You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and related notes thereto included elsewhere in this Annual Report on Form 10-K.
Some of the information contained in this discussion and analysis or set forth
elsewhere in this Annual Report on Form 10-K, including information with respect
to our plans and strategy for our business and related financing, includes
forward-looking statements that involve risks and uncertainties. As a result of
many factors, including those factors set forth in the "Risk Factors" section of
this Annual Report on Form 10-K, 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.

References in the following discussion to "we," "our," "us," "Mirati" or "the Company" refer to Mirati Therapeutics, Inc. and its subsidiaries.

Overview

Mirati Therapeutics, Inc. is a clinical-stage oncology company developing
product candidates to address the genetic and immunological promoters of cancer.
In immuno-oncology, we are advancing our kinase inhibitor clinical program where
our product candidate has the potential to improve the immune environment of
tumor cells and enhance and expand the efficacy of existing cancer immunotherapy
medicines when given in combination. Our KRAS inhibitor program is focused on
developing novel inhibitors of KRAS mutations and includes one clinical program
and a preclinical program. We also have additional preclinical programs which
include potentially first-in-class and best-in-class product candidates
specifically designed to address mutations and tumors where few treatment
options exist. We approach each of our discovery and development programs with a
singular focus: to translate our deep understanding of the molecular drivers of
cancer into better therapies and better outcomes for patients.

Our clinical programs consist of two product candidates: MRTX849, a KRAS G12C
inhibitor, and sitravatinib, a multi-kinase inhibitor. We have several early
discovery programs, including a preclinical program for a KRAS G12D inhibitor.

KRAS Inhibitor Program



The RAS family of genes is the most commonly mutated oncogene and mutations in
this gene family occur in up to approximately 25% of all human cancers. Among
the RAS family members, mutations most frequently occur in KRAS (approximately
85% of all RAS family mutations). Tumors characterized by KRAS mutations are
commonly associated with poor prognosis and resistance to therapy. Nonclinical
studies have demonstrated that cancer cells exhibiting KRAS mutations are highly
dependent on KRAS function for cell growth and survival. Historically, KRAS has
been extremely difficult to directly inhibit due to the absence of a tractable
small molecule drug binding site. Our KRAS inhibitor program is focused on the
discovery and development of small molecule compounds that target KRAS G12C and
G12D. We intend to pursue development of our KRAS G12C inhibitor program in both
single agent and rational combination approaches. We also have a KRAS G12D
inhibitor program in preclinical development.

MRTX849

Background



MRTX849, our lead KRAS G12C compound, is an investigational, specific, potent
and orally available small molecule. MRTX849 is designed to directly inhibit
KRAS G12C mutations. KRAS G12C mutations are present in approximately 14%
of non-small cell lung cancer ("NSCLC") adenocarcinoma patients, 4% of
colorectal cancer ("CRC") patients, 2% of pancreatic cancer patients, as well as
smaller percentages of several other difficult-to-treat cancers. Based on
observed preclinical attributes, we believe MRTX849 has the potential to be a
best-in-class product candidate for the suppression of G12C mutant KRAS
signaling. Single agent treatment with MRTX849 has shown complete regression in
a subset of KRAS G12C-positive human tumor models implanted in mice.

Program Update



We received U.S. Food and Drug Administration ("FDA") authorization of our
investigational new drug application for MRTX849 in November 2018, and on
January 15, 2019, we announced that we had dosed the first patient in the dose
escalation phase of a Phase 1/2 clinical trial in patients with advanced solid
tumors that harbor G12C mutations. This trial is designed to enable rapid
expansion of the single agent cohorts and could potentially serve as the basis
of a new drug application ("NDA") submission seeking accelerated approval by the
FDA. This trial also enables exploratory combination cohorts. Following single

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agent dose escalation, we are expanding into cohorts that include patients with NSCLC, CRC and those with other tumors that carry the G12C mutation.



On October 28, 2019, we reported the first interim clinical data from this Phase
1/2 clinical trial in a presentation at the 2019 American Association for Cancer
Research-National Cancer Institute-European Organisation for Research and
Treatment of Cancer ("AACR-NCI-EORTC") International Conference on Molecular
Targets and Cancer Therapeutics in Boston, Massachusetts. As of October 11,
2019, the trial had enrolled 17 patients, including 10 patients with NSCLC, four
patients with CRC, and three patients with other tumor types. Five dose cohorts
have been evaluated: 150 mg, 300 mg, 600 mg, and 1200 mg, taken orally once
daily ("QD"), and 600 mg, taken orally twice daily ("BID"). The trial enrolled
single patient dose escalation cohorts in an accelerated titration design. Trial
objectives include evaluation of safety, tolerability, pharmacodynamics,
pharmacokinetics ("PK") and tumor response evaluated using RECIST v1.1 criteria.

As of the data cut-off date of October 11, 2019, 12 patients across all dose levels were evaluable for response with at least one radiographic scan.

• At the highest dose (600 mg BID), three of five evaluable patients with

NSCLC and one of two evaluable patients with CRC achieved a Partial

Response ("PR"), and the remaining patients experienced stable disease.

• Across all dose levels, three of six patients with NSCLC and one of four

patients with CRC achieved a PR. Two responding patients (one with NSCLC

and one with CRC) achieved confirmed PRs, both with continuing tumor

shrinkage following their first scan. The other two patients with PRs


       (both NSCLC) remain on study but have not yet had confirmatory scans.



•      Clinical PK data demonstrated that the dose of 600 mg BID results in drug

levels that meet or exceed those likely to lead to full inhibition of KRAS


       G12C signaling.

• Treatment duration across all dose levels ranged from 6.7- 38.6 weeks for


       patients with NSCLC and 9.9-30.1 weeks for patients with CRC as of the
       data cut-off.



Treatment-related adverse events were primarily grade 1 events. One patient
experienced a dose-limiting toxicity ("DLT") at the 1200 mg QD dose (capsule
burden intolerance 12 capsules) and one patient experienced a DLT at the 600 mg
BID dose (grade 3/4 isolated amylase/lipase increase). The maximum tolerated
dose was not established and further dose escalation may be explored. Enrollment
into dose expansion at the 600 mg BID dose is underway.

MRTX849 Development in Collaboration with Novartis Pharmaceuticals Corporation ("Novartis")



In July 2019, we announced a clinical collaboration agreement with Novartis to
evaluate the combination of MRTX849 and Novartis' investigational SHP2
inhibitor, TNO155, in patients with advanced solid tumors that harbor G12C
mutations. Under the terms of the non-exclusive collaboration, we will sponsor
the trial and Novartis and Mirati will jointly oversee and share the costs of
clinical development activities for the combined therapy. Novartis will provide
TNO155 at no cost.

Sitravatinib

Sitravatinib is a spectrum-selective kinase inhibitor designed to potently inhibit receptor tyrosine kinases ("RTK"s), including TAM family receptors (TYRO3, Axl, Mer), split family receptors (VEGFR2, KIT) and RET. Sitravatinib is an investigational agent that is being evaluated in combination with immune checkpoint inhibitors.

Sitravatinib in Combination with Immune Checkpoint Inhibitors

Background



Sitravatinib's potent inhibition of TAM and split family RTKs may overcome
resistance to checkpoint inhibitor therapy through targeted reversal of an
immunosuppressive tumor microenvironment, enhancing antigen-specific T cell
response and expanding dendritic cell-dependent antigen presentation. As an
immuno-oncology agent, sitravatinib is being evaluated in combination with
nivolumab (OPDIVO®), Bristol-Myers Squibb Company's ("BMS") anti-PD-1 checkpoint
inhibitor, in patients with NSCLC who have experienced documented disease
progression following treatment with a checkpoint inhibitor. Sitravatinib is
also being developed in certain Asian territories in collaboration with BeiGene,
Ltd. ("BeiGene") who is evaluating sitravatinib in combination with
tislelizumab, BeiGene's investigational anti-PD-1 checkpoint inhibitor in a
number of advanced solid tumors.

Program Update


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In an ongoing Phase 2 clinical trial, we are evaluating sitravatinib in
combination with nivolumab in patients with NSCLC who have experienced
documented disease progression following prior treatment with a checkpoint
inhibitor. On October 22, 2018, we reported data from this clinical trial at the
2018 European Society of Medical Oncology Congress ("ESMO"), based on a data
cutoff date of August 27, 2018. A summary of these data, with response
confirmations updated after the data cutoff date, is presented below:

• 56 patients were evaluable for response with at least one radiographic


       scan. Patients had a median of two lines of previous therapy;



•      45 of 56 evaluable patients demonstrated tumor reductions; 18 of whom
       demonstrated tumor reductions greater than 30%;

• 11 of 56 evaluable patients achieved a confirmed PR or Complete Response


       ("CR");



•      26 of 56 evaluable patients remained on treatment at the time of data
       cut-off including eight responding patients;



•      a preliminary Kaplan-Meier estimate of median duration of response was
       greater than nine months, with six responding patients treated for more
       than six months and two responding patients treated for more than 12
       months; and

• the combination has shown an acceptable toxicity profile, and most adverse

events reported by investigators were Grade 1 or 2.





We held an end of Phase 2 meeting with the FDA in the third quarter of 2018 with
respect to the development of sitravatinib in combination with a checkpoint
inhibitor in NSCLC. Based on feedback received from the FDA, we initiated in
July 2019 a Phase 3 randomized clinical trial in second-line NSCLC patients. The
Phase 3 clinical trial is comparing the combination of sitravatinib plus
nivolumab to docetaxel in patients whose tumors have progressed on prior therapy
with platinum-chemotherapy in combination with a checkpoint inhibitor.
Ultimately, we expect the results of this clinical trial, if positive, to enable
a NDA submission for the treatment of NSCLC patients whose tumors have
progressed following treatment with a platinum-containing regimen in combination
with a checkpoint inhibitor. Enrollment is ongoing in the Phase 3 clinical
trial.

In January 2020, we amended the protocol to include third line patients who have
received chemotherapy followed by a checkpoint inhibitor, in addition to second
line patients treated with a combination of chemotherapy and a checkpoint
inhibitor. Based on a data cut of August 27, 2018, from the ongoing Phase 2
study in a similar patient population, the Kaplan-Meier median overall survival
was greater than 15 months. We also amended the statistical design to include an
interim analysis of overall survival that we believe, if positive, could support
an NDA submission seeking full approval. By amending the protocol, the overall
sample size decreased from approximately 660 to 530 patients.

On January 7, 2019, we announced a clinical collaboration with BMS in connection
with the aforementioned Phase 3 clinical trial. Under the terms of the
collaboration, we will sponsor and fund the clinical trial and BMS will provide
nivolumab at no cost. In certain specified cases, BMS will have an exclusive
right to negotiate a commercial agreement with us for a limited period of time
with respect to developing and commercializing sitravatinib worldwide excluding
certain territories in Asia, Australia and New Zealand. We maintain global
development and commercial rights to sitravatinib outside of certain Asian
territories, where we have partnered with BeiGene, and we are free to develop
the program in combination with other agents.

During the third quarter of 2018, we initiated an open label, multi-cohort Phase
2 clinical trial of sitravatinib in combination with nivolumab in patients with
advanced or metastatic urothelial carcinoma. On November 9, 2019, we reported
data from this clinical trial at the 2019 Society of Immunotherapy of Cancer
(SITC) 34th Annual Meeting, based on a data cutoff of October 17, 2019. Data
from Cohort 1 of the trial were presented, where patients must have been
previously treated with an immune checkpoint inhibitor and prior platinum-based
chemotherapy and had documented disease progression. A summary of these data is
presented below:

•      as of the data cut-off date of October 17, 2019, 22 patients were
       evaluable for response with at least one radiographic scan;

• 6 of 22 evaluable patients achieved a confirmed CR (1 patient) or PR (5


       patients);

• 21 of 22 evaluable patients achieved a confirmed CR, PR, or stable disease;






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• 4 responding patients had been treated for more than 6 months; and

• the combination was well-tolerated and most adverse events were Grade 1 or 2.

During the third quarter of 2018, we also initiated an open label Phase 2 clinical trial to assess the mechanism of action of sitravatinib combined with nivolumab in patients with advanced clear cell renal cell cancer ("RCC").



We recently determined to cease enrollment in the Phase 1b expansion clinical
trial evaluating sitravatinib as a single agent in patients with NSCLC and other
tumor types who have genetic alterations in Casitas B-lineage Lymphoma.

Sitravatinib Development in Collaboration with BeiGene, Ltd.



In January 2018, we entered into a Collaboration and License Agreement (the
"BeiGene Agreement") with BeiGene, pursuant to which we and BeiGene agreed to
collaboratively develop sitravatinib in Asia (excluding Japan and certain other
countries), Australia and New Zealand (the "Licensed Territory"). Under the
BeiGene Agreement, we granted BeiGene an exclusive license to develop,
manufacture and commercialize sitravatinib in the Licensed Territory, and we
retained exclusive rights for the development, manufacturing and
commercialization of sitravatinib outside the Licensed Territory.

In November 2018, we announced the dosing of the first patient under the BeiGene
Agreement in a Phase 1b clinical trial to assess the safety and tolerability,
pharmacokinetics and preliminary anti-tumor activity of sitravatinib in
combination with BeiGene's investigational anti-PD-1 antibody, tislelizumab, in
patients with advanced solid tumors. The clinical trial is currently enrolling
patients in China and Australia. BeiGene's clinical trials will evaluate the
combination of sitravatinib and tislelizumab in patients with NSCLC, RCC,
hepatocellular cancer, gastric cancer and ovarian cancer. In December 2019,
BeiGene reported initial proof of concept data for the ovarian cancer arm of the
trial at the 2019 ESMO Immuno-Oncology Congress.

Critical Accounting Policies and Significant Judgments and Estimates



Our discussion and analysis of financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with U.S. generally accepted accounting principles. The preparation
of these financial statements requires us to make significant estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses and related disclosures. On an ongoing basis, our actual results may
differ significantly from our estimates.

While our significant accounting policies are more fully described in Note 2 to
our consolidated financial statements appearing elsewhere in this Annual Report
on Form 10-K, we believe the following accounting policies to be critical to the
judgments and estimates used in the preparation of our consolidated financial
statements.

Revenue Recognition

Effective January 1, 2017, we adopted Accounting Standards Codification ("ASC")
Topic 606, Revenue from Contracts with Customers, using the full retrospective
transition method. This standard applies to all contracts with customers, except
for contracts that are within the scope of other standards, such as leases,
insurance, collaboration arrangements and financial instruments. Under Topic
606, we recognize revenue when our customer obtains control of promised goods or
services, in an amount that reflects the consideration that the entity expects
to receive in exchange for those goods or services. To determine revenue
recognition for contracts with customers, we perform the following five steps:
(i) identify the contract(s) with a customer; (ii) identify the performance
obligations in the contract; (iii) determine the transaction price; (iv)
allocate the transaction price to the performance obligations in the contract;
and (v) recognize revenue when (or as) the entity satisfies a performance
obligation. We only apply the five-step model to contracts when it is probable
that we will collect the consideration we are entitled to in exchange for the
goods or services we transfer. At contract inception, once the contract is
determined to be within the scope of Topic 606, we assess the goods or services
promised within each contract, determine those that are performance obligations,
and assess whether each promised good or service is distinct. We then recognize
as revenue the amount of the transaction price that is allocated to the
respective performance obligation when (or as) the performance obligation is
satisfied. We utilize key assumptions to determine a stand-alone selling price
for performance obligations, which may include revenue forecasts, expected
development timelines, discount rates, probabilities of technical and regulatory
success and costs for manufacturing clinical supplies. Because the amount of
revenue recognized for each performance obligation is determined based upon its
relative stand-alone selling price, an increase or decrease of 10% in the
estimated fair value of each performance obligation would not have a significant
impact on the amount of revenue recognized.

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Accrued Research and Development Expenses



We accrue and expense clinical trial activities performed by third parties based
upon estimates of the proportion of work completed over the life of the
individual clinical trial and patient enrollment rates in accordance with
agreements established with Clinical Research Organizations ("CROs") and
clinical trial sites. We determine the estimates by reviewing contracts, vendor
agreements and purchase orders, and through discussions with internal clinical
personnel and external service providers as to the progress or stage of
completion of trials or services and the agreed-upon fee to be paid for such
services. However, actual costs and timing of clinical trials are highly
uncertain, subject to risks and may change depending upon a number of factors,
including our clinical development plan.

We make estimates of our accrued expenses as of each balance sheet date in our
consolidated financial statements based on facts and circumstances known to us
at that time. If the actual timing of the performance of services or the level
of effort varies from the estimate, we will adjust the accrual accordingly.
Nonrefundable advance payments for goods and services, including fees for
process development or manufacturing and distribution of clinical supplies that
will be used in future research and development activities, are deferred and
recognized as expense in the period that the related goods are consumed or
services are performed.

Share-Based Compensation



We measure and recognize compensation expense for share-based payments based on
estimated fair value. We estimate the fair value of stock options granted using
the Black-Scholes option-pricing model. The Black-Scholes option- pricing model
requires the use of certain estimates and judgmental assumptions that affect the
amount of share-based compensation expense recognized in our consolidated
financial statements. These assumptions include the expected volatility of our
stock price, expected term of the options, the risk-free interest rate and
expected dividend yields. Share-based compensation is recognized using the
graded accelerated vesting method. If any of the assumptions used in our
calculation change significantly, share-based compensation expense may differ
materially from what we have recorded in the current period.

Results of Operations

Comparison of the Years Ended December 31, 2019 and 2018



This section provides an analysis of our financial results for the fiscal year
ended December 31, 2019 compared to the fiscal year ended December 31, 2018. For
the discussion covering the fiscal year ended December 31, 2018 compared to the
fiscal year ended December 31, 2017, please refer to Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed
with the SEC on February 28, 2019.

The following table summarizes our results of operations for the year ended December 31, 2019 and 2018 (in thousands):


                                         Year Ended December 31,

Increase


                                             2019              2018

(Decrease)


License and collaboration revenues  $      3,335             $ 12,926    $    (9,591 )
Research and development expenses        182,866               93,872

88,994


General and administrative expenses       42,573               21,681         20,892
Other income, net                          8,848                4,209          4,639

License and collaboration revenues



License and collaboration revenues relate to the BeiGene Agreement under which
BeiGene was granted an exclusive license to develop, manufacture and
commercialize sitravatinib in the Licensed Territory. License and collaboration
revenues for the year ended December 31, 2019 were $3.3 million and relate to
revenues earned related to a manufacturing supply services agreement with
BeiGene. License and collaboration revenues for the year ended December 31, 2018
were $12.9 million and relate primarily to the transfer of the license and
associated know-how to BeiGene, a related milestone achievement under the
BeiGene Agreement, as well as revenues earned related to a manufacturing supply
services agreement with BeiGene.

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Research and Development Expenses

Research and development expenses consist primarily of:



•            salaries and related expenses for personnel, including expenses
             related to stock options or other share-based compensation granted
             to personnel in development functions;



•            fees paid to external service providers such as CROs and contract
             manufacturing organizations related to clinical trials, including
             contractual obligations for clinical development, clinical sites,
             manufacturing and scale-up, and formulation of clinical drug
             supplies;

• costs for allocated facilities and depreciation of equipment; and

• license fees paid in connection with our early discovery efforts.

We record research and development expenses as incurred.



Our research and development efforts during the years ended December 31, 2019
and 2018 were focused primarily on our clinical development programs and our
preclinical programs. The following table summarizes our research and
development expenses, (in thousands):
                                                       Year Ended December

31, Increase


                                                          2019            2018        (Decrease)
Third-party research and development expenses:
 Clinical development programs:
Sitravatinib                                        $       60,952     $  38,377     $    22,575
MRTX849                                                     46,002             -          46,002
Discontinued programs                                        2,995         9,608          (6,613 )
 Preclinical development programs:
KRAS inhibitors                                             15,316        20,394          (5,078 )
Preclinical and early discovery                              3,353         2,418             935

Total third-party research and development expenses 128,618 70,797 57,821 Salaries and other employee related expense

                 19,835        13,182           6,653
Share-based compensation expense                            31,024         7,232          23,792
Other research and development expenses                      3,389         2,661             728
Research and development expenses                   $      182,866     $

93,872 $ 88,994





Research and development expenses for the year ended December 31, 2019 were
$182.9 million compared to $93.9 million during the year ended December 31,
2018. The increase of $89.0 million during the year ended December 31, 2019
relates to an increase in third-party research and development expenses of $57.8
million, share-based compensation expense of $23.8 million, and salaries and
other employee related expense of $6.7 million. The increase in third-party
research and development expense primarily relates to an increase in expenses
associated with the development of MRTX849 of $46.0 million and sitravatinib of
$22.6 million, offset by decreases in expenses associated with discontinued
programs of $6.6 million. The increase in expenses associated with MRTX849
relates to the Phase 1 clinical trial which was initiated in the first quarter
of 2019 and the costs are comprised largely of manufacturing production
expenses, CRO and other clinical trial-related expenses. The increase in
development expense for sitravatinib is due to increased manufacturing
production expenses, investigator payment expenses, and CRO expenses to support
the expansion of existing and new sitravatinib clinical trials. The decreases in
expenses associated with discontinued programs are due to decisions made in
prior years to discontinue development of glesatinib and mocetinostat. The
increase in share-based compensation expense of $23.8 million is due to an
increase in the fair value of stock options granted during the year ended
December 31, 2019 compared to the year ended December 31, 2018. The increase in
salaries and other employee related expense of $6.7 million is primarily due to
an increase in the number of research and development employees during the
twelve months ended December 31, 2019 compared to the same period in 2018.


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At this time, due to the risks inherent in the clinical development process and
the early stage of our product development programs we are unable to estimate
with any certainty the costs we will incur in the continued development of
sitravatinib and MRTX849. The process of conducting clinical trials necessary to
obtain regulatory approval and manufacturing scale-up to support expanded
development and potential future commercialization is costly and time consuming.
Any failure by us or delay in completing clinical trials, manufacturing scale up
or in obtaining regulatory approvals could lead to increased research and
development expense and, in turn, have a material adverse effect on our results
of operations. We expect that our research and development expenses may increase
if we are successful in advancing sitravatinib, MRTX849 and our preclinical KRAS
G12D program, or any of our other preclinical programs into more advanced stages
of clinical development.

General and Administrative Expenses



General and administrative expenses consist primarily of salaries and related
benefits, including share-based compensation, related to our executive, finance,
business development, legal, human resources and support functions. Other
general and administrative expenses include professional fees for auditing, tax,
consulting and patent-related services, rent and utilities and insurance.

General and administrative expenses for the year ended December 31, 2019 were
$42.6 million compared to $21.7 million for the same period in 2018. The
increase of $20.9 million is primarily due to an increase in share-based
compensation expense of $15.9 million, and to a lesser extent increases in
salaries and other employee related expense of $2.3 million, facilities,
insurance and other expense of $1.6 million, and professional services expense
of $1.0 million. The increase in share-based compensation expense is due to an
increase in the fair value of stock options granted during the year ended
December 31, 2019 compared to the same period in 2018. The increase in salaries
and other employee related expense, and facilities, insurance and other expense
is primarily due to an increase in the number of general and administrative
employees during the year ended December 31, 2019 compared to the same period in
2018. The increase in professional services expense is due to an increase in
consulting fees.

Other Income, Net

Other income, net consisted primarily of interest income of $8.8 million for the
year ended December 31, 2019 and $4.2 million for the year ended December 31,
2018. The increase in interest income during the twelve months ended
December 31, 2019 compared to December 31, 2018 is due to an increase in
short-term investment balances.

Liquidity and Capital Resources



At December 31, 2019, we had $415.1 million of cash, cash equivalents and
short-term investments compared to $222.8 million at December 31, 2018. In
January 2020, we completed a public offering of our common stock that generated
net proceeds of $324.1 million. In June 2019, we completed a public offering of
our common stock that generated net proceeds of $219.9 million, and in January
2019, we completed a public offering of our common stock that generated net
proceeds of $107.9 million. Based on our current and anticipated level of
operations, we believe that our cash, cash equivalents and short-term
investments will be sufficient to meet our anticipated obligations for at least
one year from the date this Annual Report on Form 10-K is filed with the SEC.

To date, we have funded our operations primarily through the sale of our common
stock, pre-funded warrants to purchase our common stock, and to a lesser extent
through up-front payments, research funding and milestone payments under
collaborative arrangements. Since inception, we have primarily devoted our
resources to funding research and development programs, including discovery
research, preclinical and clinical development activities. To fund future
operations, we will likely need to raise additional capital. The amount and
timing of future funding requirements will depend on many factors, including the
timing and results of our ongoing development efforts, the potential expansion
of our current development programs, potential new development programs and
related general and administrative support. We anticipate that we will seek to
fund our operations through public or private equity or debt financings or other
sources, such as potential collaboration agreements. We cannot make assurances
that anticipated additional financing will be available to us on favorable
terms, or at all. Although we have previously been successful in obtaining
financing through our equity securities offerings, there can be no assurance
that we will be able to do so in the future.

Cash Flows for the Years Ended December 31, 2019 and 2018

The following table provides a summary of the net cash flow activity for each of the periods set forth below (in thousands):


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                                                             Year Ended December 31,
                                                               2019             2018
Net cash used in operating activities                     $    (147,726 )   $  (70,096 )
Net cash used in investing activities                          (176,140 )     (145,765 )
Net cash provided by financing activities                       338,028

140,852


Increase (decrease) in cash, cash equivalents, and
restricted cash                                                  14,162        (75,009 )

Net cash used in operating activities



Net cash used for operating activities was $147.7 million and $70.1 million for
the years ended December 31, 2019 and 2018, respectively. Cash used in operating
activities during 2019 primarily related to our net loss of $213.3 million,
adjusted for non-cash share-based compensation expense of $55.5 million and net
cash inflows from a change in our operating assets and liabilities of $13.2
million. Cash used in operating activities during 2018 primarily related to our
net loss of $98.4 million, adjusted for non-cash share-based compensation
expense of $15.9 million and net cash outflows from a change in our operating
assets and liabilities of $13.6 million.

Net cash used in investing activities



Net cash used in investing activities for the years ended December 31, 2019 and
2018 was $176.1 million and $145.8 million, respectively, and reflects the
purchases of short-term investments and property and equipment, offset by sales
and maturities of short-term investments.

Net cash provided by financing activities



Net cash provided by financing activities for the year ended December 31, 2019
was $338.0 million and consisted of proceeds received from the issuance of
common stock, exercise of common stock options, disgorgement of stockholders'
short-swing profits, and stock issuances under the employee stock option
plan. Net cash provided by financing activities for the year ended December 31,
2018 was $140.9 million and consisted of proceeds from issuance of common stock
and pre-funded warrants, exercise of common stock options, and stock issuances
under the employee stock option plan.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as of December 31, 2019 that will affect our future liquidity (in thousands):


                                                      Less Than 1       1

-3 3 -5 More Than 5


                                           Total          year         Years        Years         Years
Operating lease obligations (1)          $ 41,804     $      272     $ 10,376     $ 13,090     $   18,066
Total Contractual Obligations            $ 41,804     $      272     $

10,376 $ 13,090 $ 18,066




(1) In June 2014 we entered into a multi-year non-cancelable building lease for
18,000 square feet of completed office and laboratory space in San Diego,
California which was originally set to expire in January 2018. In March 2017, we
amended the lease to extend the term through January 2019, and in April 2018, we
amended the lease to extend the term through January 2020, and in August 2018,
we amended the lease to expand the size of the existing space by approximately
6,100 square feet. On October 30, 2019, we amended the lease to extend the lease
term to approximately October 1, 2020, and to expand the size of the existing
space for no additional base rent. Also on August 22, 2019, we entered into a
new lease agreement for office and laboratory space located in San Diego,
California, for our future corporate headquarters.

We enter into contracts in the normal course of business with clinical sites for
the conduct of clinical trials, CROs for clinical research studies, professional
consultants for expert advice and other vendors for clinical supply
manufacturing or other services. These contracts generally provide for
termination on notice, and therefore are cancelable contracts and not included
in the table of contractual obligations and commitments.

Off-Balance Sheet Arrangements


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During the years ended December 31, 2019 and 2018, we did not have any
off-balance sheet arrangements (as defined by applicable SEC regulations) that
are reasonably likely to have a current or future material effect on our
financial condition, results of operations, liquidity, capital expenditures or
capital resources.

                                       48

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