Certain statements contained in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases "would be," "will allow," "intends to," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," or similar expressions, or the negative of such words or phrases, are intended to identify "forward-looking statements." We have based these forward-looking statements on our current expectations and projections about future events. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include those below and elsewhere in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K, particularly in Part I - Item 1A, "Risk Factors," and our other filings with theSecurities and Exchange Commission . Statements made herein are as of the date of the filing of this Form 10-Q with theSecurities and Exchange Commission and should not be relied upon as of any subsequent date. Unless otherwise required by applicable law, we do not undertake, and we specifically disclaim, any obligation to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes that appear in Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes for the year endedDecember 31, 2019 , which are included in our Annual Report on Form 10-K filed with theSecurities and Exchange Commission onFebruary 28, 2020 . Overview
We are a clinical-stage biotechnology company focused on the discovery and development of novel glycomimetic drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. We are developing a pipeline of glycomimetics, which are molecules that mimic the structure of carbohydrates involved in important biological processes, to inhibit disease-related functions of carbohydrates such as the roles they play in inflammation, cancer and infection. We believe this represents an innovative approach to drug discovery to treat a wide range of diseases. We are focusing our efforts on drug candidates for rare diseases that we believe will qualify for orphan drug designation. Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding of the role carbohydrates play in key biological processes. Most human proteins are modified by the addition of complex carbohydrate structures to the surface of such proteins, which affects the functions of the proteins and their interactions with other molecules. Our initial research and development efforts have focused on drug candidates targeting selectins, which are proteins that serve as adhesion molecules and bind to carbohydrates that are involved in the inflammatory component and progression of a wide range of diseases, including hematologic disorders, cancer and cardiovascular disease. For example, we believe that members of the selectin family play a key role in tumor metastasis and resistance to chemotherapy. Inhibiting specific carbohydrates from binding to selectins has long been viewed as a potentially attractive approach for therapeutic intervention. The ability to successfully develop drug-like compounds that inhibit binding with selectins, known as selectin antagonists, has historically been limited by the complexities of carbohydrate chemistry. We believe our expertise in carbohydrate chemistry enables us to design selectin antagonists and other glycomimetics that may inhibit the disease-related functions of certain carbohydrates in order to develop novel drug candidates to address orphan diseases with high unmet medical need.
Our lead glycomimetic drug candidate, uproleselan, is a specific E-selectin inhibitor that we are developing to be used in combination with chemotherapy to treat patients with acute myeloid leukemia, or AML, a life-threatening hematologic cancer, and potentially other hematologic cancers. We completed an initial Phase 1 trial in healthy volunteers for uproleselan, and inMay 2017 we completed enrollment in a Phase 1/2 clinical trial in patients with either relapsed/refractory or de novo/secondary AML. InDecember 2018 , at the annual meeting of theAmerican Society of Hematology , or ASH, we presented clinical data from this Phase 1/2 clinical trial that showed high remission rates, improved overall survival and improved event-free survival, all compared to historical controls derived from third-party clinical trials evaluating treatment with standard chemotherapy. 18 Table of Contents InMarch 2018 , we announced our design for a randomized, double-blind, placebo-controlled Phase 3 clinical trial to evaluate uproleselan in individuals with relapsed/refractory AML, which design is aligned with guidance received from theU.S. Food and Drug Administration , or FDA. Based on consultations with the FDA, the single pivotal trial is planned to enroll approximately 380 adult patients with relapsed or refractory AML at centers inthe United States ,Canada ,Europe andAustralia . We dosed the first patient in this trial inNovember 2018 . The primary efficacy endpoint will be overall survival; importantly, the FDA has advised us that data on overall survival will not need to be censored for transplant in the primary efficacy analysis, meaning that patients who proceed to transplant will continue to be included as part of the survival analysis. All patients will be treated with standard chemotherapy of either MEC (mitoxantrone, etoposide and cytarabine) or FAI (fludarabine, cytarabine and idarubicin), with approximately one-half of the patients randomized to receive uproleselan in addition to chemotherapy. Patients receiving uproleselan will be dosed for one day prior to initiation of chemotherapy, twice a day through the chemotherapy regimen, and then for two days after the end of chemotherapy, which was the same regimen as in the Phase 1/2 trial. The dose regimen will be fixed, rather than weight-based, which we believe will simplify administration. We plan to offer up to three cycles of consolidation therapy in both arms of the trial for patients who achieve remission. We believe that multiple cycles of treatment in patients who respond may drive an even deeper response in patients treated with uproleselan. If this is the case, it could lengthen the duration of remission with potential for additional benefit on survival. Key secondary endpoints of the Phase 3 trial will include the incidence of severe mucositis and remission rate, which will be assessed in a hierarchical fashion which may provide supportive data. The recent imposition of "lockdown," "social distancing" and "shelter in place" directives by state and federal governments inthe United States as well as governments in other regions of the world in response to the COVID-19 pandemic, including in locations in which our Phase 3 clinical trial of uproleselan is being conducted, has resulted in slowed clinical site initiation, patient recruitment and enrollment rates inApril 2020 . We cannot at this time fully assess whether these slower rates reflect a long- or short-term change that could potentially materially adversely impact the timing of completion of enrollment of our Phase 3 clinical trial. We continue to closely monitor the COVID-19 situation and any potential impact to our planned activities. Uproleselan received orphan drug designation from the FDA inMay 2015 for the treatment of patients with AML. InJune 2016 , uproleselan received fast track designation from the FDA for the treatment of adult patients with relapsed or refractory AML and elderly patients aged 60 years or older with AML. InMay 2017 , uproleselan received Breakthrough Therapy designation from the FDA for the treatment of adult patients with relapsed or refractory AML. InMay 2017 , theEuropean Commission , based on a favorable recommendation from theEMA Committee for Orphan Medicinal Products , granted orphan designation for uproleselan for the treatment of patients with AML. InJune 2018 , we received a response from the EMA to our request for scientific advice with respect to our Marketing Authorization Application, or MAA, development plan. Based on this guidance, we are conducting the global Phase 3 clinical trial and intend to pursue regulatory approval of uproleselan for the treatment of AML. InMay 2018 , we signed aCooperative Research and Development Agreement, or CRADA, with theNational Cancer Institute , or NCI, part of theNational Institutes of Health . Under the terms of the CRADA, we will collaborate with both the NCI and theAlliance for Clinical Trials in Oncology to conduct a Phase 2/3 randomized, controlled clinical trial testing the addition of uproleselan to a standard cytarabine/daunorubicin chemotherapy regimen (7&3) in older adults with previously untreated AML who are suitable for intensive chemotherapy. The primary endpoint will be overall survival, which is defined as the time from the date of randomization to death from any cause, with a planned interim analysis based on event-free survival after the first 250 patients have been enrolled in the trial. The full trial is expected to enroll approximately 670 patients. Under the terms of the CRADA, the NCI may also fund additional research, including clinical trials involving pediatric patients with AML as well as preclinical experiments and clinical trials evaluating alternative populations and chemotherapy regimens. We will supply uproleselan as well as provide financial support to augment data analysis and monitoring for the Phase 3 program. The trial opened for enrollment in early 2019 and enrolled the first patient inApril 2019 . As a potential life-cycle extension to uproleselan, we have rationally designed an innovative antagonist of E-selectin, GMI-1687, that could be suitable for subcutaneous administration. When given by subcutaneous injection in animal models, GMI-1687 has been observed to have equivalent activity to uproleselan, but at an approximately 1,000-fold lower dose. We believe that GMI-1687 could be developed to broaden the clinical usefulness of an E-selectin antagonist to conditions where outpatient treatment is preferred or required. We are currently conducting preclinical 19 Table of Contents
studies with GMI-1687 to support our planned submission of an investigational new drug application, or IND, to the FDA.
We are developing an additional drug candidate, GMI-1359, that simultaneously targets both E-selectin and a chemokine receptor known as CXCR4. Since E-selectin and CXCR4 are implicated in the retention of cancer cells in the bone and bone marrow, we believe that targeting both E-selectin and CXCR4 with a single compound could improve efficacy in the treatment of cancers that affect the bone and bone marrow, particularly solid tumors that have a propensity to metastasize to bone, such as breast and prostate cancer. We completed a Phase 1 randomized, double-blind, placebo-controlled, single-dose escalation trial of GMI-1359 in healthy volunteers. In this trial, volunteer participants received a single injection of either GMI-1359 or placebo, after which they were evaluated for safety, tolerability and pharmacokinetics, or PK. This trial was conducted at a single site inthe United States . GMI-1359 was generally well tolerated in this trial, with no participants experiencing serious adverse events. In the fourth quarter of 2019, we initiated a Phase 1b trial of GMI-1359 in hormone receptor positive breast cancer patients whose tumors have spread to bone, and the first patient was dosed inJanuary 2020 . The trial is being conducted atDuke University and will evaluate dose escalation as well as safety, PK and pharmacodynamics markers of biologic activity in these patients. InJanuary 2020 , the FDA granted GMI-1359 orphan drug designation and rare pediatric disease designation for the treatment of osteosarcoma, a rare cancer affecting approximately 900 adolescents each year inthe United States . These designations are expected to make GMI-1359 eligible for priority review by the FDA. In addition to our programs described above, we are also advancing other preclinical-stage programs. These programs include small-molecule glycomimetic compounds that inhibit the protein galectin-3, which we believe may have potential to be used for the treatment of fibrosis, cancer and cardiovascular disease.
We previously developed another glycomimetic drug candidate, rivipansel, a pan-selectin antagonist for the potential treatment of vaso-occlusive crisis, a debilitating and painful condition that occurs periodically throughout the life of a person with sickle cell disease, or SCD. Rivipansel received fast track designation from the FDA as well as orphan drug designation from the FDA inthe United States and from theEuropean Medicines Agency , or EMA, in theEuropean Union . We entered into an exclusive license agreement with Pfizer Inc., or the Pfizer Agreement, for Pfizer to further develop, obtain regulatory approval and potentially commercialize rivipansel worldwide. Pfizer conducted a pivotal Phase 3 clinical trial to evaluate the efficacy and safety of rivipansel in patients aged six and older with SCD who were hospitalized for a vaso-occlusive crisis and required treatment with intravenous opioids. The clinical trial did not meet its primary or key secondary efficacy endpoints, and Pfizer has terminated the Pfizer Agreement. The IND for rivipansel has been transferred back to us, and we are currently evaluating what, if any, next steps to take with respect to the rivipansel program after reviewing the Phase 3 data more completely. We commenced operations in 2003, and our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our glycomimetics platform, identifying potential drug candidates, undertaking preclinical studies and conducting, both alone and in collaboration with third parties, clinical trials of uproleselan, GMI-1359 and rivipansel. To date, we have financed our operations primarily through private placements of our securities, up-front and milestone payments under our license and collaboration agreements and the net proceeds from public offerings of common stock, including sales of common stock under at-the-market sales facilities withCowen and Company LLC , or Cowen. We have no approved drugs currently available for sale, and substantially all of our revenue to date has been revenue from up-front and milestone payments, although we have received nominal amounts of revenue under research grants. Since inception, we have incurred significant operating losses. We had an accumulated deficit of$266.1 million as ofMarch 31, 2020 , and we expect to continue to incur significant expenses and operating losses over at least the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will increase substantially as we:
· initiate and conduct our planned clinical trials of uproleselan, GMI-1359 and
GMI-1687, including fulfilling our funding and supply commitments related to
the clinical trial of uproleselan being conducted in collaboration with NCI;
20 Table of Contents
· conduct NDA-enabling activities related to manufacture, toxicology and clinical
pharmacology for our product candidates;
· manufacture additional uproleselan drug supplies for validation and prepare for
commercialization;
· seek to discover and develop additional drug candidates;
· seek regulatory approvals for any drug candidates that successfully complete
clinical trials;
· ultimately establish a sales, marketing and distribution infrastructure and
scale up external manufacturing capabilities to commercialize any drug
candidates for which we may obtain regulatory approval;
· maintain, expand and protect our intellectual property portfolio;
· hire additional clinical, quality control, regulatory and scientific personnel;
and
· add operational, financial and management information systems and personnel,
including personnel to support our drug development and potential future
commercialization efforts.
To fund further operations, we will need to raise capital. We may obtain additional financing in the future through the issuance of our common stock, through other equity or debt financings, potentially including the use of our at-the-market sales facility with Cowen, or through collaborations or partnerships with other companies, such as our recent collaboration with Apollomics. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could compromise our ability to execute on our business plan. For example, the current global COVID-19 pandemic presents material uncertainty and its disruption of the capital markets may have a material adverse impact on our ability to raise additional capital if we decided to do so. Although it is difficult to predict future liquidity requirements, we believe that our existing cash and cash equivalents will be sufficient to fund our operations into 2022. However, our ability to successfully transition to profitability will be dependent upon achieving a level of revenues adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities. COVID-19 Business Update With the global spread of the ongoing COVID-19 pandemic in the first quarter of 2020, we have implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on our employees and our business. While we are experiencing limited financial impacts at this time beyond the delays in recruitment in our ongoing uproleselan Phase 3 clinical trial, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, our business, financial condition, results of operations and growth prospects could be materially adversely affected. We continue to closely monitor the COVID-19 situation as we evolve our business continuity plans and response strategy. InMarch 2020 , our workforce transitioned to working remotely in accordance with federal and state declarations. We are currently preparing plans to reopen our office to allow employees to return to the office based on a phased approach that is consistent with federal and state guidelines, with a focus on employee safety and optimal work environment.
Our Collaboration and License Agreements
Apollomics InJanuary 2020 , we entered into an exclusive collaboration and license agreement with Apollomics (Hong Kong ) Limited, or Apollomics, for the development and commercialization of uproleselan and GMI-1687 in Mainland China,Hong Kong ,Macau andTaiwan , also known asGreater China . Under the terms of the agreement, Apollomics will be responsible for clinical development and commercialization inGreater China . We will also collaborate with Apollomics to advance the preclinical and clinical development of GMI-1687. We received an upfront cash payment of$9.0 million and, subject to the terms of the agreement, will be eligible to receive potential milestone payments totaling approximately$180.0 million , as well as tiered royalties ranging from the high single digits to 15%, as a percentage of net sales. Apollomics will be responsible for all costs related to development, regulatory approvals, and commercialization activities for uproleselan and GMI-1687 inGreater China , and we and Apollomics expect to enter 21 Table of Contents into clinical and commercial supply agreements with respect to our provision of uproleselan and GMI-1687 to Apollomics. We retain all rights for both compounds in the rest of the world. Pfizer InOctober 2011 , we entered into the Pfizer Agreement, under which we granted Pfizer an exclusive worldwide license to develop and commercialize products containing rivipansel for all fields and uses. Pfizer was required to use commercially reasonable efforts, at its expense, to develop, obtain regulatory approval for and commercialize rivipansel for SCD inthe United States . OnAugust 2, 2019 , Pfizer announced that its pivotal Phase 3 clinical trial to evaluate the efficacy and safety of rivipansel in patients aged six and older with SCD who were hospitalized for a vaso-occlusive crisis and required treatment with intravenous opioids did not meet its primary or key secondary efficacy endpoints. OnFebruary 5, 2020 , Pfizer delivered notice to us of its termination of the Pfizer Agreement, which termination was effective as ofApril 5, 2020 . Following the effective date of the termination of the Pfizer Agreement, we retain all rights to the potential future development and commercialization of rivipansel. We did not earn any revenue or receive any payments from Pfizer during the three months endedMarch 31, 2020 or 2019 and will not be eligible to receive any future payments from Pfizer following the termination of the Pfizer Agreement.
We entered into a research services agreement, or the Research Agreement, with theUniversity of Basel , or the University, for biological evaluation of selectin antagonists. While the scope of work under the Research Agreement ended in 2017, certain patents covering the rivipansel compound are subject to provisions of the Research Agreement. Under the terms of the Research Agreement, we owed the University 10% of any milestone and royalty payments received from Pfizer with respect to rivipansel. There were no payments due to the University for the three months endedMarch 31, 2020 or 2019, and as a result of the termination of the Pfizer Agreement, we do not expect to make any future payments to the University.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance withU.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to our revenue recognition, accrued research and development expenses, stock-based compensation expense and income taxes. We base our estimates on historical experience, known trends and events and various other factors that we believed 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 resources. Actual results may differ from these estimates and judgments under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates are reflected in our financial statements prospectively from the date of the change in estimate. We define our critical accounting policies as those accounting principles generally accepted inthe United States that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. For a description of our critical accounting policies, please see the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year endedDecember 31, 2019 . There have not been any material changes to our critical accounting policies sinceDecember 31, 2019 .
Components of Operating Results
Revenue
To date, we have not generated any revenue from the sale of our drug candidates and do not expect to generate any revenue from the sale of drugs in the near future. Substantially all of our historical revenue has consisted of upfront and milestone payments under the agreements with Pfizer and Apollomics. 22 Table of Contents Research and Development Research and development expenses consist of expenses incurred in performing research and development activities, including compensation and benefits for full-time research and development employees, facilities expenses, overhead expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, fees paid to CROs and other consultants and other outside expenses. Other preclinical research and platform programs include activities related to exploratory efforts, target validation, lead optimization for our earlier programs and our proprietary glycomimetics platform. Our research and development expenses have related primarily to the development of rivipansel, uproleselan and our other drug candidates. We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis because we are organized and record expense by functional department and our employees may allocate time to more than one development project. Accordingly, we only allocate a portion of our research and development expenses by functional area and by drug candidate. Research and development costs are expensed as incurred. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. Research and development activities are central to our business model. Drug 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 our research and development expenses to increase over the next several years as we seek to progress uproleselan, GMI-1359 and our other drug candidates into and through clinical development. However, it is difficult to determine with certainty the duration and completion costs of our current or future preclinical studies and clinical trials of our drug candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our drug candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval for any of our drug candidates.
The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety of factors that include:
· per patient trial costs; · the number of patients that participate in the trials; · the number of sites included in the trials; · the countries in which the trial is conducted;
· the length of time required to enroll eligible patients, which we expect to be
lengthened as a result of the ongoing COVID-19 pandemic;
· the number of doses that patients receive;
· the drop-out or discontinuation rates of patients;
· potential additional safety monitoring or other studies requested by regulatory
agencies;
· the duration of patient follow-up; and
· the safety and efficacy profile of the drug candidate.
In addition, the probability of success for each drug candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drug candidate's commercial potential. 23 Table of Contents General and Administrative
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, accounting, business development and human resources functions. Other significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters and fees for accounting and consulting services. We anticipate that our general and administrative expenses will increase in the future to support our continued research and development activities.
Interest Income
Interest income consists of interest income earned on our cash and cash equivalents.
Results of Operations for the Three Months Ended
The following table sets forth our results of operations for the three months
ended
Three Months Ended March 31, Period-to-Period (in thousands) 2020 2019 Change Revenue$ 9,000 $ - $ 9,000 Costs and expenses: Research and development expense 12,668 11,773 895 General and administrative expense 4,440
3,360 1,080 Total costs and expenses 17,108 15,133 1,975 Loss from operations (8,108) (15,133) 7,025 Interest income 445 1,049 (604)
Net loss and comprehensive loss$ (7,663) $
(14,084) $ 6,421 Revenue We recognized$9.0 million in revenue during the three months endedMarch 31, 2020 from the Apollomics Agreement for the development and commercialization of uproleselan and GMI-1687 inGreater China . There was no revenue recognized during the three months endedMarch 31, 2019 .
Research and Development Expense
The following table summarizes our research and development expense by
functional area for the three months ended
Three Months EndedMarch 31 , Period-to-Period
(in thousands) 2020 2019 Change Clinical development$ 5,023 $ 2,607 $ 2,416 Manufacturing and formulation 3,137 5,244 (2,107) Contract research services, consulting and other costs 568 594 (26) Laboratory costs 574 502 72 Personnel-related 2,630 2,318 312
Stock-based compensation 736 508 228 Research and development expense$ 12,668 $
11,773 $ 895 24 Table of Contents
The following table summarizes our research and development expense by drug
candidate for the three months ended
Three Months Ended March 31, Period-to-Period (in thousands) 2020 2019 Change Uproleselan$ 8,161 $ 7,874 $ 287 GMI-1359 104 166 (62)
Other research and development 1,037 907 130 Personnel-related and stock-based compensation 3,366 2,826 540 Research and development expense$ 12,668 $
11,773 $ 895 Research and development expense increased by$895,000 , or 8%, to$12.7 million for the quarter endedMarch 31, 2020 from$11.8 million for the quarter endedMarch 31, 2019 . Clinical development expenses increased by$2.4 million , primarily as a result of increased clinical costs related to our ongoing global Phase 3 clinical trial of uproleselan in individuals with relapsed/refractory AML and the Phase 2/3 clinical trial being conducted by the NCI, which opened for enrollment in early 2019. Personnel-related and stock-based compensation expenses increased due to annual performance adjustments processed in the quarter endedMarch 31, 2020 . These increases were offset in part by a$2.1 million decrease in manufacturing and formulation due to lower raw material costs in the first quarter endedMarch 31, 2020 as compared to the first quarter endedMarch 31, 2019 .
General and Administrative Expense
The following table summarizes the components of our general and administrative
expense for the three months ended
Three Months Ended March 31, Period-to-Period (in thousands) 2020 2019 Change Personnel-related $ 1,607 $ 1,134 $ 473
Stock-based compensation 1,086 875 211 Legal, consulting and other professional expenses 1,508 1,135 373 Other 239 216 23 General and administrative expense $ 4,440
$ 3,360 $ 1,080 General and administrative expense increased for the three months endedMarch 31, 2020 by$1.1 million , or 32%, compared to the first quarter endedMarch 31, 2019 primarily due to an increase in personnel-related costs and professional fees including legal, patent and consulting expenses. Personnel-related expenses increased due to additional general and administrative headcount and annual salary adjustments awarded in the first quarter of 2020. Patent, legal fees, consulting and other professional expenses including director and officer's insurance premiums, increased by$373,000 for the quarter endedMarch 31, 2020 as compared toMarch 31, 2019 . Interest Income Interest income decreased by$604,000 to$445,000 for the quarter endedMarch 31, 2020 from$1.0 million for the quarter endedMarch 31, 2019 , due to lower average cash balances and lower interest rates on those balances.
Liquidity and Capital Resources
Sources of Liquidity We have historically financed our operations primarily through public offerings and private placements of our capital stock, including sales agreements with Cowen, and upfront and milestone payments from our license and collaboration agreements. As ofMarch 31, 2020 , we had$154.8 million in cash and cash equivalents. 25 Table of Contents
InSeptember 2017 , we entered into a new at-the-market sales agreement with Cowen, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to$100.0 million through Cowen acting as our sales agent. During the year endedDecember 31, 2017 , we sold an aggregate of 1,600,000 shares of our common stock under the at-the-market facility for net proceeds of$19.3 million . There were no sales under this agreement during the three months endedMarch 31, 2020 and 2019. As ofMarch 31, 2020 , we have the ability to sell up to$80.0 million of common stock under the at-the-market sales agreement with Cowen. We entered into a collaboration and license agreement with Apollomics inJanuary 2020 and are potentially eligible to earn milestone payments and royalties under that agreement. InJanuary 2020 , Apollomics made an upfront payment to the Company of$9.0 million . Our ability to earn the milestone and royalty payments and their timing will be dependent upon the outcome of Apollomics' activities and is uncertain at this time. Funding Requirements Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, laboratory and related supplies, clinical costs, legal and other regulatory expenses and general overhead costs. The successful development of any of our drug candidates is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of uproleselan or our other drug candidates. We are also unable to predict when, if ever, material net cash inflows will commence from uproleselan or our other drug candidates. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of: · successful enrollment in, and completion of, clinical trials; · receipt of marketing approvals from applicable regulatory authorities;
· establishing commercial manufacturing capabilities or making arrangements with
third-party manufacturers;
· obtaining and maintaining patent and trade secret protection and regulatory
exclusivity for drug candidates;
· launching commercial sales of drugs, if and when approved, whether alone or in
collaboration with others; and
· obtaining and maintaining healthcare coverage and adequate reimbursement.
A change in the outcome of any of these variables with respect to the development of any of our drug candidates would significantly change the costs and timing associated with the development of that drug candidate. Because our drug candidates are in various stages of clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our drug candidates or whether, or when, we may achieve profitability. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements, including our existing license agreement with Apollomics. Except for Apollomics' conditional obligations to make milestone and royalty payments to us under our license agreement, we do not have any committed external source of liquidity. To the extent that we raise additional capital through the future sale of equity or debt, 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 existing common stockholders. If we raise additional funds through the issuance of convertible debt securities, these securities could contain covenants that would restrict our operations.
We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available on reasonable terms, or at all. If we raise additional funds through collaboration arrangements in the future, we
26 Table of Contents may have to relinquish valuable rights to our drug candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves. The recent imposition of "lockdown," "social distancing" and "shelter in place" directives by state and federal governments inthe United States as well as governments in other regions of the world in response to the COVID-19 pandemic has resulted in slowed clinical site initiation, patient recruitment and enrollment rates inApril 2020 in our Phase 3 clinical trial of uproleselan. We cannot at this time determine whether these slower rates reflect a long- or short-term change that could potentially materially adversely impact our cash available to fund our continuing operations or the timing of completion of enrollment of our Phase 3 clinical trial. We continue to closely monitor the COVID-19 situation and any potential impact to our planned activities. Outlook Based on our research and development plans and our timing expectations related to the progress of our programs, we expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into 2022. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of testing drug candidates in clinical trials is costly, and the timing of progress in these trials is uncertain. As discussed above, at this time we can not accurately predict changes in our cash used in operating activities or the timing of completion of enrollment in our Phase 3 clinical trial of uproleselan due to the COVID-19 pandemic. We are continuing to assess and monitor the COVID-19 situation and the potential impact to our clinical trial plans and expectations as a result of delayed site initiations and patient recruitment and enrollment. As we continue to gather data regarding our clinical trial activities, we expect to be in a position to assess the need, if any, to change our previous guidance. Cash Flows The following is a summary of our cash flows for the three months endedMarch 31, 2020 and 2019: Three Months Ended March 31, (in thousands) 2020 2019
Net cash provided by (used in):
Operating activities$ (3,500) $ (14,348) Investing activities (8) (40) Financing activities 130 31
Net change in cash and cash equivalents
Operating Activities Net cash used in operating activities for the three months endedMarch 31, 2020 and 2019 was primarily the result of ongoing costs associated with our uproleselan clinical development programs which includes significant costs for project support, investigator site start-up costs and patient enrollment fees as well as clinical manufacturing costs. These cash expenses were offset by non-cash expenses for stock-based compensation, lease expense and depreciation, and for the three months endedMarch 31, 2020 , the upfront payment of$9.0 million received from Apollomics. Investing Activities
Net cash used in investing activities for the three months ended
Financing Activities
Net cash provided by financing activities for the three months ended
27 Table of Contents
Off-Balance Sheet Arrangements
During the three months ended
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