IKENA ONCOLOGY, INC. You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K that was filed with theSEC onMarch 17, 2022 . Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties, such as statements of our plans, strategies, objectives, expectations and intentions. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report 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 targeted oncology company developing precision medicines tailored to biomarker-defined patient groups with specific unmet needs. With our robust biomarker and translational approach we aim to develop targeted treatments and define patient populations that are most likely to respond to treatment. Our current programs are across the Hippo pathway, RAS pathway, and key immune signals in the tumor-microenvironment (TME), with approaches to targeting both cancer driving targets and mechanisms of resistance to targeted therapies. Our focus on patient-driven development is platform and process agnostic, allowing us to research both known and novel targets, with a shared guiding principle of aiming to address the unmet needs of biomarker-defined patient populations. Since we commenced operations in 2016, we have advanced multiple product candidates into clinical development. In addition, we have a robust pipeline of discovery-stage targeted oncology programs. Our lead targeted oncology product candidate, IK-930, is an oral small molecule inhibitor of the transcriptional enhanced associate domain, or TEAD, transcription factor in the Hippo signaling pathway. The Hippo pathway is genetically altered in approximately 10% of human cancers and is widely accepted as a prevalent driver of cancer pathogenesis and a mediator of poor outcomes for patients. In our ongoing first-in-human clinical trial, we are focusing on indications that provide the potential for rapid clinical development to achieve proof-of-concept, such as NF2 deficient mesothelioma and solid tumors with YAP1 or TAZ gene fusions, including epithelioid hemangioendothelioma, in which 100% of patients have Hippo pathway alterations. InOctober 2021 , our Investigational New Drug Application, or IND, for IK-930 was accepted by the FDA and we subsequently initiated a first-in-human Phase 1 clinical trial to evaluate the safety, tolerability, pharmacokinetics, pharmacodynamics, and preliminary antitumor activity of IK-930 in patients with advanced solid tumors with or without gene alterations in the Hippo pathway. The first patient was dosed inJanuary 2022 . IK-930 received orphan drug designation in mesothelioma from theU.S. Food and Drug Administration ("FDA") inMarch 2022 . We also plan to assess IK-930 in combination with other targeted therapies across several indications, including EGFR mutated non-small cell lung cancer and KRAS mutated cancers.
Our discovery efforts are focused on additional targeted oncology programs, following our philosophy of designing treatments for patients' populations identified through the genetic make-up of their tumors. Our pre-clinical pipeline is growing to include additional Hippo pathway and RAS pathway-targeting programs. We are generating mechanistic and translational data to identify underserved RAS-mutated cancer patient populations and assess approaches that could benefit them.
Our clinical-stage programs also include product candidates in development to
target immune signaling in the TME. These programs are all built on the same
foundation of biomarker-driven clinical trial design and patient enrichment,
aiming to develop therapies that can precisely be used for specific cancer
patients. IK-175 is an oral inhibitor of aryl hydrocarbon receptor, which we are
evaluating in a Phase 1a/1b clinical trial, as monotherapy and in combination
with nivolumab, in patients with advanced or metastatic solid tumors, including
urothelial carcinomas, for which current standard-of-care therapy is no longer
effective or is intolerable. We expect to report initial clinical data from this
trial in the second half of 2022. Additionally, a second Phase 1b trial with
IK-175 in head and neck squamous cell carcinoma ("HNSCC") was initiated in July
2022 and is expected to enroll its first patient by the end of 2022. The IK-175
program is partnered with Bristol-Myers Squibb Company.
Also within TME immune signaling, IK-007, which is designed to inhibit the
prostaglandin E receptor 4 in the COX2 pathway, is being evaluated in a Phase 1b
clinical trial in combination with pembrolizumab for the treatment of patients
with advanced or progressive microsatellite stable colorectal cancer ("MSS CRC")
for which first and second line standard therapy (at least one of which
contained fluorouracil) is no longer effective or is intolerable. We recently
completed enrollment in this trial and expect to share additional data in the
second half of 2022. IK-007 is also being evaluated in an investigator-initiated
trial in inflammatory breast cancer at MD Anderson Cancer Center .
We were incorporated as a
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raising capital, conducting discovery, research and development activities, and
providing general and administrative support for these operations. On March 30,
2021 , we completed an IPO, in which we issued and sold 8,984,375 shares of our
common stock at a public offering price of $16.00 per share, including 1,171,875
shares of common stock sold pursuant to the underwriters' exercise of their
option to purchase additional shares of common stock, for aggregate gross
proceeds of $143.8 million . We raised approximately $131.3 million in net
proceeds after deducting underwriting discounts and commissions and offering
expenses payable by us.
To date, we have not had any products approved for sale and have not generated any revenue from product sales.
We have incurred significant net losses in every year since our inception and expect to continue to incur significant expenses and increasing net losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year and could be substantial. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our current or future product candidates. Our net losses were$37.3 million and$22.4 million for the six months endedJune 30, 2022 and 2021, respectively. As ofJune 30, 2022 , we had an accumulated deficit of$182.8 million . We anticipate that our expenses will increase significantly as we:
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advance the development of our product candidate pipeline;
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initiate and continue research and preclinical and clinical development of potential new product candidates;
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maintain, expand and protect our intellectual property portfolio;
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acquire or in-license additional product candidates and technologies;
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expand our infrastructure and facilities to accommodate our growing employee base and ongoing development activities;
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establish agreements with contract research organizations, or CROs, and contract manufacturing organizations, or CMOs, in connection with our preclinical studies and clinical trials;
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require the manufacture of larger quantities of our product candidates for clinical development and potential commercialization;
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seek marketing approvals for our product candidates that successfully complete clinical trials, if any;
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establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval; and
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add operational, financial and management information systems and personnel, including personnel to support our research and development programs, any future commercialization efforts and our operations as a public company. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity instruments, debt financings, or other capital sources, which may include collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates. We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain marketing approval for our product candidates. The lengthy process of securing marketing approvals for new drugs requires the expenditure of substantial resources. Any delay or failure to obtain regulatory approvals would materially adversely affect the development efforts of our product candidates and our business overall. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenue from product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. If we raise additional funds through 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 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 product development programs or any future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. As ofJune 30, 2022 , we had cash, cash equivalents and marketable securities of$192.8 million which will enable us to fund our operating expenses and capital expenditure requirements through mid-2024. To date, we have primarily financed our operations through proceeds from private placements of preferred stock prior to the completion of the IPO, payments from a collaboration agreement, related party revenue and completion of the IPO. We expect to incur substantial operating losses and negative cash flows 14 -------------------------------------------------------------------------------- from operations for the foreseeable future as we continue to invest significantly in research and development of our programs. Our belief with respect to our ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from our estimates, we may need to seek additional funding sooner that would otherwise be expected. There can be no assurance that we will be able to obtain additional funding on acceptable terms, if at all. Impact of COVID-19 Pandemic InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 a global pandemic. More recently, other, more infectious, variants of COVID-19 have been identified, which continue to spread throughout theU.S. and worldwide. Since the onset of the global pandemic in 2020, we have been closely monitoring the spread of COVID-19 and its variants, and plan to continue taking steps to identify and mitigate the adverse impacts on, and risks to, our business posed by its spread and actions taken by governmental and health authorities to address the COVID-19 pandemic. The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition and results of operations is highly uncertain and will depend on future developments that cannot be predicted, including new information that may emerge concerning the severity of the COVID-19 pandemic, existing and emerging variants and the level of acceptance of vaccines, and actions taken by government authorities and businesses to help contain or prevent the further spread of COVID-19. For instance, a recurrence or continuation of COVID-19 and variant cases could cause a more widespread or severe impact on clinical and research activity depending on where infection rates are highest. If we, or any of the third parties with whom we engage, were to experience any shutdowns or other prolonged business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially negatively affected, which could have a material adverse impact on our business, results of operations and financial condition. Accordingly, we cannot predict the extent to which our business, financial condition and results of operations will be affected. We remain focused on maintaining a strong balance sheet, liquidity and financial flexibility and continue to monitor developments as we deal with the disruptions and uncertainties from a business and financial perspective relating to COVID-19 and variants thereof. We will continue to work diligently with our partners and stakeholders to advance our clinical studies to the extent safe to do so for patients, caregivers and healthcare practitioners. In 2021, further development, outside of committed manufacturing efforts, of the IK-412 program was paused for the remainder of the BMS contract term in part due to manufacturing delays caused by COVID-19 supply chain issues. We will continue to monitor the impact of COVID-19 related supply chain issues relating to our business.
See "Risk Factors" for a discussion of the potential adverse impact of the COVID-19 pandemic on our business, financial condition, and results of operations.
Components of our Results of Operations
Revenue
We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval and successful commercialization efforts, we may generate revenue in the future from product sales. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.
All of our revenue has been derived from research and development revenue under our BMS Collaboration Agreement.
Collaboration Agreement and Stock Purchase Agreement with BMS
InJanuary 2019 , we entered into the Bristol-Myers Squibb Company ("BMS") Collaboration Agreement with Celgene Corporation (which was acquired by BMS inNovember 2019 ), pursuant to which BMS may elect in its sole discretion to exclusively license rights to develop and commercialize compounds (and products and diagnostic products containing such compounds) that modulate the activity of two collaboration targets, kynurenine and aryl hydrocarbon receptor, or AHR, excluding AHR agonists for inverse agonists, which we are developing as IK-412 and IK-175, respectively. On a program-by-program basis, through the earlier ofJanuary 2024 or the completion of a Phase 1b clinical trial for each of IK-175 and IK-412, BMS has the exclusive option to exclusively license to develop, commercialize and manufacture the relevant product candidate worldwide. Concurrent with execution of the BMS Collaboration Agreement, we entered into a stock purchase agreement with Celgene Corporation (now BMS) inNovember 2019 , or the Stock Purchase Agreement, pursuant to which we issued Celgene Corporation 14,545,450 shares of Series A-1 preferred stock. 15 -------------------------------------------------------------------------------- BMS paid a total of$95.0 million in aggregate upfront consideration related to the BMS Collaboration Agreement and Stock Purchase Agreement. We are eligible to receive$50.0 million , in case of an exercise of its option with respect to IK-175, and$40.0 million , in case of an exercise of its option with respect to IK-412. If we do not complete a Phase 1b clinical trial by the end of the research term, we may elect to provide a data package to BMS upon which BMS may exercise the foregoing option for an additional$0.25 million fee. Development of IK-412 was paused in 2021, outside of the committed manufacturing efforts, in part due to COVID-19 related delays. BMS retains the option to license IK-412 according to the terms of the BMS Collaboration Agreement. Upon the exercise of the delivery of each license, we become eligible to receive up to$265.0 million in regulatory milestones and$185.0 million in commercial milestones as well as a tiered royalties at rates ranging from the high single to low teen digits percentages based on worldwide annual net sales by BMS, subject to specified gross sale reductions. Operating Expenses
Our operating expenses since inception consist solely of research and development costs and general and administrative costs.
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research and development activities. These efforts and costs include external research costs, personnel costs, consultants, supplies, license fees and facility-related expenses. We expense research and development costs as incurred. These expenses include:
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employee-related expenses, including salaries, related benefits and stock-based compensation expense, for employees engaged in research and development functions;
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expenses incurred under agreements with CROs which are primarily engaged to support our clinical trials;
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expenses incurred under agreements with CMOs, which are primarily engaged to provide drug substance and product for our preclinical research and development programs, nonclinical studies and other scientific development services;
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the cost of acquiring and manufacturing preclinical study materials, including manufacturing registration and validation batches;
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facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance;
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acquisition of in-process research and development assets that have no alternative future use;
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costs related to compliance with quality and regulatory requirements; and
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payments made under third-party licensing agreements.
Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned clinical development activities in the near term and in the future. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of, or obtain regulatory approval for, any of our current or future product candidates. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:
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our ability to add and retain key research and development personnel;
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our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize our product candidates;
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our successful enrollment in and completion of clinical trials, including our ability to generate positive data from any such trials;
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the size and cost of any future clinical trials for existing or future product candidates in our pipeline;
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the costs associated with the development of any additional programs we identify in-house or acquire through collaborations and other arrangements and the success of such collaborations;
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the terms and timing of any additional collaborations, license or other arrangement, including the timing of any payments thereunder;
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our ability to establish and maintain agreements and operate with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if any of our product candidates are approved;
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costs related to manufacturing of our product candidates or to account for any future changes in our manufacturing plans;
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our ability to obtain and maintain patents, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates, both inthe United States and internationally;
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our ability to obtain and maintain third-party insurance coverage and adequate reimbursement for our product candidates, if and when approved;
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the acceptance of our product candidates, if approved, by patients, the medical community and third-party payors;
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effectively competing with other products if our product candidates are approved;
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the impact of any business interruptions to our operations, including the timing and enrollment of patients in our planned clinical trials, or to those of our manufacturers, suppliers, or other vendors resulting from the evolving COVID-19 pandemic or similar public health crisis; and
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our ability to maintain a continued acceptable safety profile for our therapies following approval.
A change in the outcome of any of these variables with respect to the development of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, auditing, tax services and insurance costs. We expect that our general and administrative expenses will increase as our organization and grows in the future to support continued research and development activities and potential commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, attorneys and accountants, among other expenses. Additionally, we expect to incur increased expenses associated with being a public company, including costs of additional personnel, accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing andSecurities and Exchange Commission , orSEC , requirements, director and officer insurance costs, and investor and public relations costs.
Results of Operations
The following table summarizes our results of operations (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
Dollar
2022 2021 Change % of Change 2022 2021 Dollar Change % of Change
Revenue:
Research and development
revenue under collaboration
agreement $ 382 $ 3,549 $ (3,167 ) (89 )% $ 3,766 $ 7,023 $ (3,257 ) (46 )%
Operating expenses:
Research and development 15,488 11,374 4,114 36 % 29,831 21,396 8,435 39 %
General and administrative 5,845 4,862 983 20 % 11,848 8,035 3,813 47 %
Total operating expenses 21,333 16,236 5,097 31 % 41,679 29,431 12,248 42 %
Loss from operations (20,951 ) (12,687 ) (8,264 ) 65 % (37,913 ) (22,408 ) (15,505 ) 69 %
Other income (expense), net 460 6 454 7567 % 583 11 572 5200 %
Net loss $ (20,491 ) $ (12,681 ) $ (7,810 ) 62 % $ (37,330 ) $ (22,397 ) $ (14,933 ) 67 %
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Revenue
The research and development revenue under collaboration agreement is related to the BMS Collaboration Agreement for the IK-175 and IK-412 programs which was executed inJanuary 2019 . The decrease in revenue during the three and six months endedJune 30, 2022 , as compared to the same periods in the prior year, was primarily due to a change in estimate of the development services expected to be performed during the term of the collaboration agreement related to IK-175 and the strategic decision made inDecember 2021 to pause the development of IK-412, outside of the committed manufacturing efforts, for the remainder of the BMS contract term. As a result of the change in estimate, as well as ongoing activities occurring in the three and six months endedJune 30, 2022 , the Company recognized$0.4 million and$3.8 million of research and development revenue, net, related to IK-175 and IK-412 during the three and six months endedJune 30, 2022 , respectively.
Research and Development Expenses
The following table summarizes our research and development expenses (in
thousands):
Three Months Ended June 30, Six Months Ended June 30,
Dollar Dollar
2022 2021 Change % of Change 2022 2021 Change % of Change
Direct research and
development expenses by
program:
IK-930 $ 2,514 $ 2,597 $ (83 ) (3 )% $ 5,368 $ 3,912 $ 1,456 37 %
IK-175 1,505 1,390 115 8 % 2,762 2,780 (18 ) (1 )%
IK-412 462 853 (391 ) (46 )% 705 2,039 (1,334 ) (65 )%
IK-007 396 708 (312 ) (44 )% 846 1,386 (540 ) (39 )%
Other discovery stage
programs 4,390 2,581 1,809 70 % 8,140 4,866 3,274 67 %
Research and development
personnel and overhead
expenses and unallocated 6,221 3,245 2,976 92 % 12,010 6,413 5,597 87 %
Total research and
development expenses $ 15,488 $ 11,374 $ 4,114 36 % $ 29,831 $ 21,396 $ 8,435 39 %
During the three and six months ended June 30, 2022 research and development
expenses increased $4.1 million and $8.4 million , respectively. The increase was
primarily related to personnel and overhead costs due to an increase in
headcount and expenses incurred for discovery stage programs.
General and Administrative Expenses
The following table summarizes our general and administrative expenses (in
thousands):
Three Months Ended June 30, Six Months Ended June 30,
Dollar
2022 2021 Dollar Change
% of Change 2022 2021 Change % of Change
General and administrative
983 20 % $ 11,848 $ 8,035 $ 3,813 47 %
During the during the three and six months ended June 30, 2022 general and
administrative expenses increased $1.0 million and $3.8 million , respectively.
The increase was primarily attributable to an increase in compensation expense
due to an increase in headcount and in insurance expense, as well as general
increases in legal expenses to support our operations as a public company.
Sources of Liquidity
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any product candidates for several years, if ever. To date, we have financed our operations primarily through private placements of preferred stock, from upfront payments from the BMS Collaboration Agreement, from cash obtained from acquisitions, and most recently, from common stock in our IPO. As ofJune 30, 2022 , we had cash, cash equivalents and marketable securities of$192.8 million . 18 --------------------------------------------------------------------------------
Cash Flows
The following table summarizes our sources and uses of cash (in thousands):
Six Months
Ended
2022 2021
Net cash provided (used in) by operating activities
$ (28,894 ) Net cash (used in) provided by investing activities (145,565 ) (1,026 ) Net cash provided by financing activities 1,070
131,433
Net increase in cash and cash equivalents and restricted cash$ (183,730 ) $ 101,513
The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital. The increase in cash used in operating activities of$10.3 million was primarily attributable to the increase in our net loss of$14.9 million , partially offset by a decrease in deferred revenue of$3.3 million and an increase in stock-based compensation expense of$1.7 million .
The increase in cash used investing activities of$144.5 million was primarily attributable the purchases of marketable securities of$175.0 million in connection with the Company investing its excess cash, offset by$29.5 million of marketable security maturities.
Net Cash Provided by Financing Activities
The decrease in cash provided by financing activities of
Funding Requirements We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development for, initiate clinical trials for, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Furthermore, we expect to continue to incur additional costs associated with operating as a public company including increased costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing andSEC requirements, director and officer insurance costs, and investor and public relations costs. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. We expect that our existing cash, cash equivalents, and marketable securities as ofJune 30, 2022 , will enable us to fund our operating expenses and capital expenditure requirements through mid 2024. We have based this estimate on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our future operating and capital requirements will depend on many factors, including:
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the scope, progress, results and costs of discovery, preclinical development, laboratory testing and clinical trials for other potential product candidates we may develop, if any;
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the costs, timing and outcome of regulatory review of our product candidates;
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our ability to establish and maintain collaborations on favorable terms, if at all;
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the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we might have at such time;
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the costs and timing of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
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the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;
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the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining and enforcing our intellectual
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the in-licensing or acquisition of assets in line with our strategy;
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our headcount growth and associated costs as we expand our business operations and our research and development activities; and
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the costs of operating as a public company.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interests may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect your rights as a common stockholder. Any debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise funds through 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 through equity or debt financings when needed, we may be required to delay, 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. OnApril 27, 2022 , we filed a shelf registration statement on Form S-3 ("Shelf"), with theSEC , which covers the offering, issuance and sale by us of up to an aggregate of$300.0 million of our common stock, preferred stock, debt securities, warrants and/or units of any combination thereof. We simultaneously entered into a sales agreement withJefferies LLC , as sales agent, to provide for the issuance and sale by us of up to$100.0 million of our common stock from time to time in "at-the-market" offerings under the Shelf, which we refer to as the ATM Program. The Shelf was declared effective by theSEC onMay 5, 2022 . As of the date hereof, no sales have been made pursuant to the ATM Program.
Contractual Obligations
We have a non-cancelable operating lease agreement for our office, lab and animal care facility space in ourBoston, Massachusetts corporate headquarters. We expect lease payments under this commitment to total$1.8 million in 2022 and increase annually through the lease expiration in 2026. Our total future minimum lease payments for each of the next five years and in total are included in Note 14 in our Annual Report on Form 10-K that was filed with theSEC onMarch 17, 2022 . We enter into contracts in the normal course of business with CROs and CMOs for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. These contracts typically, do not contain any minimum purchase commitments and are generally cancelable by us, typically upon prior notice of 30 days. Payments due upon cancelation consist only of payments for services provided and expenses incurred up to the date of cancelation. We may incur potential contingent payments upon our achievement of clinical, regulatory and commercial milestones, as applicable, or that we may be required to make royalty payments under license agreements we have entered into with various entities pursuant to which we have in-licensed certain intellectual property such as our patent license agreement with theUniversity of Texas at Austin and our license agreement withAskAt, Inc. Due to the uncertainty of the achievement and timing of the events requiring payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time and have not been included in the table above.
Critical Accounting Policies and Use of Estimates
Our management's discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States , or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different 20 -------------------------------------------------------------------------------- assumptions or conditions. During the six months endedJune 30, 2022 , there were no material changes to our critical accounting policies from those described in our Annual Report on Form 10-K that was filed with theSecurities Exchange Commission onMarch 17, 2022 .
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. Emerging Growth Company InApril 2012 , the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an "emerging growth company," or an EGC, can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for new or revised accounting standards during the period in which we remain an emerging growth company; however, we may adopt certain new or revised accounting standards early. We will remain an emerging growth company until the earliest to occur of: (1) the last day of the fiscal year in which we have more than$1.07 billion in annual revenue; (2) the date we qualify as a "large accelerated filer," with at least$700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than$1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering. We are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that our voting and non-voting common stock held by non-affiliates is more than$250.0 million measured on the last business day of our second fiscal quarter, or our annual revenues are more than$100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is more than$700.0 million measured on the last business day of our second fiscal quarter.
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