You should read the following discussion of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, include forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.
Overview
We are a clinical-stage immuno-oncology company focused on helping patients fight cancer by developing a pipeline of product candidates based on expertise in protein engineering and oncology led by the CD47 blocker, evorpacept (evorpacept is the recommended United States Adopted Name (USAN); this product is also known as ALX148), currently in multiple Phase 1 and 2 clinical trials. Cancer cells leverage CD47, a cell surface protein, as a "don't eat me" signal to evade detection by the immune system. Our company is developing a next-generation checkpoint inhibitor designed to have a high affinity for CD47 and to avoid the limitations caused by hematologic toxicities inherent in other CD47 blocking approaches. We believe our lead product candidate, evorpacept will have a wide therapeutic window to block the "don't eat me" signal on cancer cells, and will enhance the immune activation of broadly used anti-cancer agents through combination treatment strategies. As ofJune 30, 2022 , we had dosed over 260 subjects with evorpacept across a range of hematologic and solid malignancies in combination with a number of leading anti-cancer agents. We plan to initiate additional studies in combination with leading anti-cancer agents. In solid tumors, we are conducting two ongoing randomized Phase 2 trials (ASPEN -03 andASPEN -04) of evorpacept for the treatment of first-line advanced head and neck squamous cell carcinoma, or HNSCC, with the first subject enrolled in the first trial inMay 2021 and the first subject enrolled in the second trial inJuly 2021 . TheFood and Drug Administration , or the FDA, granted Fast Track designation for evorpacept in combination with pembrolizumab, platinum, and fluorouracil for the first-line treatment of adult patients with metastatic or unresectable, recurrent HNSCC inFebruary 2020 . InJuly 2022 , the FDA granted Fast Track designation for evorpacept in combination with pembrolizumab for first-line treatment of adult patients with metastatic or unresectable, recurrent HNSCC whose tumors express PD-L1. We are also conducting a randomized Phase 2/3 trial (ASPEN -06) of evorpacept for the treatment of second and third line advanced HER2-overexpressing gastric/gastroesophageal junction, or GEJ, cancer and dosed the first patient inMarch 2022 . The FDA granted Fast Track designation for evorpacept in combination with trastuzumab, ramucirumab and paclitaxel for the treatment of patients with HER2-overexpressing advanced gastric or GEJ adenocarcinoma with disease progression on or after prior trastuzumab and fluoropyrimidine or platinum containing chemotherapy inJanuary 2020 . InJanuary 2022 , theFDA's Office of Orphan Products Development granted Orphan Drug Designation to evorpacept for the treatment of patients with gastric/GEJ cancer. We recently announced we will initiate a new clinical study (ASPEN -07) to investigate evorpacept in combination with an antibody-drug conjugate or ADC, PADCEV® (enfortumab vedotin-ejfv), for the second-line treatment of locally advanced or metastatic urothelial cancer, or UC, in the fourth quarter of 2022. Our collaborator, Zymeworks, is conducting an ongoing Phase 1 trial for the treatment of advanced HER2-expressing breast cancer and other solid tumors and enrolled the first subject inOctober 2021 . In hematologic malignancies, we have initiated two Phase 1 trials of evorpacept for the treatment of myelodysplastic syndromes, or MDS (ASPEN -02), and acute myeloid leukemia, or AML (ASPEN -05), with the first patient dosed in each trial inOctober 2020 andOctober 2021 , respectively. InJune 2022 , we paused enrollment into theASPEN -05 AML trial based on the desire to leverage upcoming dose optimization data from theASPEN -02 MDS study to inform dose optimization inASPEN -05. InJune 2022 , theFDA's Office of Orphan Drug Products Development granted Orphan Drug Designation to evorpacept for the treatment of patients with AML. In 2021, an investigator-sponsored trial (IST) of evorpacept was initiated in combination with rituximab and lenalidomide for the treatment of patients with indolent and aggressive non-Hodgkin lymphoma, or NHL, atMD Anderson Cancer Center .
Based on our early clinical results to date in multiple oncology indications showing encouraging anti-tumor activity and tolerability and our clinical development plans, our strategy is to pursue evorpacept as a potentially critical component of future oncology combination treatments.
Our second program, ALTA-002, is a collaboration between us andTallac Therapeutics, Inc. (Tallac) that combines our company's SIRP? antibody with Tallac's toll-like receptor 9 (TLR9) agonist, resulting in a potent immune activator targeted to myeloid cells in the tumor to promote innate and adaptive anti-cancer immune responses. This novel Toll-like receptor agonist antibody conjugation platform (TRAAC) enables systemic delivery of targeted TLR9 activation. An investigational new drug, or IND, for ALTA-002 is planned for 2023. Additionally, with our acquisition ofScalmiBio, Inc. (ScalmiBio), we are planning to expand our pipeline of drug candidates to antibody drug conjugates based on expertise in protein engineering and oncology. Our predecessor company,ALX Oncology Limited , an Irish private company limited by shares, was initially incorporated inIreland onMarch 13, 2015 under the nameAlexo Therapeutics Limited and changed its name toALX Oncology Limited onOctober 11, 2018 . We were then incorporated inDelaware onApril 1, 2020 under the nameALX Oncology Holdings Inc. 19 -------------------------------------------------------------------------------- Since our founding, we have devoted substantially all of our resources to identifying and developing evorpacept, advancing preclinical programs, scaling up manufacturing, conducting clinical trials and providing general and administrative support for these operations. We have no products approved for marketing and we have never received any revenue from drug product sales. InJuly 2020 , we completed our initial public offering, raising net proceeds of$169.5 million , after deducting underwriting discounts and commissions of$13.0 million and offering-related expenses of$3.2 million . InDecember 2020 , we completed a follow-on offering, raising net proceeds of$194.9 million , after deducting underwriting discounts and commissions of$12.5 million and offering-related expenses of$0.7 million . From inception throughJune 30, 2022 , we have raised an aggregate of$545.3 million to fund our operations, of which$175.1 million were net proceeds from sales of our convertible preferred stock,$5.8 million were net proceeds from borrowings under a term loan,$169.5 million were net proceeds from our initial public offering and$194.9 million were net proceeds from our follow-on offering. InMarch 2022 , we filed a universal shelf registration statement (Shelf Registration Statement), which provides for aggregate offerings of up to$450.0 million of the Company's securities. InMay 2022 , we filed an amendment to the Shelf Registration Statement, which was declared effective by theSecurities and Exchange Commission (SEC) onMay 31, 2022 . We believe that our Shelf Registration Statement will provide us with the flexibility to raise additional capital to finance our operations as needed. InDecember 2021 , we entered into a sales agreement (Sales Agreement) withCantor Fitzgerald & Co. andCredit Suisse Securities (USA) LLC , under which we may, subject to the effectiveness of the Shelf Registration Statement, offer and sell our common stock, having aggregate gross proceeds of up to$150.0 million , from time to time through them as our sales agent in an at-the-market offering. No securities have been sold pursuant to the Shelf Registration Statement or Sales Agreement. We have incurred net losses in each year since inception. Our net losses were$32.9 million and$16.3 million for the three months endedJune 30, 2022 and 2021, respectively, and$57.5 million and$30.5 million for the six months endedJune 30, 2022 and 2021, respectively. As ofJune 30, 2022 , we had an accumulated deficit of$259.4 million . Substantially all of our operating losses are a result of expenses incurred in connection with our research and development programs, primarily evorpacept, and from general and administrative expenses associated with our operations.
We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We expect our expenses will increase substantially in connection with our ongoing activities, as we:
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advance evorpacept through multiple clinical trials in multiple indications;
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pursue regulatory approval of evorpacept in hematological malignancies and solid tumors;
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continue our discovery and preclinical and clinical development efforts, including our collaborations with Tallac Therapeutics, Zymeworks and our recent acquisition of ScalmiBio;
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obtain and maintain patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates;
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manufacture supplies for our preclinical studies and clinical trials; and
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continue to add operational, financial and management information systems to support ongoing operations as a public company.
Components of Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the development of our lead product candidate, evorpacept, which include:
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expenses incurred in connection with the preclinical and clinical development, including expenses incurred under collaboration agreements and under agreements with contract research organizations, or CROs;
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employee-related expenses, including salaries, related benefits, travel and stock-based compensation expenses for employees engaged in research and development functions;
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expenses related to production of clinical materials, including fees paid to contract manufacturing organizations, or CMOs;
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laboratory, vendor expenses and third-party drugs related to the execution of preclinical studies and clinical trials;
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facilities and other expenses, which include expenses for rent and maintenance of facilities, depreciation and amortization expense and other supplies; and
•
milestone payments related to our ScalmiBio acquisition.
20 -------------------------------------------------------------------------------- We expense research and development costs as incurred. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered or as services are performed. We record accruals for estimated costs of research, preclinical studies, clinical trials and manufacturing development, which are a significant component of research and development expenses. We determine the estimated costs through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fees to be paid for such services. Our research and development expenses consist primarily of costs associated with the development of our lead product candidate, evorpacept, and include external costs, such as fees paid to consultants, central laboratories, contractors, collaborators, CMOs and CROs in connection with our preclinical and clinical development activities. Almost all of our research and development expenses to date have been related to the clinical development of our lead product candidate, evorpacept. We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities related to progress on our existing product candidates and developing new product candidates. As our product candidates advance into later stages of development, we begin to conduct larger clinical trials. The process of conducting the necessary clinical trials to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of any of our product candidates. In addition, we will incur expenses related to the preclinical research conducted internally and through the contract with Tallac Therapeutics, as further described in Note 8 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
The successful development of our current and future product candidates is highly uncertain. This is due to the numerous risks and uncertainties, including the following:
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successful completion of preclinical studies and clinical trials;
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delays in regulators or institutional review boards authorizing us or our investigators to commence our clinical trials or in our ability to negotiate agreements with clinical trial sites or CROs;
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the number and location of clinical sites included in the trials;
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raising additional funds necessary to complete clinical development of our product candidates;
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obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates;
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contracting with third-party manufacturers for clinical supplies of our product candidates;
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protecting and enforcing our rights in our intellectual property portfolio, including, if necessary, litigation; and
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maintaining a continued acceptable safety profile of the products following approval.
A change in the outcome of any of these variables with respect to the development of our product candidates may significantly impact the costs and timing associated with the development of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates. Research and development activities are essential to our business model. There are numerous factors associated with the successful commercialization of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact the success, cost or timing of our clinical development programs.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related expenses, business development expenses, facilities expenses, depreciation and amortization expenses and professional services expenses, including legal, human resources, audit, accounting and tax-related services, and directors and officers liability insurance premiums. Personnel and related costs consist of salaries, benefits and stock-based compensation expenses. Facilities costs consist of rent and maintenance of facilities. We anticipate that our general and administrative expenses will continue to increase as a result of increased headcount, expanded infrastructure and higher consulting, legal, tax and regulatory-related services associated with maintaining compliance with stock exchange listing andSEC requirements, audit and investor relations costs, director and officer insurance premiums and other costs associated with being a public company.
Interest Income
Our interest income consists primarily of interest income on cash, cash equivalents and short-term and long-term investments.
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Other Income (Expense), Net
Our other income (expense), net, consists primarily of interest expense on finance leases.
Results of Operations
The following table summarizes our results of operations for the three months
and six months ended
Three Months Ended Six Months Ended June 30, Change June 30, Change 2022 2021 $ % 2022 2021 $ % Operating expenses: Research and development$ 26,748 $ 11,213 $ 15,535 139 %$ 43,821 $ 21,062 $ 22,759 108 % General and administrative 7,041 5,086 1,955 38 % 14,715 9,445 5,270 56 % Total operating expenses 33,789 16,299 17,490 107 %
58,536 30,507 28,029 92 % Loss from operations (33,789 ) (16,299 ) (17,490 ) 107 %
(58,536 ) (30,507 ) (28,029 ) 92 % Interest income 876 23 853 3709 % 1,101 48 1,053 2194 % Other income (expense), net (7 ) 2 (9 ) -450 % (18 ) - (18 ) 100 % Net loss$ (32,920 ) $ (16,274 ) $ (16,646 ) 102 %
Research and Development Expenses
The following table summarizes our research and development expenses incurred for the three months and six months endedJune 30, 2022 and 2021 (dollars in thousands): Three Months Ended Six Months Ended June 30, Change June 30, Change 2022 2021 $ % 2022 2021 $ % Clinical and development costs$ 17,729 $ 7,448 $ 10,281 138 %$ 27,720 $ 14,798 $ 12,922 87 % Preclinical costs 1,007 577 430 75 % 1,848 1,048 800 76 % Personnel and related costs 3,681 1,921 1,760 92 % 7,046 3,210 3,836 120 % Stock-based compensation expense 2,690 715 1,975 276 % 4,765 1,294 3,471 268 % Other research costs 1,641 552 1,089 197 % 2,442 712 1,730 243 % Total research and development expenses$ 26,748 $ 11,213 $ 15,535 139 %$ 43,821 $ 21,062 $ 22,759 108 % Research and development expenses increased by$15.5 million during the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . The increase was primarily attributable to (i) an increase of$10.3 million in clinical and development costs primarily due to manufacturing of clinical trial materials to support a higher number of active clinical trials and future expected patient enrollment related to the advancement of our lead product candidate, as well as an increase of$1.6 million related to the Tallac Collaboration for work related to the IND filing planned for 2023, (ii) an increase of$0.4 million in preclinical costs primarily related to development of new targets, (iii) an increase of$1.8 million in personnel and related costs due primarily to an increase driven by headcount growth and a portion of a retention bonus payable to ScalmiBio stockholders, (iv) an increase of$2.0 million in stock-based compensation expense due to additional awards granted sinceJune 30, 2021 and (v) an increase of$1.1 million in other research costs due primarily to an increase of$0.5 million in facility costs related to the expansion of our new laboratory space and remaining increase of$0.5 million in VAT fees related to companion drug purchased for use in our clinical trials. Research and development expenses increased by$22.8 million during the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . The increase was primarily attributable to (i) an increase of$12.9 million in clinical and development costs primarily due to manufacturing of clinical trial materials to support a higher number of active clinical trials and future expected patient enrollment related to the advancement of our lead product candidate, as well as an increase of$2.6 million related to the Tallac Collaboration for work related to the IND filing planned for 2023, (ii) an increase of$0.8 million in preclinical costs primarily due to development of new targets and costs related to Tallac Collaboration, (iii) an increase of$3.8 million in personnel and related costs due primarily to an increase driven by headcount growth and a portion of a retention bonus payable to ScalmiBio stockholders, (iv) an increase of$3.5 million in stock-based compensation expense due to additional awards granted sinceJune 30, 2021 and (v) an increase of$1.7 million in other research costs due primarily to an increase of$1.0 million in facility costs related to the expansion of our new laboratory space and remaining increase of$0.6 million in VAT fees related to companion drug purchased for use in our clinical trials. 22 --------------------------------------------------------------------------------
General and Administrative Expenses
The following table summarizes our general and administrative expenses incurred for the three months and six months endedJune 30, 2022 and 2021 (dollars in thousands): Three Months Ended Six Months Ended June 30, Change June 30, Change 2022 2021 $ % 2022 2021 $ % Personnel and related costs$ 1,508 $ 1,209 $ 299 25 %$ 2,978 $ 2,396 $ 582 24 % Stock-based 3,146 1,522 1,624 6,572 2,743 3,829 compensation expense 107 % 140 % Other general and administrative costs 2,387 2,355 32 1 % 5,165 4,306 859 20 % Total general and administrative expenses$ 7,041 $ 5,086 $ 1,955 38 %$ 14,715 $ 9,445 $ 5,270 56 % General and administrative expenses increased by$2.0 million during the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . The increase was primarily attributable to (i) an increase of$1.6 million in stock-based compensation expense due to additional stock option awards granted sinceJune 30, 2021 and (ii) an increase of$0.3 million in personnel and related costs primarily driven by headcount growth. General and administrative expenses increased by$5.3 million during the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . The increase was primarily attributable to (i) an increase of$3.8 million in stock-based compensation expense due to additional stock option awards granted sinceJune 30, 2021 , (ii) an increase of$0.6 million in personnel and related costs primarily driven by headcount growth and (iii) an increase of$0.9 million in other costs primarily driven by an increase in legal patent fees,SEC related filing fees and facility and information technology costs.
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have incurred significant operating losses and have not generated any product revenue. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all, subject to marketing approval of any of our product candidates. To date, we have funded our operations with proceeds from the sales of shares of our common stock and convertible preferred stock and borrowings under our term loan. As ofJune 30, 2022 , we had cash, cash equivalents and short-term and long-term investments of$324.2 million .
Funding Requirements
We have incurred losses and negative cash flows from operations since inception and anticipate that we will continue to incur net losses for the foreseeable future. As ofJune 30, 2022 , we had an accumulated deficit of$259.4 million . We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials for our product candidates in development. In addition, we expect to incur additional costs associated with operating as a public company. Management recognizes the need to raise additional capital to fully implement its business plan. The timing and amount of such future capital requirements are difficult to forecast and will depend on many factors, including:
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the timing and progress of preclinical and clinical development activities;
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successful enrollment in and completion of clinical trials;
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the timing and outcome of regulatory review of our product candidates;
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our ability to establish agreements with third-party manufacturers for clinical supply for our clinical trials and, if any of our product candidates are approved, commercial manufacturing;
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addition and retention of key research and development personnel;
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our efforts to enhance operational, financial and information management systems, and hire additional personnel, including personnel to support development of our product candidates;
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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we obtain marketing approval;
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the legal patent costs involved in prosecuting patent applications and enforcing patent claims and other intellectual property claims;
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the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone and royalty payments thereunder;
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macroeconomic conditions, such as inflation, economic downturns, disasters, and medical or public health crises; and
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the impact of the ongoing COVID-19 pandemic or geopolitical risks, which may exacerbate the magnitude of the factors discussed above.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We do not currently have any committed external source of funds. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to and volatility in the credit and financial markets inthe United States and worldwide resulting from the ongoing COVID-19 pandemic. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves. InJuly 2020 , we completed our initial public offering pursuant to a registration statement on Form S-1. In the initial public offering, we issued and sold an aggregate of 9,775,000 shares of common stock, including the underwriters' exercise in full of their overallotment option, under the registration statement at a public offering price of$19.00 per share. Net proceeds were approximately$169.5 million , after deducting underwriting discounts and commissions of$13.0 million and offering-related expenses of$3.2 million . InDecember 2020 , we completed our follow-on public offering pursuant to a registration statement on Form S-1. In the follow-on public offering, we issued and sold an aggregate of 2,737,000 shares of common stock, including the underwriters' exercise in full of their overallotment option, under the registration statement at a public offering price of$76.00 per share. Net proceeds were approximately$194.9 million , after deducting underwriting discounts and commissions of$12.5 million and offering-related expenses of$0.7 million . InDecember 2021 , we entered into a sales agreement withCantor Fitzgerald & Co. andCredit Suisse Securities (USA) LLC , under which we may offer and sell our common stock, having aggregate gross proceeds of up to$150.0 million , from time to time through them as our sales agent in our at-the-market equity offering program, or the ATM Offering Program. OnMarch 25, 2022 , we filed a Shelf Registration Statement with theSEC . InMay 2022 , we filed an amendment to the Shelf Registration Statement, which was declared effective by theSEC onMay 31, 2022 . No sales have been made under the ATM Offering Program as of the date of this report. We believe our existing cash, cash equivalents and short-term and long-term investments will enable us to fund our operating expenses and capital expenditure requirements through the fourth quarter of 2024. We have based these estimates on assumptions in which actuals may materially differ, and we could utilize our available capital resources sooner than we expect.
Cash Flows
The following table presents a summary of the net cash flow activity for the six
months ended
Six Months Ended June 30, 2022 2021 Net cash provided by (used in): Operating activities$ (37,672 ) $ (25,757 ) Investing activities (260,053 ) (7 ) Financing activities 502 1,509
Net decrease in cash, cash equivalents and restricted cash
Operating Activities In the six months endedJune 30, 2022 , net cash used in operating activities of$37.7 million was attributable to a net loss of$57.5 million , offset by non-cash charges of$12.1 million and a change in our net operating assets and liabilities of$7.7 million . Non-cash charges consisted primarily of stock-based compensation expense of$11.3 million and non-cash lease costs of$0.5 million . The change in operating assets and liabilities was primarily due to (i) an increase in accounts payable and accrued expenses and other current liabilities of$8.8 million primarily due to timing of invoices and payments, (ii) a decrease in other non-current liabilities of$0.6 million and (iii) a decrease in other assets of$0.3 million . 24 -------------------------------------------------------------------------------- In the six months endedJune 30, 2021 , net cash used in operating activities of$25.8 million was attributable to a net loss of$30.5 million , offset by non-cash charges of$4.3 million and a change in our net operating assets and liabilities of$0.5 million . Non-cash charges consisted primarily of stock-based compensation expense of$4.0 million and non-cash lease costs of$0.2 million . The change in operating assets and liabilities was primarily due to (i) an increase of$5.8 million in accounts payable, (ii) an increase of$2.3 million in other non-current liabilities due to the recognition of lease liabilities as a result of ASC 842 adoption as well as the commencement of new leases, (iii) an increase of$1.2 million in accrued expenses and other current liabilities, (iv)$0.7 million increase in payable and accrued liabilities due to related party, (v) a decrease of$9.0 million in other assets of which$5.7 million related to certain clinical activities and$3.3 million related to right-of-use assets due to the recognition of right-of-use assets as a result of ASC 842 adoption as well as the commencement of new leases and (vi) a decrease of$0.5 million in prepaids expenses and other current assets.
Investing Activities
In the six months endedJune 30, 2022 , net cash used in investing activities of$260.1 million was attributable to purchases of short-term and long-term investments of$279.2 million offset by cash received for sales and maturities of investments of$20.0 million and purchases of property and equipment of$0.8 million .
In the six months ended
Financing Activities In the six months endedJune 30, 2022 , net cash provided by financing activities was$0.5 million and was attributable to proceeds from the exercise of stock options under equity incentive plans of$0.3 million and proceeds from issuance of common stock pursuant to employee stock purchase plan of$0.3 million offset by principal payments on finance leases of$0.1 million . In the six months endedJune 30, 2021 , net cash provided by financing activities was$1.5 million and was attributable to proceeds from the exercise of stock options under equity incentive plans.
Contractual Obligations and Commitments
We have contractual obligations from our operating leases, finance leases,
manufacturing and service contracts and other research and development
activities. The following table aggregates our material expected contractual
obligations and commitments as of
June 30, 2022 Total 2022 2023-2024 2025-2026 Thereafter Operating lease$ 8,572 $ 549 $ 2,519 $ 2,504 $ 3,000 obligations (i) Finance lease obligations 504 216 288 (ii) - - Manufacturing and service contracts (iii) 49,150 17,205 31,727 218 - Total$ 58,226 $ 17,970 $ 34,534 $ 2,722 $ 3,000 (i) The payments consist of (i) payments due for the office space inBurlingame, California under a single operating sub-lease agreement that expires in 2023, (ii) payments due for the office space inSouth San Francisco, California under a single operating lease agreement that expires in 2026 and (iii) payments due for the office and laboratory space inPalo Alto, California under a single operating lease agreement that expires in 2030. See Note 5 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for details of related commitments.
(ii)
Payments due for embedded finance leases related to a pharmaceutical support service contract. See Note 5 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for details of related commitments.
(iii)
InNovember 2015 , we entered into a Master Service Agreement, or the MSA, withKBI Biopharma, Inc. relating to formulation development, process development and current good manufacturing practices, or cGMP, manufacturing of evorpacept for use in clinical trials on a project basis. The MSA had an initial term of three years with successive one-year renewal periods, is cancellable upon notice and is non-exclusive. Statements of work under the MSA commit us to certain future purchase obligations of approximately$46.5 million . In addition, we have commitments with two other drug product manufacturers that commit us to certain future purchase obligations of approximately$2.6 million . We expect to make payments for these commitments through 2026 based on non-cancellable commitments and forecasts that include estimates of future market demand, quantity discounts and manufacturing efficiencies that may impact timing of purchases.
We enter into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts generally provide for termination upon notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation. These payments are not included in the table of contractual obligations above.
Off-Balance Sheet Arrangements
During the period presented, we did not have, nor do we currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
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Critical Accounting Policies and Significant Judgments and 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 generally accepted accounting principles inthe United States , or GAAP. The preparation of these 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 financial statements, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience and on various other factors 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 significantly from these estimates under different assumptions or conditions. Our critical accounting policies are more fully described in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Judgments and Estimates" in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . During the six months endedJune 30, 2022 , there were no material changes to our critical accounting policies from those discussed in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 filed with theSEC onFebruary 28, 2022 .
Recent Accounting Pronouncements
See "Note 2. Significant Accounting Policies - Recent Accounting Pronouncements" to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.
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