You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year endedDecember 31, 2021 , filed with theSecurities and Exchange Commission ("SEC") onMarch 31, 2022 (as subsequently amended by Amendment No. 1 to the Company's Annual Report on Form 10-K, filed with theSEC onApril 29, 2022 , the "2021 Form 10-K"). Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "we," "us," and "our" refer toInvivyd, Inc. together with its consolidated subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements regarding our management team's expectations, hopes, beliefs, intentions or strategies regarding the future, projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, and are not guarantees of future performance. The words "may," "anticipate," "believe," "could," "expect," "intends," "might," "plan," "possible," "potential," "aim," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements speak only as of the date of this Quarterly Report on Form 10-Q and 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. 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 include, without limitation, statements about the following:
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the timing, progress and results of our preclinical studies and clinical trials of our product candidates, including statements regarding the timing of our planned regulatory submissions, initiation and completion of studies or trials and related preparatory work and the period during which the results of the trials will become available, and our research and development programs;
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the timing of any submission of filings for regulatory approval of, and our ability to obtain and maintain regulatory approvals for, our product candidates;
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our manufacturing capabilities and strategy, including the scalability and commercial viability of our manufacturing methods and processes;
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our ability to identify patients with the diseases treated by our product candidates and to enroll these patients in our clinical trials;
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our expectations regarding the size of the patient populations, market acceptance and opportunity for and clinical utility of our product candidates, if approved for commercial use;
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our expectations regarding the scope of any approved indication for NVD200, adintrevimab, or any other product candidate;
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our ability to successfully commercialize our product candidates;
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our ability to leverage technology and our platform to identify and develop future product candidates;
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our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for or ability to obtain additional funding before we can expect to generate any revenue from product sales;
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our belief that we have sufficient cash resources to fund our operating expenses and capital expenditure requirements into the second quarter of 2024;
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our competitive position and the development of and projections relating to our competitors or our industry; and
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business disruptions affecting our preclinical studies or the initiation, patient enrollment, development and operation of our clinical trials, including a public health crisis, such as the outbreak of COVID-19.
24 -------------------------------------------------------------------------------- The foregoing list of forward-looking statements is not exhaustive. You should refer to the "Risk Factors" section of this Quarterly Report on Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Other sections of this Quarterly Report on Form 10-Q may include additional factors that could harm our business and financial performance. 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. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. 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. You should, however, review the factors and risks and other information we describe in the reports we file from time to time with theSEC . Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Overview
Invivyd, Inc. is a biopharmaceutical company on a mission to protect humanity from serious viral respiratory diseases. We are developing antibodies to transcend the limits of naturally occurring immunity and provide superior protection from viral diseases, beginning with coronavirus disease 2019 ("COVID-19"). Our technology works at the intersection of evolutionary virology, predictive modeling, and antibody engineering, and is designed to identify high-quality, long-lasting antibodies with a high barrier to viral escape. With our integrated discovery platform approach, we are generating a robust pipeline of product candidates for use in both prevention and treatment of disease. NVD200 is a combination product of two monoclonal antibodies which demonstrated potent in vitro neutralizing activity against prior and current SARS-CoV-2 variants of concern, including Omicron sublineages, as well as the more antigenically divergent SARS-CoV-1. This antibody combination has been selected for neutralization potency, breadth of coverage, and non-dominant epitope recognition. The antibodies in the combination target non-overlapping epitopes that are rarely targeted by endogenous neutralizing antibodies, which limits immune pressure on these sites and increases the probability of sustained utility in an evolving viral landscape. We intend to initiate clinical trials of NVD200 in the first quarter of 2023. One of the antibodies in NVD200 is a re-engineered version of adintrevimab, our investigational monoclonal antibody. Adintrevimab has demonstrated clinically meaningful results in global Phase 3 clinical trials against multiple variants of concern for the prevention and treatment of COVID-19. Due to the emergence and global spread of the Omicron variant BA.1, against which adintrevimab has reduced in vitro neutralization potency compared to prior variants, enrollment was paused in Phase 2/3 trials inJanuary 2022 . We reported preliminary safety and efficacy data (pre-Omicron) from both our EVADE (evaluating adintrevimab for the prevention of COVID-19) and STAMP (evaluating adintrevimab for the treatment of COVID-19) trials inMarch 2022 and are in the process of closing both trials. We also have multiple discovery stage candidates for the prevention of seasonal influenza. COVID-19 has caused the current global pandemic that remains a significant global health crisis and has resulted in millions of deaths and lasting health problems in many survivors. We believe that COVID-19 will become an endemic disease requiring a variety of effective, safe and convenient prevention and treatment options for years to come. We are leveraging our team's collective expertise and capabilities to deliver our COVID-19 antibodies to patients and to discover novel solutions to infectious diseases through internal research and collaborations. Adintrevimab is designed to be a potent, long-acting and broadly neutralizing antibody for both the prevention and treatment of COVID-19. Data from our Phase 1 healthy volunteer clinical trial, ADG20-1-001, confirmed the extended half-life of adintrevimab, which we believe may allow for durable protection against COVID-19, depending on the variant. InFebruary 2022 , we expanded the Phase 1 clinical trial to evaluate safety and pharmacokinetics at higher doses. As ofNovember 3, 2022 , there were no trial drug related adverse events, serious adverse events, injection-site reactions or hypersensitivity reactions reported across all dose levels evaluated. In the primary analysis population, patients infected with or exposed to a non-Omicron variant (the "pre-Omicron group"), adintrevimab met the primary objectives across all three indications, demonstrating statistically significant and clinically meaningful efficacy. In pre-exposure and post-exposure prophylaxis, adintrevimab was associated with 71% and 75% relative risk reductions compared to placebo, respectively, in the prevention of reverse transcription-polymerase chain reaction ("RT-PCR") confirmed symptomatic COVID-19. In an exploratory analysis of patients exposed to the Omicron variant (the "post-Omicron group") in pre-exposure prophylaxis, adintrevimab was associated with a clinically meaningful reduction in the risk of developing RT-PCR confirmed symptomatic COVID-19 compared with placebo. In treatment, adintrevimab was associated with a 66% relative risk reduction compared to placebo in the incidence COVID-19 related hospitalization or all cause death through Day 29 in the pre-Omicron group. In patients treated within three days of symptom onset, adintrevimab was associated with a reduced risk of COVID-19 hospitalization or death 25 -------------------------------------------------------------------------------- from any cause through Day 29 by 74% compared to placebo. A preliminary analysis of available safety data in each trial revealed a safety profile similar to that of placebo for adintrevimab. Adintrevimab, which has demonstrated broadly neutralizing activity in vitro against SARS-CoV-2 variants of concern including Alpha, Beta, Delta, Gamma and Omicron BA.1, has markedly reduced neutralization activity in vitro against the currently circulating Omicron sublineages. Based on feedback from the FDA regarding adintrevimab's lack of neutralizing activity against the BA.2 variant, we paused the submission of an Emergency Use Authorization ("EUA") request. We intend to continue engaging with the FDA and monitor the evolution of SARS-CoV-2 and the in vitro activity of adintrevimab against predominant variants inthe United States to determine the optimal timing for the planned EUA request. In addition, we continue engaging with other health authorities outside ofthe United States on potential authorization pathways for adintrevimab. We are committed to advancing adintrevimab as a potential future therapeutic option in anticipation of the emergence of new variants. More than 700,000 doses of adintrevimab have been manufactured and are available as a prophylaxis and treatment option for COVID-19 in the future, if a suitable variant arises. We plan to leverage our integrated discovery platform approach to produce candidate antibodies to develop therapeutic or preventative options for other infectious diseases, such as additional coronaviruses and influenza. We continue to evaluate product candidates for infectious diseases with high unmet medical need through in-licensing opportunities that may leverage our team's expertise and capabilities. SARS-CoV-2 has given rise to a global pandemic that swept rapidly throughout the world beginning in 2020. Of significant current concern is the continued emergence of a number of SARS-CoV-2 variants with increased transmissibility, pathogenicity, and/or the ability to evade neutralizing antibodies. In addition to the emergence of these variants, there are multiple factors that we believe contribute to the likelihood of COVID-19 becoming an endemic threat, including: (1) viral transmission before symptom onset; (2) uneven global rollout of vaccinations; (3) ongoing vaccine hesitancy; (4) limited duration of immunity conferred by both natural infection and vaccination; (5) limited vaccine efficacy against certain SARS-CoV-2 variants; (6) uncertain impact of vaccines on transmission; and (7) variable implementation of virus mitigation behaviors, such as wearing masks and social distancing. We also believe that future pandemics similar to the COVID-19 pandemic are likely because, in many parts of the world, humans live in close proximity to animal species harboring coronaviruses that are capable of infecting humans. Our vision is to discover, develop and commercialize differentiated products for the prevention and treatment of infectious diseases. To enable this vision, our current discovery efforts are focused on unique antibody-based product candidates that we optimize to improve breadth, potency, half-life, where applicable, and developability. Key elements that we believe differentiate our approach include: (1) recognition of the importance of and identification of broadly neutralizing antibodies; (2) industry-leading B cell mining, protein engineering and developability screening capabilities through our internal expertise and collaborations; and (3) reducing risk of clinical resistance. InOctober 2022 , we submitted for publication in a peer-reviewed journal, and deposited to MedRxiv, a scientific manuscript describing an analysis of the relationship between serum neutralizing antibody titers mediated by vaccination and passive monoclonal antibody transfer and protection against symptomatic COVID-19. The analysis utilized data from both vaccine efficacy trials and our EVADE trial, which was comprised of patient outcomes across both Delta and BA.1/BA1.1 variants, which adintrevimab neutralizes with different potencies. It is our belief that these data suggest that monoclonal antibody neutralization potency, combined with associated dosing and pharmacokinetic information for any one antibody, is a potential surrogate marker of protection from symptomatic disease. We were formed inJune 2020 . InJuly 2020 , we entered into an assignment and license agreement (the "Adimab Assignment Agreement"), withAdimab , pursuant to which we acquired certain rights toAdimab's antibodies relating to COVID-19 and severe acute respiratory syndrome ("SARS"), as well as related provisional patent applications, know-how and data generated with respect to the associated antibodies. In addition,Adimab granted to us a non-exclusive, worldwide license to certain ofAdimab's platform patents and technology for use in research and development. In connection with the rights and license acquired, we issued 5,000,000 shares of our Series A Preferred Stock toAdimab . InMay 2021 , we entered into a funded discovery agreement withAdimab focused on discovery efforts for new antibodies that may be effective against other coronaviruses and influenza, both of which have the potential to cause pandemics. In the event thatAdimab discovers an antibody that is expected to meet certain product profiles developed by us, we will have the exclusive option to requireAdimab to assign us its rights in any such antibody and to grant us certain licenses. InSeptember 2022 , we entered into a platform transfer agreement withAdimab and were granted the right under certain intellectual property ofAdimab to practice certain elements ofAdimab's platform technology, including B-cell cloning, usingAdimab's proprietary yeast cell lines and other antibody optimization libraries, trade secrets, protocols and software ofAdimab , to discover, engineer and optimize antibodies. We were also granted the right under certain intellectual property ofAdimab to research, develop, make, sell and exploit such antibodies and products containing such antibodies. In 2022, we secured dedicated laboratory space and expanded our research team in order to enable internal discovery and development of our product candidates. In addition, we engage other third parties to perform ongoing research and development and other services on our behalf. Since our inception, we have devoted substantially all of our resources to organizing and staffing, building an intellectual property portfolio, business planning, conducting research and development, establishing and executing arrangements with third parties for the manufacture of our product candidates and raising capital. We rely heavily on partnerships, external consultants and contract research organizations ("CROs") to conduct our discovery, non-clinical, preclinical and clinical activities. Additionally, we are currently 26 -------------------------------------------------------------------------------- dependent on WuXi Biologics (Hong Kong ) Limited ("WuXi"), a contract development and manufacturing organization ("CDMO"), for the manufacture of our product candidates for clinical and commercial use. We expect to continue to rely on third parties for clinical trials and the manufacture and testing of our product candidates. Since our inception, we have financed our operations with net proceeds of$464.7 million from sales of our preferred stock, and most recently, with net proceeds from our initial public offering ("IPO"). InAugust 2021 , we completed our IPO, pursuant to which we issued and sold 20,930,000 shares of our common stock, including 2,730,000 shares of common stock pursuant to the full exercise of the underwriters' option to purchase additional shares. We received aggregate net proceeds from our IPO of$327.5 million , after deducting underwriting discounts and commissions and offering expenses payable by us. To date, we have not generated any revenue from any sources, including product sales or government supply contracts. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our product candidates, if approved. Since our inception, we have incurred significant losses, including a net loss of$196.7 million for the nine months endedSeptember 30, 2022 . As ofSeptember 30, 2022 , we had an accumulated deficit of$488.9 million . We expect to continue to incur significant expenses and recognize losses in the foreseeable future as we expand and progress our research and development activities, as well as the associated manufacturing activities and commercialization efforts. In addition, our losses from operations may fluctuate significantly from period to period depending on the timing of our clinical trials and our expenditures on other research and development activities, including any associated manufacturing activities, and potential commercialization efforts. Our expenses could increase substantially in connection with our ongoing activities, as we:
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initiate and conduct clinical trials of NVD200, adintrevimab or any other product candidate;
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develop product candidates in new indications or patient populations;
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continue to advance the preclinical development of our other product candidates and our preclinical and discovery programs, including development and screening of additional antibodies;
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seek regulatory approval for any product candidates that successfully complete clinical trials;
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pursue marketing approvals or EUA and reimbursement for our product candidates;
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acquire or in-license other product candidates, intellectual property and/or discovery technologies;
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further develop and validate our commercial-scale current good manufacturing practices ("cGMP") manufacturing process for NVD200;
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manufacture material under cGMP at our contracted manufacturing facilities for clinical trials and potential EUA, regulatory approval and commercial sales;
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maintain, expand, enforce, defend and protect our intellectual property portfolio;
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comply with regulatory requirements established by the applicable regulatory authorities;
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establish a sales, marketing and distribution infrastructure to commercialize any product candidates for which we may obtain regulatory approval or EUA;
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hire and retain additional personnel, including research, clinical, development, manufacturing, quality control, quality assurance, regulatory and scientific personnel;
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add operational, financial, corporate development, management information systems and administrative personnel, including personnel to support our product development and planned future commercialization efforts; and
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incur additional legal, accounting and other expenses in operating as a public company.
We do not anticipate generating revenue from product sales, including government supply contracts, unless and until we successfully complete clinical development and obtain marketing approvals or EUA for one or more of our product candidates. Subject to receiving marketing approval or EUA for any of our product candidates for the prevention and/or treatment of COVID-19, we expect to enter into arrangements with third parties for the sale, marketing and distribution of our product candidates. Accordingly, if we obtain marketing approval or EUA for any of our product candidates, we will incur significant additional commercialization expenses related to product manufacturing, marketing, sales and distribution. 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 a combination of equity offerings, government or private-party grants, debt financings, collaborations with other companies and strategic alliances. 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, scale back or 27 --------------------------------------------------------------------------------
discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in-licenses or acquisitions.
Because of the numerous risks and uncertainties associated with pharmaceutical product development and emergence of adintrevimab susceptible SARS-CoV-2 VOCs, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. We may never obtain regulatory approval for any of our product candidates. Even if we are able to generate 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. Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities of$418.7 million as ofSeptember 30, 2022 , will be sufficient to fund our operating expenses and capital expenditure requirements into the second quarter of 2024. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See "Liquidity and Capital Resources."
Impact of COVID-19 on Our Operations
InMarch 2020 , theWorld Health Organization declared the outbreak of COVID-19 a global pandemic. The evolving and constantly changing impact of the pandemic and the disease will directly affect the potential commercial prospects of NVD200, adintrevimab and other product candidates for the prevention and treatment of COVID-19. The severity of the COVID-19 pandemic, the evolution of the disease and the continued emergence of VOCs (such as the widespread Omicron variant and its sublineages), the availability, administration and acceptance of vaccines, monoclonal antibodies, antiviral agents and other therapeutic modalities, vaccine mandates by employers and/or local or national governments, and the potential development of "herd immunity" by the global population will affect the design and enrollment of our clinical trials, the potential regulatory authorization or approval of our product candidates and the commercialization of our product candidates, if approved. In addition, our business and operations may be more broadly adversely affected by the COVID-19 pandemic. The COVID-19 outbreak and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred, supply chains have been disrupted, facilities and production have been suspended and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services has fallen. The global COVID-19 pandemic continues to evolve rapidly, and we will continue to monitor it closely. The ultimate extent of the impact of the COVID-19 pandemic on our business, financial condition, operations and product development timelines and plans remains highly uncertain and will depend on future developments, including the duration and spread of outbreaks and the continued emergence of variants, its impact on our clinical trial design and enrollment, trial sites, CROs, CDMOs, and other third parties with which we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. To date, we have experienced some delays and disruptions in our development activities as a result of the COVID-19 pandemic. Some of our CROs, CDMOs and other service providers also continue to be impacted. We will continue to monitor developments as we address the disruptions, delays and uncertainties relating to the COVID-19 pandemic. These developments and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, our results and operations may be materially adversely affected and may affect our ability to raise capital.
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales, including government supply contracts, or any other sources. If our development efforts for our product candidates are successful and result in regulatory approval or collaboration or license agreements with third parties, we may generate revenue in the future from product sales or payments from collaboration or license agreements that we may enter into with third parties, or any combination thereof.
Research and Development Expenses
The nature of our business and primary focus of our activities generates a significant amount of research and development costs. Research and development expenses represent costs incurred by us for:
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the non-clinical and preclinical development of our product candidates, including our discovery efforts;
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the procurement of our product candidates from third-party manufacturers; and
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the global clinical development of our product candidates.
Such costs consist of:
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personnel-related expenses, including salaries, bonuses, benefits and other compensation-related costs, including stock-based compensation expense, for employees engaged in research and development functions;
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expenses incurred under agreements with third parties, such as collaborators, consultants, contractors and CROs, that conduct the discovery, non-clinical and preclinical studies and clinical trials of our product candidates and research programs;
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costs of procuring manufactured product candidates for use in non-clinical studies, preclinical studies and clinical trials from third-party CDMOs;
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costs of outside consultants and advisors, including their fees and stock-based compensation;
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laboratory-related expenses, which include equipment, laboratory supplies, rent expense and other operating costs;
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payments made under third-party licensing agreements; and
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other expenses incurred as a result of research and development activities.
We expense research and development costs as incurred. Non-refundable 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. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered. Our primary focus since inception has been the development of antibodies against COVID-19. Our research and development costs consist primarily of external costs, such as fees paid to CDMOs, CROs and consultants in connection with our non-clinical studies, preclinical studies and clinical trials. To date, external research and development costs for any individual product candidate have been tracked commencing upon product candidate nomination. We do not allocate employee-related costs, costs associated with our discovery efforts and other internal or indirect costs to specific research and development programs or product candidates because these resources are used and these costs are deployed across multiple programs under development and, as such, are not separately classified. Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher and more variable development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Our research and development expenses could increase substantially in the near term as we advance NVD200 through clinical development, pursue regulatory approval of our product candidates, continue to discover and develop additional product candidates and incur expenses associated with hiring additional personnel to support our research and development efforts, including the associated manufacturing activities. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:
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the timing and progress of preclinical and clinical development activities;
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the number and scope of preclinical and clinical programs we decide to pursue;
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filing acceptable investigational new drug applications with the FDA or comparable foreign applications that allow commencement of our planned clinical trials or future clinical trials for our product candidates;
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sufficiency of our financial and other resources to complete the necessary preclinical studies and clinical trials, manufacture the product candidates and complete associated regulatory activities;
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our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and successfully develop, obtain regulatory approval or EUA for our product candidates;
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successful enrollment and timely completion of clinical trials, including our ability to generate positive data from any such clinical trials;
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the costs associated with the development of any additional development programs and product candidates we identify in-house or acquire through collaborations;
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the prevalence, nature and severity of adverse events experienced with any product candidates;
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the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;
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our ability to obtain and maintain patent, trademark and trade secret protection and regulatory exclusivity for our product candidates, if and when approved, and otherwise protecting our rights in our intellectual property portfolio;
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receipt of timely marketing approvals from applicable regulatory authorities;
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our ability to maintain compliance with regulatory requirements, including good clinical practices, current good laboratory practices and cGMPs, and to comply effectively with other rules, regulations and procedures applicable to the development and sale of pharmaceutical products;
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potential significant and changing government regulation, regulatory guidance and requirements and evolving treatment guidelines; and
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the impact of any business interruptions to our operations or those of third parties with which we work, particularly in light of the current COVID-19 pandemic.
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. We may never succeed in obtaining regulatory approval or EUA for any of our product candidates. In addition, in the absence of a declaration by theU.S. Department of Health and Human Services of a federal public health emergency (a "Public Health Emergency"), we will not be able to receive an EUA. The declaration of a Public Health Emergency has recently been extended tomid-January 2023 and may or may not be renewed again.
Acquired in-process research and development ("IPR&D") expenses consist primarily of the upfront costs we incurred inJuly 2020 , as well as any costs of contingent milestone payments we incurred in subsequent periods, to acquire rights toAdimab's antibodies relating to COVID-19 and SARS and related intellectual property and a license to certain ofAdimab's platform patents and technology, or the IPR&D assets, for use in the research and development of our product candidates. We expensed the cost of the IPR&D assets because they had no alternative future use as of the acquisition date. We will recognize additional acquired IPR&D expenses in the future if and when it is deemed probable that we will make contingent milestone payments toAdimab under the terms of the agreement by which we acquired the IPR&D assets.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries, bonuses, benefits, third-party fees and other related costs, including stock-based compensation, for our personnel and external contractors involved in our executive, finance, legal, business development and other administrative functions, as well as our commercial function. Selling, general and administrative expenses also include costs incurred for outside services associated with such functions, including legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; insurance costs; market research costs; and other selling, general and administrative expenses. These costs relate to the operation of the business, unrelated to the research and development function, or any individual program. Our selling, general and administrative expenses could increase in the future as our business expands and we increase our headcount to support the expected growth in our research and development activities and the potential commercialization of our product candidates. In particular, we could incur additional commercialization expenses prior to any regulatory approval or EUA of our product candidates as we continue to expand our commercial function to support potential future product launches. We also anticipate that we will continue to incur increased expenses associated with operating as a public company, including increased costs of accounting, audit, legal, regulatory and tax-related services, director and officer insurance premiums, and investor and public relations costs. We also expect to incur additional intellectual property-related expenses as we file additional patent applications to protect innovations arising from our research and development activities. InJune 2022 , and subsequently amended inSeptember 2022 , we entered into a noncancelable agreement for dedicated laboratory and office space inNewton, MA for research and development purposes. ThroughSeptember 30, 2022 , we have operated as a virtual company and maintained a corporate headquarters for general and administrative purposes only. Therefore, we did not incur material operating expenses for the rent, maintenance and insurance of facilities, or for depreciation of fixed assets. Other Income (Expense), Net Other income (expense), net consists of interest income earned from our cash, cash equivalents and marketable securities and the net amortization or accretion of premiums and discounts related to our marketable securities. We expect our interest income to vary each reporting period depending on our average bank deposits, money market funds and investment balances during the period and market interest rates.
Income Taxes
Since our inception, we have not recorded any income tax expense or realized benefits for the net losses we have incurred or for the research and development tax credits generated in each period as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss ("NOL") carryforwards and tax credit carryforwards will not be realized. 30 --------------------------------------------------------------------------------
Results of Operations
Comparison of the three months ended
The following table summarizes our results of operations for the three months
ended
Three Months Three Months Ended Ended September September 30, 30, (in thousands) 2022 2021 Change Operating expenses: Research and development$ 30,131 $ 45,366 $ (15,235 ) Acquired in-process research and development 4,000 4,000 - Selling, general and administrative 13,200 11,052 2,148 Total operating expenses 47,331 60,418 (13,087 ) Loss from operations (47,331 ) (60,418 ) 13,087 Other income (expense): Other income (expense), net 2,244 43 2,201 Total other income (expense), net 2,244 43 2,201 Net loss$ (45,087 ) $ (60,375 ) $ 15,288
The following discussion presents the components of our expenses for the periods presented:
Research and Development Expenses
Three Months Three Months Ended Ended September September 30, 30, (in thousands) 2022 2021 Change Direct, external research and development expenses by program: Adintrevimab$ 6,248 $ 31,878 $ (25,630 ) NVD200 11,837 - 11,837 Unallocated research and development expenses: Personnel-related costs 9,701 6,857 2,844 External discovery-related and other costs 2,345 6,631 (4,286 ) Total research and development expenses$ 30,131 $
45,366
Research and development expenses were
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The decrease in direct costs related to our adintrevimab program of$25.6 million was primarily due to a decrease in our contract manufacturing and contract research expenses. Contract manufacturing expenses decreased$15.0 million , primarily related to the ramp up of adintrevimab manufacturing during the three months endedSeptember 30, 2021 , for which there were less costs incurred, and which were further reduced by the recognition of the seven-figure WuXi credit, during the three months endedSeptember 30, 2022 , partially offset by an increase in costs related to the manufacturing of materials for use in our clinical trials and non-clinical studies for our NVD200 product candidate. Contract research expenses decreased$9.6 million related to lower costs due to a pause in trial enrollment inJanuary 2022 . In addition, other external and non-clinical expenses decreased$1.0 million .
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The increase in direct expenses related to NVD200 is due to the nomination of our NVD200 product candidate in 2022 to proceed to IND-enabling activities. The costs primarily related to contract manufacturing expenses for the manufacture of materials for use in our clinical trials and non-clinical studies.
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Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were$6.3 million and stock-based compensation expense was$3.4 million for the three months endedSeptember 30, 2022 , compared to personnel-related costs of$4.7 million and stock-based compensation expense of$2.2 million for the three months endedSeptember 30, 2021 . The increase in personnel-related costs of$2.8 million was primarily due to the hiring of additional individuals to support the development of our product candidates, including an increase in stock-based compensation expense of$1.2 million .
•
The decrease in external discovery-related and other costs of$4.3 million was primarily due to a decrease of$4.4 million of direct costs related to ADG10, an antibody-based product candidate previously considered for potential use in combination with adintrevimab for the treatment and prevention of COVID-19, during the three months endedSeptember 30, 2021 , for which there were no comparable costs during the three months endedSeptember 30, 2022 . 31 --------------------------------------------------------------------------------
Acquired IPR&D expenses of$4.0 million for the three months endedSeptember 30, 2022 consisted of$1.0 million incurred related to an option exercise pursuant to the Adimab Collaboration Agreement and$3.0 million incurred related to our upfront consideration payable for the rights assigned pursuant to theAdimab Platform Transfer Agreement. Acquired IPR&D expenses of$4.0 million for the three months endedSeptember 30, 2021 consisted of the cost we incurred in the period under the Adimab Assignment Agreement for a milestone payment that became due toAdimab inAugust 2021 upon the dosing of the first patient in a Phase 3 global clinical trial evaluating adintrevimab for the prevention of COVID-19. The amount of this contingent payment was recognized as an IPR&D expense based on the nature of the associated assets acquired fromAdimab on the date the milestone achievement became probable.
Selling, General and Administrative Expenses
Three Months Three Months Ended Ended September September 30, 30, (in thousands) 2022 2021 Change Personnel-related costs$ 6,749 $ 6,432 $ 317 Professional and consultant fees 5,838 4,108 1,730 Other 613 512 101
Total selling, general and administrative expenses
Selling, general and administrative expenses were$13.2 million for the three months endedSeptember 30, 2022 , compared to$11.1 million for the three months endedSeptember 30, 2021 . The$2.1 million increase in selling, general and administrative expenses was primarily due to the following:
•
Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were$2.7 million and stock-based compensation expense was$4.0 million for the three months endedSeptember 30, 2022 , compared to personnel-related costs of$2.6 million and stock-based compensation expense of$3.8 million for the three months endedSeptember 30, 2021 . Personnel-related costs remained relatively consistent between periods.
•
The increase in professional services and consultant fees of$1.7 million was primarily due to costs incurred as we began operating as a public company, including expenses related to corporate governance matters, director and officer insurance premiums, audit and other fees.
•
Other costs remained relatively consistent between periods.
Other Income (Expense), Net
Other income (expense), net was
Comparison of the nine months ended
The following table summarizes our results of operations for the nine months
ended
Nine Months Nine Months Ended Ended September 30, September 30, (in thousands) 2022 2021 Change Operating expenses: Research and development$ 159,295 $ 114,465 $ 44,830 Acquired in-process research and development 4,000 7,500 (3,500 ) Selling, general and administrative 36,524 21,853 14,671 Total operating expenses 199,819 143,818 56,001 Loss from operations (199,819 ) (143,818 ) (56,001 ) Other income (expense): Other income (expense), net 3,076 70 3,006 Total other income (expense), net 3,076 70 3,006 Net loss$ (196,743 ) $ (143,748 ) $ (52,995 ) 32
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The following discussion presents the components of our expenses for the periods presented:
Research and Development Expenses
Nine Months Nine Months Ended Ended September September 30, 30, (in thousands) 2022 2021 Change Direct, external research and development expenses by program: Adintrevimab$ 107,044 90,561$ 16,483 NVD200 11,837 - 11,837 Unallocated research and development expenses: Personnel-related costs 28,410 14,457 13,953 External discovery-related and other costs 12,004 9,447 2,557 Total research and development expenses$ 159,295 $
114,465
Research and development expenses were
•
The increase in direct costs related to our adintrevimab program of$16.5 million was primarily due to an increase in our contract manufacturing and contract research expenses. Contract manufacturing expenses increased$13.5 million related to 2022 commercial manufacturing of adintrevimab, procured from WuXi, our sole-source supplier of drug substance and drug product, partially offset by the recognition of the seven-figure WuXi credit. Contract research expenses increased$4.3 million related to monitoring of patients enrolled in our clinical trials as of the enrollment pause inJanuary 2022 , compared to lower enrollment and a partial period of clinical trial related expenses during the nine months endedSeptember 30, 2021 . These increases were partially offset by a decrease of$1.3 million in other external and non-clinical expenses.
•
The increase in direct expenses related to NVD200 is due to the nomination of our NVD200 product candidate in 2022 to proceed to IND-enabling activities. The costs primarily related to contract manufacturing expenses for the manufacture of materials for use in our clinical trials and non-clinical studies.
•
Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were$18.4 million and stock-based compensation expense was$10.0 million for the nine months endedSeptember 30, 2022 , compared to personnel-related costs of$10.9 million and stock-based compensation expense of$3.6 million for the nine months endedSeptember 30, 2021 . The increase in personnel-related costs of$13.9 million was primarily due to the hiring of additional individuals to support the development of our product candidates, including an increase in stock-based compensation expense of$6.4 million .
•
The increase in external discovery-related and other costs of$2.6 million was primarily due to an increase of$2.6 million related to the quarterly fee under the Adimab Collaboration Agreement, which commenced during the three months endedSeptember 30, 2021 , an increase of$1.1 million related to services performed byAdimab on our behalf under the Adimab Assignment Agreement and the Adimab Collaboration Agreement, an increase of$1.7 million related to information technology costs, software expenditures, and insurance costs, an increase of$0.6 million in laboratory-related expenses, which include equipment, laboratory supplies, rent expense and other operating costs, and an increase of$1.0 million in other external discovery-related and other costs. These increases are offset by a decrease of$4.4 million of direct costs related to ADG10 during the nine months endedSeptember 30, 2021 , for which there were no comparable costs during the nine months endedSeptember 30, 2022 .
Acquired IPR&D expenses of$4.0 million for the nine months endedSeptember 30, 2022 consisted of$1.0 million incurred related to an option exercise pursuant to the Adimab Collaboration Agreement and$3.0 million incurred related to our upfront consideration payable for the rights assigned pursuant to theAdimab Platform Transfer Agreement. Acquired IPR&D expenses of$7.5 million for the nine months endedSeptember 30, 2021 consisted of the costs we incurred in the period under theAdimab Assignment Agreement for a$1.0 million milestone payment that became due toAdimab inFebruary 2021 upon the dosing of the first patient in a Phase 1 clinical trial evaluating adintrevimab for the prevention of COVID-19, a$2.5 million milestone payment that became due toAdimab inApril 2021 upon the dosing of the first patient in the first Phase 2 clinical trial evaluating adintrevimab for the prevention of COVID-19 and a$4.0 million milestone payment that became due toAdimab inAugust 2021 upon the dosing of the first patient in a Phase 3 global clinical trial evaluating adintrevimab for the prevention of COVID-19. The 33 --------------------------------------------------------------------------------
amounts of these contingent payments were recognized as an IPR&D expense based
on the nature of the associated assets acquired from
Selling, General and Administrative Expenses
Nine Months Nine Months Ended Ended September 30, September 30, (in thousands) 2022 2021 Change Personnel-related costs$ 14,176 $ 11,980 $ 2,196 Professional and consultant fees 20,744 9,026 11,718 Other 1,604 847 757
Total selling, general and administrative expenses
21,853
Selling, general and administrative expenses were$36.5 million for the nine months endedSeptember 30, 2022 , compared to$21.9 million for the nine months endedSeptember 30, 2021 . The$14.6 million increase in selling, general and administrative expenses was primarily due to the following:
•
Personnel-related costs, including salaries, bonuses, benefits and other compensation-related costs were$8.4 million and stock-based compensation expense was$5.8 million for the nine months endedSeptember 30, 2022 , compared to personnel-related costs of$5.7 million and stock-based compensation expense of$6.3 million for the nine months endedSeptember 30, 2021 . The increase in personnel-related costs of$2.2 million was primarily due to the hiring of additional individuals to support our operations as we began operating as a public company, partially offset by the reversal of stock-based compensation expense related to the forfeiture of stock options in conjunction with the resignation of our former Chief Executive Officer and President.
•
The increase in professional services and consultant fees of$11.7 million was primarily due to costs incurred as we began operating as a public company, including expenses related to corporate governance matters, director and officer insurance premiums, audit and other fees.
•
Other costs remained relatively consistent between periods.
Other Income (Expense), Net
Other income (expense), net was
Liquidity and Capital Resources
Sources of Liquidity
Since our inception inJune 2020 , we have not generated any revenue from any sources, including from product sales or government supply contracts, and have incurred significant operating losses and negative cash flows from operations. We expect to incur substantial expenses and operating losses for the foreseeable future as we advance the clinical development of our product candidates. To date, we have financed our operations with net proceeds of$464.7 million from sales of our preferred stock, and with net proceeds from our IPO inAugust 2021 , in which we issued and sold 20,930,000 shares of our common stock, including 2,730,000 shares of common stock pursuant to the full exercise of the underwriters' option to purchase additional shares. We received aggregate net proceeds from our IPO of$327.5 million , after deducting underwriting discounts and commissions and offering expenses payable by us.
As of
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented: Nine Months Nine Months Ended September Ended September 30, 30, (in thousands) 2022 2021 Net cash used in operating activities$ (172,583 ) $ (111,524 ) Net cash used in investing activities (91,854 ) (188,627 ) Net cash provided by financing activities 365
663,432
Net (decrease) increase in cash and cash equivalents
$ 363,281 34
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Operating Activities
During the nine months endedSeptember 30, 2022 , operating activities used$172.6 million of cash, primarily due to our net loss of$196.7 million , partially offset by non-cash charges of$16.1 million . Net cash provided by changes in our operating assets and liabilities consisted of a$10.4 million increase in accounts payable, offset by a$27.6 million decrease in accrued expenses, a$22.4 million decrease in prepaid expenses and other current assets, and a$3.1 million decrease in other non-current assets. The increase in accounts payable and decrease in accrued expenses was primarily due to the timing of vendor invoicing and payments. The decrease in prepaids expenses and other current assets and in other non-current assets was primarily due to our utilization of WuXi manufacturing deposits. During the nine months endedSeptember 30, 2021 , operating activities used$111.5 million of cash, primarily due to our net loss of$143.7 million , partially offset by non-cash charges of$10.6 million . Net cash provided by changes in our operating assets and liabilities consisted of a$8.9 million increase in accounts payable and a$30.1 million increase in accrued expenses, partially offset by a$11.3 million increase in prepaid expenses and other current assets and a$6.0 million increase in other non-current assets. The increases in accounts payable and accrued expenses were primarily due to amounts owed to vendors in connection with our research and development activities, including increased external costs associated with clinical trials and manufacturing, as well as increases in accrued employee bonuses. The increase in prepaid expenses and other current assets and other non-current assets was primarily due to prepayments for external research and development activities and prepayments for insurance premiums.
Investing Activities
Net cash used in investing activities during the nine months endedSeptember 30, 2022 consisted of$140.3 million in purchases of marketable securities and$0.5 million in purchases of property and equipment, offset by$49.0 million in maturities of marketable securities.
Net cash used in investing activities during the nine months ended
Financing Activities
Net cash provided by financing activities during the nine months endedSeptember 30, 2022 primarily consisted of$0.2 million from exercises of stock options and$0.1 million from issuance of common stock under the employee stock purchase plan. Net cash provided by financing activities during the nine months endedSeptember 30, 2021 consisted of$328.3 million from sales of our common stock and$335.2 million of net proceeds from the issuance of our Series C Preferred Stock inApril 2021 . Funding Requirements Our expenses could increase in connection with our ongoing activities, particularly as we advance the non-clinical and preclinical studies and the clinical trials of our product candidates, including any associated manufacturing activities, and potential commercialization efforts. Our funding requirements and timing and amount of our operating expenditures will depend on many factors, including:
•
the rate of progress in the development of our product candidates;
•
the scope, progress, results and costs of discovery, non-clinical studies, preclinical development, laboratory testing and clinical trials for our product candidates and associated development programs;
•
the extent to which we develop, in-license or acquire other product candidates and technologies in our pipeline;
•
the scope, progress, results and costs of manufacturing and validation activities associated with our current product candidates with the development and manufacturing of our future product candidates and other programs as we advance them through preclinical and clinical development;
•
the number and development requirements of product candidates that we may pursue;
•
the costs, timing and outcome of regulatory review of our product candidates;
•
our headcount growth and associated costs as we expand our research and development capabilities and establish a commercial infrastructure for any product candidates for which we may obtain regulatory approval or EUA;
•
the timing and costs of securing sufficient capacity for clinical and commercial supply of our current and potential future product candidates, or the raw material components thereof;
•
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval or EUA;
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•
the costs necessary to obtain regulatory approvals, if any, for products inthe United States and other jurisdictions, and the costs of post-marketing studies that could be required by regulatory authorities in jurisdictions where approval is obtained;
•
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
•
the continuation of our existing licensing and collaboration arrangements and entry into new collaborations and licensing arrangements, if at all;
•
the need and ability to hire additional research, clinical, development, scientific and manufacturing personnel;
•
the costs we incur in maintaining business operations;
•
the need to implement additional internal systems and infrastructure;
•
the effect of competing technological, product and market developments;
•
the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;
•
the costs of operating as a public company; and
•
the progression of the COVID-19 pandemic and emergence of potential outbreaks of other coronaviruses, including the impact of any business interruptions to our operations or to those of our contract manufacturers, suppliers or other vendors resulting from the COVID-19 pandemic or other similar public health crises. As ofNovember 10, 2022 , we believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2024. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, government or private-party grants, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of such securities may include liquidation or other preferences and anti-dilution protections that adversely affect your rights as a common stockholder. Additional 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 debt, making acquisitions or capital expenditures or declaring dividends, which could adversely constrain our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute your ownership interest. 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 or through other sources, 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 to third parties that we would otherwise prefer to develop and market ourselves.
Contractual Obligations and Commitments
During the three months endedSeptember 30, 2022 , there were material changes to our contractual obligations from those described in the 2021 Form 10-K. InApril 2022 , the total volume of contractually binding drug substance and drug product batches to be manufactured under the Commercial Manufacturing Agreement was reduced to$51.6 million , a decrease of$107.8 million from the previous commitment of minimum non-cancelable purchase obligations of$159.4 million . In addition, WuXi agreed to provide us with a credit in the low eight-figures to offset future services rendered by WuXi. InJuly 2022 , we provided notice to WuXi to cancel the contractually binding drug product batches. As ofSeptember 30, 2022 , approximately$3.5 million was included in accounts payable and accrued expenses pursuant to the Commercial Manufacturing Agreement. As ofSeptember 30, 2022 , the total remaining cost of contractually binding drug substance batches to be manufactured under the Commercial Manufacturing Agreement is$18.1 million . InJune 2022 , we entered into a two year noncancelable agreement for dedicated laboratory and office space inNewton, Massachusetts . The monthly rental payments under the agreement include base rent charges of$0.7 million per year. InSeptember 2022 , we amended theNewton, Massachusetts agreement to terminate our initial rent obligation. Pursuant to the amendment, we entered into a separate two year noncancelable agreement for new dedicated laboratory and office space on the same campus as the aforementionedNewton, Massachusetts lease. We are expected to take occupancy of the new space during the fourth quarter of 2022. The monthly rental payments under the amended agreement include base rent charges of$1.3 million per year. For additional information, see Note 8 to our condensed consolidated financial statements appearing in this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Significant Judgments and Estimates
Our financial statements are prepared in accordance with generally accepted accounting principles inthe United States . The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies and estimates are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Judgments and Estimates" in our 2021 Form 10-K. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no significant changes to our critical accounting policies and estimates from those 36 -------------------------------------------------------------------------------- described in the 2021 Form 10-K, except as disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations and cash flows is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. 37
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