompanying notes. We evaluate our estimates on an ongoing
basis, including those estimates related to agreements, research collaborations
and investments. We base our estimates on historical experience and various
other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions. The following items in our financial statements require significant
estimates and judgments:
· Stock-based compensation. We recognize non-cash expense for the fair value of
all stock options and other share-based awards. We use the Black-Scholes option
valuation model to calculate the fair value of stock options, using the
single-option award approach and straight-line attribution method. For options
granted to employees and directors, we recognize the resulting fair value as
expense on a straight-line basis over the vesting period of each respective
stock option, generally four years. For options granted to non-employees, we
remeasure the fair value expense using Black-Scholes each reporting period.
We have granted share-based awards that vest upon achievement of certain
performance criteria, or Performance Awards. We multiply the number of
Performance Awards by the fair market value of our common stock on the date of
grant to calculate the fair value of each award. We estimate an implicit service
period for achieving performance criteria for each award. We recognize the
resulting fair value as expense over the implicit service period when we
conclude that achieving the performance criteria is probable. We periodically
review and update as appropriate our estimates of implicit service periods and
conclusions on achieving the performance criteria. Performance Awards vest and
common stock is issued upon achievement of the performance criteria.
· Income Taxes. We make estimates and judgments in determining the need for a
provision for income taxes, including the estimation of our taxable income or
loss for each full fiscal year. We have accumulated significant deferred tax
assets that reflect the tax effects of net operating loss and tax credit
carryovers and temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income
tax purposes. Realization of deferred tax assets is dependent upon future
earnings, if any. We are uncertain as to the timing and amount of any future
earnings. Accordingly, we offset these deferred tax assets with a valuation
allowance. We may in the future determine that our deferred tax assets will
likely be realized, in which case we will reduce our valuation allowance in the
quarter in which such determination is made. If the valuation allowance is
reduced, we may recognize a benefit from income
taxes in our statement of operations in that period. We classify interest
recognized in connection with our tax positions as interest expense, when
Results of Operations - Three Months ended March 31, 2019 and 2018
Research and Development Expense
Research and development expense consists primarily of costs of drug development
work associated with our drug candidates, including:
· Pre-clinical testing,
· clinical trials,
· clinical supplies and related formulation and design costs, and
· compensation and other personnel-related expenses.
Research and development expenses were $0.6 million and $1.1 million during the
three months ended March 31, 2019 and 2018, respectively. The 46% decrease was
due primarily to a $0.4 million increase in grant funding received from NIH as
well as a decrease in non-cash stock-based compensation expenses. Receipts from
NIH grants are recorded as a reduction in research and development
expenses. Research and development expenses included non-cash stock-related
compensation expenses were $0.1 million and $0.4 million during the three months
ended March 31, 2019 and 2018, respectively.
Our research and development expenses may fluctuate from period to period due to
the timing and scope of our development activities and the results of clinical
trials and pre-clinical studies.
General and Administrative Expense
General and administrative expenses consist of personnel costs, allocated
expenses and other expenses for outside professional services, including legal,
human resources, audit and accounting services. Personnel costs consist of
salaries, bonus, benefits and stock-based compensation. Allocated expenses
consist primarily of facility costs. We incur expenses associated with operating
as a public company, including expenses related to compliance with the rules and
regulations of the U.S. Securities and Exchange Commission (the "SEC") and
Nasdaq Stock Market LLC ("Nasdaq"), additional insurance expenses, additional
audit expenses, investor relations activities, Sarbanes-Oxley compliance
expenses and other administrative expenses and professional services.
General and administrative expenses were $0.9 million and $1.1 million during
the three months ended March 31, 2019 and 2018, respectively. The 20% decrease
was due primarily to a decrease in non-cash stock based compensation related
expense partially offset by an increase in compensation costs from the hiring of
a chief financial officer in October 2018. General and administrative expenses
included non-cash stock-based compensation expenses of $0.2 million and $0.5
million during the three months ended March 31, 2019 and 2018, respectively.
We expect our general and administrative expenses during the remainder of 2019
to remain approximately the same as compared to 2018 activities.
Interest and other income, net, was $92,000 and $7,000 during the three months
ended March 31, 2019 and 2018, respectively. The increase was due primarily to
higher cash balances from our August 2018 stock offering as well as an increase
in interest rates. We expect interest income to increase in 2019 compared to
2018 due to our higher cash and cash equivalent balances as well as a higher
interest rate environment.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through public and
private stock offerings, payments received under collaboration agreements and
interest earned on our investments. We intend to continue to use our
capital resources to fund research and development activities, capital
expenditures, working capital requirements and other general corporate purposes.
As of March 31, 2019, cash and cash equivalents were $19.1 million.
At-the-Market Common Stock Issuance
On February 8, 2018, we entered into a Capital on Demand™ Sales Agreement (the
"ATM Agreement") with JonesTrading. In accordance with the terms of the ATM
Agreement, we were able to offer and sell shares of our common stock, from
time to time in one or more public offerings of our common stock, with
JonesTrading acting as agent, in transactions pursuant to a shelf registration
statement that was declared effective by the SEC on July 31, 2017. On August 16,
2018, we suspended sales of our common stock under our ATM Agreement.
There were no common stock sales under the ATM Agreement during the three months
ended March 31, 2019. During the three months ended March 31, 2018, we sold a
total of 300,000 shares of our common stock under the ATM Agreement, in the open
market at an average gross selling price of $6.70 per share for net proceeds of
$1.9 million. We expensed approximately $0.1 million of cost for the offering,
excluding JonesTrading commissions.
Net cash used in operating activities was $0.6 million for the three months
ended March 31, 2019, resulting primarily from the net loss reported of $1.3
million partially offset by non-cash stock based compensation expense of $0.3
million and operating liabilities of $0.4 million.
Net cash used in operating activities was $1.6 million for the three months
ended March 31, 2018, resulting primarily from the net loss reported of $2.2
million and changes in operating assets and liabilities of $0.3 million
partially offset by non-cash stock-based compensation expense of $0.8 million.
Net cash used in investing activities was $18,000 for the three months ended
March 31, 2019, resulting primarily from the purchase of equipment. There was no
cash from investing activities during the three months ended March 31, 2018.
Net cash used in financing activities during the three months ended March 31,
2019 was $0.1 million, resulting primarily from the issuance costs incurred
during the period. Net cash provided by financing activities during the three
months ended March 31, 2018 was $1.9 million. Cash provided in 2018 was related
to sale common stock, net of issuance costs, under our ATM facility.
Realization of our other deferred tax assets is dependent on future earnings, if
any. We are uncertain about the timing and amount of any future earnings.
Accordingly, we offset these net deferred tax assets with a valuation allowance.
We have a non-cancelable operating lease for approximately 6,000 square feet of
office space in Austin, Texas that expires on December 31, 2020. Minimum lease
payments total $71,000 for the nine months ending December 31, 2019 and $99,000
for the full year ending December 31, 2020.
We have an accumulated deficit of $165.3 million as of March 31, 2019. We expect
our cash requirements to be significant in the future. The amount and timing of
our future cash requirements will depend on regulatory and market acceptance of
our drug candidates, the resources we devote to researching and developing,
formulating, manufacturing, commercializing and supporting our products and
other corporate needs. We believe that our current resources should be
sufficient to fund our operations for at least the next 12 months. We may seek
additional future funding through public or private financing within this
timeframe, if such funding is available and on terms acceptable to us.
Off-balance Sheet Arrangements
As of March 31, 2019, we did not have any relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements or
other contractually narrow or limited purposes. In addition, we do not engage in
trading activities involving non-exchange traded contracts. Therefore, we are
not materially exposed to financing, liquidity, market or credit risk that could
arise if we had engaged in these relationships.
We do not have relationships or transactions with persons or entities that
derive benefits from their non-independent relationship with us or our related
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