JASPER THERAPEUTICS, INC. You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this "Quarterly Report") and with the audited financial statements and the related notes for the fiscal years endedDecember 31, 2020 and 2019 included in our final prospectus filed with theSecurities and Exchange Commission onOctober 26, 2021 pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"), relating to the Registration Statement on Form S-1 (the "Prospectus"). Certain of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled "Risk Factors, in Part II, Item 1A of this Quarterly Report," 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. You should carefully read the section entitled "Risk Factors" to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section of this Quarterly Report entitled "Cautionary Note Regarding Forward-Looking Statements." The events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. Our company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by
law.
Overview
We are a clinical-stage biotechnology company dedicated to enabling cures
through hematopoietic stem cell therapy. We are focused on the development and
commercialization of safer and more effective conditioning agents and stem cell
engineering to allow for expanded use of stem cell transplantation and ex
vivo gene therapy, a technique in which genetic manipulation of cells is
performed outside of the body prior to transplantation.
Our drug development pipeline includes multiple product candidates designed to
improve hematopoietic stem cell therapy. Our lead product candidate, JSP191, is
in clinical development as a novel conditioning antibody that clears
hematopoietic stem cells from bone marrow in patients prior to undergoing
allogeneic stem cell therapy or stem cell gene therapy. We are also developing
engineered hematopoietic stem cells ("eHSC") product candidates reprogrammed
using mRNA delivery and gene editing that have a competitive advantage over
endogenous hematopoietic stem cells ("HSCs") because they permit higher levels
of engraftment without the need for toxic conditioning of the patient and with
potentially lower risk of other serious complications seen with current stem
cell transplants. We also plan to continue to expand our pipeline to include
other novel stem cell therapies based on immune modulation, graft engineering or
cell and gene therapies. Our goal is to expand the use of curative stem cell
transplant and gene therapies for all patients, including children and
the elderly.
Stem cell transplantation is among the most widely practiced forms of cellular
therapy and has the potential to cure a wide variety of diseases, including
cancers, genetic disorders and autoimmune diseases. A stem cell transplant
procedure involves three main steps: (i) stem cells from the patient's or
donor's bone marrow are collected; (ii) the patient's bone marrow is cleared of
any remaining stem cells in order to make space to receive new transplanted stem
cells, which is known as conditioning; and (iii) the new stem cells are
transplanted into the patient via infusion where they fasten to, or engraft in,
the bone marrow and grow into the blood and immune cells that form the basis of
reset and rebuilt blood and immune systems. Transplants are either allogeneic or
autologous, depending on the source of the new stem cells for the transplant. In
an allogeneic transplant, patients receive cells from a stem cell donor. In an
autologous transplant, the patient's own stem cells are used. Autologous
transplants also include stem cell gene therapies, where cells are collected
from the patient, edited to either enable a functioning gene or correct a
defective gene, and then transplanted into the patient via infusion. Our
programs span both allogeneic and autologous transplants, with initial programs
in JSP191 based on an allogeneic approach.
Currently, patients must receive highly toxic and potentially
life-threatening conditioning agents to prepare their bone marrow for
transplantation with either donor stem cells or their own gene-edited stem
cells. Younger, fitter patients capable of surviving these toxic side effects
are typically given myeloablative, or high-intensity, conditioning whereas older
or less fit patients are typically given reduced intensity, but still toxic,
conditioning which leads to less effective transplants. These toxicities include
a range of acute and chronic effects to the gastrointestinal tract, kidneys,
liver, lung, endocrine, and neurologic tissues. Depending upon the conditioning
regimen, fitness of the patient, and compatibility between the donor and
recipient, the risk of transplant-related mortality ranges from 10% to more than
50% in older patients. Less toxic ways to condition patients have been developed
to enable transplant for older patients or those with major comorbidities, but
these regimens risk less potent disease elimination and higher rates of disease
relapse. Even though stem cell therapy can be one of the most powerful forms of
disease cure, these limitations of non-targeted conditioning regimens have seen
little innovation over the past decade.
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Our lead product candidate, JSP191, is a monoclonal antibody designed to block a
specific survival signal on stem cells and is in development as a highly
targeted conditioning agent prior to stem cell therapy. We are developing JSP191
for severe combined immunodeficiency ("SCID") for which we are currently
conducting an open label Phase 1/2 clinical trial in two cohorts of SCID
patients: patients with a history of a prior allogeneic transplant for SCID but
with poor graft outcomes and newly diagnosed SCID patients. The primary endpoint
in Phase 1 is to evaluate the safety and tolerability of JSP191. The two primary
efficacy endpoints in Phase 2 are the proportion of subjects achieving adequate
donor HSC engraftment and the proportion of subjects achieving naïve T cell
production greater than or equal to 85 cells/uL, a level expected to provide
immune reconstitution, during weeks 36 to 104 post-transplant. Based on
preliminary results from our ongoing Phase 1/2 clinical trial, we believe JSP191
has demonstrated the ability as a single agent to enable engraftment of donor
HSCs as determined by donor chimerism, or the percentage of bone marrow cells in
the patient that are of donor origin after transplant. Five out of the first six
patients produced naïve T cells at a level expected to provide improved immune
function by two years post-transplant. No JSP191 treatment-related serious
adverse events have been reported to date and pharmacokinetics have been
consistent with earlier studies in healthy volunteers. We expect to complete
enrollment in this Phase 1/2 clinical trial by the end of 2022.
The FDA has granted rare pediatric disease designation to JSP191 as a conditioning treatment for patients with SCID. In addition, the FDA granted orphan drug designation to JSP191 for conditioning treatment prior to hematopoietic stem cell transplantation.
We also are evaluating JSP191 in an open label Phase 1 clinical trial in
patients with myelodysplastic syndrome ("MDS") or acute myeloid leukemia ("AML")
that were transplant eligible but still had trace evidence of leukemic cells
that can remain in a patient after chemotherapy, or MRD, as detected by
cytogenetics, flow cytometry or next-generation sequencing. The primary
endpoints are to evaluate the safety, tolerability and pharmacokinetic
parameters of JSP191. In the initial dose finding portion of the clinical trial,
0.6 mg/kg JSP191-based conditioning was well tolerated in all six MDS/AML
patients as of September 30, 2021 . Furthermore, it led to successful transplant
as demonstrated by full donor chimerism (greater than 95%) in five of six
patients and elimination of MRD in five of six patients, which are secondary
endpoints of the clinical trial. The next portion of the clinical trial, a
Phase 1b dose expansion cohort, is currently enrolling at multiple centers. We
expect to complete enrollment in late 2021 to early 2022 with topline data
available in the first half of 2022.
We expect to begin enrollment in an additional Phase 1a pilot clinical trial in
the first quarter of 2022 studying JSP191-based conditioning in patients with
severe autoimmune disease. We are also collaborating with the National
Institutes of Health to conduct clinical trials of JSP191 in patients with
sickle cell disease ("SCD") and chronic granulomatous disease and with Stanford
University in patients with Fanconi anemia. We believe that JSP191 may also be
useful for conditioning in allogenic transplant for other diseases beyond which
the company is currently studying. We also believe that targeted
JSP191-based conditioning may improve the efficacy and safety of gene therapies.
We are working with Graphite Bio, Inc. ("Graphite Bio") for gene therapy in
patients with X-linked severe combined immunodeficiency ("X-SCID") first as a
non-clinical collaboration with an option to expand to clinical trials and with
Aruvant Sciences for gene therapy in patients with SCD.
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Our eHSC platform is designed to overcome key limitations of stem cell
transplant and stem cell gene therapy. By using mRNA delivery and/or gene
editing, we believe we can reprogram donor or gene corrected stem cells to have
a transient proliferative and survival advantage over the patient's existing
cells. We believe initial preclinical experiments by us demonstrate that
expression of a modified stem cell factor receptor can lead to cell line
proliferation independent of stem cell factor ("SCF") concentration, which would
enable our eHSCs to outcompete unmodified HSCs through better survival and
engraftment. Also, since JSP191 only blocks signaling through the stem cell
factor receptor, these eHSCs are not affected by JSP191 when used in
combination. Other initial experiments have shown that mRNA can be used to
express these receptor variants on the cell surface. We have also identified
other potential receptor modifications that prevent the binding of JSP191 but
retain the ability to bind SCF, therefore allowing the eHSCs to proliferate
normally even in the presence of JSP191.
We intend to become a fully integrated discovery, development and commercial
company in the field of hematopoietic stem cell therapy. We are developing our
product candidates to be used individually or, in some cases, in combination
with one another. As a result, we believe our pipeline could be tailored to the
patient-specific disease so that a patient may receive more than one of our
therapies as part of his or her individual allogeneic or gene-edited stem cell
therapy. Our goal is to advance our product candidates through regulatory
approval and bring them to the commercial market based on the data from our
clinical trials and communications with regulatory agencies and payor
communities. We expect to continue to advance our pipeline and innovate through
our research platform.
We have an exclusive license agreement with Amgen Inc. ("Amgen") for the
development and commercialization of the JSP191 monoclonal antibody in all
indications and territories worldwide. We also have an exclusive license
agreement with
AMHC was incorporated in theState of Delaware inAugust 2019 . Old Jasper was incorporated in theState of Delaware inMarch 2018 and did not have any significant operations or research and development activities untilNovember 2019 , when it entered into a license agreement with Amgen for a license to certain patents and know-how related to Amgen's proprietary monoclonal antibody known as AMG 191, which we later renamed as JSP191. Since Old Jasper's inception inMarch 2018 , we have devoted substantially all of our resources to performing research and development, enabling manufacturing activities in support of our product development efforts, hiring personnel, acquiring and developing our technology and product candidates, performing business planning, establishing our intellectual property portfolio, raising capital and providing general and administrative support for these activities. We do not have any products approved for sale and have not generated any revenue from product sales. We expect to continue to incur significant and increasing expenses and substantial losses for the foreseeable future as we continue our development of and seek regulatory approvals for our product candidates and commercialize any approved products, seek to expand our product pipeline and invest in our organization. We expect to incur increased expenses associated with operating as a public company, including significant legal, audit, accounting, regulatory, tax-related, director and officer insurance, investor relations and other expenses.
We have incurred significant losses and negative cash flows from operations since our inception. During the nine months endedSeptember 30, 2020 and 2021, we incurred net losses of$21.7 million and$21.6 million , respectively. We generated negative operating cash flows of$19.1 million and$12.9 million for the nine months endedSeptember 30, 2021 and 2020, respectively. As ofSeptember 30, 2021 , we had an accumulated deficit of$58.4 million . We expect to continue to incur substantial losses for the foreseeable future, and our transition to profitability will depend upon successful development, approval and commercialization of our product candidates and upon achievement of sufficient revenues to support our cost structure. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates. We may never achieve profitability, and unless we do and until then, we will need to continue to raise additional capital. Cash and cash equivalents, inclusive of the net proceeds from the Business Combination and PIPE Financing were$100.9 million as ofSeptember 30, 2021 , which management believes are sufficient to support our operations for at least one year from the issuance date of our interim condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report. Therefore, based on management's updated evaluation of our ability to continue as a going concern, management has concluded the factors that previously raised substantial doubt about our ability to continue as a going concern no longer exist as of the issuance date of our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report. Additional funds are necessary to maintain current operations and to continue our research and development activities, and we will need to raise additional financing to continue our products' development for the foreseeable future, and until we become profitable. Our management plans to monitor expenses and raise additional capital through a combination of public and private equity, debt financings, strategic alliances, and licensing arrangements. Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts needed, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any product candidate, or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially harm our business, financial condition and results of operations.
We expect our expenses will increase substantially in connection with our ongoing and planned activities, as we:
? advance product candidates through preclinical studies and clinical trials;
? procure the manufacture of supplies for our preclinical studies and clinical
trials; ? acquire, discover, validate, and develop additional product candidates;
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? attract, hire and retain additional personnel;
? operate as a public company;
? implement operational, financial and management systems;
? pursue regulatory approval for any product candidates that successfully
complete clinical trials;
? establish a sales, marketing, and distribution infrastructure to commercialize
any product candidate for which we may obtain marketing approval and related
commercial manufacturing build-out; and
? obtain, maintain, expand, and protect our portfolio of intellectual property
rights.
We do not currently own or operate any manufacturing facility. We rely on
contract manufacturing organizations ("CMOs") to produce our drug candidates in
accordance with the FDA's current good manufacturing practices ("cGMP")
regulations for use in our clinical studies. Under our license agreement with
Amgen, we received a substantial amount of drug product to support initiation of
our planned clinical trials of JSP191. Since November 2019 , we have entered into
development and manufacturing agreements with Lonza Sales AG ("Lonza") relating
to the manufacturing of JSP191 drug substance and drug product and product
quality testing. The facility of Lonza in Slough, United Kingdom is responsible
for production and testing of drug substance. The facility of Lonza in Stein,
Switzerland is responsible for production and testing of drug product.
Labelling, packaging and storage of finished drug product is provided by PCI
Pharma Services , in San Diego, California .
Given our stage of development, we do not yet have a marketing or sales
organization or commercial infrastructure. Accordingly, if we obtain regulatory
approval for any of our product candidates, we also expect to incur significant
commercialization expenses related to product sales, marketing, manufacturing,
and distribution.
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 the sale of our product candidates, 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 may be forced to reduce our operations.
Business Impact of the COVID-19 Pandemic
InMarch 2020 , theWorld Health Organization declared the global COVID-19 outbreak a pandemic. The global COVID-19 pandemic continues to evolve rapidly, including with respect to the spread of variants, and we will continue to monitor it closely. While our operations to date have not been significantly impacted by the COVID-19 pandemic, we cannot at this time predict the specific extent, duration, or full impact that the COVID-19 pandemic will have on our business, financial condition and operations, including ongoing and planned clinical trials and clinical development timelines, particularly as we advance our product candidates to clinical development, the continued spread of COVID-19 and the measures taken by the governmental authorities could disrupt the supply chain and the manufacture or shipment of drug substances and finished drug products for our product candidates for use in our clinical trials, impede our clinical trial initiation and recruitment and the ability of patients to continue in clinical trials, impede testing, monitoring, data collection and analysis and other related activities. The COVID-19 pandemic could also potentially affect the business of the FDA or other regulatory authorities, which could result in delays in meetings related to our ongoing and planned clinical trials. We experienced slower than anticipated patient enrollment in our SCID clinical trial in 2020 due to reluctance of these immunocompromised patients to travel and undergo hospitalization during the pandemic. We may continue to experience interruptions to our clinical trials due to the COVID-19 pandemic. The impact of the COVID-19 pandemic on our financial performance will depend on future developments, including the duration and spread of the pandemic, its impact on our clinical trial enrollment, trial sites, contract research organizations ("CROs"), CMOs, and other third parties with whom we do business, its impact on regulatory authorities and our key scientific and management personnel, progress of vaccination and related governmental advisories and restrictions. 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 or the overall economy are impacted for an extended period, our business may be materially adversely affected.
Business Combination Agreement
OnSeptember 24, 2021 (the "Closing Date"), we consummated the previously announced business combination (the "Business Combination") pursuant to the terms of the Business Combination Agreement, dated as ofMay 5, 2021 (the "BCA"), by and among AMHC,Ample Merger Sub, Inc. , a then-wholly-owned subsidiary of AMHC ("Merger Sub"), and the pre-Business Combination Jasper Therapeutics, Inc. (now namedJasper Tx Corp. ) ("Old Jasper"). Pursuant to the terms of the BCA, on the Closing Date, (i) Merger Sub merged with and into Old Jasper (the "Merger"), with Old Jasper as the surviving company in the Merger, and, after giving effect to the Merger, Old Jasper became a wholly-owned subsidiary of AMHC and changed its name to "Jasper Tx Corp. ", and (ii) AMHC changed its name to "Jasper Therapeutics, Inc. ". 29 In addition, as previously disclosed, concurrently with the execution of the BCA, onMay 5, 2021 , AMHC entered into Subscription Agreements with certain investors (the "PIPE Investors "), pursuant to which thePIPE Investors agreed to subscribe for and purchase, and AMHC agreed to issue and sell to thePIPE Investors , an aggregate of 10,000,000 shares of AMHC's Class A Common Stock at a price of$10.00 per share, for aggregate gross proceeds of$100.0 million (the "PIPE Financing"). The PIPE Financing was consummated concurrently with the closing of the Business Combination. In accordance with the BCA, at the closing of the Business Combination each share of Old Jasper common stock and Old Jasper redeemable convertible preferred stock outstanding immediately prior to the closing was automatically cancelled, extinguished and converted into a number of shares of our common stock or, in certain circumstances, our non-voting common stock, based on Old Jasper's equity value of$275.0 million divided by$10.00 . The exchange ratio agreed between the parties was one-for-0.282378 share of our common stock for all Old Jasper stockholders, except for Amgen. Amgen's 100 shares of Old Jasper Series A-2 redeemable convertible preferred stock were converted into 2,200,000 shares of our voting common stock, which represented 8% of the Old Jasper equity value, as per the terms of the Amgen's agreement. Each vested and unvested option to purchase shares of Old Jasper's common stock outstanding at the closing was converted into a comparable option to purchase shares of our common stock, with the same terms after giving effect of the exchange ratio of one-for-0.2823780. Each unvested award of restricted shares of Old Jasper common stock outstanding immediately prior to the closing was converted into a comparable right to receive restricted shares of our common stock, after giving effect of the same exchange ratio. In connection with the Business Combination, immediately prior to the closing, (i)Amplitude Healthcare Holdings LLC (the "Sponsor") forfeited 200,000 shares of AMHC's Class B Common Stock, (ii) each share of AMHC's Class B Common Stock outstanding was converted into one share of AMHC's Class A Common Stock, and (iii) following such conversion, an aggregate of 13,037,901 shares of AMHC's Class A Common Stock (inclusive of 10,000,000 shares AMHC's Class A Common Stock that were issued to thePIPE Investors ) was converted into an equivalent number of shares of our common stock. In accordance with the Sponsor Support Agreement among us, the Sponsor and Old Jasper, datedMay 5, 2021 and amended onSeptember 24, 2021 , 1,050,000 shares of our common stock held by the Sponsor were placed in escrow (the "Earnout Shares") and will be released as follows: (a) 250,000 Earnout Shares will be released if, during the period from and afterSeptember 24, 2021 until theSeptember 24, 2024 (the "Earnout Period"), over any twenty trading days within any thirty day consecutive trading day period, the volume-weighted average price of our common stock (the "Applicable VWAP") is greater than or equal to$11.50 , (b) 500,000 Earnout Shares will be released if, during the Earnout Period, the Applicable VWAP is greater than or equal to$15.00 , and (c) 300,000 Earnout Shares will be released if, during the Earnout Period, the Applicable VWAP is greater than or equal to$18.00 . Immediately after giving effect to the Business Combination, there were 36,520,288 shares of our voting common stock outstanding (which includes 611,818 shares of our common stock subject to restricted stock awards), 1,296,022 shares of our non-voting common stock outstanding and 2,721,557 shares of our common stock subject to outstanding options to purchase shares of our common stock. We also have outstanding publicly traded warrants to purchase 4,999,993 shares of our common stock (the "Common Stock Warrants"), all of which were issued in connection with our initial public offering, and entitle a holder to purchase one share of the our common stock at an exercise price of$11.50 per share. The Common Stock Warrants are publicly traded and exercisable during the exercise period, which started onOctober 24, 2021 and ends onSeptember 24, 2026 , unless the Common Stock Warrants are redeemed or we extend the exercise period. We are authorized to issue 490,000,000 shares of voting common stock, 2,000,000 shares of non-voting common stock, and 10,000,000 shares of preferred stock, each with$0.0001 par value per share. There were 36,520,288 shares of voting common stock, 1,296,022 shares of non-voting common stock and no shares of preferred stock issued and outstanding as ofSeptember 30, 2021 .
Refer to Note 3 in our interim condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report for further details on the accounting for this transaction.
Amgen License Agreement OnNovember 21, 2019 , we entered into a license agreement with Amgen (the "Amgen License Agreement") pursuant to which we obtained an exclusive, sublicensable license for certain patents, data, and non-data know-how related to Amgen's proprietary monoclonal antibody known as AMG191, as renamed to JSP191. Concurrently with the execution of the license agreement, Amgen assigned to us its rights and obligations under the Investigator Sponsored Research Agreement ("ISRA") previously entered into inJune 2013 between Amgen andThe Board of Trustees of theLeland Stanford Junior University ("Stanford") related to the clinical study of JSP191. Under the ISRA, we received an option to negotiate a definitive license withStanford for rights to certainStanford intellectual property related to the study of JSP191 in exchange for an option exercise fee of$1.0 million , payable over a two-year period (the "Option"). There are no other fees due under the ISRA. We exercised the Option inJune 2020 , and the definitive license withStanford was executed inMarch 2021 . Upon exercise of the Option, the$1.0 million option exercise fee was recognized as research and development cost. InJune 2020 , we andStanford agreed that the Investigational New Drug Application ("IND") and control of the study related to this ISRA would be transferred to us. We paid$0.2 million related to the option exercise fee in each of June andNovember 2020 andMay 2021 , we paid$0.2 million . Unpaid option fees liability of$0.4 million is included in current liabilities as ofSeptember 30, 2021 . 30 As consideration for the rights granted to us under the license agreement with Amgen, we issued Amgen 100 shares of Old Jasper's Series A-2 redeemable convertible preferred stock inNovember 2019 , the fair value of which was estimated$0.9 million , which was recognized as research and development expense in the same period. The Amgen License Agreement terminates on the 10-year anniversary of the date on which the exploitation of the licensed products is no longer covered by a valid claim under a licensed patent in such country. On a country-by-country basis, upon the expiration of the term in each country with respect to the licensed products, the licenses granted to us by Amgen become fully paid and non-exclusive. We and Amgen have the right to terminate the agreement for a material breach as specified in the agreement. Stanford License Agreement InMarch 2021 , we entered into a license agreement withStanford (the "Stanford License Agreement") following the exercise of the Option inJune 2020 . We received a worldwide, exclusive license with a right to sublicense for JSP191 in the field of depleting endogenous blood stem cells in patients for whom hematopoietic cell transplantation is indicated.Stanford transferred certain know-how and patents related to JSP191. Under the terms of the Stanford License Agreement, we agreed to use commercially reasonable efforts to develop, manufacture, and sell licensed product and to develop markets for a licensed product. In addition, we agreed to use commercially reasonable efforts to meet the milestones as specified in the agreement over the next six years and must notifyStanford in writing as each milestone is met. We will pay annual license maintenance fees, beginning on the first anniversary of the effective date of the Stanford License Agreement and ending upon the first commercial sale of a product, method, or service in the licensed field of use, as follows:$25,000 for each first and second year,$35,000 for each third and fourth year, and$50,000 at each anniversary thereafter ending upon the first commercial sale. We are also obligated to pay late stage clinical development milestones and first commercial sales milestone payments of up to$9.0 million in total. We will also pay low single-digit royalties on net sales of licensed products, if approved. The Stanford License Agreement expires on a country-by-country basis on the last-to-expire valid claim of a licensed patent in such country. We may terminate the agreement by givingStanford a written notice at least 12 months in advance of the effective date of termination. We may also terminate the Stanford License Agreement solely with respect to any particular patent application or patent by givingStanford written notice at least 60 days in advance of the effective date of termination.Stanford may terminate the Stanford License Agreement after 90 days from a written notice byStanford , specifying a problem, including a delinquency on any report required pursuant to agreement or any payment, missing a milestone or for a material breach, unless we remediate the problem in that 90-day period.
Other collaboration and clinical trial agreements
Collaboration with Zai Lab InDecember 2020 , we entered into a clinical collaboration agreement with Zai Lab Limited ("Zai Lab ") to study JSP191 in combination with Zai Lab's anti-CD47 antibody as a pre-transplant conditioning agent. Scientifically, we seek to demonstrate whether or not this combination synergistically depletes endogenous HSCs in non-human primates with minimum toxicity. Total expenses of up to$0.3 million will be shared between the parties equally.
Collaboration with
InAugust 2020 , we entered into a clinical trial agreement withStanford in whichStanford will execute a Phase 1/2 clinical trial utilizing JSP191 to treat Fanconi Anemia patients in Bone Marrow Failure requiring allogeneic transplant with non-sibling donors atStanford Lucile Packard Children's Hospital . As consideration for the services performed byStanford under this agreement, we will payStanford a total of$0.9 million over approximately three years upon the achievement of the first development and clinical milestone, including FDA filings and patients' enrollment. As ofDecember 31, 2020 , we accrued$0.3 million related to the achievement of the first milestone under this agreement, which was paid inFebruary 2021 . The second and the third milestones are based on the progress of the clinical trials and will be recognized when achieved.
Collaboration with the National Heart, Lung, and
InFebruary 2021 , we entered into a clinical trial agreement with the National Heart, Lung, andBlood Institute ("NHLBI") in which NHLBI will serve as the IND sponsor of a Phase 1/2 clinical trial to evaluate JSP191 as a targeted, non-toxic conditioning regimen prior to allogeneic transplant for SCD. Each party incurs its own costs under this agreement.
Collaboration with the
In
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Collaboration with Graphite Bio
In
Collaboration with
In
Collaboration with the
InAugust 2021 , we entered into a clinical trial agreement with theNational Cancer Institute ("NCI") for the clinical development of JSP191 for the treatment of GATA2 deficiency. NCI will perform the preclinical studies and submit an IND for this indication to the FDA. We will provide materials to
use in such studies.
Collaboration with
In
Components of Results of Operations
Operating Expenses Research and Development The largest component of our total operating expenses since our inception has been research and development activities, including the preclinical and clinical development of our product candidates. Research and development expenses consist primarily of compensation and benefits for research and development employees, including stock-based compensation; expenses incurred under agreements with CROs and investigative sites that conduct preclinical and clinical studies; the costs of acquiring and manufacturing clinical study materials and other supplies; payments under licensing and research and development agreements; other outside services and consulting costs; and facilities, information technology and overhead expenses. Research and development costs are expensed as incurred.
External research and development costs include:
? costs incurred under agreements with third-party CROs, CMOs and other third
parties that conduct preclinical and clinical activities on our behalf and
manufacture our product candidates;
? costs associated with acquiring technology and intellectual property licenses
that have no alternative future uses;
? consulting fees associated with our research and development activities; and
? other costs associated with our research and development programs, including
laboratory materials and supplies.
Internal research and development costs include:
? employee-related costs, including salaries, benefits and
stock-based compensation expense for our research and development personnel;
and
? other expenses and allocated overheads incurred in connection with our research
and development programs. We expect our research and development expenses to increase substantially for the foreseeable future as we advance our product candidates into and through preclinical studies and clinical trials, pursue regulatory approval of our product candidates and expand our pipeline of product candidates. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, early clinical data, investment in our clinical programs, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for any of our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or if, when and to what extent we will generate revenue from the commercialization and sale of our product candidates, if approved.
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Our future research and development costs may vary significantly based on factors, such as:
? the scope, rate of progress, expense and results of our discovery and
preclinical development activities;
? the costs and timing of our chemistry, manufacturing and controls activities,
including fulfilling cGMP-related standards and compliance, and identifying and
qualifying suppliers;
? per patient clinical trial costs;
? the number of trials required for approval;
? the number of sites included in our clinical trials;
? the countries in which the trials are conducted;
? delays in adding a sufficient number of trial sites and recruiting suitable
patients to participate in our clinical trials;
? the number of patients that participate in the trials;
? the number of doses that patients receive;
? patient drop-out or discontinuation rates;
? potential additional safety monitoring requested by regulatory agencies;
? the duration of patient participation in the trials and follow up;
? the cost and timing of manufacturing our product candidates;
? the phase of development of our product candidates;
? the efficacy and safety profile of our product candidates;
? the timing, receipt, and terms of any approvals from applicable regulatory
authorities, including the FDA and non-
? maintaining a continued acceptable safety profile of our product candidates
following approval, if any, of our product candidates;
? significant and changing government regulation and regulatory guidance;
? changes in the standard of care on which a clinical development plan was based,
which may require new or additional trials;
? the extent to which we establish additional strategic collaborations or other
arrangements; and
? the impact of any business interruptions to our operations or to those of the
third parties with whom we work, particularly in light of the current COVID-19 pandemic environment. General and Administrative General and administrative expenses consist primarily of personnel costs and expenses, including salaries, employee benefits, stock-based compensation for our executive and other administrative personnel; legal services, including relating to intellectual property and corporate matters; accounting, auditing, consulting and tax services; insurance; and facility and other allocated costs not otherwise included in research and development expenses. We expect our general and administrative expenses to increase substantially for the foreseeable future as we anticipate an increase in our personnel headcount to support expansion of research and development activities, as well as to support our operations generally. We also expect an increase in expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with applicable Nasdaq andSEC requirements; additional director and officer insurance costs; and investor and public relations costs.
Other Income (Expense), Net
Other income (expense), net includes interest expense, foreign currency transactions gains and losses, changes in the fair value of our derivative tranche liabilities, which were settled inFebruary 2021 , changes in the fair value of common stock warrant liability and earnout liability, which were recorded at the closing of the Business Combination. These financial instruments were classified as liabilities in our interim condensed consolidated balance sheets and re-measured at each reporting period end until they are exercised, settled or expire. 33 Results of Operations
Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended
September 30, Change Change
2021 2020 $ %
Operating expenses
Research and development $ 7,188 $ 4,520 $ 2,668 37 %
General and administrative 2,891 1,488 1,403 49 %
Total operating expenses 10,079 6,008 4,071 40 %
Loss from operations (10,079 ) (6,008 ) (4,071 ) 40 %Interest and other (expense) income, net (9 ) (111 ) 102 * Change in fair value of earnout liability 6,226 - 6,226 100 % Change in fair value of derivative liability - (4,706 ) 4,706 -100 % Change in fair value of common stock warrants liability 450 - 450 100 % Total other income (expense), net 6,667 (4,817 ) 11,484 172 % Net loss and comprehensive loss$ (3,412 ) $ (10,825 ) $
7,413 -217 % * Not meaningful
Research and Development Expenses
The following table summarizes our research and development expenses for the
three months ended
Three Months Ended
September 30,
2021 2020External costs: CRO, CMO and other third-party preclinical studies and clinical trials
$ 4,997 $ 2,697 Consulting costs 665
696
Other research and development costs, including laboratory materials and supplies 232 201 Internal costs: Personnel-related costs 1,234 926
Facilities and overhead costs 60 - Total research and development expense:$ 7,188
$ 4,520 Research and development expenses increased by$2.7 million , from$4.5 million for the three months endedSeptember 30, 2020 , to$7.2 million for the three months endedSeptember 30, 2021 . External CRO, CMO and other third-party preclinical studies and clinical trials expenses increased by$2.3 million for the three months endedSeptember 30, 2021 as compared to the same period of 2020. CRO expenses related to our SCID and MDS/AML clinical trials increased by$1.3 million and CMO and manufacturing costs increased by$1.0 million for the three months endedSeptember 30, 2021 compared to the three months endedSeptember 30, 2020 . The increase related to continuing patient enrollment and new site openings for our trials.
Our external costs by program for the three months ended
Three Months Ended
September 30,
2021 2020
JSP191 platform $ 3,297 $ 2,626
MDS/AML clinical trial 1,215 355
SCID clinical trial 1,101 371
Other 281 242
Total external costs $ 5,894 $ 3,594 Employee payroll and related expenses increased by$0.3 million , from$0.9 million for the three months endedSeptember 30, 2020 to$1.2 million for the three months endedSeptember 31, 2021 , as a result of hiring employees in our research and development organization. 34
General and Administrative Expenses
General and administrative expenses increased by$1.4 million , from$1.5 million for the three months endedSeptember 30, 2020 , to$2.9 million for the three months endedSeptember 30, 2021 . Employee payroll and related expenses increased by$0.2 million , from$0.5 million for the three months endedSeptember 30, 2020 to$0.7 million for the three months endedSeptember 30, 2021 , due to the increased headcount of our executives and administrative employees. Expenses related to professional consulting services increased by$1.1 million , from$0.8 million for the three months endedSeptember 30, 2020 to$1.9 million for the three months endedSeptember 30, 2021 , due to increased spending on consulting, recruiting, legal, audit, accounting and other services during the 2021 period as compared to the 2020 period. Other Income (Expense), Net
Total other income (expense), net increased by
We recognized other expense related to the change in fair value of our derivative liability of$4.7 million during the three months endedSeptember 30, 2020 and did not have such expense in the 2021 period, as the derivative was settled inFebruary 2021 and was no longer outstanding. Upon the closing of the Business Combination onSeptember 24, 2021 , we have outstanding warrants to purchase an aggregate of 4,999,993 shares of our common stock that were concluded to be a derivative financial instrument and are measured at fair value at each reporting period end until these are exercised, expire or are redeemed. These warrants are publicly traded, and the fair value is estimated using the closing price of a warrant at each period end. We recognized$0.5 million of other income related to the change in fair value of common stock warrants for the three months endedSeptember 30, 2021 . Upon the closing of the Business Combination onSeptember 24, 2021 , we recognized earnout liability related to the Sponsor Earnout Shares placed in escrow. These shares will be released from escrow upon achieving agreed common stock price targets within the specified period. This liability is recorded at fair value using Monte Carlo simulation valuation model and are re-measured at each period end until shares are released or forfeited. The significant inputs used in theMonte Carlo model include the expected volatility of our common stock and the expected term when shares will be released. We recognized$6.2 million of other income related to the change in fair value of the earnout liability for the three months endedSeptember 30, 2021 .
Nine months ended
The following table summarizes our results of operations for the nine months
ended
Nine Months Ended
September 30, Change Change
2021 2020 $ %
Operating expenses
Research and development $ 16,764 $ 11,236 $ 5,528 33 %
General and administrative 7,987 3,489 4,498 56 %
Total operating expenses 24,751 14,725 10,026 41 %
Loss from operations (24,751 ) (14,725 ) (10,026 ) 41 %Interest and other (expense) income, net (4 ) (93 ) 89 * Change in fair value of earnout liability 6,226 - 6,226 100 % Change in fair value of derivative liability (3,501 ) (6,864 ) 3,363 -96 % Change in fair value of common stock warrant liability 450 - 450 100 % Total other income (expense), net 3,171 (6,957 ) 10,128 319 % Net loss and comprehensive loss$ (21,580 ) $ (21,682 ) $
102 0 % * Not meaningful
Research and Development Expenses
The following table summarizes our external and internal research and development expenses for the nine months endedSeptember 30, 2021 and 2020 (in thousands): Nine Months EndedSeptember 30, 2021 2020
External costs: CRO, CMO and other third-party preclinical studies and clinical trials
$ 9,937 $ 6,189 Consulting costs 2,445
2,093
Technology and intellectual property license and option -
1,000
Other research and development costs, including laboratory materials and supplies 384 202 Internal costs: Personnel-related costs 3,865 1,752
Facilities and overhead costs 133
-
Total research and development expense:$ 16,764
$ 11,236 35
Research and development expenses increased by
External CRO, CMO and other third-party preclinical studies and clinical trials expenses increased by$3.7 million for the nine months endedSeptember 30, 2021 as compared to the same period of 2020. The increase is primarily related to an increase in our CRO expenses related to ongoing SCID and MDS/AML clinical trials and increased CMO product development and manufacturing expenses. Expenses related to professional consulting services increased by$0.3 million , from$2.1 million to$2.4 million for the nine months endedSeptember 30, 2020 and 2021, respectively. The increase related to external consulting incurred to supplement our research and development personnel. Technology and intellectual property license and option expenses of$1.0 million for the nine months endedSeptember 30, 2020 related to the option exercised under the ISRA withStanford inJune 2020 . We did not incur any licenses expenses in the 2021 period. Other external research and development costs increased by$0.2 million for the nine months endedSeptember 30, 2021 compared to the same period of 2020 due to an increase in spending for laboratory materials and supplies, shipping, packaging and labeling and other miscellaneous costs.
Our external research and development expenses by program were as follows for
the nine months ended
Nine Months Ended
September 30,
2021 2020
JSP191 platform $ 7,525 $ 7,025
MDS/AML clinical trial 2,619 847
SCID clinical trial 2,004 1,322
Other 618 290
Total external costs $ 12,766 $ 9,484
Employee payroll and related expenses increased by $2.1 million for the nine
months ended September 30, 2021 compared to the same period of 2020, from $1.8
million to $3.9 million accordingly, as a result of hiring seven additional
employees in our research and development organization. Stock-based compensation
expenses increased by $0.3 million , from $0.2 million for the nine months ended
September 2020 compared to $0.5 million for the nine months ended September30, 2021.
General and Administrative Expenses
General and administrative expenses increased by$4.5 million , from$3.5 million for the nine months endedSeptember 30, 2020 , to$8.0 million for the nine months endedSeptember 30, 2021 . Employee payroll and related expenses increased by$0.3 million , from$1.4 million for the nine months endedSeptember 30, 2020 , to$1.7 million for the nine months endedSeptember 30, 2021 , as a result of continued hiring of our executives and administrative employees. Expenses related to recruiting and professional consulting services increased by$3.2 million , from$1.7 million for the nine months endedSeptember 30, 2020 to$4.9 million for the nine months endedSeptember 30, 2021 , and related to significant consulting, legal, audit and accounting services incurred in connection with our increased operating activities and the closing of the Business Combination. Rent expense increased by$0.4 million for the nine months endedSeptember 30, 2021 , as compared to rent expense for the nine months endedSeptember 30, 2020 . Other expenses, including insurance, office supplies, subscriptions and other miscellaneous expenses, increased by$0.6 million for the nine months endedSeptember 30, 2021 as compared to expenses for the nine months endedSeptember 30, 2020 , as we continued expanding our operations to support our research and development programs development.
Other Income (Expenses), Net
Total other income (expense), net increased by
We recognized other expense related to the changes in fair value of our derivative liability of$6.9 million for the nine months endedSeptember 2020 as compared to$3.5 million for the nine months endedSeptember 2021 . This derivative liability was an obligation to issue additional Series A-1 redeemable convertible preferred shares in two tranches, which was recorded at fair value and re-measured at each reporting period until it was settled. We settled the first tranche liability inOctober 2020 and the second tranche liability inFebruary 2021 . After that, we ceased to have any such outstanding derivative liability. This derivative liability was measured using the option pricing method by estimating the fair value using the Black-Scholes model. The significant inputs used in the Black-Scholes model include the fair value of the redeemable convertible preferred stock, the risk-free interest rate, the expected volatility and the expected term when each tranche would be settled. Upon the closing of the Business Combination onSeptember 24, 2021 , we have outstanding warrants to purchase an aggregate of 4,999,993 shares of our common stock that were concluded to be a derivative financial instrument and are measured at fair value at each reporting period end until these are exercised, expire or are redeemed. These warrants are publicly traded and the fair value is estimated using the closing price of a warrant at the period end. We recognized$0.5 million of other income related to the change in fair value of the common stock warrants for the nine months endedSeptember 30, 2021 . Upon the closing of the Business Combination onSeptember 24, 2021 , we recognized earnout liability related to the Sponsor Earnout Shares placed in escrow. These shares will be released from escrow upon achieving agreed common stock price targets within the specified period. This liability is recorded at fair value using Monte Carlo simulation valuation model and are re-measured at each period end until shares are released or forfeited. The significant inputs used in theMonte Carlo model include the expected volatility of our common stock and the expected term when shares will be released. We recognized$6.2 million of other income related to the change in fair value of the earnout liability for the nine months endedSeptember 30, 2021 . 36
Liquidity and Capital Resources
Prior to the closing of the Business Combination, we funded our operations primarily from the issuance of redeemable convertible preferred stock shares and the issuance of convertible promissory notes. We received net cash proceeds of$95.3 million at the closing of the Business Combination, which includes the remaining cash in our trust account after redemptions and the payment of the closing costs and$100.0 million received from thePIPE Investors . As ofSeptember 30, 2021 , we had$100.9 million of cash and cash equivalents, which includes the net proceeds from the Business Combination and PIPE Financing. Our existing cash and cash equivalents are sufficient to fund our operations for the next 12 months from the date of issuance of our interim condensed consolidated financial statements included elsewhere in this Quarterly Report. Therefore, based on management's updated evaluation of the our ability to continue as a going concern, management has concluded the factors that previously raised substantial doubt about our ability to continue as a going concern no longer exist as of the issuance date of our unaudited condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report.
Future Funding Requirements
Our primary uses of cash are to fund our operations, which consist primarily of research and development expenditures related to our programs and, to a lesser extent, general and administrative expenditures. We anticipate that we will continue to incur significant expenses for the foreseeable future as we continue to advance our product candidates, expand our corporate infrastructure, operate as a public company, further our research and development initiatives for our product candidates, scale our laboratory and manufacturing operations, and incur marketing costs associated with potential commercialization. We are subject to all the risks typically related to the development of new drug candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.
We have incurred significant losses and negative cash flows from operations since our inception. As ofSeptember 30, 2021 , we had an accumulated deficit of$58.4 million . Given our recurring losses from operations and negative cash flows, we expect to need to finance our future cash needs through public or private equity or debt financings, collaborations, or a combination of these approaches. The sale of equity or convertible debt securities may result in dilution to our stockholders, and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. Debt financings may subject us to covenant limitations or restrictions on our ability to take specific actions, such as incurring additional debt or making capital expenditures. Our ability to raise additional funds may be adversely impacted by negative global economic conditions and any disruptions to and volatility in the credit and financial markets inthe United States and worldwide that may result from the ongoing COVID-19 pandemic or other factors. There can be no assurance that we will be successful in acquiring additional funding at levels sufficient to fund our operations or on terms favorable or acceptable to us. If we are unable to obtain adequate financing when needed or on terms favorable or acceptable to us, we may be forced to delay, reduce the scope of or eliminate one or more of our research and development programs.
Our future financing requirements will depend on many factors, including:
? the timing, scope, progress, results and costs of research and development,
preclinical and non-clinical studies and clinical trials for our current and
future product candidates;
? the number, scope and duration of clinical trials required for regulatory
approval of our current and future product candidates;
? the outcome, timing and costs of seeking and obtaining regulatory approvals
from the FDA and comparable foreign regulatory authorities for our product
candidates, including any requirement to conduct additional studies or generate
additional data beyond that which we currently expect would be required to
support a marketing application;
? the costs of manufacturing clinical and commercial supplies of our current and
future product candidates;
? 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;
? any product liability or other lawsuits related to our product candidates;
? the revenue, if any, received from commercial sales of any product candidates
for which we may receive marketing approval;
? our ability to establish a commercially viable pricing structure and obtain
approval for coverage and adequate reimbursement from third-party and
government payers;
? the costs to establish, maintain, expand, enforce and defend the scope of our
intellectual property portfolio, including the amount and timing of any
payments we may be required to make, or that we may receive, in connection with
licensing, preparing, filing, prosecuting, defending and enforcing our patents
or other intellectual property rights;
? expenses incurred to attract, hire and retain skilled personnel;
? the costs of operating as a public company; and
? the impact of the COVID-19 pandemic, which may exacerbate the magnitude of the
factors discussed above.
Cash Flows
The following table summarizes our sources and uses of cash for the periods
presented (in thousands):
Nine months ended
September 30,
2021 2020Net cash used in operating activities$ (19,094 ) $ (12,874 ) Net cash used in investing activities (1,717 )
-
Net cash provided by financing activities 101,878
484
Net increase (decrease) in cash and cash equivalents and restricted cash$ 81,067 $ (12,390 ) 37
Cash Flows from Operating Activities
Net cash used in operating activities was
Cash used in operating activities in the nine months endedSeptember 30, 2021 was primarily due to our net loss for the period of$21.6 million adjusted by non-cash net gain charges of$2.0 million and a net change of$4.4 million in our net operating assets and liabilities. The non-cash charges consisted of$3.2 million net gain related to the changes in fair value of a derivative liability, common stock warrant liability and the earnout liability, reduced by non-cash expenses, which included$0.8 million related to stock-based compensation expense,$0.2 million related to depreciation and amortization expense and$0.2 million related to non-cash lease expense. The changes in our net operating assets and liabilities were primarily due to an increase of$3.2 million in accrued expenses and other current liabilities, and an increase in accounts payable of$1.2 million due to the timing of payments to our vendors. Cash used in operating activities in the nine months endedSeptember 30, 2020 was primarily due to our net loss for the period of$21.7 million adjusted by non-cash charges of$7.6 million and a net change of$1.2 million in our net operating assets and liabilities. The non-cash charges consisted of$6.9 million related to changes in the fair value of the derivative tranche liabilities and$0.8 million related to stock-based compensation expense. The changes in our net operating assets and liabilities were primarily due to an increase of$1.6 million in accounts payable, offset by an increase of$0.8 million in prepaid expenses, as we expanded our operations, started clinical trials and increased our research and development activities during the nine months endedSeptember 30, 2020 .
Cash Flows from Investing Activities
Cash used in investing activities for the nine months ended
We did not have cash used in investing activities for the nine months ended
Cash Flows from Financing Activities
Cash provided by financing activities for the nine months endedSeptember 30, 2021 was$101.9 million , which consisted of$95.3 million net proceeds received at the closing of the Business Combination, which included the PIPE Financing,$10.8 million net proceeds received inFebruary 2021 upon the issuance of Series A-1 redeemable convertible preferred stock shares and$0.2 million of cash received from exercised of stock options. Cash received was reduced by$4.3 million related to expenses paid by us related to the Business Combination.
Cash provided by financing activities for the nine months ended
Contractual Obligations and Commitments
There have been no significant changes during the nine months endedSeptember 30, 2021 to the contractual obligations disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations, included in the Prospectus.
The following table summarizes our contractual obligations and commitments at
Payments due by Period
Less than More than
1 year 1 - 3 Years 4 - 5 Years 5 Years Total
Operating Lease Obligations* $ 708 $ 1,480 $ 1,434 $ -$ 3,622 License Option Liability 400 - - 400 Total$ 1,108 $ 1,480 $ 1,434 $ -$ 4,022
* Consists of our office and lab space lease in
expires inMay 2026 . We enter into contracts in the normal course of business with CROs for clinical trials, with CMOs for clinical supplies manufacturing and with other vendors for preclinical studies, supplies and other services and products for operating purposes. These contracts generally provide for termination on notice or may have a potential termination fee if a purchase order is cancelled within a specified time, and therefore are cancelable contracts and not included in
the
table above.
38
Critical Accounting Policies and Significant Judgments and Estimates
Our critical accounting policies are disclosed in our audited financial statements for the years endedDecember 31, 2020 and 2019, and the related notes included in the Prospectus. Since the date of such financial statements, there have been no material changes to our significant accounting policies other than those described in Note 2 of the notes to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Recently Issued Accounting Pronouncements
See Note 2 to the condensed consolidated financial statements for more information regarding recently issued accounting pronouncements.
Off-Balance Sheet Arrangements
During the periods presented we did not have, nor do we currently have, any
off-balance sheet arrangements as defined in the rules and regulations of the
JOBS Act The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have opted to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) followingNovember 22, 2024 , (b) in which we have total annual gross revenue of at least$1.07 billion , or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds$700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which we have issued more than$1.00 billion in non-convertible debt securities during the prior three-year period. References herein to "emerging growth company" have the meaning associated with it in the JOBS Act.
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