Except as otherwise noted or where the context otherwise requires, as used in this report, the words "we," "us," "our," the "Company" and "9 Meters" refer to9 Meters Biopharma, Inc. The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes thereto for the year endedDecember 31, 2021 , included in our Annual Report on Form 10-K, filed with theSEC onMarch 23, 2022 .
Overview
9 Meters is a clinical-stage company pioneering novel treatments for people with rare digestive diseases, gastrointestinal conditions ("GI") with unmet needs, and debilitating disorders in which the biology of the gut is a contributing factor. We are developing vurolenatide, a proprietary Phase 2 long-acting GLP-1 agonist, for SBS; larazotide, a tight junction regulator for multi-system inflammatory syndrome in children; and a robust pipeline of early-stage candidates for undisclosed rare diseases and/or unmet needs. Our current product development pipeline is described in the table below: 23 --------------------------------------------------------------------------------
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Vurolenatide for the Treatment of Short Bowel Syndrome
Vurolenatide is a long-acting injectable glucagon-like-peptide-1 ("GLP-1") analogue being developed for SBS, a debilitating orphan disease with an underserved market. It affects up to 20,000 adults in theU.S. , with similar prevalence inEurope . Patients with SBS cannot absorb enough water, vitamins, protein, fat, calories and other nutrients from food. It is a severe disease with life-changing consequences, such as impaired intestinal absorption, diarrhea and metabolic complications. A portion of patients have life-long dependency on Parenteral Support ("PS") to survive with risk of life-threatening infections and extra-organ impairment. Vurolenatide links exenatide, a GLP-1 analogue, to a long-acting linker technology and is designed specifically to address the gastric effects in SBS patients by slowing digestive transit time. The asset uses proprietary XTEN® technology to extend the half-life of exenatide, allowing for weekly to every other week dosing, which could increase convenience for patients and caregivers. Vurolenatide is patent-protected and has received orphan drug designation by theU.S. Food and Drug Administration ("FDA"). We announced top-line results from our Phase 1b/2a clinical trial for vurolenatide in SBS in the fourth quarter of 2020. The study met its primary objective as vurolenatide demonstrated excellent safety and tolerability. In addition, vurolenatide demonstrated a clinically relevant improvement in total stool output (TSO) volume within 48 hours of first dose. The Phase 1b/2a clinical trial was an open-label, two-dose study evaluating the safety and tolerability of three escalating fixed doses of vurolenatide (50 mg, 100 mg, 150 mg) in 9 adults with SBS for 56 days. The trial was conducted atCedars-Sinai Medical Center . Patients in each of the three cohorts received two subcutaneous doses two weeks apart with six weeks of subsequent follow-up. The study assessed the safety and tolerability of repeated doses on Days 1 and 15 at each dose level. Because reduced TSO volume and bowel movement frequency are correlated with improved intestinal absorption and potentially less need for intravenous supplementation for nutrition and hydration, these were key secondary objectives in the trial. The primary purpose of this open-label Phase 1b/2a trial was to assess the compound's safety and potential efficacy to inform future development.
Vurolenatide was generally safe and well tolerated: 17 treatment-emergent adverse events (TEAEs) were observed in 9 patients, 15 of which were mild, transient and self-limited without further intervention. The majority of TEAEs were GI-related (nausea and vomiting).
Importantly, 8 of the 9 patients experienced meaningful declines in TSO following each dose, relative to a baseline output. The rapid onset of clinical improvements in stool volumes, as observed in all 9 patients having substantial reductions 24 -------------------------------------------------------------------------------- in stool output within 48 hours of the first dose, shows the potential for vurolenatide to address the primary problem of chronic malabsorptive diarrhea in SBS patients. Additionally, four of seven patients showed reductions in bowel movement frequency after one dose and five of six evaluable patients showed reductions in bowel movement frequency after the second dose. Furthermore, of the five patients on PS in the trial, two patients showed reduction in PS after each dose. Results of the short-form health survey quality of life instrument demonstrated directional improvement in multiple elements of health status over the course of the trial. The short-form health survey, or SF-36, is a set of generic, coherent and easily administered quality-of-life measures. These measures rely upon patient self-reporting and are now widely utilized by managed care organizations and by Medicare for routine monitoring and assessment of care outcomes in adult patients. In the second quarter of 2021, we launched a multi-center, double-blind, double-dummy, randomized, placebo-controlled Phase 2 trial of vurolenatide for the treatment of SBS. The study's primary efficacy outcome measure was TSO. Treatment groups were determined based on doses identified as effective in the Phase 1b/2a study (50 mg weekly, 50 mg biweekly, 100 mg biweekly and placebo) and dosing interval was based on earlier pharmacokinetic data. Study patients receive weekly or biweekly subcutaneous injections of vurolenatide in a double dummy fashion. The primary objective is to determine whether there is any improvement in 24-hour stool output volume over the double-blind treatment period compared to baseline and to further evaluate the efficacy and tolerability of vurolenatide in the SBS population in light of the positive Phase 1b/2a data. There is no regulatory approval precedent for the Phase 3 study population; this necessitated development of a novel primary efficacy outcome measure based on the pathophysiology of SBS (i.e., chronic malabsorptive diarrhea) and what is often perceived as the most bothersome clinical symptom experienced by SBS patients. Hence, the primary efficacy endpoint is 24-hour mean TSO (TSO = sum of ostomy and per rectal stool output) over the treatment period. OnJune 30, 2022 , we announced positive preliminary results from the Phase 2 study. The preliminary results are based on data from a complete randomization block and are intended to support an end-of-phase 2 meeting with the FDA, which is scheduled for the third quarter of 2022. Results are based on the first 11 randomized patients with appropriate distribution across the four arms of the ongoing study. Overall, 7 of 11 patients met the primary efficacy definition of TSO responder (defined by the Company as patients whose change from baseline in 24-hour mean TSO reduction is ? 10%), over the 6-week efficacy evaluation period. The arm of the study anticipated to be taken forward into Phase 3 showed a mean reduction in TSO of greater than 25%. PS volume, a secondary endpoint, was evaluated over the 6-week treatment period. 3 of the 5 patients in the study with a PS requirement, all of whom were randomly assigned to active drug, demonstrated a mean decrease (defined as ? 20%) in their PS volume requirement over the treatment period. In terms of safety and tolerability, vurolenatide was generally well tolerated with mild to moderate and transient side effects including nausea and vomiting, which are typical for GLP-1 agonists. There were no adverse events leading to early study withdrawal. Two serious adverse events were reported, both central catheter infections, which were deemed to be unrelated to study drug. Overall, preliminary results from the study support and build upon the findings from our Phase 1b/2a trial of vurolenatide in SBS. In addition, based on these results, we have identified the most effective and tolerable dose and dosing interval intended to progress into the Phase 3 study. The study is ongoing and remains blinded to study staff, patients and investigators. Vurolenatide has received Orphan Drug Designation from the FDA.The FDA Office of Orphan Products Development grants orphan designation to advance the evaluation of safe and effective drugs and biologics to treat, prevent or diagnose rare diseases affecting fewer than 200,000 people in theU.S. Under the Orphan Drug Act, orphan designation qualifies drug sponsors for development incentives conferred by the FDA, including tax credits for qualified clinical testing. Larazotide In 2019, we initiated a Phase 3 clinical trial ("CeDLara") for our drug candidate, larazotide in CeD. InJune 2022 , we announced completion of a pre-specified interim analysis for the Phase 3 CeDLara study for patients with CeD who continue to experience gastrointestinal symptoms while adhering to a gluten-free diet. The interim analysis was conducted by an independent statistician, with the sole purpose of re-estimating the treatment group size required to detect a statistically significant clinical effect of larazotide, utilizing patient data from the study. Based on consultation with the independent statistician, we determined that the additional number of patients needed to reach a significant clinical outcome between placebo and larazotide would be too large to support trial continuation. The interim analysis included the first approximately 50% of the initial target enrollment and followed the completion of the 12-week double-blind efficacy portion of the study. Following thorough analysis of the interim data, we decided to discontinue further development of larazotide in celiac disease. The study of larazotide for the treatment of MIS-C is not affected by this decision. Resources dedicated to the larazotide celiac program will be reallocated to support the vurolenatide Phase 3 25 --------------------------------------------------------------------------------
program. Furthermore, we will continue to consider other potential uses of larazotide where the mechanism of action may be applicable.
We entered into a collaboration with theEuropean Biomedical Research Institute of Salerno, Italy ("EBRIS") to study larazotide for the treatment of MIS-C. MIS-C is a rare and serious complication of COVID-19 with symptoms that resemble those ofKawasaki disease, potentially including persistent fever, gastrointestinal symptoms, myocardial dysfunction, and cardiogenic shock with ventricular dysfunction in the setting of multisystem inflammation. MIS-C occurs when SARS-CoV-2 superantigens move through the tight junctions between the gut epithelial cells into the bloodstream, leading to the hyperinflammatory immune response. We believe that larazotide's mechanism of action as a tight junction regulator may prevent SARS-CoV-2 superantigens from entering the bloodstream. Following receipt of a Study May Proceed letter from the FDA under a recently filed Investigator IND, EBRIS initiated a Phase 2a study in MIS-C in the fourth quarter of 2021 to evaluate the use of larazotide in a group of children through a randomized placebo-controlled trial atMassGeneral Hospital for Children led by pediatric pulmonologistLael Yonker , M.D. Under the terms of the collaboration agreement, we will supply larazotide for the purposes of the clinical study and EBRIS is responsible for conducting the Phase 2a trial inclusive of all associated clinical costs.
NM-003 Long-Acting GLP-2
NM-003 is a proprietary long-acting glucagon-like-peptide ("GLP-2") receptor agonist with improved serum half-life compared with short-acting versions. OnDecember 9, 2020 , we announced that the FDA has granted orphan drug designation to NM-003 for prevention of acute graft versus host disease. NM-003, utilizes proprietary XTEN technology to extend circulating half-life. NM-003 is currently undergoing a preclinical proof-of-concept study. Based on the results of this study, we intend to progress NM-003 through a clinical and regulatory pathway in an undisclosed orphan and rare GI indication.
NM-102 Tight Junction Microbiome Modulator
NM-102, a small molecule peptide, is being developed as a potential microbiome modulator and undergoing an indication selection process. NM-102 is a long-acting, degradation-resistant peptide, believed to be gut-restricted, and presumed to prevent gut microbial metabolites and antigens from trafficking into systemic circulation. We recently announced a collaboration withGustav Roussy , a leading cancer center inVillejuif, France , using NM-102. This collaboration adds to an initial 14-month preclinical research project initiated inMarch 2019 , which focused on the relationship between intestinal microbiome composition and systemic responses to cancer treatments such as chemotherapy and immune checkpoint inhibitors.
NM-136 Humanized Monoclonal Antibody
OnJuly 19, 2021 , we entered into and closed an asset purchase agreement (the "Lobesity Asset Purchase Agreement") withLobesity LLC ("Lobesity"), pursuant to which we acquired global development rights to a proprietary and highly specific humanized monoclonal antibody, now known as NM-136, that targets glucose-dependent insulinotropic polypeptide ("GIP"), as well as the related intellectual property (the "Lobesity Acquisition"). GIP is a hormone found in the upper small intestine that is released into circulation after food is ingested, and when found in high concentrations, can contribute to obesity and obesity-related disorders such as Prader-Willi Syndrome. NM-136 has been shown to prevent GIP from binding to its receptor, which in preclinical obesity models has been shown to significantly decrease weight and abdominal fat by reducing nutrient absorption from the intestine as well as nutrient storage without affecting appetite. We have initiated antibody profiling to support a preclinical development program. 26 --------------------------------------------------------------------------------
Corporate Development
Lobesity Acquisition
OnJuly 19, 2021 , we completed Lobesity Asset Purchase Agreement with Lobesity, pursuant to which we acquired global development rights to a proprietary and highly specific humanized monoclonal antibody, NM-136, that targets GIP, as well as the related intellectual property. We paid a combination of cash and equity consideration in the form of a$5 million upfront payment, as 40% cash and 60% equity (consisting of 2,417,211 shares of unregistered common stock priced at our 3-day volume weighted-price immediately prior to the closing), plus the right to contingent payments including certain potential worldwide regulatory and clinical milestone payments totaling$45.5 million for a single indication (with the total amount payable, if multiple indications are developed, not to exceed$58.0 million ), global sales-related milestone payments totaling up to$50.0 million , and, subject to certain adjustments, a mid-single digit royalty on worldwide net sales. Financial Overview Since our inception, we have focused our efforts and resources on identifying and developing our research and development programs. We have not had any products approved for commercial sale and have incurred operating losses in each year since inception. Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. To date, we have financed our operations primarily through public offerings of equity securities and private placements of convertible debt and equity securities. As ofJune 30, 2022 , we had an accumulated deficit of$191.3 million . We incurred net losses of$11.1 million and$8.3 million during the three months endedJune 30, 2022 and 2021, respectively, and$22.5 million and$13.7 million during the six months endedJune 30, 2022 and 2021, respectively. We expect to continue to incur significant expenses and increase our operating losses for the foreseeable future, which may fluctuate significantly between periods. We anticipate that our expenses will increase substantially as and to the extent we:
•continue research and development, including preclinical and clinical development of our existing and future product candidates, including vurolenatide;
•experience delays in our clinical trials due to the COVID-19 pandemic;
•successfully develop acquired clinical assets;
•seek regulatory approval for our product candidates;
•commercialize any product candidates for which we obtain regulatory approval;
•maintain and protect our intellectual property rights;
•add operational, financial and management information systems and personnel;
•pursue additional in- or out-licenses or similar strategic transactions; and
•continue to incur additional legal, accounting, regulatory, tax-related and other expenses required to operate as a public company.
As such, we will need substantial additional funding to support our operating activities. Adequate funding may not be available to us on acceptable terms, or at all. We currently anticipate that we will seek to fund our operations through equity or debt financings, strategic alliances or licensing arrangements, or other sources of financing. Our failure to obtain sufficient funds on acceptable terms could have a material adverse effect on our business, results of operations and financial condition. 27 --------------------------------------------------------------------------------
COVID-19
The effect of the COVID-19 pandemic and its associated restrictions, including the recent Omicron variant, has delayed and may continue to delay the expected development timelines and may increase the anticipated aggregate costs for our product candidates. Impacts from the COVID-19 pandemic include, but are not limited to, disruptions in the supply chain for clinical supplies, delays in the timing and pace of participant enrollment in clinical trials and lower than anticipated participant enrollment and completion rates due to COVID-19 clinical site closures, delays in the review and approval of our regulatory submissions by the FDA and other agencies with respect to our product candidates, and other unforeseen disruptions. Site activation and patient enrollment have been impacted by the COVID-19 pandemic and could continue to be impacted by the pandemic over the next several months and potentially longer. We are working closely with our clinical trial sites and product candidate manufacturers to ensure that patient safety and clinical supply of our product candidates are not adversely impacted by the pandemic, while also attempting to progress our trials and product candidate development as much as we can. In response to the COVID-19 pandemic, we put in place several safety measures for our employees, patients, healthcare providers and suppliers. These measures included, but were not limited to, substantially restricting travel, limiting access to our corporate office, including allowing employees to work remotely, providing personal protective equipment to employees, investigator sites and third-party vendors, implementing social distancing protocols, and coordinating safety protocols with our investigator sites. The ultimate impact resulting from the COVID-19 pandemic will depend, among other factors, on the extent of the pandemic in the regions with clinical trial sites, the timing and availability of the COVID-19 vaccines and length and severity of travel restrictions and other limitations ordered by governmental agencies. New and potentially more contagious variants, could further affect the impact of the COVID-19 pandemic on our operations. The economic impact of the COVID-19 pandemic and its effect on capital markets and investor sentiment may adversely impact our ability to raise capital when needed or on acceptable terms to fund our development programs and operations. We do not yet know the full extent of potential delays or impacts on our business, clinical trial activities, ability to access capital or on healthcare systems or the global economy as a whole due to the COVID-19 pandemic. However, these effects could have a material adverse impact on our business and financial condition.
Critical Accounting Policies and Use of Estimates
Use of Estimates
Our management's discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States . The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions.
Critical Accounting Policies
Areas of the financial statements where estimates may have the most significant effect include accrued expenses, share-based compensation, income taxes and management's assessment of our ability to continue as a going concern. Changes in the facts or circumstances underlying these estimates could result in material changes and actual results could differ from these estimates. There have been no material changes to our critical accounting policies described in "Critical Accounting Policies and Use of Estimates" of the Annual Report on Form 10-K for the year endedDecember 31, 2021 , filed with theSEC onMarch 23, 2022 . 28 --------------------------------------------------------------------------------
Recently Issued Accounting Pronouncements
For details of recent Accounting Standards Updates and our evaluation of their adoption on our condensed consolidated financial statements, see "Note 1-Summary of Significant Accounting Policies-Recent Accounting Pronouncements" to our condensed consolidated financial statements in "Part I. Financial Information - Item I. Financial Statements" included elsewhere in this Quarterly Report on Form 10-Q. Results of Operations
Comparison of the Three Months Ended
The following table sets forth the key components of our results of operations
for the three months ended
Three Months Ended June 30, 2022 2021 $ Change % Change Operating expenses: Research and development$ 7,546,477 $ 5,707,290 $ 1,839,187 32 % General and administrative 3,648,944 2,551,171 1,097,773 43 % Total operating expenses 11,195,421 8,258,461 2,936,960 36 % Loss from operations (11,195,421) (8,258,461) (2,936,960) 36 % Total other income (expense), net 65,319 5,351 59,968 1,121 % Net loss$ (11,130,102) $ (8,253,110) $ (2,876,992) 35 %
Research and Development Expense
Research and development expense for the three months endedJune 30, 2022 , increased approximately$1.8 million , or 32%, as compared to the three months endedJune 30, 2021 . The increase was driven primarily by an increase of approximately$1.4 million for our Phase 2 clinical trial in SBS and an increase of approximately$1.6 million in development costs for NM-136. Personnel costs and benefits associated with our research and development personnel increased approximately$0.1 million due to hiring additional personnel sinceJune 30, 2021 . In addition, milestone and license fees increased by$0.5 million associated with the non-cash milestone fee paid to EBRIS. These increases were offset by decreases in our CeDLara clinical trial costs of approximately$1.0 million and decreases in our development costs of NM-102 of approximately$0.6 million . Additionally, general research and development costs for our other preclinical programs decreased by approximately$0.2 million . Three Months Ended June 30, 2022 2021 Research and development expenses: NM-001 Celiac Disease$ 1,007,454 $
1,955,129
NM-002 Short Bowel Syndrome 3,216,657
1,803,987
NM-102 Orphan Indication 174,807 742,998 NM-136 Obesity Disorder 1,584,587 - Milestone & license fees 500,000 -
Other research and development expenses 1,062,972 1,205,176
Total research and development expenses
29 --------------------------------------------------------------------------------
General and Administrative Expense
General and administrative expense for the three months endedJune 30, 2022 , increased by approximately$1.1 million , or 43%, as compared to the three months endedJune 30, 2021 . The increase is primarily due to an increase in non-cash stock compensation expense of approximately$0.9 million which is primarily related to an increase in option modification expense of$0.8 million for the accelerated vesting of options for certain former employees, board members and consultants. Professional and legal fees increased by approximately$0.2 million .
Other Income (Expense), Net
Other income (expense), net for the three months endedJune 30, 2022 , changed by approximately$0.1 million as compared to the three months endedJune 30, 2021 . The change in other income (expense), net is primarily due to the increase in interest income of approximately$0.1 million .
Comparison of the Six Months Ended
The following table sets forth the key components of our results of operations
for the six months ended
Six Months Ended June 30, 2022 2021 $ Change % Change Operating expenses: Research and development$ 15,914,955 $ 8,897,592 $ 7,017,363 79 % General and administrative 6,644,715 4,759,971 1,884,744 40 % Total operating expenses 22,559,670 13,657,563 8,902,107 65 % Loss from operations (22,559,670) (13,657,563) (8,902,107) 65 % Total other income (expense), net 77,829 (26,626) 104,455 (392) % Net loss$ (22,481,841) $ (13,684,189) $ (8,797,652) 64 %
Research and Development Expense
Research and development expense for the six months endedJune 30, 2022 increased approximately$7.0 million , or 79%, as compared to the six months endedJune 30, 2021 . The increase is primarily due to the launch of our Phase 2 trial in SBS representing an increase of approximately$4.5 million , and increases in development costs for NM-102 and NM-136 of approximately$0.2 million and$2.4 million , respectively. In addition, personnel costs associated with our research and development personnel increased by approximately$0.6 million . Milestone and license fees increased by approximately$0.5 million associated with the non-cash milestone fee paid to EBRIS. These increases were offset by decreases in our CeDLara clinical trial costs of$0.9 million and decreases in our general research and development of$0.3 million . 30 -------------------------------------------------------------------------------- Six Months Ended June 30, 2022 2021 Research and development expenses: NM-001 Celiac Disease$ 2,658,947 $ 3,501,281 NM-002 Short Bowel Syndrome 7,043,591 2,592,947 NM-102 Orphan Indication 1,101,301 848,243 NM-136 Obesity Disorder 2,360,129 - Milestone & license fees 500,000 -
Other research and development expenses 2,250,987 1,955,121
Total research and development expenses
General and Administrative Expense
General and administrative expense for the six months endedJune 30, 2022 increased by approximately$1.9 million , or 40%, as compared to the six months endedJune 30, 2021 . The increase is primarily due to an increase in non-cash stock compensation expense of approximately$1.1 million which is primarily related to an increase in option modification expense associated with the accelerated vesting of options for certain former employees, board members and consultants. In addition, professional and legal fees increased by approximately$0.4 million and personnel costs and benefits of our general and administrative employees increased by approximately$0.2 million . General corporate fees increased by approximately$0.2 million .
Other Income (Expense), Net
Other income (expense), net for the six months endedJune 30, 2022 , changed by approximately$0.1 million , or 392%, as compared to the six months endedJune 30, 2021 . The change in other income (expense), net is primarily due to the increase in interest income of approximately$0.1 million .
Liquidity and Capital Resources
Sources of Liquidity
As ofJune 30, 2022 , we had cash and cash equivalents of approximately$29.5 million , compared to approximately$47.0 million as ofDecember 31, 2021 . The decrease in cash and cash equivalents was primarily due to expenditures for business operations, research and development and clinical trial costs, including conducting our Phase 2 trial in SBS and our Phase 3 trial in CeD. InJuly 2022 , we received net proceeds of$20.0 million from the issuance of the 2022 Convertible Note, subject to a subsequent financing requirement to raise at least$25.0 million byMarch 31, 2023 , and a minimum liquidity requirement. The 2022 Convertible Note is further described in Note 10-Subsequent Events. To date, we have not generated revenue from product sales. We do not know when, or if, we will generate any revenue from product sales. We expect to incur substantial expenditures in the foreseeable future for the continued development and clinical trials of our product candidates. We will continue to require additional financing to develop and eventually commercialize our product candidates. Our future liquidity and capital requirements will depend on a number of factors, including the outcome of our clinical trials, which could be delayed due to the ongoing COVID-19 pandemic and our ability to complete the development and commercialization of our products. There are a number of variables beyond our control including the timing, success and overall expense associated with our clinical trials. Consequently, there can be no assurance that we will be able to achieve our objectives and we will need to seek additional funding. If we are unable to raise additional funds when needed, our ability to develop our product candidates will be impaired. We may also be required to delay, reduce or terminate some or all of our development programs and clinical trials. We continue to evaluate multiple dilutive and non-dilutive sources for future funding. If we raise additional funds through the issuance of equity securities, substantial dilution to our existing stockholders could occur. We have concluded that the prevailing conditions and ongoing liquidity risks faced by us raise substantial doubt about our ability to continue as a going concern. 31 --------------------------------------------------------------------------------
Cash Flows
The following table sets forth the primary sources and uses of cash for the six
months ended
Six Months
Ended
2022
2021
Net cash (used in) provided by: Operating activities$ (17,534,655) $ (13,333,821) Investing activities (2,842) (6,892) Financing activities - 39,512,787
Net (decrease) increase in cash and cash equivalents
$ 26,172,074 Operating Activities For the six months endedJune 30, 2022 , our net cash used in operating activities of approximately$17.5 million primarily consisted of a net loss of$22.5 million offset by the adjustment for non-cash share-based compensation of approximately$2.5 million , non-cash payment of milestone fees of approximately$0.5 million and the net change in operating assets and liabilities of approximately$2.0 million .
For the six months ended
Investing Activities
Net cash used in investing activities for the six months endedJune 30, 2022 and 2021 represents the purchase of property and equipment of approximately$3,000 and$7,000 , respectively. Financing Activities For the six months endedJune 30, 2022 , there was no net cash provided by financing activities. For the six months endedJune 30, 2021 , net cash provided by financing activities of approximately$39.5 million primarily consisted of gross proceeds of approximately$34.5 million from theApril 2021 Offering, proceeds of approximately$7.5 million from the exercise of warrants and proceeds of approximately$0.2 million from the exercise of stock options. These increases were offset by a decrease of approximately$2.7 million in stock issuance costs and$0.1 million in repayments of debt.
Contractual Obligations and Commitments
InJuly 2020 , we entered into a four-year lease agreement for office space that expires onSeptember 30, 2024 . Base annual rent for the four-year lease period is$72,000 with monthly rent payments of$6,000 . We estimated the present value of the lease payments over the remaining term of the lease using a discount rate of 12%, which represented our estimated incremental borrowing rate. The two-year renewal option was excluded from the lease payments as we concluded the exercise of this option was not considered reasonably certain. Periodically, we enter into separation and general release agreements with former executives that include separation benefits consistent with the former executive's employment agreements. There was no severance expense incurred during the three and six months endedJune 30, 2022 and 2021. Severance payments are made in equal installments over 12 months from the date of separation. The accrued severance obligation in respect of former executives is approximately$0.2 million as ofJune 30, 2022 . We are obligated to make future payments to third parties under in-license agreements, including sublicense fees, royalties, and payments that become due and payable on the achievement of certain development and commercialization milestones. In general, the amount and timing of sub-license fees and the achievement and timing of development and commercialization milestones are not probable and estimable, and as such, these commitments have not been included on the 32 -------------------------------------------------------------------------------- accompanying condensed consolidated balance sheets. We incurred approximately$0.5 million in development milestone fees during the three and six months endedJune 30, 2022 . There were no development milestone fees incurred during the three and six months endedJune 30, 2021 . We also enter into agreements in the normal course of business with contract research organizations and other third parties with respect to services for clinical trials, clinical supply manufacturing and other operating purposes that are generally terminable by us with thirty to ninety days advance notice.
Off-Balance Sheet Arrangements
As of
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