The following discussion and analysis and the unaudited interim condensed
consolidated financial statements included in this quarterly report on Form 10-Q
should be read in conjunction with the consolidated financial statements and
notes thereto for the year ended December 31, 2020 and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations, both
of which are contained in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission, or SEC, on February 26, 2021.
Forward-Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
or the Exchange Act. All statements other than statements of historical facts
contained in this quarterly report, including statements regarding our future
results of operations and financial position, business strategy, the impact of
the COVID-19 pandemic, prospective products, product approvals, research and
development costs, timing and likelihood of success, plans and objectives of
management for future operations, clinical developments and future results of
product development programs, are forward-looking statements. These statements
involve known and unknown risks, uncertainties and other important factors that
may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "expect," "plan," "anticipate," "could," "intend,"
"target," "project," "contemplates," "believes," "estimates," "predicts,"
"potential" or "continue" or the negative of these terms or other similar
expressions. The forward-looking statements in this quarterly report are only
predictions. We have based these forward-looking statements largely on our
current expectations and projections about future events and financial trends
that we believe may affect our business, financial condition and results of
operations. These forward-looking statements speak only as of the date of this
quarterly report and are subject to a number of risks, uncertainties and
assumptions, including those described in Part II, Item 1A, "Risk Factors" of
this report and Part I, Item 1A, "Risk Factors" in our most recent Annual Report
on Form 10-K filed with the SEC on February 26, 2021. The events and
circumstances reflected in our forward-looking statements may not be achieved or
occur and actual results could differ materially from those projected in the
forward-looking statements. Moreover, we operate in an evolving environment. New
risk factors and uncertainties may emerge from time to time, and it is not
possible for management to predict all risk factors and uncertainties. Except as
required by applicable law, we do not plan to publicly update or revise any
forward-looking statements contained herein, whether as a result of any new
information, future events, changed circumstances or otherwise.
Overview
We are a clinical-stage biopharmaceutical company focused on discovering,
acquiring, developing and commercializing therapeutics in the disease areas of
immunology, inflammation and oncology. We are currently enrolling patients in
Phase 2 clinical trials for two clinical-stage product candidates. We are
developing seralutinib for the treatment of pulmonary arterial hypertension, or
PAH, and commenced enrolling patients for a Phase 2 TORREY clinical trial in PAH
patients in December 2020. We expect topline results from this trial in the
first half of 2022, subject to developments in the ongoing COVID-19 pandemic. We
are developing GB004 for the treatment of inflammatory bowel disease, including
ulcerative colitis, or UC, and Crohn's disease. We commenced enrolling patients
for a Phase 2 SHIFT-UC clinical trial in UC in October 2020. We expect topline
results from this trial in the first half of 2022, subject to developments in
the ongoing COVID-19 pandemic. In the third quarter of 2021, we announced that
we will discontinue clinical development for our oncology-focused product
candidate, GB1275, which is currently in a Phase 1/2 clinical trial in solid
tumor indications as a monotherapy and in combination with either pembrolizumab
or chemotherapy. We also have multiple preclinical programs at various stages of
development in the therapeutic areas of immunology, inflammation and oncology,
and we are advancing those product candidates towards clinical development. We
have assembled a deeply experienced and highly skilled group of industry
veterans, scientists, clinicians and key opinion leaders from leading
biotechnology and pharmaceutical companies, as well as leading academic centers
from around the world. Our employees are a team of highly dedicated, passionate
individuals who pride themselves on a culture of respect, humility,
transparency, inclusion, dedication, collaboration and fun. Our ultimate goal is
to enhance and extend the lives of patients.
We were incorporated in October 2015 and commenced operations in 2017. To date,
we have focused primarily on organizing and staffing our company, business
planning, raising capital, identifying, acquiring and in-licensing our product
candidates and conducting preclinical studies and early clinical trials. We have
funded our operations primarily through equity and debt financings. We raised
$942.0 million from October 2017 through June 30, 2021 through Series A and B
convertible preferred stock financings, a convertible note financing, our IPO
completed in February 2019, proceeds from our Credit
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Facility, and proceeds from our concurrent underwritten public offerings of 2027
Notes and common stock in May 2020. In addition, we received $12.8 million in
cash in connection with the January 2018 acquisition of AA Biopharma Inc., of
which Pulmagen Therapeutics (Asthma) Limited is a wholly-owned subsidiary. As of
June 30, 2021, we had $405.9 million in cash, cash equivalents and marketable
securities.
We have incurred significant operating losses since our inception and expect to
continue to incur significant operating losses for the foreseeable future. For
the three and six months ended June 30, 2021 our net loss was $59.8 million and
$117.5 million, respectively. For the three and six months ended June 30, 2020
our net loss was $66.9 million and $120.9 million, respectively. As of June 30,
2021, we had an accumulated deficit of $695.0 million. We expect our expenses
and operating losses will increase substantially as we conduct our ongoing and
planned clinical trials, continue our research and development activities and
conduct preclinical studies, and seek regulatory approvals for our product
candidates, as well as hire additional personnel, protect our intellectual
property and incur additional costs associated with being a public company. In
addition, as our product candidates progress through development and toward
commercialization, we will need to make milestone payments to the licensors and
other third parties from whom we have in-licensed or acquired our product
candidates, including seralutinib and GB004. Our net losses may fluctuate
significantly from quarter-to-quarter and year-to-year, depending in particular
on the timing of our clinical trials and preclinical studies and our
expenditures on other research and development activities.
We do not expect to generate any revenue from product sales unless and until we
successfully complete development and obtain regulatory approval for one or more
of our product candidates, which we expect will take a number of years. If we
obtain regulatory approval for any of our product candidates, we expect to incur
significant commercialization expenses related to product sales, marketing,
manufacturing and distribution. Accordingly, until such time as we can generate
substantial product revenues to support our cost structure, if ever, we expect
to finance our cash needs through equity offerings, debt financings or other
capital sources, including potentially collaborations, licenses and other
similar arrangements. However, we may be unable to raise additional funds or
enter into such other arrangements when needed on favorable terms or at all. Our
failure to raise capital or enter into such other arrangements when needed could
have a negative impact on our financial condition and on our ability to pursue
our business plans and strategies. If we are unable to raise additional capital
when needed, we could be forced to delay, limit, reduce or terminate our product
candidate development or future commercialization efforts or grant rights to
develop and market our product candidates even if we would otherwise prefer to
develop and market such product candidates ourselves.
COVID-19 Pandemic
The current COVID-19 worldwide pandemic has presented substantial public health
and economic challenges and continues to affect our employees, patients,
communities and business operations, as well as the U.S. and global economies
and financial markets. International and U.S. governmental authorities in
impacted regions continue to take actions in an effort to slow the spread of
COVID-19, including issuing varying forms of "stay-at-home" orders, and
restricting business functions outside of one's home. In response, we have
implemented a work-from-home policy for certain of our employees. To date, we
have been able to continue to supply our product candidates to our patients
currently enrolled in our clinical trials, including for seralutinib, GB004 and
GB1275, and do not currently anticipate any interruptions in supply. In
addition, while we are continuing the clinical trials we have underway in sites
across the globe, COVID-19 precautions have caused delays, and may continue to
delay completion of these and future trials and may directly or indirectly
impact the timeline for data readouts, initiation of, as well as monitoring,
data collection and analysis and other related activities for, some of our
current and future clinical trials. For example, our current expectations for
how we will continue to enroll our Phase 2 clinical trials of seralutinib and
GB004 are based on an assumption that clinical trial and healthcare activities
continue to return to normal and clinical sites remain open or reopen during the
second half of 2021 in light of the continued spread of COVID-19. In particular
with respect to seralutinib, some PAH clinical trial sites are currently closed
or limited as PAH patients may be at a higher risk of COVID-19 complications
than the general population, and some PAH clinical trials may close again if
there is a surge of COVID-19 cases in the specific geographies of such trial
site locations. Therefore, our assumptions around enrollment timing may prove to
be incorrect, in particular if COVID-19 continues to spread. In light of recent
developments relating to the COVID-19 pandemic, and consistent with the FDA's
updated industry guidance for conducting clinical trials, clinical trials may be
deprioritized in favor of treating patients who have contracted the virus or to
prevent the spread of the virus. This may lead to clinical trial protocol
deviations or to discontinuation of treatment for patients who are currently
enrolled in our trials. Any delays in the completion of our clinical trials,
data analysis or readouts and any disruption in our supply chain could have a
material adverse effect on our business, results of operations and financial
condition. The full extent to which the COVID-19 pandemic will directly or
indirectly impact our business, results of operations and financial condition,
will depend on future developments that are highly uncertain, including as a
result of new information that may emerge concerning COVID-19 and the actions
taken to contain or treat it, as well as the economic impact on local, regional,
national and international markets.
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Components of Results of Operations
Revenue
We have not generated any revenue since our inception and do not expect to
generate any revenue from the sale of products for the foreseeable future.
Operating expenses
Research and development
Research and development expenses have related primarily to preclinical and
clinical development of our product candidates and discovery efforts. Research
and development expenses are recognized as incurred and payments made prior to
the receipt of goods or services to be used in research and development are
capitalized until the goods or services are received.
Research and development expenses include or could include:
•salaries, payroll taxes, employee benefits, and stock-based compensation
charges for those individuals involved in research and development efforts;
•external research and development expenses incurred under agreements with
contract research organizations, or CROs, investigative sites and consultants to
conduct our clinical trials and preclinical and non-clinical studies;
•laboratory supplies;
•costs related to manufacturing our product candidates for clinical trials and
preclinical studies, including fees paid to third-party manufacturers;
•costs related to compliance with regulatory requirements; and
•facilities, depreciation and other allocated expenses, which include direct and
allocated expenses for rent, maintenance of facilities, insurance, equipment and
other supplies.
Our direct research and development expenses consist principally of external
costs, such as fees paid to CROs, investigative sites and consultants in
connection with our clinical trials, preclinical and non-clinical studies, and
costs related to manufacturing clinical trial materials. We deploy our personnel
and facility related resources across all of our research and development
activities. We track external costs and personnel expense on a
program-by-program basis and allocate common expenses, such as facility related
resources, to each program based on the personnel resources allocated to such
program. Stock-based compensation and personnel and common expenses not
attributable to a specific program are considered unallocated research and
development expenses.
We plan to substantially increase our research and development expenses for the
foreseeable future as we continue the development of our product candidates and
conduct discovery and research activities for our preclinical programs. We
cannot determine with certainty the timing of initiation, the duration or the
completion costs of current or future preclinical studies and clinical trials of
our product candidates due to the inherently unpredictable nature of preclinical
and clinical development. Clinical and preclinical development timelines, the
probability of success and development costs can differ materially from
expectations. We anticipate that we will make determinations as to which product
candidates to pursue and how much funding to direct to each product candidate on
an ongoing basis in response to the results of ongoing and future preclinical
studies and clinical trials, regulatory developments and our ongoing assessments
as to each product candidate's commercial potential. We will need to raise
substantial additional capital in the future.
Our clinical development costs may vary significantly based on factors such as:
•the costs incurred as a result of the COVID-19 pandemic, including clinical
trial delays;
•per patient trial costs;
•the number of trials required for approval;
•the number of sites included in the trials;
•the countries in which the trials are conducted;
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•the length of time required to enroll eligible patients;
•the number of patients that participate in the trials;
•the number of doses that patients receive;
•the drop-out or discontinuation rates of patients;
•potential additional safety monitoring requested by regulatory agencies;
•the duration of patient participation in the trials and follow-up;
•the cost and timing of manufacturing our product candidates;
•the phase of development of our product candidates; and
•the efficacy and safety profile of our product candidates.
In process research and development
In process research and development, or IPR&D, expenses include IPR&D acquired
as part of an asset acquisition or in-license for which there is no alternative
future use, are expensed as incurred.
IPR&D expenses consist of our upfront payments made to Pulmokine, Inc., in
connection with the in-license of seralutinib, the value of our stock issued to
former AA Biopharma Inc. shareholders, in connection with the acquisition of
GB001, our upfront payments made to Aerpio Pharmaceuticals, Inc., or Aerpio, in
connection with the in-license and subsequent amendment of the in-license of
GB004, our upfront and milestone payments made to Adhaere Pharmaceuticals, Inc.,
or Adhaere, in connection with the acquisition of GB1275, and upfront and
milestone payments made in connection with the acquisition of certain
preclinical programs.
General and administrative
General and administrative expenses consist primarily of salaries and
employee-related costs, including stock-based compensation, for personnel in
executive, finance and other administrative functions. Other significant costs
include facility-related costs, legal fees relating to intellectual property and
corporate matters, professional fees for accounting and consulting services and
insurance costs.
We expect our general and administrative expenses will increase for the
foreseeable future to support our expanded infrastructure and increased costs of
operating as a public company. These increases will likely include increased
expenses related to audit, legal, regulatory and tax-related services associated
with maintaining compliance with exchange listing and SEC requirements, director
and officer insurance premiums, and investor relations costs associated with
operating as a public company.
Other income, net
Other income, net consists of (1) interest income on our cash, cash equivalents
and marketable securities, (2) sublease income, (3) interest expense related to
our Credit Facility and our 2027 Notes, and (4) other miscellaneous income
(expense).
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results
of operations are based on our condensed consolidated financial statements,
which have been prepared in accordance with generally accepted accounting
principles in the United States, or GAAP. The preparation of these financial
statements requires us to make judgments and estimates that affect the reported
amounts of assets, liabilities, revenues, and expenses and the disclosure of
contingent assets and liabilities in our condensed consolidated financial
statements. We base our estimates on historical experience, known trends and
events, and various other factors that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions. On an ongoing basis, we evaluate our judgments and
estimates in light of changes in circumstances, facts and experience. During the
six months ended June 30, 2021, there have been no significant changes in our
critical accounting policies as discussed in Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Critical
Accounting Policies and Estimates" in our Annual Report on Form 10-K filed with
the SEC on February 26, 2021.
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Results of Operations - Comparison of the Three and Six Months Ended June 30,
2021 and 2020
The following table sets forth our selected statements of operations data for
the three months ended June 30, 2021 and 2020:
                                                             Three months ended June 30,              2021 vs 2020
                                                               2021                  2020                Change
                                                                               (in thousands)
Operating expenses:
Research and development                                 $       44,318          $  38,684          $       5,634
In process research and development                                  15             15,000                (14,985)
General and administrative                                       11,263             11,655                   (392)
Total operating expenses                                         55,596             65,339                 (9,743)
Loss from operations                                            (55,596)           (65,339)                 9,743
Other income (expense), net
Interest income                                                     141                898                   (757)
Interest expense                                                 (4,834)            (2,491)                (2,343)
Other income                                                        457                 62                    395
Total other income (expense), net                                (4,236)            (1,531)                (2,705)
Net loss                                                 $      (59,832)         $ (66,870)         $       7,038

The following table sets forth our selected statements of operations data for the six months ended June 30, 2021 and 2020:


                                             Six months ended June 30,           2021 vs 2020
                                               2021                 2020            Change
                                                            (in thousands)
Operating expenses:
Research and development               $       86,145           $   80,098      $       6,047
In process research and development                45               17,805            (17,760)
General and administrative                     22,609               22,403                206
Total operating expenses                      108,799              120,306            (11,507)
Loss from operations                         (108,799)            (120,306)            11,507
Other income (expense), net
Interest income                                   334                2,496             (2,162)
Interest expense                               (9,614)              (3,198)            (6,416)
Other income                                      606                   64                542
Total other expense, net                       (8,674)                (638)            (8,036)
Net loss                               $     (117,473)          $ (120,944)     $       3,471



Operating Expenses
Research and development
Research and development expenses were $44.3 million for the three months ended
June 30, 2021, compared to $38.7 million for the three months ended June 30,
2020, for an increase of $5.6 million, which was primarily attributable to an
increase of $6.2 million of costs associated with preclinical studies and
clinical trials for GB004, an increase of $4.3 million of costs associated with
preclinical studies and clinical trials for seralutinib and an increase of $3.4
million of costs associated with preclinical studies for our other programs,
offset by a decrease of $7.7 million of costs associated with preclinical
studies and
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clinical trials for GB001 and a decrease of $0.6 million of costs associated
with preclinical studies and clinical trials for GB1275.
Research and development expenses were $86.1 million for the six months ended
June 30, 2021, compared to $80.1 million for the six months ended June 30, 2020,
for an increase of $6.0 million, which was primarily attributable to an increase
of $11.3 million of costs associated with preclinical studies and clinical
trials for GB004, an increase of $7.4 million of costs associated with
preclinical studies and clinical trials for seralutinib and an increase of $7.2
million of costs associated with preclinical studies for our other programs,
offset by a decrease of $17.8 million of costs associated with preclinical
studies and clinical trials for GB001 and a decrease of $2.1 million of costs
associated with preclinical studies and clinical trials for GB1275.
The following table shows our research and development expenses by program for
the three and six months ended June 30, 2021 and 2020:
                                                      Three months ended June 30,               Six months ended June 30,
                                                        2021                 2020                 2021                2020
                                                            (in thousands)
Seralutinib                                       $       11,646          $  7,352          $      22,313          $ 14,906
GB004                                                     10,386             4,185                 19,244             7,924
GB1275                                                     2,525             3,094                  5,357             7,439
GB001                                                        445             8,166                  1,713            19,542
Other Programs                                            19,316            15,887                 37,518            30,287
Total research and development                    $       44,318          $

38,684 $ 86,145 $ 80,098




In process research and development
There were no significant IPR&D expenses for the three months ended June 30,
2021. IPR&D for the three months ended June 30, 2020 was $15.0 million, which
was attributable to an upfront payment to Aerpio in connection with the
amendment to the in-license agreement of GB004.
There were no significant IPR&D expenses for the six months ended June 30, 2021.
IPR&D for the six months ended June 30, 2020 was $17.8 million, which was
primarily attributable to a $15.0 million upfront payment to Aerpio in
connection with the amendment to the in-license agreement of GB004.
General and administrative
General and administrative expenses were $11.3 million for the three months
ended June 30, 2021, compared to $11.7 million for the three months ended
June 30, 2020, for a decrease of $0.4 million, which was primarily attributable
to a decrease in stock-based compensation costs.
General and administrative expenses were $22.6 million for the six months ended
June 30, 2021, compared to $22.4 million for the six months ended June 30, 2020,
for an increase of $0.2 million, which was primarily attributable an increase of
costs related to personnel.
Other income (expense), net
Other expense, net was $4.2 million for the three months ended June 30, 2021,
compared to other expense, net of $1.5 million for the three months ended
June 30, 2020, for an increase of $2.7 million, which was primarily attributable
to a $2.3 million increase in interest expense on our 2027 Notes and a $0.8
million decrease in investment income earned on our cash, cash equivalents and
marketable securities during the period.
Other expense, net was $8.7 million for the six months ended June 30, 2021,
compared to other expense, net of $0.6 million for the six months ended June 30,
2020, for an increase of $8.1 million, which was primarily attributable to a
$6.4 million increase in interest expense on our 2027 Notes and a $2.2 million
decrease in investment income earned on our cash, cash equivalents and
marketable securities during the period.
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Liquidity and Capital Resources
We have incurred substantial operating losses since our inception and expect to
continue to incur significant operating losses for the foreseeable future and
may never become profitable. As of June 30, 2021, we had an accumulated deficit
of $695.0 million.
Our primary use of cash is to fund operating expenses, which consist primarily
of research and development expenditures, and to a lesser extent, general and
administrative expenditures. Cash used to fund operating expenses is impacted by
the timing of when we pay these expenses, as reflected in the change in our
outstanding accounts payable and accrued expenses.
Under our license agreements with Pulmokine and Aerpio, as well as our other
license and acquisition agreements, we have payment obligations that are
contingent upon future events such as our achievement of specified development,
regulatory and commercial milestones and are required to make royalty payments
in connection with the sale of products developed under those agreements. As of
June 30, 2021, we were unable to estimate the timing or likelihood of achieving
the milestones or making future product sales. Other contractual obligations
include future payments under our Credit Facility, 2027 Notes and existing
operating leases.
From our inception through the six months ended June 30, 2021, our operations
have been financed primarily by gross proceeds of $942.0 million from the sale
of our convertible preferred stock, convertible promissory note, proceeds from
our IPO, proceeds from our Credit Facility, and proceeds from our concurrent
underwritten public offerings of 2027 Notes and common stock. As of June 30,
2021 we had cash, cash equivalents and marketable securities of $405.9 million.
Cash in excess of immediate requirements is invested in accordance with our
investment policy, primarily with a view to capital preservation and liquidity.
On February 12, 2019, we closed our IPO and the underwriters in the IPO
purchased 19,837,500 shares, including the full exercise of their option to
purchase additional shares of common stock. The net proceeds from the IPO were
$291.3 million, after deducting underwriting discounts and commissions and
estimated offering costs. In connection with the closing of the IPO, the
outstanding shares of our convertible preferred stock were converted into shares
of common stock at a ratio of 4.5-to-one.
On May 2, 2019, we entered into a credit, guaranty and security agreement, as
amended on September 18, 2019 and July 2, 2020, pursuant to which the lenders
party thereto agreed to make term loans available to us for working capital and
general business purposes, in a principal amount of up to $150.0 million in term
loan commitments, including a $30.0 million term loan which was funded at the
closing date, with the ability to access the remaining $120.0 million in two
additional tranches (each $60.0 million), subject to specified availability
periods, the achievement of certain clinical development milestones, minimum
cash requirements and other customary conditions, or the Credit Facility. As of
June 30, 2021, no other tranches under the Credit Facility were available to be
drawn.
On April 10, 2020, we filed a registration statement on Form S-3, or the Shelf
Registration Statement, covering the offering from time to time of common stock,
preferred stock, debt securities, warrants and units, which registration
statement became automatically effective on April 10, 2020.
In May 2020, we issued $200.0 million aggregate principal amount 5.00%
convertible senior notes due 2027 in a registered public offering. The interest
rate on the 2027 Notes is fixed at 5.00% per annum. Interest is payable
semi-annually in arrears on June 1 and December 1 of each year commencing on
December 1, 2020. The total net proceeds from the 2027 Notes, after deducting
the underwriting discounts and commissions and other offering costs, were
approximately $193.6 million. Concurrent with the registered underwritten public
offering of the 2027 Notes, we completed an underwritten public offering of
9,433,963 shares of our common stock. We received net proceeds of $117.1
million, after deducting underwriting discounts and commissions and other
offering costs. Our concurrent offerings of 2027 Notes and common stock were
registered pursuant to the Shelf Registration Statement.
Additional information about our long-term borrowings is presented in Note 5
"Indebtedness" to the Notes to Unaudited Condensed Consolidated Financial
Statements included in Part I, Item 1, of this Form 10-Q, which is incorporated
herein by this reference.
The following table shows a summary of our cash flows for each of the six months
ended June 30, 2021 and 2020, respectively:
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                                                                           Six months ended June 30,
                                                                            2021                    2020
                                                                                (in thousands)
Net cash used in operating activities                              $     (106,346)              $ (94,694)
Net cash provided by (used in) investing activities                       (38,108)                134,283
Net cash provided by financing activities                                   1,045                 311,400

Effect of exchange rate changes on cash, cash equivalents and restricted cash

                                                    $         (192)              $     (16)

Net increase (decrease) in cash, cash equivalents and restricted cash

$     (143,601)              $ 350,973


Operating activities
During the six months ended June 30, 2021, operating activities used
approximately $106.3 million of cash, primarily resulting from a net loss of
$117.5 million and changes in operating assets and liabilities of $11.7 million,
reduced by stock-based compensation expense of $16.8 million and amortization of
debt discount and issuance costs of $3.3 million. Net cash used in changes in
operating assets and liabilities consisted primarily of changes in accounts
payable and accrued compensation and benefits.
During the six months ended June 30, 2020, operating activities used
approximately $94.7 million of cash, primarily resulting from a net loss of
$120.9 million and changes in operating assets and liabilities of $11.1 million,
reduced by IPR&D expense of $17.8 million and stock-based compensation expense
of $17.1 million. Net cash used in changes in operating assets and liabilities
consisted primarily of changes in accounts payable and accrued compensation and
benefits.
Investing activities
During the six months ended June 30, 2021, investing activities used
approximately $38.1 million of cash, primarily resulting from the purchases of
marketable securities of $49.9 million, offset by the maturities of marketable
securities of $12.8 million.
During the six months ended June 30, 2020, investing activities provided
approximately $134.3 million of cash, primarily resulting from the sales and
maturities of marketable securities of $226.8 million, offset by the purchases
of marketable securities of $73.8 million and a $15.0 million upfront payment to
Aerpio in connection with the amendment to the in-license agreement of GB004.
Financing activities
During the six months ended June 30, 2021, financing activities provided $1.0
million of cash, primarily resulting from the purchase of shares pursuant to the
ESPP and the exercise of stock options.
During the six months ended June 30, 2020, financing activities provided $311.4
million of cash, primarily resulting from the concurrent registered underwritten
public offerings of 2027 Notes and our common stock for net proceeds of $193.6
million and $117.1 million, respectively.
Funding requirements
Based on our current operating plan, we believe that our existing cash, cash
equivalents and marketable securities, and access to our Credit Facility, will
be sufficient to fund our operations into the second half of 2023. However, our
forecast of the period of time through which our financial resources will be
adequate to support our operations is a forward-looking statement that involves
risks and uncertainties, and actual results could vary materially. 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
product candidates in clinical trials is costly, and the timing of progress and
expenses in these trials is uncertain.
Our future capital requirements will depend on many factors, including:
•the type, number, scope, progress, expansions, results, costs and timing of,
our preclinical studies and clinical trials of our product candidates which we
are pursuing or may choose to pursue in the future;
•the costs and timing of manufacturing for our product candidates;
•the costs, timing and outcome of regulatory review of our product candidates;
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•the costs of obtaining, maintaining and enforcing our patents and other
intellectual property rights;
•our efforts to enhance operational systems and hire additional personnel to
satisfy our obligations as a public company, including enhanced internal
controls over financial reporting;
•the costs associated with hiring additional personnel and consultants as our
preclinical and clinical activities increase;
•the timing and amount of the milestone or other payments we must make to the
licensors and other third parties from whom we have in-licensed our acquired our
product candidates;
•the costs and timing of establishing or securing sales and marketing
capabilities if any product candidate is approved;
•our ability to achieve sufficient market acceptance, coverage and adequate
reimbursement from third-party payors and adequate market share and revenue for
any approved products;
•the terms and timing of establishing and maintaining collaborations, licenses
and other similar arrangements;
•costs associated with any products or technologies that we may in-license or
acquire; and
•any delays and cost increases that result from the COVID-19 pandemic.
Until such time as we can generate substantial product revenues to support our
cost structure, if ever, we expect to finance our cash needs through equity
offerings, our Credit Facility, debt financings or other capital sources,
including potentially collaborations, licenses and other similar arrangements.
However, we may be unable to raise additional funds or enter into such other
arrangements when needed on favorable terms or at all. To the extent that we
raise additional capital through the sale of equity or convertible debt
securities, the ownership interest of our stockholders will be or could be
diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect the rights of our common stockholders. Debt
financing and preferred equity financing, if available, may involve agreements
that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or
declaring dividends. If we raise funds through collaborations, licenses and
other similar arrangements with third parties, we may have to relinquish
valuable rights to our technologies, future revenue streams, research programs
or product candidates or grant licenses on terms that may not be favorable to us
and/or may reduce the value of our common stock. Our failure to raise capital or
enter into such other arrangements when needed could have a negative impact on
our financial condition and on our ability to pursue our business plans and
strategies. If we are unable to raise additional capital when needed, we could
be forced to delay, limit, reduce or terminate our product candidate development
or future commercialization efforts or grant rights to develop and market our
product candidates even if we would otherwise prefer to develop and market such
product candidates ourselves.

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