ATYR PHARMA, INC. The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q, the consolidated financial statements and accompanying notes thereto for the fiscal year endedDecember 31, 2019 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, which are contained in our Annual Report on Form 10-K, filed with theSecurities and Exchange Commission , orSEC , onMarch 26, 2020 (2019 Annual Report). This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended or the Exchange Act. Such forward-looking statements, which represent our intent, belief or current expectations, involve risks and uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "expect," "anticipate," "estimate," "intend," "plan," "predict," "potential," "believe," "should" and similar expressions. Factors that could cause or contribute to differences in results include, but are not limited to those set forth under "Risk Factors" under Item 1A of Part II below, and elsewhere in this Quarterly Report on Form 10-Q. Except as required by law we undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect actual outcomes. 17 --------------------------------------------------------------------------------
Overview
We are a biotherapeutics company engaged in the discovery and development of innovative medicines based on novel biological pathways. We have concentrated our research and development efforts on a newly discovered area of biology, the extracellular functionality and signaling pathways of tRNA synthetases. Built on more than a decade of foundational science on extracellular tRNA synthetase biology and its effect on immune responses, we have built a global intellectual property estate directed to a potential pipeline of protein compositions derived from 20 tRNA synthetase genes and their extracellular targets, such as neuropilin-2 (NRP2). Our primary focus is on ATYR1923, a clinical stage product candidate which downregulates immune responses by binding to the NRP2 receptor and is in development for the treatment of severe inflammatory lung diseases. ATYR1923, a fusion protein comprised of the immuno-modulatory domain of histidyl tRNA synthetase (HARS) fused to the fragment cystallizable (FC) region of a human antibody, is a selective modulator of NRP2 that downregulates the innate and adaptive immune response in inflammatory disease states. We began developing ATYR1923 as a potential therapeutic for patients with interstitial lung diseases (ILDs), a group of immune-mediated disorders that cause progressive fibrosis of the lung tissue. We selected pulmonary sarcoidosis, a major form of ILD, as our first clinical indication and are currently enrolling a proof-of-concept Phase 1b/2a clinical trial in patients. The study has been designed to evaluate the safety, tolerability and immunogenicity of multiple doses of ATYR1923 and to evaluate established clinical endpoints and certain biomarkers to assess preliminary activity of ATYR1923. A blinded interim analysis of safety and tolerability, the primary endpoint of our ongoing Phase 1b/2a clinical trial, showed study drug (ATYR1923 or placebo) was observed to be generally well tolerated with no drug-related serious adverse events (SAEs), consistent with the earlier Phase 1 study results in healthy volunteers. The final results of our current Phase 1b/2a clinical trial will guide future development of ATYR1923 in pulmonary sarcoidosis and provide insight for the potential of ATYR1923 in other ILDs, such as connective tissue disease ILD (CTD-ILD) and chronic hypersensitivity pneumonitis (CHP). In response to the COVID-19 pandemic, we are investigating ATYR1923's potential as a treatment for COVID-19 patients with severe respiratory complications. The inflammatory lung injury related to COVID-19 may be similar to that of interstitial lung diseases. By targeting aberrant immune responses, we believe that ATYR1923's mechanism of action has substantial overlap with this disease pathology. Our Phase 2 clinical trial is a randomized, double blind, placebo-controlled study of ATYR1923 in hospitalized COVID-19 patients with severe respiratory complications who do not require mechanical ventilation. The trial is designed to evaluate the preliminary safety and efficacy of ATYR1923 as compared to placebo through the assessment of key clinical outcome measures. InOctober 2020 , we completed enrollment in the Phase 2 clinical trial with a total of 32 patients exceeding the target enrollment of 30 patients. We expect to report topline data from this trial at the turn of the calendar year. InJanuary 2020 , we entered into a license withKyorin Pharmaceutical Co., Ltd. (Kyorin) for the development and commercialization of ATYR1923 for ILDs inJapan . Under the collaboration and license agreement with Kyorin (the Kyorin Agreement), Kyorin received an exclusive right to develop and commercialize ATYR1923 inJapan for all forms of ILDs. We received an$8.0 million upfront payment and we are eligible to receive an additional$167.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties ranging from the mid-single digits to mid-teens on net sales inJapan . Under the terms of the Kyorin Agreement, Kyorin will fund all research, development, regulatory, marketing and commercialization activities inJapan . InSeptember 2020 , Kyorin began dosing of its Phase 1 trial of ATYR1923 (known as KRP-R120 inJapan ). The Phase 1 trial, which is being conducted and funded by Kyorin, is a placebo-controlled study to evaluate the safety, pharmacokinetics and immunogenicity of ATYR1923 in 32 healthy Japanese male volunteers. Assuming successful completion of the study, Kyorin would then be able to initiate patient trials in ILDs inJapan . In conjunction with our clinical development of ATYR1923, we have in parallel been advancing our discovery pipeline of NRP2 antibodies and tRNA synthetases. InNovember 2020 , we declared an IND candidate in oncology from our NRP2 antibody program, ATYR2810. We intend to evaluate this fully humanized monoclonal antibody for the potential treatment of certain aggressive tumors where NRP2 is implicated. NRP2 expression is associated with worsened patient outcomes in many cancers. NRP2 is also a receptor that plays a key role in lymphatic development and in regulating inflammatory responses. NRP2 can interact with multiple ligands and coreceptors to influence their functional roles. We continue to actively investigate NRP2 receptor biology, both internally and in collaboration with key academic thought leaders, to identify new product candidates for a variety of disease settings, including cancer, inflammation, and lymphangiogenesis. InMarch 2020 , our subsidiary,Pangu BioPharma Limited (Pangu BioPharma), together with theHong Kong University of Science and Technology (HKUST) was awarded a grant of approximately$750,000 to build a high-throughput platform for the development of bi-specific antibodies. The two-year project is being funded by theHong Kong government'sInnovation and Technology Commission under the Partnership Research Program (PRP). The PRP aims to support research and development projects 18
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undertaken by companies in collaboration with local universities and public research institutions. The grant will fund approximately 50% of the total estimated project cost, with our company contributing the remaining 50%.
Our continued research of tRNA synthetases is being conducted through both industry and academic collaborations. InNovember 2020 , we announced the identification of receptor targets for two tRNA synthetases from our pipeline. The receptor targets may have utility in the development of new therapeutics to treat cancer and fibrosis. Human tRNA synthetases play a role in extracellular responses in certain disease states, including cellular stress and tissue homeostasis. Identifying target receptors for an extracellular tRNA synthetase helps inform discovery and development activities by providing additional focus towards relevant disease pathways and potential therapeutic applications. The discovery work was completed as part of a research collaboration with CSL Behring (CSL), a global biotherapeutics leader specializing in immunology, hematology and other rare and serious medical conditions. The impact of the COVID-19 pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. Impacts to our business have included the delay in enrollment of our Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis and the discontinuation of some patients in that trial, temporary closures of portions of our facilities and those of our licensees and collaborators, disruptions or restrictions on our employee's ability to travel and delays in certain research and development activities. Other potential impacts to our business include, but are not limited to disruptions to or delays in other clinical trials, third-party manufacturing supply and other operations, the potential diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns, interruptions or delays in the operations of the FDA or other regulatory authorities, and our ability to raise capital and conduct business development activities. Financial Operations Overview
Organization and Business; Principles of Consolidation
We conduct substantially all of our activities throughaTyr Pharma, Inc. , aDelaware corporation, at our facility inSan Diego, California .aTyr Pharma, Inc. was incorporated in theState of Delaware inSeptember 2005 . The condensed consolidated financial statements include our accounts and our 98% majority-owned subsidiary inHong Kong ,Pangu BioPharma Limited as ofSeptember 30, 2020 . All intercompany transactions and balances are eliminated in consolidation.
Revenue Recognition
InJanuary 2020 , we entered into the Kyorin Agreement for the development and commercialization of ATYR1923 for ILDs inJapan . Under the Kyorin Agreement, Kyorin received an exclusive right to develop and commercialize ATYR1923 inJapan for all forms of ILDs. We received an$8.0 million upfront payment and we are eligible to receive an additional$167.0 million in the aggregate upon achievement of certain development, regulatory and sales milestones, as well as tiered royalties ranging from the mid-single digits to mid-teens on net sales inJapan . Under the terms of the Kyorin Agreement, Kyorin will fund all research, development, regulatory, marketing and commercialization activities inJapan . Following the first anniversary of the effective date of the Kyorin Agreement, Kyorin has the right to terminate the agreement for any reason upon 90 days advance written notice. Either party may terminate the Kyorin Agreement in the event that the other party breaches the agreement and fails to cure the breach, becomes insolvent or challenges certain of the intellectual property rights licensed under the agreement.
For the nine months ended
InMarch 2019 , we entered into a research collaboration and option agreement with CSL for the development of product candidates derived from up to four tRNA synthetases from our preclinical pipeline (CSL Agreement).
For the nine months ended
Research and Development Expenses
To date, our research and development expenses have related primarily to the development of, and clinical trials for, our product candidates, and to research efforts targeting the potential therapeutic application of other tRNA synthetase-based immuno-modulators and, more recently research efforts related to NRP2 biology. These expenses consist primarily of:
• salaries and employee-related expenses, including stock-based compensation
and benefits for personnel in research and product development functions;
• costs associated with conducting our preclinical, development and
regulatory activities, including fees paid to third-party professional
consultants, service providers and our scientific, therapeutic and
clinical advisory board;
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• costs to acquire, develop and manufacture preclinical study and clinical
trial materials;
• costs incurred under clinical trial agreements with clinical research
organizations (CROs) and investigative sites;
• costs for laboratory supplies; and
• allocated facilities, depreciation and other allocable expenses.
Product candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials.
We expect that the levels of our research and development expenses will increase
in the current year and will consist primarily of costs related to our ATYR1923
Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis, our ATYR1923
Phase 2 clinical trial in COVID-19 patients with severe respiratory
complications, and other potential therapeutics based on tRNA synthetase biology
and NRP2 biology.
We cannot determine with certainty the timing of initiation, the duration or the
completion costs of current or future preclinical studies and clinical trials of
our product candidates. In particular, as a result of the COVID-19 pandemic,
many clinical trial sites in our ongoing Phase 1b/2a clinical trial in patients
with pulmonary sarcoidosis temporarily suspended dosing of previously-enrolled
patients and/or enrollment of new patients. While the majority of such sites are
now continuing enrollment and trial activities, the availability of top-line
results from the clinical trial is delayed. This delay may also cause certain
research and development expenses related to the trial to be incurred in future
quarters, and ultimately, the incurrence of such expenses related to the
clinical trial could shift materially.
At this time, due to the inherently unpredictable nature of preclinical and
clinical development and given the early stage of our programs, we are unable to
estimate with any certainty the costs we will incur or the timelines we will
require in the continued development of our product candidates. Clinical and
preclinical development timelines, the probability of success and development
costs can differ materially from expectations. We anticipate that we will make
determinations as to which product candidates to pursue and how much funding to
direct to each product candidate on an ongoing basis in response to the results
of ongoing and future preclinical studies and clinical trials, regulatory
developments and our ongoing assessments as to each product candidate's
commercial potential. In addition, we cannot forecast which programs or product
candidates may be subject to future collaborations, when such arrangements will
be secured, if at all, and to what degree such arrangements would affect our
development plans and capital requirements.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related costs for employees in executive, finance and administration, corporate development and administrative support functions, including stock-based compensation expenses and benefits. Other significant general and administrative expenses include accounting, legal services, expenses associated with applying for and maintaining patents, cost of insurance, cost of various consultants, occupancy costs, information systems costs and depreciation.
Other Expense, net
InNovember 2016 , we entered into a loan and security agreement, as amended (Loan Agreement) withSilicon Valley Bank (SVB) and Solar Capital Ltd. (together with SVB, the Lenders) to borrow up to$20.0 million issuable in three separate tranches (the Term Loans),$10.0 million of which was funded inNovember 2016 ,$5.0 million of which was funded inJune 2017 and$5.0 million of which was funded inDecember 2017 . Other expense, net consists primarily of interest income earned on cash, cash equivalents and available-for-sale investments and interest expense on our Term Loans outstanding with the Lenders as discussed below.
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 accounting principles generally accepted inthe United States . 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 as of the date of the condensed consolidated financial statements, as well as the reported expenses during the reporting periods. We monitor and analyze these items for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on our historical experience and on various other factors we believe to be 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. Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to us in our critical accounting estimates. 20 -------------------------------------------------------------------------------- We discuss our accounting policies and assumptions that involve a higher degree of judgment and complexity within Note 2 to our audited consolidated financial statements in our 2019 Annual Report. There have been no material changes to our critical accounting policies and estimates as disclosed in our 2019 Annual Report other than noted above.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended September 30, Increase /
2020 2019 (Decrease)
Revenues $ 148 $ 184 $ (36 )
Research and development expenses 4,616 3,799 817
General and administrative expenses 2,044 1,883 161
Other expense, net (88 ) (147 ) (59 )
Revenues. Revenues for the three months ended
Research and development expenses. Research and development expenses were$4.6 million and$3.8 million for the three months endedSeptember 30, 2020 and 2019, respectively. The increase of$0.8 million was due primarily to the progression of our ATYR1923 Phase 1b/2a clinical trial in patients with pulmonary sarcoidosis and our ATYR1923 Phase 2 clinical trial in COVID-19 patients with severe respiratory complications. General and administrative expenses. General and administrative expenses were$2.0 million and$1.9 million for the three months endedSeptember 30, 2020 and 2019, respectively. The increase of$0.2 million was due primarily to an increase in insurance costs. Other expense, net. Other expense, net was$0.1 million for each of the three months endedSeptember 30, 2020 and 2019. The decrease was primarily a result of lower balances on our Term Loans which we started paying down inJune 2018 .
Comparison of the Nine Months Ended
The following table summarizes our results of operations for the nine months
ended
Nine Months Ended September 30, Increase /
2020 2019 (Decrease)
Revenues $ 8,402 $ 278 $ 8,124
Research and development expenses 12,593 $ 10,458 2,135
General and administrative expenses 6,780 6,836 (56 )
Other expense, net (324 ) (614 ) (290 )
Revenues. Revenues were $8.4 million and $0.3 million for the nine months ended
September 30, 2020 and 2019, respectively. The increase of $8.1 million was due
primarily to $8.0 million from license revenue under the Kyorin Agreement.
Research and development expenses. Research and development expenses were $12.6
million and $10.5 million for the nine months ended September 30, 2020 and 2019,
respectively. The increase of 2.1 million was due primarily to the progression
of our ATYR1923 Phase 1b/2a clinical trial in patients with pulmonary
sarcoidosis and our ATYR1923 Phase 2 clinical trial in COVID-19 patients with
severe respiratory complications.
General and administrative expenses. General and administrative expenses were
consistent between the periods at $6.8 million for each of the nine months ended
September 30, 2020 and 2019.
Other expense, net. Other expense, net was $0.3 million and $0.6 million for the
nine months ended September 30, 2020 and 2019, respectively. The $0.3 million
decrease was primarily a result of lower balances on our Term Loans which we
started paying down in June 2018 .
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--------------------------------------------------------------------------------Liquidity and Capital Resources
Other than the net income generated in the three months endedMarch 31, 2020 , we have incurred losses and negative cash flows from operations since our inception. As ofSeptember 30, 2020 , we had an accumulated deficit of$333.6 million and we expect to continue to incur net losses for the foreseeable future. We believe that our existing cash, cash equivalents and available-for-sale investments, of$36.1 million as ofSeptember 30, 2020 will be sufficient to meet our anticipated cash requirements for a period of at least one year from the filing date of this Quarterly Report on Form 10-Q.
Sources of Liquidity
From our inception throughSeptember 30, 2020 , we have financed our operations primarily through the sale of equity securities and convertible debt and through venture debt and term loans.
InMay 2019 , we entered into a sales agreement withH.C. Wainwright & Co., LLC (Wainwright) with respect to an at-the-market offering program (ATM Offering Program) under which we may offer and sell shares of our common stock having an aggregate offering price of up to$10.0 million . InNovember 2020 , we entered into an amendment to our sales agreement with Wainwright to increase the amount of the ATM Offering Program from$10.0 million to$20.0 million . Wainwright is entitled to a commission at a fixed rate equal to 3% of the gross proceeds. Under the ATM Offering Program, during 2019, we sold an aggregate of 611,687 shares of common stock at an average price of$5.43 per share for gross proceeds of$3.3 million . During the nine months endedSeptember 30, 2020 , we sold an aggregate of 630,685 shares of common stock at an average price of$4.00 per share for gross proceeds of$2.5 million under the ATM Offering Program. InFebruary 2020 , we completed an underwritten follow-on public offering of 4,235,294 shares of our common stock at a price to the public of$4.25 per share. InMarch 2020 , the underwriters fully exercised their option to purchase additional shares resulting in the issuance of an additional 635,294 shares of common stock. The total gross proceeds from the underwritten follow-on public offering, including the underwriters' option to purchase additional shares, was approximately$20.7 million , before deducting underwriting discounts, commissions and offering expenses payable by us. We anticipate using the net proceeds from the offering for general corporate purposes, including clinical trial expenses, research and development expenses, manufacturing expenses, and general administrative expenses. Additionally, inSeptember 2020 , we entered into a common stock purchase agreement (Purchase Agreement) withAspire Capital Fund, LLC (Aspire Capital ), which provides that, upon the terms and subject to the conditions and limitations set forth therein,Aspire Capital is committed to purchase up to an aggregate of$20.0 million of shares of our common stock at our request from time to time during the 30 month term of the Purchase Agreement. Concurrently with entering into the Purchase Agreement, we also entered into a registration rights agreement withAspire Capital , in which we agreed to file one or more registration statements, as permissible and necessary to register under the Securities Act, registering the sale of the shares of our common stock that have been and may be issued toAspire Capital under the Purchase Agreement. As ofSeptember 30, 2020 , we had not sold any shares of common stock toAspire Capital under this Purchase Agreement.
Debt Financing
We have a Loan Agreement with our Lenders for the Term Loans which were fully repaid onNovember 3, 2020 , including the final payment equal to 8.75% of the funded amounts. Cash Flows
The following table sets forth a summary of the net cash flow activity for each of the periods indicated (in thousands):
Nine Months Ended September 30,
2020 2019Net cash provided by (used in):
Operating activities$ (9,900 ) $ (15,097 ) Investing activities 3,697 6,145 Financing activities 15,144 3,331
Net change in cash and cash equivalents
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Operating activities. Net cash used in operating activities was $9.9 million and
$15.1 million for the nine months ended September 30, 2020 and 2019,
respectively. Net cash used in operating activities for the nine months ended
September 30, 2020 was primarily related to our net loss of $11.3 million ,
adjusted for non-cash stock-based compensation expense of $1.1 million and net
cash outflows from the changes in our operating assets and liabilities of $1.1
million . Net cash used in operating activities for the nine months ended
September 30, 2019 was primarily related to our net loss of $17.6 million ,
adjusted for non-cash stock-based compensation expense of $1.4 million and net
cash outflows from the changes in our operating assets and liabilities of $0.1
million .
Investing activities. Net cash provided by investing activities for the nine
months ended September 30, 2020 and 2019 was $3.7 million and $6.1 million ,
respectively. The fluctuation in net cash provided by investing activities
resulted primarily from the timing differences in investment purchases, sales
and maturities, and the fluctuation of our portfolio mix between cash
equivalents and short-term investment holdings. The average term to maturity in
our investment portfolio is less than one year.
Financing activities. Net cash provided by financing activities for the nine
months ended September 30, 2020 consisted primarily of $18.8 million in proceeds
from the issuance of common stock through an underwritten follow-on public
offering in February 2020 , net of offering costs and $2.4 million in proceeds
from the issuance of common stock through the ATM Offering Program, net of
offering costs, offset by a $6.0 million repayment on our Term Loans. Net cash
provided by financing activities for the nine months ended September 30, 2019
consisted of $4.9 million in proceeds from the issuance of common stock through
a registered direct offering, net of offering costs and $4.4 million proceeds
from issuance of common stock through the ATM Offering Program, offset by a $6.0
million repayment on our Term Loans.
Funding Requirements
To date, we have not generated any revenues from product sales. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to advance ATYR1923 in clinical development, continue our research and development activities with respect to other potential therapies based on tRNA synthetase biology andNPR2 biology, and seek marketing approval for product candidates that we may develop. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. We currently have no sales or marketing capabilities and would need to expand our organization to support these activities. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.
Our future capital requirements are difficult to forecast and will depend on many factors, including:
• our ability to initiate, and the progress and results of, our clinical
trials of ATYR1923;
• delays of our current clinical trials of ATYR 1923 and any resulting cost
increases as a result of the COVID-19 pandemic;
• the number and characteristics of product candidates that we pursue;
• the scope, progress, results and costs of preclinical development, and
clinical trials for other product candidates;
• the manufacturing of preclinical study and clinical trial materials;
• our ability to maintain existing and enter into new collaboration and
licensing arrangements and the timing of any payments we may receive
under such arrangements;
• the costs, timing and outcome of regulatory review of our product candidates;
• the costs and timing of preparing, filing and prosecuting patent
applications, maintaining and enforcing our intellectual property rights
and defending any intellectual property-related claims;
• the costs and timing of future commercialization activities, including
product manufacturing, marketing, sales and distribution, for any of our
product candidates for which we receive marketing approval; and
• the extent to which we acquire or in-license other products and technologies.
Until such time, if ever, as we can generate substantial product revenues, we
expect to finance our cash needs through a combination of equity offerings,
grant funding, collaborations, strategic partnerships and/or licensing
arrangements, and when we are closer to commercialization of our product
candidates potentially through debt financings. To the extent we raise
additional capital through the sale of equity, the ownership interest of our
stockholders will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect the rights of our common
stockholders. If we raise additional funds through collaborations, strategic
partnerships or licensing arrangements with third parties, we may have to
relinquish valuable rights to our product candidates, our other technologies,
future revenue streams or research programs or grant licenses on terms that may
not be favorable to us. The incurrence of additional indebtedness would increase
our fixed payment obligations and may require us to agree
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to certain restrictive covenants, such as limitations on our ability to incur
additional debt, limitations on our ability to acquire, sell or license
intellectual property rights and other operating restrictions that could
adversely impact our ability to conduct our business. We may be unable to raise
additional funds on acceptable terms or at all. As a result of the COVID-19
pandemic and actions taken to slow its spread, the global credit and financial
markets have experienced extreme volatility and disruptions, including severely
diminished liquidity and credit availability, declines in consumer confidence,
declines in economic growth, increases in unemployment rates and uncertainty
about economic stability. If the equity and credit markets deteriorate, it may
make any necessary debt or equity financing more difficult, more costly and more
dilutive. If we are unable to raise additional funds, we may be required to
delay, limit, reduce or terminate our product development or future
commercialization efforts or grant rights to develop and market our product
candidates even if we would otherwise prefer to develop and market such product
candidates ourselves.
Contractual Obligations and Commitments
We enter into contracts in the normal course of business with clinical trial sites and clinical supply manufacturing organizations and with vendors for preclinical safety and research studies, research supplies and other services and products purposes. These contracts generally provide for termination after a notice period, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments. Our contractual obligations have not materially changed outside the ordinary course of our business during the nine months endedSeptember 30, 2020 , as compared to those disclosed in our 2019 Annual Report. We have a Loan Agreement with our Lenders for the Term Loans which were fully repaid onNovember 3, 2020 , including the final payment equal to 8.75% of the funded amounts.
Recent Accounting Pronouncements
For discussion of recently issued accounting pronouncements, refer to Item 1 of Part I, Notes to Condensed Consolidated Financial Statements (Unaudited) - Note 1 - Recent Accounting Pronouncements.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of theSEC .
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