You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and related
notes included elsewhere in this quarterly report. This discussion and other
parts of this quarterly report contain forward-looking statements that involve
risks and uncertainties, such as statements of our plans, objectives,
expectations and intentions. As a result of many factors, including those
factors set forth in the "Risk Factors" section of our 2020 Form 10-K, and in
our subsequently filed Quarterly Reports on Form 10-Q, our actual results could
differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion and analysis.
Overview
We are a commercial-stage biopharmaceutical company focused on the development
and commercialization of novel small molecule therapeutics for the treatment of
patients with cancer. Our first approved product by the U.S. Food and Drug
Administration ("FDA"), COSELA™ (trilaciclib), is the first and only therapy
indicated to proactively help protect bone marrow from the damage of
chemotherapy and is the first innovation in managing myeloprotection in decades.
COSELA was developed from a technology platform that targets key cellular
pathways including transient arrest of the cell cycle at G1, prior to the
beginning of DNA replication. Our therapies are designed to improve outcomes for
patients across multiple oncology indications.
We shall use "COSELA" when we are referring to our FDA approved drug and
"trilaciclib" when we are referring to our development of COSELA for additional
indications.
Product Pipeline
Trilaciclib is a first-in-class therapy designed to help protect against
chemotherapy-induced myelosuppression. Trilaciclib helps protect HSPCs in bone
marrow by transiently inhibiting CDK4/6 leading to a temporary arrest of
susceptible host cells during chemotherapy in ES-SCLC patients. This reduces the
duration and severity of neutropenia and other myelosuppressive consequences of
chemotherapy. In addition, trilaciclib activates and enhances the immune system
response driving increased anti-tumor efficacy, which we continue to explore in
clinical trials.
On February 12, 2021, COSELA was approved by the FDA to decrease the incidence
of chemotherapy-induced myelosuppression in adult patients treated with a
platinum/etoposide-containing regimen or topotecan-containing regimen for
extensive stage small cell lung cancer ("ES-SCLC"). We are also exploring
potential use of trilaciclib in a variety of tumors, including colorectal cancer
("CRC"), metastatic triple negative breast cancer ("mTNBC"), neoadjuvant breast
cancer, non-small cell lung cancer ("NSCLC"), and bladder cancer.
Rintodestrant is an oral selective estrogen receptor degrader ("SERD") for the
treatment of ER+ breast cancer. We are in the process of evaluating partnering
options for rintodestrant. In 2020, we out-licensed global rights to lerociclib,
an internally discovered and differentiated oral CDK4/6 inhibitor designed to
enable more effective combination treatment strategies across multiple oncology
indications. We also have intellectual property focused on cyclin-dependent
kinase targets.
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G1 Therapeutics Product Pipeline
Development &
Commercialization Rights
Candidate Indication Status (all indications)
Extensive-stage COSELA
small cell lung (trilaciclib)
cancer (ES-SCLC) Approved by FDA
Colorectal cancer Registrational
(CRC) trial
ongoing
1L/2L metastatic Registrational G1 Therapeutics owns all
Triple negative trial global development and
trilaciclib breast cancer ongoing commercial rights across all
(mTNBC) indications, with the
2L/3L Non-small Phase 2 trial exception of Greater China
cell lung cancer ongoing (Simcere)
(NSCLC)
1L Bladder cancer Phase 2 trial
ongoing
Neoadjuvant breast Phase 2 trial
cancer ongoing
(I-SPY 2 TRIAL™)
rintodestrant ER+, HER2- breast Phase 1b
cancer complete G1 - Global
EQRx: Global and Japan (ex.
Asia Pacific)
lerociclib Multiple Clinical Stage
Genor Biopharma: Asia Pacific
(ex. Japan)
Trilaciclib helps protect HSPCs in bone marrow by transiently inhibiting CDK4/6
leading to a temporary arrest of susceptible host cells during chemotherapy in
ES-SCLC patients. This reduces the duration and severity of neutropenia and
other myelosuppressive consequences of chemotherapy. In addition, trilaciclib
has demonstrated immune system response enhancement which we are exploring in
clinical trials to show increased anti-tumor efficacy.
Trilaciclib, a transient IV CDK4/6 inhibitor, is a novel therapeutic approach
which is given before chemotherapy that temporarily blocks progression through
the cell cycle. This provides two benefits. First, it proactively helps protect
HSPCs in bone marrow leading to preservation of neutrophils, erythrocytes, and
platelets (called myeloprotection) which reduces the occurrences and severity of
neutropenia and other myelosuppressive consequences of chemotherapy. This
myeloprotection benefit has been conclusively proven in double-blind
placebo-controlled clinical trials in extensive-stage small cell lung cancer.
Second, trilaciclib activates and enhances the immune system response driving
increased anti-tumor efficacy, which we are exploring in clinical trials. Our
randomized clinical trials have demonstrated that trilaciclib can provide
myeloprotection benefits and has the potential to improve survival as a result
of its anti-tumor efficacy benefit.
Chemotherapy is an effective and important weapon against cancer. However,
chemotherapy does not differentiate between healthy cells and cancer cells and
kills both, including important stem cells in the bone marrow (namely, HSPCs)
that produce white blood cells, red blood cells and platelets, and immune cells.
This chemotherapy-induced bone marrow damage is known as myelosuppression. When
white blood cells, red blood cells and platelets become depleted, chemotherapy
patients are at increased risk of infection, experience anemia and fatigue, and
are at increased risk of bleeding. Myelosuppression often requires the
administration of rescue interventions such as growth factors and blood or
platelet transfusions and may also result in chemotherapy dose delays and
reductions. Immune cell damage may decrease the ability of the immune system to
fight the cancer, as well as infection.
On February 12, 2021, COSELA™ was approved by the FDA to decrease the incidence
of chemotherapy-induced myelosuppression in adult patients when administered
prior to a platinum/etoposide-containing regimen or topotecan-containing regimen
for extensive-stage small cell lung cancer ("ES-SCLC"). COSELA became
commercially available through G1's specialty distributor network on March 2,
2021. COSELA is administered intravenously as a 30-minute infusion completed
within four (4) hours prior to the start of chemotherapy and is the first and
only FDA-approved therapy that helps proactively deliver multilineage
myeloprotection to patients with ES-SCLC being treated with chemotherapy. The
approval of COSELA is based on data from three (3) randomized,
placebo-controlled trials that showed patients receiving COSELA prior to
chemotherapy had clinically meaningful and statistically significant reduction
in the duration and severity of neutropenia, reduction of red blood cell
transfusions, as well as improvements in other
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myeloprotection measures, compared to patients receiving chemotherapy without
COSELA. G1 announced on March 25, 2021 that COSELA had been included in two
updated National Comprehensive Cancer Network® ("NCCN") Clinical Practice
Guidelines in Oncology (NCCN Guidelines®): The Treatment Guidelines for Small
Cell Lung Cancer and the Supportive Care Guidelines for Hematopoietic Growth
Factors. These guidelines document evidence-based, consensus-driven management
to ensure that all patients receive preventive, diagnostic, treatment, and
supportive services that are most likely to lead to optimal outcomes.
In June 2020, we entered into a three-year co-promotion agreement for COSELA™
(trilaciclib) in the United States and Puerto Rico with Boehringer Ingelheim.
The agreement is limited to support for SCLC. Under the terms of the agreement,
we will book revenue in the United States and Puerto Rico and retain development
and commercialization rights to trilaciclib. We will lead marketing, market
access and medical engagement initiatives; Boehringer Ingelheim will lead sales
force engagements.
In August 2020, we entered into an exclusive license agreement with Nanjing
Simcere Dongyuan Pharmaceutical Co., Ltd ("Simcere") for development and
commercialization rights for trilaciclib in all indications in Greater China
(mainland China, Hong Kong, Macau and Taiwan). Under the terms of the agreement,
we received an upfront payment of $14.0 million and will be eligible to receive
up to $156.0 million in development and commercial milestone payments. Simcere
will also pay us tiered low double-digit royalties on annual net sales of
trilaciclib in Greater China. As part of the agreement, Simcere will participate
in global clinical trials of trilaciclib and the companies will be responsible
for all development and commercialization costs in their respective territories.
We are also executing on our tumor-agnostic strategy to evaluate the potential
benefits of trilaciclib to patients with other tumors that are treated with
chemotherapy. We have five ongoing clinical trials: a pivotal trial in 1L
colorectal cancer ("CRC"), a pivotal trial in mTNBC (including 1L and 2L
patients), a Phase 2 trial in neoadjuvant breast cancer ("I-SPY 2"), a Phase 2
trial in 2L/3L non-small cell lung cancer ("NSCLC") in post-checkpoint patients,
and a Phase 2 1L bladder cancer trial with chemotherapy and a checkpoint
inhibitor. These studies across treatment settings and tumor types will evaluate
trilaciclib's dual benefits in both multi-lineage myeloprotection and anti-tumor
efficacy.
Pivotal 1L Colorectal Cancer ("CRC")
We are enrolling patients in PRESERVE 1, a randomized, placebo-controlled
registrational trial of trilaciclib in CRC. CRC is a large indication commonly
treated with 5-FU-based chemotherapy. We have extensive preclinical research
demonstrating myeloprotection and potential efficacy in 5-FU-based regimens with
trilaciclib. Our ongoing 1L CRC trial is with FOLFOXIRI, which is the most
efficacious chemo regimen in this tumor but is also highly myelosuppressive. By
reducing the toxicity of FOLFOXIRI, we believe we will significantly expand its
use in CRC and potentially improve overall survival.
1L/2L Metastatic Triple-Negative Breast Cancer ("mTNBC")
In 2017, we initiated a randomized Phase 2 trial of trilaciclib in patients with
first-/second-/third-line mTNBC receiving gemcitabine ("GC") and
carboplatin. Enrollment was completed in the second quarter of 2018. At the 2018
SABCS, we presented preliminary trilaciclib data demonstrating improvement in
progression-free survival ("PFS"). In September 2019, we presented updated data
demonstrating significant improvement in OS (preliminary). Though the trial did
not meet the primary myeloprotection endpoints, patients receiving trilaciclib
were able to receive approximately 50% more cycles of chemotherapy, without
additional hematological toxicity. These data were presented at the 2019 ESMO
Congress and were concurrently published in The Lancet Oncology. Updated safety
and efficacy data from this trial were presented at the 2020 SABCS. Data
included that compared to GC alone (Group 1), OS was improved in both
trilaciclib arms (Groups 2 and 3) (Group 2: HR=0.31, p=0.0016; Group 3: HR=0.40,
p=0.0004). Median OS was 12.6 months in Group 1, not reached for Group 2, and
17.8 months in Group 3. The median OS for Groups 2 and 3 combined was 19.8
months (HR=0.37, p<0.0001). OS findings in patients receiving trilaciclib were
consistent with previously reported data from this trial. The median OS for GC
alone (Group 1, 12.6 months) was consistent with the previous trial findings and
historical data. Patients with both PD-L1-positive and PD-L1-negative tumors
treated with trilaciclib and GC demonstrated improvement in OS compared to
patients receiving GC alone, with the PD-L1-positive subset achieving
statistically significant improvement. Further, data from T cell clonality
analyses suggest that administering trilaciclib prior to chemotherapy enhanced
immune system function. These compelling Phase 2 data supported the potential
effectiveness of trilaciclib in mTNBC.
On April 28, 2021, G1 announced the initiation of PRESERVE 2, a pivotal Phase 3,
randomized, double-blind, placebo-controlled study of COSELA™ (trilaciclib) in
patients receiving first- or second-line gemcitabine and carboplatin
chemotherapy for locally advanced unresectable or metastatic triple-negative
breast cancer. PRESERVE 2 will evaluate the survival benefit of COSELA in 250
patients with locally advanced unresectable or metastatic TNBC. PRESERVE 2 will
enroll two cohorts of patients. Cohort 1 (n=170) will evaluate patients
receiving first-line therapy, regardless of PD-L1 status, who are PD-1/PD-L1
inhibitor-naïve. Cohort 2 (n=80) will evaluate PD-L1 positive patients receiving
second-line therapy following prior PD-1/PD-L1 inhibitor therapy in the locally
advanced unresectable/metastatic setting.
2L/3L Non-Small Cell Lung Cancer ("NSCLC")
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On May 10, 2021 we announced the initiation of PRESERVE 4, a multicenter
randomized, double blind, placebo controlled Phase 2 study of trilaciclib in
post-checkpoint patients with metastatic NSCLC treated with docetaxel in the 2nd
and 3rd line setting. Myeloprotection and anti-tumor efficacy endpoints are
being assessed in this study. We believe that evaluating trilaciclib in 2L/3L
NSCLC (post-checkpoint setting) will provide us with meaningful data in an area
of high unmet need with a large patient population. NSCLC is a known immunogenic
tumor which may provide trilaciclib an opportunity to increase anti-tumor
efficacy through its distinct mechanism even after checkpoint inhibitors have
failed. There is also a highly complementary commercial fit with our initial
SCLC indication.
1L Bladder Cancer
On June 14, 2021 we announced the initiation of PRESERVE 3, a randomized,
open-label Phase 2 study of trilaciclib administered with first-line
platinum-based chemotherapy and the immune checkpoint inhibitor avelumab
maintenance therapy in patients with untreated, locally advanced or metastatic
urothelial carcinoma (mUC). Myeloprotection and anti-tumor efficacy endpoints
are being assessed in this study. There is a strong rationale to evaluate
trilaciclib in 1L bladder cancer: (1) bladder is a known immunogenic tumor
proven to be responsive to chemotherapy; (2) the most common chemotherapy
regimen used in 1L bladder is gemcitabine and platinum, which is similar to the
chemotherapy regimen in our mTNBC study (gemcitabine and carboplatin) where we
showed significant OS benefits; and (3) we have observed synergistic benefits
combining trilaciclib with checkpoints. G1 announced in February 2021 that it
had entered into a clinical trial collaboration with the alliance between Merck
KGaA, Darmstadt, Germany and Pfizer whereby the alliance will contribute
clinical supply of avelumab to this G1-sponsored and funded trial in mUC.
Phase 2 Neoadjuvant Breast Cancer (I-SPY 2)
Trilaciclib is included in a randomized, investigational treatment arm for the
ongoing I-SPY 2 TRIAL™ for neoadjuvant treatment of locally advanced breast
cancer. The trial, initiated in the second quarter of 2020 and run by the
non-profit Quantum Leap Healthcare Collaborative, is designed to rapidly screen
promising experimental treatments and identify those most effective in specific
patient subgroups based on molecular characteristics (biomarker signatures).
This trial will generate myeloprotection and anti-tumor efficacy data across the
different subtypes of breast cancer.
Rintodestrant
Rintodestrant is a clinical-stage oral SERD, for use as a monotherapy and in
combination with CDK4/6 inhibitors, initially Ibrance® (palbociclib), for the
treatment of ER+, HER2- breast cancer. Based on compelling preclinical efficacy
and safety data, we filed an Investigational New Drug application ("IND") with
the FDA in the fourth quarter of 2017. In 2018, we initiated a Phase 1/2a (dose
escalation/dose expansion) clinical trial in ER+, HER2- breast cancer.
Preliminary data from the Phase 1 portion of this trial were presented at the
2019 ESMO Congress, showing that rintodestrant was well tolerated and
demonstrated evidence of anti-tumor activity in heavily pre-treated patients.
The mature monotherapy data were presented at the 2020 SABCS conference,
confirming the safety and efficacy results of the preliminary analysis. Based on
these findings the Company advanced an 800 mg dose of rintodestrant into a
40-patient Phase 1b combination arm with palbociclib, a CDK4/6 inhibitor, which
was provided under a non-exclusive clinical supply agreement that we signed with
Pfizer in February 2020. Data from this arm were presented at the 2021 American
Society of Clinical Oncology (ASCO) annual virtual meeting. Key study findings
with a median duration of treatment of 6.2 months in the ongoing Phase 1
combination trial presented in the poster included that rintodestrant combined
with palbociclib was very well tolerated, with no rintodestrant-related serious
adverse events (SAEs) or dose-reductions reported. The clinical benefit rate
(CBR) doubled from 30% to 60% when palbociclib was added to rintodestrant,
suggesting the potential for favorable antitumor activity in patients with
ER+/HER2- advanced breast cancer, including in patients with tumors harboring
ESR1 variants. The CBR among patients with early relapse (first metastatic
recurrence while on adjuvant endocrine therapy [ET] for at least 2 years'
duration, or within 12 months of completing adjuvant ET) was 73%. The Company is
in the process of evaluating partnering options for rintodestrant.
Lerociclib
Lerociclib is a differentiated oral CDK4/6 inhibitor being developed for use in
combination with other targeted therapies in multiple oncology indications. In
2020, we entered into separate, exclusive agreements with EQRx, Inc. (rights for
U.S., Europe, Japan and all markets outside Asia-Pacific) and Genor Biopharma
Co. Inc. (rights for Asia-Pacific, excluding Japan) for the development and
commercialization of lerociclib in all indications. Combined, these agreements
provided $26.0 million in upfront payments, along with sales-based royalties and
up to $330.0 million in potential milestone payments. EQRx, Inc. and Genor
Biopharma Co. Inc. are responsible for all costs related to the development and
commercialization of lerociclib in their respective territories.
Coronavirus (COVID-19) impact on operations
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We have implemented business continuity plans to address the COVID-19 pandemic
and minimize disruptions to ongoing operations. Enrollment of patients in
current and future clinical trials may be impacted by COVID-19. We do not
anticipate significant supply chain delays or shortages as a result of the
COVID-19 pandemic. COVID-19 travel limitations and government-mandated
work-from-home or shelter-in-place orders, may reduce the number of in-person
meetings with prescribers and fewer patient visits with physicians, potentially
resulting in fewer new prescriptions.
We established a COVID-19 response team which continually monitors the impact of
COVID-19 on our operations. The COVID-19 response team manages our workplace
protocols that governs our employees' use of our office. To mitigate the impact
of COVID-19 on our business, we put in place the following safety measures for
our employees, patients, healthcare professionals, and suppliers to limit
exposure: we substantially restricted travel, supplied personal protective
equipment to employees, limited access to our headquarters and asked most of our
staff to work remotely. In addition, we added bandwidth and VPN capacity to our
infrastructure to facilitate remote work arrangements. We will continue to
monitor the impact of COVID-19 on our operations and report to our Board of
Directors regularly on the progress of our response to the COVID-19 outbreak.
Financial Overview
Since our inception in 2008, we have devoted substantially all of our resources
to synthesizing, acquiring, testing and developing our product candidates,
including conducting preclinical studies and clinical trials and providing
general and administrative support for these operations as well as securing
intellectual property protection for our product candidates. Currently, COSELATM
is our only product approved for sale. We began generating revenue for the net
product sales from COSELA in March of 2021. We recorded $3.1 million of net
product sales from COSELA and $17.7 million of license revenue for the six
months ended June 30, 2021, and $45.3 million of license revenue for the year
ended December 31, 2020. To date, we have financed our operations primarily
through the sale of equity securities, our loan agreement with Hercules Capital,
Inc., and licensing arrangements. Under our licensing arrangements, we are
eligible to receive certain development and sales-based milestones. Our ability
to earn these milestones and the timing of achieving these milestones is
primarily dependent upon the outcome of the licensee's activities and is
uncertain at this time.
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As of June 30, 2021, we had cash and cash equivalents of $244.0 million. Since
inception we have incurred net losses. As of June 30, 2021 we had an accumulated
deficit of $502.0 million. Substantially all of our net losses have resulted
from costs incurred in connection with our research and development programs,
our commercial launch preparations, and from general and administrative expenses
associated with our operations. We expect to continue to incur significant
expenses and increasing operating losses. We expect our research and
development, commercial activities, and general and administrative expenses will
continue to increase in connection with our ongoing and future activities as we:
• continue development of our product candidates, including initiating additional
clinical trials;
• identify and develop new product candidates;
• seek marketing approvals for our product candidates that successfully complete
clinical trials;
• grow our sales, marketing and distribution infrastructure to commercialize
COSELA and any future products for which we may obtain marketing approval;
• achieve market acceptance of our product candidates in the medical community
and with third-party payors;
• maintain, expand and protect our intellectual property portfolio;
• hire additional personnel;
• enter into collaboration arrangements, if any, for the development of our
product candidates or in-license other products and technologies;
• add operational, financial and management information systems and personnel,
including personnel to support our product development and planned future
commercialization efforts; and
• continue to incur increased costs as a result of operating as a public company.
License agreement with the University of Illinois
In November 2016, and as amended in March 2017, we entered into a license
agreement with the Board of Trustees of the University of Illinois, ("the
University"). Pursuant to the license agreement, as amended, the University
licensed patent rights to us, with rights to sublicense, to make, have made,
use, import, sell and offer for sale SERDs, including rintodestrant, covered by
certain patent rights owned by the University. The rights licensed to us are
exclusive, worldwide, non-transferable rights, for all fields of use. Under the
terms of the agreement, as amended, we paid a one-time only, non-refundable
upfront fee of $0.5 million, and are required to pay the University low
single-digit royalties on all net sales of products and a share of any
sublicensing revenues. We are also obligated to pay annual maintenance fees,
which are fully creditable against any royalty payments made by us. In addition,
we may also be required to pay the University milestone payments of up to an
aggregate of $2.6 million related to the initiation and execution of clinical
trials and the first commercial sale of a product and the first commercial sale
of a product in another country. To date, we have made milestone payments
totaling $0.6 million, of which $0 was incurred during the current quarter. We
will also be responsible for any future patent prosecution costs that may arise.
Components of our Results of Operations
Revenue
On February 12, 2021, COSELATM was approved by the FDA and we began generating
revenue for the product sales of COSELA in March 2021. Prior to the approval of
COSELA, our revenues have been derived from our license agreements.
We entered into an exclusive license agreement with Nanjing Simcere Dongyuan
Pharmaceutical Co., Ltd ("Simcere") in August 2020 and granted them the rights
to develop and commercialize trilaciclib in Greater China (mainland China, Hong
Kong, Macau, and Taiwan) (the "Simcere Territory"). We received an upfront
payment of $14.0 million (less applicable withholding taxes of $1.4 million) in
September 2020. Revenue was recognized once the transfer of the related
technology and know-how was completed in the fourth quarter of 2020. We have the
potential to receive $156.0 million upon reaching development and commercial
milestones, and receive tiered low double-digit royalties on annual net sales of
trilaciclib in the Simcere Territory. During the six months ended June 30, 2021,
three development milestones totaling $8.0 million (less applicable withholding
taxes of $0.8 million) were received and recognized as revenue.
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We entered into an exclusive license agreement with EQRx, Inc. ("EQRx") in July
2020 and granted them the rights to develop and commercialize lerociclib in the
U.S, Europe, Japan and all other global markets, excluding the Asia-Pacific
region (except Japan) (the "EQRx Territory"). We received an upfront payment of
$20.0 million in August 2020. This was recognized as revenue in September 2020
when we transferred the license and related technology and know-how. We have the
potential to receive $290.0 million upon reaching development and commercial
milestones, and receive tiered royalties ranging from mid-single digits to
mid-teens based on annual net sales of lerociclib in the EQRx Territory.
We entered into an exclusive license agreement with Genor Biopharma Co. Inc.
("Genor") in June 2020 and granted them the rights to develop and commercialize
lerociclib in the Asia-Pacific Region, excluding Japan (the "Genor Territory").
We received an upfront payment of $6.0 million in July 2020. This was recognized
as revenue in September 2020 when we transferred the license and related
technology and know-how. We have the potential to receive $40.0 million upon
reaching development and commercial milestones, and receive tiered royalties
ranging from high single to low double-digits based on annual net sales of
lerociclib in the Genor Territory. During the six months ended June 30, 2021,
one development milestone totaling $3.0 million was met and recognized as
revenue, and payment was received in April 2021.
We entered into an exclusive license agreement with ARC Therapeutics, LLC
("ARC") in May 2020. The Company granted ARC an exclusive, worldwide,
royalty-bearing license of its CDK2 inhibitor compounds in exchange for an
upfront payment and equity in ARC with a total value of approximately $2.1
million, which resulted in the recognition of related party revenue. The Company
is entitled to receive additional milestone payments and sales-based royalties,
and has right of first negotiation to re-acquire these assets.
Operating expenses
We classify our operating expenses into three categories: cost of goods sold,
research and development and selling, general and administrative. Personnel
costs, including salaries, benefits, bonuses, and stock-based compensation
expense, comprise a significant component of research and development and
general and administrative expense categories. We allocate expenses associated
with personnel costs based on the nature of work associated with these
resources. In addition, costs to sell and market COSELA are included within
selling, general and administrative expense categories.
Cost of goods sold
Cost of goods sold includes direct and indirect costs related to the
manufacturing and distribution of COSELA, including third-party manufacturing
costs, packaging services, freight-in, third-party logistics costs associated
with COSELA, and personnel costs. Cost of goods sold may also include period
costs related to certain inventory manufacturing services and inventory
adjustment charges.
Research and development expenses
The largest component of our total operating expenses since inception has been
research and development activities, including the preclinical and clinical
development of our product candidates.
Research and development costs are expensed as incurred. Our research and
development expense primarily consists of:
• salaries and personnel-related costs, including bonuses, benefits and any
stock-based compensation, for our scientific personnel performing or managing
out-sourced research and development activities;
• costs incurred under agreements with contract research organizations and
investigative sites that conduct preclinical studies and clinical trials;
• costs related to manufacturing pharmaceutical active ingredients and drug
products for preclinical studies and clinical trials;
• costs related to upfront and milestone payments under in-licensing agreements;
• fees paid to consultants and other third parties who support our product
candidate development;
• other costs incurred in seeking regulatory approval of our product candidates;
and
• allocated facility-related costs and overhead.
The successful development of our product candidates is highly uncertain.
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.
Accordingly, we expect research and development costs to increase significantly
for the foreseeable future as programs progress. However, we do not believe that
it is possible at this time to accurately project total program-specific
expenses through commercialization. We are also unable to predict when, if ever,
material net cash inflows will commence from our product candidates to offset
these expenses. Our expenditures on current and future preclinical and clinical
development
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programs are subject to numerous uncertainties in timing and cost to completion.
The duration, costs and timing of clinical trials and development of our product
candidates will depend on a variety of factors, including:
• the scope, rate of progress, and expenses of our ongoing as well as any
additional clinical trials and other research and development activities;
• future clinical trial results;
• achievement of milestones requiring payments under our in-licensing agreements;
• uncertainties in clinical trial enrollment rates or drop-out or discontinuation
rates of patients;
• potential additional studies requested by regulatory agencies;
• significant and changing government regulation; and
• the timing and receipt of any regulatory approvals.
We track research and development expenses on a program-by-program basis only
for clinical-stage product candidates. Preclinical research and development
expenses and chemical manufacturing research and development expenses are not
assigned or allocated to individual development programs. As of the second
quarter of 2021, we had two clinical-stage product candidates, trilaciclib and
rintodestrant.
Selling, general and administrative expenses
Selling, general and administrative expenses consist of personnel costs,
allocated expenses and other expenses for outside professional services,
including legal, audit and accounting services. Personnel costs consist of
salaries, bonuses, benefits and stock-based compensation. Other general and
administrative expenses include facility-related costs not otherwise allocated
to research and development expense, professional fees, commercialization costs,
expenses associated with obtaining and maintaining patents and costs of our
information systems. We anticipate that our general and administrative expenses
will continue to increase in the future as we increase our headcount to support
our continued research and development and commercialization of COSELATM.
We expect to continue to incur additional selling, general and administrative
expenses in the future in connection with the commercialization of COSELA, as we
support continued research and development activities, and as we support our
operations in a public company environment, including expenses related to
compliance with the rules and regulations of the SEC and Nasdaq, additional
insurance expenses, and expenses related to investor relations activities.
Total other income (expense), net
Total other income (expense), net consists of interest income earned on cash and
cash equivalents and interest expenses incurred under our loan and security
agreement with Hercules.
Income taxes
To date, we have not been required to pay U.S. federal or state income taxes
because we have not generated taxable income. Income tax expense recognized in
2021 relate to the foreign withholding taxes incurred as a result of the
milestone payments received from the Simcere license agreement during the year.
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Results of Operations
Comparison of the three months ended June 30, 2021 and June 30, 2020
Three Months Ended June 30, Change
2021 2020 $
(in thousands)
Revenues:
Product sales, net $ 2,532 $ - $ 2,532
License revenue 4,072 2,140 1,932
Total revenues 6,604 2,140 4,464
Operating expenses:
Cost of goods sold 808 - 808
Research and development 18,752 18,531 221
Selling, general and administrative 25,236 14,431 10,805
Total operating expenses 44,796 32,962 11,834
Loss from operations (38,192 ) (30,822 ) (7,370 )
Other income (expense):
Interest income 9 91 (82 )
Interest expense (927 ) (265 ) (662 )
Other income (expense) (92 ) (214 ) 122
Total other income (expense), net (1,010 ) (388 ) (622 )
Loss before income taxes (39,202 ) (31,210 ) (7,992 )
Income tax expense 220 - 220
Net loss $ (39,422 ) $ (31,210 ) $ (8,212 )
Product sales, net
Product sales, net was $2.5 million and $0 for the three months ended June 30,
2021 and 2020, respectively. The revenue for the three months ended June 30,
2021 related to the product sales of COSELA. We received FDA approval of COSELA
on February 12, 2021 and product was commercially available beginning March 2,
2021.
License Revenue
License revenue was $4.1 million and $2.1 million for the three months ended
June 30, 2021 and 2020, respectively. The increase of $2 million, or 90%, was
primarily due to revenue recognized from a development milestone related to
Simcere, delivery of clinical drug supply and manufacturing services to Simcere,
EQRx and Genor, and amounts to be reimbursed by EQRx for the costs associated
with the two primary lerociclib clinical trials.
Cost of goods sold
Cost of goods sold was $0.8 million and $0 for the three months ended June 30,
2021 and June 30, 2020, respectively, which includes our third-party logistics
costs for the sales of COSELA, inventory overhead costs, and personnel costs.
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Research and development
Research and development expenses were $18.8 million for the three months ended
June 30, 2021 compared to $18.5 million for the three months ended June 30,
2020. The increase of $0.3 million, or 2%, was primarily due to an increase in
clinical spend of $7.9 million, driven by the Company's new clinical trials,
which is offset by a decrease of $7.5 million in expense recognized for the
manufacturing of active pharmaceutical ingredients and drug product to support
clinical trials, and a decrease of $0.2 million in preclinical and discovery
costs. The following table summarizes our research and development expenses
allocated to trilaciclib, rintodestrant, lerociclib and unallocated research and
development expenses for the periods indicated:
Three Months Ended June 30,
2021 2020
(in thousands)
Clinical Program Expenses-trilaciclib $ 14,973 $ 5,617
Clinical Program Expenses-rintodestrant
531 1,374
Clinical Program Expenses-lerociclib 968 1,544
Chemical Manufacturing and Development 1,505 9,034
Discovery, Pre-Clinical and Other Expenses 775 962
Total Research and Development Expenses $ 18,752 $ 18,531
Selling, general and administrative
Selling, general and administrative expenses were $25.2 million for the three
months ended June 30, 2021 compared to $14.4 million for the three months ended
June 30, 2020. The increase of $10.8 million, or 75%, was due to an increase of
$5.9 million in commercialization activities, an increase of $3.9 million in
personnel costs due to increased headcount, of which $1.8 million related to
non-cash stock compensation expense, an increase of $1.2 million in information
technology spend, and an increase of $0.3 million in medical affairs costs
related to trilaciclib, which was partially offset by a decrease of $0.5 million
in professional services and other administrative costs.
Total other income (expense), net
Total other income (expense), net was $(1.0) million for the three months ended
June 30, 2021 as compared to $(0.4) million for the three months ended June 30,
2020. The decrease of $0.6 million, or -160%, was primarily due to the lower
balance of money market funds due to cash used in operating activities and
changes in interest rates during the three months ended June 30, 2021 as
compared to the three months ended June 30, 2020 and interest expense on our
loan payable.
Income tax expense
Income tax expense was $0.2 million for the three months ended June 30, 2021 as
compared to $0 for the three months ended June 30, 2020. The increase was
related to the foreign withholding taxes incurred as a result of the development
milestone payments received from the Simcere license agreement during the
quarter.
Results of Operations
Comparison of the six months ended June 30, 2021 and June 30, 2020
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Six Months Ended June 30, Change
2021 2020 $
(in thousands)
Revenues:
Product sales, net $ 3,141 $ - $ 3,141
License revenue 17,681 2,140 15,541
Total revenues 20,822 2,140 18,682
Operating expenses:
Cost of goods sold 1,051 - 1,051
Research and development 35,292 38,965 (3,673 )
Selling, general and administrative 48,206 25,818 22,388
Total operating expenses 84,549 64,783 19,766
Loss from operations (63,727 ) (62,643 ) (1,084 )
Other income (expense):
Interest income 28 872 (844 )
Interest expense (1,675 ) (265 ) (1,410 )
Other income (expense) (132 ) (197 ) 65
Total other income (expense), net (1,779 ) 410 (2,189 )
Loss before income taxes (65,506 ) (62,233 ) (3,273 )
Income tax expense 358 - 358
Net loss $ (65,864 ) $ (62,233 ) $ (3,631 )
Product sales, net
Product sales, net was $3.1 million and $0 for the six months ended June 30,
2021 and June 30, 2020, respectively. The revenue for the six months ended
June 30, 2021, related to the product sales of COSELA. We received FDA approval
of COSELA on February 12, 2021 and product was commercially available beginning
March 2, 2021.
License Revenue
License revenue was $17.7 million and $2 million for the six months ended
June 30, 2021 and June 30, 2020, respectively. The increase in revenue is due to
revenue recognized from development milestones related to the Simcere and Genor
license agreements, delivery of clinical drug supply and manufacturing services
to Simcere, EQRx and Genor, and amounts to be reimbursed by EQRx for the costs
associated with the two primary lerociclib clinical trials.
Cost of goods sold
Cost of goods sold was $1.1 million and $0 for the six months ended June 30,
2021 and June 30, 2020, respectively, which include our third-party logistics
costs for the sales of COSELA, inventory overhead costs, and personnel costs.
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Research and development
Research and development expenses were $35.3 million for the six months ended
June 30, 2021 compared to $39.0 million for the six months ended June 30, 2020.
The decrease of $3.7 million, or -9%, was primarily due to a decrease of
$10.9 million in costs for manufacturing of active pharmaceutical ingredients
and drug product to support clinical trials, as well as a decrease of $0.9
million in external costs related to discovery, pre-clinical and other
development costs. The decrease was offset by an increase of $8.1 million in
spend for clinical trials driven by the Company's new clinical trials. The
following table summarizes our research and development expenses allocated to
trilaciclib, rintodestrant, lerociclib and unallocated research and development
expenses for the periods indicated:
Six Months Ended June 30,
2021 2020
(in thousands)
Clinical Program Expenses-trilaciclib $ 26,721 $ 15,116
Clinical Program Expenses-rintodestrant
1,896 3,745
Clinical Program Expenses-lerociclib 1,995 3,595
Chemical Manufacturing and Development 3,250 14,184
Discovery and Pre-clinical Expenses 1,430 2,325
Total Research and Development Expenses $ 35,292 $ 38,965
Selling, general and administrative
Selling, general and administrative expenses were $48.2 million for the six
months ended June 30, 2021 compared to $25.8 million for the six months ended
June 30, 2020. The increase of $22.4 million, or 87%, was due to an increase of
$12.5 million in commercialization activities, an increase of $8.0 million in
personnel costs due to increased headcount, of which $3.3 million related to
non-cash stock compensation expense, an increase of $1.7 million in information
technology spend, and an increase of $0.2 million in expenses related to
professional services and other administrative costs.
Total other income (expense), net
Total other income (expense), net was $(1.8) million for the six months ended
June 30, 2021 as compared to $0.4 million for the six months ended June 30,
2020. The decrease of $2.2 million, or -534%, was primarily due to the lower
balance of money market funds due to cash used in operating activities and
changes in interest rates during the six months ended June 30, 2021, as compared
to the six months ended June 30, 2020, and interest expense on our loan payable.
Income tax expense
Income tax expense was $0.4 million for the six months ended June 30, 2021 as
compared to $0 for the six months ended June 30, 2020. The increase was related
to the foreign withholding taxes incurred as a result of the development
milestone payments received from the Simcere license agreement during the year.
Liquidity and Capital Resources
We have incurred cumulative losses and negative cash flows from operations since
our inception in 2008. As of June 30, 2021, we had an accumulated deficit of
$502.0 million. We anticipate that we will continue to incur losses.
As of June 30, 2021, we had cash and cash equivalents of $244.0 million. To
date, we have funded our operations primarily through proceeds from our initial
public offering, our follow-on stock offerings, our debt agreement with Hercules
Capital, and proceeds from our license agreements. Under our licensing
arrangements, we are eligible to receive certain development and sales-based
milestones. Our ability to earn these milestones and the timing of achieving
these milestones is primarily dependent upon the outcome of the licensee's
activities and are uncertain at this time.
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Shelf registration statement
On July 2, 2021, we filed an automatically effective shelf registration
statement with the Securities and Exchange Commission. Each issuance under the
shelf registration statement will require the filing of a prospectus supplement
identifying the amount and terms of securities to be issued. The registration
statement does not limit the amount of securities that may be issued
thereunder. Our ability to issue securities is subject to market conditions and
other factors. This registration statement will expire on July 2, 2024, three
years after its date of effectiveness.
At-the-market offering
On June 15, 2018, we entered into a sales agreement for "at the market
offerings" with Cowen and Company, LLC ("Cowen"), which allowed us to issue and
sell shares of common stock pursuant to a shelf registration statement for total
gross sales proceeds of up to $125.0 million from time to time through Cowen,
acting as our agent. Between June 18, 2018 and August 2, 2018, we sold 752,008
shares of common stock pursuant to this agreement resulting in $36.1 million in
net proceeds, realizing $12.1 million in the second quarter of 2018 and the
remaining $24.0 million by August 2, 2018.
Between January 14, 2021 and February 9, 2021, we sold 3,513,027 shares of
common stock pursuant to this agreement resulting in $86.4 million in net
proceeds. As of February 9, 2021, we used the entirety of the remaining
availability under the 2018 sales agreement with Cowen.
On July 2, 2021, we entered into a new sales agreement for "at the market
offerings" with Cowen, which allows us to issue and sell shares of common stock
pursuant to a shelf registration statement for total gross sales proceeds of up
to $150.0 million from time to time through Cowen, acting as our agent. We have
not sold any shares of common stock to date under the 2021 sales agreement.
Loan and Security Agreement with Hercules
On May 29, 2020, we entered into a loan and security agreement with Hercules
Capital, Inc. ("Hercules") under which Hercules has agreed to lend us up to
$100.0 million, to be made available in a series of tranches, subject to
specified conditions. We borrowed $20.0 million at loan closing. The term of the
loan is approximately 48 months, with an original maturity date of June 1, 2024.
No principal payments are due during an interest-only period, commencing on the
initial borrowing date and continuing through June 1, 2022. Per the terms of the
loan agreement, upon reaching the performance milestone, the interest only
period was to be extended through January 1, 2023 and we will now repay the
principal balance and interest of the advances in equal monthly installments
through the maturity date of June 1, 2025. On March 31, 2021, we entered into
the First Amendment to Loan and Security Agreement with Hercules where we drew
the remaining $10.0 million of the first tranche along with amending the
interest rate and the financial covenants.
Genor License Agreement
On June 15, 2020, we entered into an exclusive license agreement with Genor
Biopharma Co. Inc. ("Genor") for the development and commercialization of
lerociclib in the Asia-Pacific region, excluding Japan (the "Genor Territory").
Under the license agreement, we granted to Genor an exclusive, royalty-bearing,
non-transferable license, with the right to grant sublicenses, to develop,
obtain, hold and maintain regulatory approvals for, and commercialize
lerociclib, in the Genor Territory.
Under the license agreement, Genor agreed to pay us a non-refundable, upfront
cash payment of $6.0 million with the potential to pay an additional $40.0
million upon reaching certain development and commercial milestones. In
addition, Genor will pay us tiered royalties ranging from high single to low
double-digits based on annual net sales of lerociclib in the Genor Territory.
The upfront cash payment was received in July 2020. In September 2020, we
transferred to Genor the related technology and know-how that is necessary to
develop, seek regulatory approval for, and commercialize lerociclib in the Genor
Territory. Genor will be responsible for the development of the product in the
Genor Territory and will be responsible, at its sole cost, for obtaining supply
of lerociclib to meet its development, regulatory approval, and
commercialization obligations under the agreement. In the first half of 2021, we
recognized revenue related to a development milestone of $3.0 million, for which
cash was received in April 2021.
EQRx License Agreement
On July 22, 2020, we entered into an exclusive license agreement with EQRx, Inc.
("EQRx") for the development and commercialization of lerociclib in the U.S.,
Europe, Japan and all other global markets, excluding the Asia-Pacific region
(except Japan) (the "EQRx Territory"). Under the license agreement, we granted
to EQRx an exclusive, royalty-bearing, non-transferable license, with the right
to grant sublicenses, to develop, obtain, hold and maintain regulatory approvals
for, and commercialize lerociclib in the EQRx Territory.
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Under the license agreement, EQRx agreed to pay us a non-refundable, upfront
cash payment of $20.0 million with the potential to pay an additional $290.0
million upon reaching certain development and commercial milestones. In
addition, EQRx will pay us tiered royalties ranging from mid-single digits to
mid-teens based on annual net sales of lerociclib in the EQRx Territory. The
upfront cash payment was received in August 2020. In September 2020, we
transferred to EQRx the related technology and know-how that is necessary to
develop, seek regulatory approval for, and commercialize lerociclib in the EQRx
Territory. EQRx will be responsible for the development of the product in the
EQRx Territory. We will continue until completion, as the clinical trial
sponsor, its two primary clinical trials at EQRx's sole cost and expense. EQRx
will reimburse us for all of its out-of-pocket costs incurred after the
effective date of the license agreement in connection with these clinical
trials. We will invoice EQRx within 30 days following the end of the quarter,
and EQRx will pay within 30 days after its receipt of such invoice.
Simcere License Agreement
On August 3, 2020, we entered into an exclusive license agreement with Nanjing
Simcere Dongyuan Pharmaceutical Co., Ltd ("Simcere") for the development and
commercialization of trilaciclib in all indications in Greater China (mainland
China, Hong Kong, Macau, and Taiwan) (the "Simcere Territory"). Under the
license agreement, we granted to Simcere an exclusive, royalty-bearing,
non-transferable license, with the right to grant sublicenses, to develop,
obtain, hold and maintain regulatory approvals for, and commercialize
trilaciclib in the Simcere Territory.
Under the license agreement, Simcere agreed to pay us a non-refundable, upfront
cash payment of $14.0 million with the potential to pay an additional $156.0
million upon reaching certain development and commercial milestones. In
addition, Simcere will pay us tiered low double-digit royalties on annual net
sales of trilaciclib in the Simcere Territory. The upfront payment of $14.0
million (less applicable withholding taxes of $1.4 million) was received in
September 2020. In return, we will furnish to Simcere the related technology and
know-how that is necessary to develop, seek regulatory approval for, and
commercialize trilaciclib in the Simcere Territory. Simcere will be responsible
for all development and commercialization costs in its territory and may be able
to participate in global clinical trials as agreed upon by the companies. In the
first half of 2021, we received three development milestone payments totaling
$8.0 million (less applicable withholding taxes of $0.8 million).
Cash flows
The following table summarizes our cash flows for the periods indicated:
Six Months Ended June 30, Change
2021 2020 $
(in thousands)
Net cash used in operating activities $ (63,368 ) $ (55,873 ) $ (7,495 )
Net cash provided/used in investing
activities - - -
Net cash provided by financing activities 100,023 20,932 79,091
Net change in cash, cash equivalents, and
restricted cash $ 36,655 $ (34,941 ) $ 71,596
Net cash used in operating activities
During the six months ended June 30, 2021, net cash used in operating activities
was $63.4 million which consisted primarily of a net loss of $65.9 million and a
decrease in net operating assets and liabilities of $10.2 million, partially
offset by non-cash stock compensation expense of $11.6 million, $0.2 million of
depreciation expense, $0.5 million in amortization of debt issuance costs, and
$0.4 million of non-cash interest expense.
During the six months ended June 30, 2020, net cash used in operating activities
was $55.9 million, which consisted primarily of a net loss of $62.2 million, a
decrease in net operating assets and liabilities of $2.5 million, and a decrease
of $0.9 million in net equity interest, partially offset by $9.1 million of
non-cash stock compensation expense, $0.3 million of depreciation expense, and
$0.3 of non-cash interest expense.
Net cash used in operating activities decreased by $7.5 million as compared to
the six months ended June 30, 2020 primarily due to an increase in net loss of
$3.7 million and an increase of accounts receivable of $4.7 million, offset by
an increase in non-cash stock comp expense of $2.5 million.
Net cash used in investing activities
During the six months ended June 30, 2021 and the six months ended June 30,
2020, there was no cash provided or used in investing activities.
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Net cash provided by financing activities
During the six months ended June 30, 2021, net cash provided by financing
activities was $100.0 million, which consisted of $86.4 million in net proceeds
from our ATM offering after deducting cash paid during the year for underwriting
discounts and commissions and other expenses, $9.9 million in net proceeds from
debt funding, and $3.7 million from proceeds from the exercise of stock options.
During the six months ended June 30, 2020, net cash provided by financing
activities was $20.9 million, which consisted of $19.5 million in net proceeds
from debt funding and $1.4 million from the exercise of stock options.
Operating capital requirements and plan of operations
We anticipate that we will continue to generate losses for the foreseeable
future, and we expect the losses to increase as we continue the development of
and seek regulatory approvals for our product candidates, and continue to
commercialize COSELATM. We are subject to all of the risks inherent in the
development of new products, and we may encounter unforeseen expenses,
difficulties, complications, delays and other unknown factors that may adversely
affect our business. We expect to incur additional costs associated with
operating as a public company and we anticipate that we will need substantial
additional funding in connection with our continuing operations.
We believe that our existing cash and cash equivalents will be sufficient to
fund our projected cash needs for at least the next 12 months.
We have based our projections of operating capital requirements on assumptions
that may prove to be incorrect and we may use all of our available capital
resources sooner than we expect. Because of the numerous risks and uncertainties
associated with research, development and commercialization of pharmaceutical
products, we are unable to estimate the exact amount of our operating capital
requirements. Our future funding requirements will depend on many factors,
including, but not limited to:
• the scope, progress, results and costs of nonclinical development,
laboratory testing and clinical trials for our product candidates;
• the scope, prioritization and number of our research and development
programs;
• the costs, timing and outcome of regulatory review of our product candidates;
• the extent to which we enter into non-exclusive, jointly funded clinical
research collaboration arrangements, if any, for the development of our
product candidates in combination with other companies' products;
• our ability to establish such collaborative co-development arrangements on
favorable terms, if at all;
• the achievement of milestones or occurrence of other developments that
trigger payments under our license agreements and any collaboration
agreements into which we enter;
• the extent to which we are obligated to reimburse, or entitled to
reimbursement of, clinical trial costs under future collaboration
agreements, if any;
• the extent to which we acquire or in-license product candidates and
technologies, such as rintodestrant, and the terms of such in-licenses;
• the costs of future commercialization activities, including product sales,
marketing, manufacturing and distribution, for any of our product
candidates for which we receive marketing approval;
• revenue, if any, received from commercial sales of our product candidates;
and
• the costs of preparing, filing and prosecuting patent applications,
maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims.
Until such time, if ever, as we can generate substantial revenues, we expect to
finance our cash needs through a combination of equity offerings, debt
financings, other third-party funding, marketing and distribution arrangements
and other collaborations, strategic alliances and licensing arrangements. We do
not have any committed external source of funds except for amounts included
under our licensing arrangements and the loan agreement with Hercules. To the
extent that we raise additional capital through the sale of equity or
convertible debt securities, our stockholders' 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, if available, may involve agreements that include covenants limiting
or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring dividends. If we raise
funds through additional collaborations, strategic alliances or licensing
arrangements with third parties, we may have to relinquish valuable rights to
our technologies, future revenue streams, research programs or product
candidates or to grant licenses on terms that may not be favorable to us. If we
are unable to raise additional funds when needed, we may be required to delay,
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limit, reduce or terminate our product development or future commercialization
efforts or grant rights to develop and market product candidates that we would
otherwise prefer to develop and market ourselves.
Contractual Obligations, Commitments and Contingencies
There have been no material changes to our contractual obligations during the
current period from those disclosed in our Annual Report on Form 10-K for the
year ended December 31, 2020 (the "2020 Form 10-K).
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 under applicable SEC rules.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America, or U.S. GAAP. The preparation of our financial statements requires us
to make estimates, judgments, and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
as of the dates of the balance sheet, and the reported amount of expenses
incurred during the reporting period. In accordance with U.S. GAAP, we evaluate
our estimates and judgments on an ongoing basis. Our estimates are based on our
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. Actual results may differ from these
estimates under different assumptions or conditions.
We believe that our accounting policies are critical to the process of making
significant judgments and estimates in the preparation of our financial
statements and understanding and evaluating our reported financial results. We
discussed our accounting policies and significant assumptions used in our
estimates in Note 2 of our audited financial statements included in our 2020
Form 10-K. There have been no material changes during the six months ended
June 30, 2021 to our critical accounting policies, significant judgments and
estimates disclosed in our 2020 Form 10-K.
Recent Accounting Pronouncements
Note 2 to our unaudited condensed financial statements included in Item 1 of
this Quarterly Report on Form 10-Q does not include any recently issued
accounting pronouncements that are applicable to our Company or impact our
financial statements.
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