The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed financial
statements and related notes included in this Quarterly Report on Form 10-Q, or
Quarterly Report, and the audited financial statements and notes thereto as of
and for the fiscal year ended December 31, 2021 and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations, both
of which are contained in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2021 filed with the Securities and Exchange Commission, or
SEC, on February, 24, 2022.
This Quarterly Report includes forward-looking statements and information within
the meaning of Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, which are subject to the "safe harbor" created by
those sections, that involve a number of risks, uncertainties and assumptions.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as "may," "will," "intend,"
"plan," "believe," "anticipate," "expect," "seek", "estimate," "predict,"
"potential," "continue," "likely," or "opportunity," the negative of these words
or other similar words. Similarly, statements that describe our plans,
strategies, intentions, expectations, objectives, goals or prospects and other
statements that are not historical facts are also forward-looking statements.
For such statements, we claim the protection of the Private Securities
Litigation Reform Act of 1995. Readers of this Quarterly Report are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the time this Quarterly Report was filed with the SEC. These
forward-looking statements are based largely on our expectations and projections
about future events and future trends affecting our business, and are subject to
risks and uncertainties that could cause actual results to differ materially
from those anticipated in the forward-looking statements. These risks and
uncertainties include, without limitation, the risk factors identified in our
SEC reports, including this Quarterly Report. In addition, past financial or
operating performance is not necessarily a reliable indicator of future
performance, and you should not use our historical performance to anticipate
results or future period trends. We can give no assurances that any of the
events anticipated by the forward-looking statements will occur or, if any of
them do, what impact they will have on our results of operations and financial
condition. Except as required by law, we undertake no obligation to update
publicly or revise our forward-looking statements.
References to "we," "us" and "our" refer to Kura Oncology, Inc.
Overview
We are a clinical-stage biopharmaceutical company committed to realizing the
promise of precision medicines for the treatment of cancer. Our pipeline
consists of small molecule product candidates that target cancer signaling
pathways where there is a strong scientific and clinical rationale to improve
outcomes, and we intend to pair them with molecular or cellular diagnostics to
identify those patients most likely to respond to treatment. We presently have
two clinical-stage product candidates, ziftomenib (ziftomenib is the
international nonproprietary name for KO-539) and tipifarnib, one
preclinical-stage product candidate, KO-2806, currently in investigational new
drug, or IND, -enabling studies, as well as additional programs that are at a
discovery stage. We own global commercial rights to all of our programs and
product candidates. We plan to advance our product candidates through a
combination of internal development and strategic partnerships while maintaining
significant development and commercial rights.
Our first product candidate, ziftomenib, is a potent, selective, reversible and
oral small molecule inhibitor which blocks the interaction of two proteins,
menin and the protein expressed by the Lysine K-specific Methyl Transferase 2A
gene, or KMT2A (formerly referred to as the mixed-lineage leukemia 1 gene). We
have generated preclinical data that support the potential anti-tumor activity
of ziftomenib in genetically defined subsets of acute leukemia, including those
with rearrangements or partial tandem duplications in the KMT2A gene as well as
those with oncogenic driver mutations in genes such as nucleophosmin 1, or NPM1.
Our preclinical data support the hypothesis that ziftomenib targets epigenetic
dysregulation and removes a key block to cellular differentiation to drive
anti-tumor activity. We believe ziftomenib has the potential to address
approximately 35% of acute myeloid leukemia, or AML, including NPM1-mutant AML
and KMT2A-rearranged AML. In the pediatric population, KMT2A-rearranged
leukemias make up approximately 10% of acute leukemias in all age groups and in
the case of infant leukemias, the frequency of KMT2A rearrangements is 70-80%.
These pediatric leukemia sub-types portend a poorer prognosis and five-year
survival rate that is lower than other leukemia sub-types and therefore
represent a significant unmet medical need given the lack of curative
therapeutic options.
We received orphan drug designation for ziftomenib for the treatment of AML from
the U.S. Food and Drug Administration, or the FDA, in July 2019. We initiated
our menin-KMT2A Phase 1/2 clinical trial of ziftomenib in relapsed or refractory
AML which we call the Kura Oncology MEnin-KMT2A Trial, or KOMET-001, in
September 2019. The Phase 1a
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dose escalation portion of the KOMET-001 trial used an accelerated design and
the Phase 1b portion of the study seeks to validate a recommended Phase 2 dose
and schedule, or RP2D.
On December 5, 2020, we announced preliminary results from our KOMET-001 trial
at an oral presentation at the 2020 American Society of Hematology Annual
Meeting, or ASH. As of the data cutoff date for the ASH presentation, November
2, 2020, the trial had enrolled 12 patients with relapsed or refractory AML, of
whom ten were evaluable for safety and tolerability and eight were evaluable for
efficacy. Clinical or biological activity was reported in six of the eight
efficacy-evaluable patients, including two patients achieving a complete
remission, one patient achieving a morphological leukemia-free state, and one
patient experiencing a marked decrease in hydroxyurea requirements and having
attained peripheral blood count stabilization. As presented at ASH, ziftomenib
has been well tolerated with a manageable safety profile to date. As of the data
cutoff date, no drug discontinuations due to treatment-related adverse events
and no evidence of QTc prolongation were reported. Treatment related adverse
effects (grade ? 3) were reported to include pancreatitis, increased lipase,
decreased neutrophil count, tumor lysis syndrome and deep venous thrombosis.
On May 6, 2021, we reported that we amended the KOMET-001 trial protocol to
include two Phase 1b expansion cohorts at doses that cleared the safety
threshold in dose escalation. The Phase 1b portion of the study is designed to
determine the lowest dose of ziftomenib that provides maximum biologic and
clinical effect, consistent with guidance from the FDA relating to targeted
oncology therapies, known as Project Optimus.
On June 24, 2021, we reported that we dosed our first patient in the Phase 1b
expansion cohorts. Each cohort - a lower dose (200 mg) and a higher dose (600
mg) - is comprised of NPM1-mutant and KMT2A-rearranged relapsed/refractory AML
patients. Both doses demonstrated preliminary evidence of activity and safety
and were determined to be well tolerated in the Phase 1a portion of the study.
We expect to enroll 12 evaluable patients in each cohort and assess those
patients for safety and tolerability, pharmacokinetics and efficacy in order to
determine the RP2D. The study protocol gives us the flexibility to enroll up to
30 patients in the selected cohort while we transition into the
registration-directed portion of the study. We believe data from all patients
treated at the RP2D will contribute to the registrational patient population.
Pending determination of the RP2D, we are preparing to conduct a comprehensive
clinical development plan for ziftomenib, aimed at broadening the opportunity to
develop treatments for patients with acute leukemias. Additional development
opportunities include combination studies, other genetic subtypes, a pediatric
development strategy and other indications, such as acute lymphocytic leukemia
and myelodysplastic syndrome.
On November 24, 2021, we reported that the FDA had placed the KOMET-001 trial on
a partial clinical hold. The partial clinical hold was initiated following our
report to the FDA of a Grade 5 serious adverse event potentially associated with
differentiation syndrome, a known adverse event related to differentiating
agents in the treatment of AML. Patients who were enrolled in the Phase 1b
expansion cohorts at the time of the partial clinical hold were permitted to
continue to receive ziftomenib, although no additional patients were to be
enrolled until the partial clinical hold was lifted. On January 20, 2022, we
announced that the FDA had lifted the partial clinical hold on the KOMET-001
trial following agreement on our mitigation strategy for differentiation
syndrome, and that the study would resume screening and enrollment of new
patients. We have completed enrollment in the Phase 1b expansion cohorts of the
KOMET-001 trial, and we anticipate identifying the RP2D and reporting top-line
data in the third quarter of 2022.
On December 13, 2021, we reported the presentation of preclinical data for
ziftomenib and its potential for synergistic activity in combination with the
BCL2 inhibitor venetoclax, a current standard of care in the treatment of
patients with AML. These data confirm that treatment with ziftomenib drives
dose-dependent induction of growth inhibition, differentiation and loss of
viability of AML cells with KMT2A rearrangements or NPM1 mutations, while also
reducing key protein levels such as MEIS1, FLT3 and BCL2 and menin itself. In
addition, the new findings show that co-treatment with ziftomenib and venetoclax
induces synergistic activity in patient-derived AML cells expressing KMT2A
rearrangements or NPM1 mutations, with or without mutant FLT3 expression, and
prolongs survival in an aggressive disseminated model of KMT2A-rearranged,
FLT3-mutant AML.
Our second product candidate, tipifarnib, is a potent, selective and orally
bioavailable inhibitor of farnesyl transferase that has been previously studied
in more than 5,000 cancer patients and demonstrated compelling and durable
anti-cancer activity in certain patients with a manageable side effect profile.
We are currently evaluating tipifarnib in multiple solid tumor and hematologic
indications.
Our most advanced solid tumor indication for tipifarnib is in patients with head
and neck squamous cell carcinoma, or HNSCC, that carry mutations in the HRAS
gene. We are conducting a global, multi-center, open-label, non-comparative
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registration-directed clinical trial of tipifarnib in HRAS mutant HNSCC designed
with two cohorts: a treatment cohort, which we call AIM-HN, and a prospective
observational cohort, which we call SEQ-HN.
In July 2020, we amended the AIM-HN trial protocol to enable enrollment of
patients with any HRAS mutation, in addition to patients with a high HRAS
variant allele frequency, in order to assess the potential for clinical benefit
in the overall HRAS mutant HNSCC population. We also introduced a number of
modifications to the protocol that seek to enable us to enroll patients in the
study more efficiently as well as modifications that we believe better reflect
the evolving standards of care for recurrent/metastatic HNSCC. While these
amendments do not change the primary outcome measure of an objective response
rate, or ORR, in patients with high HRAS mutant variant allele frequency, the
modifications will require us to enroll an increased number of evaluable HNSCC
patients. As a result of the COVID-19 pandemic and the additional patients
required for the trial, we anticipate we will continue to face delays in our
timelines and milestones for the AIM-HN trial and, accordingly, are unable to
reasonably forecast at this time when our AIM-HN trial will become fully
enrolled.
On February 24, 2021, we announced that tipifarnib was granted Breakthrough
Therapy Designation from the FDA for the treatment of patients with recurrent or
metastatic HRAS mutant HNSCC with variant allele frequency ? 20% after disease
progression on platinum-based chemotherapy. The Breakthrough Therapy Designation
is based upon data from our Phase 2 RUN-HN trial, which was published in the
Journal of Clinical Oncology on June 10, 2021.
In addition to evaluating tipifarnib as a monotherapy in patients with recurrent
or metastatic HRAS mutant HNSCC, we have been evaluating the use of tipifarnib
in combination with other targeted oncology therapies to address larger patient
populations and to pursue earlier lines of therapy. Among these potential
combinations, we have prioritized the combination of tipifarnib and an inhibitor
of the PI3 kinase alpha enzyme for clinical evaluation in patients with
biomarker-defined subsets of HNSCC. On July 6, 2021, we announced a clinical
collaboration with Novartis Pharma AG, or Novartis, to evaluate the combination
of tipifarnib and alpelisib, a PI3 kinase alpha inhibitor, in patients with
HNSCC whose tumors have HRAS overexpression and/or PIK3CA mutation and/or
amplification. In the fourth quarter of 2021, we commenced a Phase 1/2
open-label, biomarker-defined cohort study, which we call the KURRENT-HN trial,
to evaluate the safety and tolerability of the combination, determine the
recommended dose and schedule for the combination, and assess early antitumor
activity of the combination for the treatment of such patients. Under the terms
of our collaboration agreement with Novartis, we sponsor the KURRENT-HN trial
and supply tipifarnib, and Novartis supplies alpelisib. On December 16, 2021, we
announced dose administration for the first patient in KURRENT-HN.
The KURRENT-HN trial is an ongoing multicenter, open-label, Phase 1/2 trial
designed to evaluate the safety of the combination of tipifarnib and alpelisib,
determine the recommended combination dose(s) regimen, and evaluate preliminary
anti-tumor activity in patients with recurrent/metastatic (R/M) HNSCC whose
tumors are dependent upon HRAS and/or PIK3CA signaling. We anticipate enrolling
approximately 40 HNSCC patients into two biomarker defined cohorts (Cohort 1,
PIK3CA; Cohort 2, HRAS).
We are also evaluating the use of farnesyl transferase inhibitors, or FTIs, in
combination with epidermal growth factor receptor, or EGFR, -targeted therapies
to prevent emergence of resistance to EGFR-targeted therapies. At the American
Association for Cancer Research Annual Meeting in April 2022, our collaboration
partner, INSERM, the French National Institute of Health and Medical Research,
released preclinical data supporting the potential of tipifarnib to prevent
emergence of resistance to the EGFR tyrosine kinase inhibitor osimertinib in
EGFR mutant non-small cell lung cancer, or NSCLC. Using Rho-pathway inhibitor
screening, researchers at INSERM found that tipifarnib induced a complete
clearance of drug-tolerant dormant cells, a potential mechanism of resistance to
EGFR-targeted therapy in NSCLC. Several farnesylated targets were identified
that appear to control the ability of tumor cells to enter and exit a
drug-tolerant state. In parallel, using preclinical in vivo models of
EGFR-mutated lung tumors, co-treatment with tipifarnib durably prevented relapse
to osimertinib for up to six months, with no evidence of toxicity. Collectively,
this mechanistic and translational research strongly supports the use of an FTI
to prevent or delay the adaptive response to osimertinib in patients with
EGFR-mutated NSCLC. We are preparing to initiate a Phase 1 clinical trial, which
we plan to call the KURRENT-LUNG trial, of tipifarnib in combination with
osimertinib in treatment-naïve locally advanced/metastatic EGFR mutated NSCLC
and expect to dose the first patient in the third quarter of 2022.
As previously reported, we are developing a next-generation farnesyl transferase
inhibitor which we believe demonstrates improved potency, pharmacokinetic and
physicochemical properties relative to tipifarnib. In June 2021, we nominated a
development candidate, KO-2806, which we have advanced into IND-enabling
studies. We intend to direct this development candidate at innovative biology
and larger disease indications in combination with other targeted therapies,
including osimertinib, and we expect to submit an IND for KO-2806 in the fourth
quarter of 2022. We are also evaluating both tipifarnib and KO-2806 in
combination with other targeted therapies in other indications.
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Liquidity Overview
As of March 31, 2022, we had cash, cash equivalents and short-term investments
of $480.1 million. In February 2022, we terminated our $75.0 million Common
Stock Sales Agreement with SVB Leerink LLC and Stifel, Nicolaus & Company,
Incorporated and entered into a new Common Stock Sales Agreement with SVB
Securities LLC, Credit Suisse Securities (USA) LLC and Cantor Fitzgerald & Co.,
or the ATM Facility, under which we may offer and sell, from time to time, at
our sole discretion, shares of our common stock having an aggregate offering
price of up to $150.0 million. We have not yet sold any shares of our common
stock under the ATM Facility. To date, we have not generated any revenues from
product sales, and we do not have any approved products. Since our inception, we
have funded our operations primarily through equity and debt financings. We
anticipate that we will require significant additional financing in the future
to continue to fund our operations as discussed more fully below under the
heading "Liquidity and Capital Resources."
Financial Operations Overview
Research and Development Expenses
We focus on the research and development of our product programs. Our research
and development expenses consist of costs associated with our research and
development activities including salaries, benefits, share-based compensation
and other personnel costs, clinical trial costs, manufacturing costs for
non-commercial products, fees paid to external service providers and
consultants, facilities costs and supplies, equipment and materials used in
clinical and preclinical studies and research and development. All such costs
are charged to research and development expense as incurred. Payments that we
make in connection with in-licensed technology for a particular research and
development project that have no alternative future uses in other research and
development projects or otherwise and therefore, no separate economic values,
are expensed as research and development costs at the time such costs are
incurred. As of March 31, 2022, we have no in-licensed technologies that have
alternative future uses in research and development projects or otherwise.
We cannot determine with certainty the timing of initiation, the duration or the
completion costs of current or future preclinical studies and clinical trials of
our product candidates. At this time, due to the inherently unpredictable nature
of preclinical and clinical development, we are unable to estimate with any
certainty the costs we will incur and the timelines we will require in the
continued development of our product candidates and our other pipeline programs.
Clinical and preclinical development timelines, the probability of success and
development costs can differ materially from expectations. Our future research
and development expenses will depend on the preclinical and clinical success of
each product candidate that we develop, as well as ongoing assessments of the
commercial potential of such product candidates. In addition, we cannot forecast
which product candidates may be subject to future collaborations, when such
arrangements will be secured, if at all, and to what degree such arrangements
would affect our development plans and capital requirements.
Completion of clinical trials may take several years or more, and the length of
time generally varies according to the type, complexity, novelty and intended
use of a product candidate. The cost of clinical trials may vary significantly
over the life of a project as a result of differences arising during clinical
development, including, among others:
• managing the impact of COVID-19 pandemic and related precautions on the
operation of our clinical trials;
• per patient clinical trial costs;
• the number of clinical trials required for approval;
• the number of sites included in the clinical trials;
• the length of time required to enroll suitable patients;
• the number of doses that patients receive;
• the number of patients that participate in the clinical trials;
• the drop-out or discontinuation rates of patients;
• the duration of patient follow-up;
• potential additional safety monitoring or other studies requested by
regulatory agencies;
• the number and complexity of analyses and tests performed during the clinical
trial;
• the phase of development of the product candidate; and
• the efficacy and safety profile of the product candidate.
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General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits,
share-based compensation and other personnel costs for employees in executive,
finance, business development and support functions. Other significant general
and administrative expenses include the costs associated with obtaining and
maintaining our patent portfolio, professional services for audit, legal,
pre-commercial planning, investor and public relations, director and officer
insurance premiums, corporate activities and allocated facilities.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income.
Income Taxes
We have incurred net losses and have not recorded any U.S. federal or state
income tax benefits for the losses as they have been offset by valuation
allowances.
Results of Operations
The following table sets forth our results of operations for the periods
presented, in thousands:
Three Months Ended
March 31,
2022 2021 Change
Research and development expenses $ 20,913 $ 20,324 $ 589
General and administrative expenses 11,869 10,572 1,297
Other income (expense), net
329 202 127
Comparison of the Three Months Ended March 31, 2022 and 2021
Research and Development Expenses. The following table illustrates the
components of our research and development expenses for the periods presented,
in thousands:
Three Months Ended
March 31,
2022 2021 Change
Ziftomenib-related costs $ 4,085 $ 2,661 $ 1,424
Tipifarnib-related costs 4,861 10,177 (5,316 )
Discovery stage programs 1,345 770 575
Personnel costs and other expenses 8,166 5,345 2,821
Share-based compensation expense 2,456 1,371 1,085
Total research and development expenses $ 20,913 $ 20,324 $ 589
The increase in ziftomenib-related research and development expenses for the
three months ended March 31, 2022 compared to the same period in 2021 was
primarily due to increases in costs related to our Phase 1/2 clinical trial of
ziftomenib. The decrease in tipifarnib-related research and development expenses
for the three months ended March 31, 2022 compared to the same period in 2021
was primarily due to decreases in manufacturing and companion diagnostics
development activities, and clinical costs related to our registration-directed
trial of tipifarnib. The increase in discovery stage program research and
development expenses for the three months ended March 31, 2022 compared to the
same period in 2021 was primarily due to increased research activities for new
programs. Personnel costs and other expenses include employee salaries and
related expenses, facilities expenses and overhead expenses. We expect our
research and development expenses to increase in future periods as we continue
clinical development activities for ziftomenib and tipifarnib.
General and Administrative Expenses. The increase in general and administrative
expenses for the three months ended March 31, 2022 compared to the same period
in 2021 was primarily due to increases of $0.7 million in professional fees and
$0.5 million in non-cash share-based compensation expense. We expect our general
and administrative expenses to increase in future periods to support our planned
increase in research and development activities.
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Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through equity and
debt financings. We have devoted our resources to funding research and
development programs, including discovery research, preclinical and clinical
development activities.
In February 2022, we entered into the ATM Facility under which we may offer and
sell, from time to time, at our sole discretion, shares of our common stock
having an aggregate offering price of up to $150.0 million. We have not yet sold
any shares of our common stock under the ATM Facility.
We have incurred operating losses and negative cash flows from operating
activities since inception. As of March 31, 2022, we had an accumulated deficit
of $465.4 million. We expect our expenses to increase in connection with our
ongoing activities, particularly as we continue the research and development of,
continue and initiate clinical trials of, and seek marketing approval for, our
product candidates. In addition, if we obtain marketing approval for any of our
product candidates, we expect to incur significant commercialization expenses
related to product sales, marketing, manufacturing and distribution to the
extent that such sales, marketing and distribution are not the responsibility of
potential collaborators. Accordingly, we will need to obtain substantial
additional funding in connection with our continuing operations. If we are
unable to raise capital when needed or on attractive terms, we would be forced
to delay, reduce or eliminate our research and development programs or future
commercialization efforts.
As of March 31, 2022, we had cash, cash equivalents and short-term investments
of $480.1 million. Based on our current plans, we believe that our existing
cash, cash equivalents and short-term investments will be sufficient to enable
us to fund our operating expenses and capital expenditure requirements through
2024. Our future capital requirements will depend on many factors, including:
•
the scope, progress, results and costs of drug discovery, preclinical
development, laboratory testing and clinical trials for our product candidates;
•
the costs, timing and outcome of regulatory review of our product candidates;
•
the costs of establishing or contracting for sales, marketing and distribution
capabilities if we obtain regulatory approvals to market our product candidates;
•
the costs of securing and producing drug substance and drug product material for
use in preclinical studies, clinical trials and for use as commercial supply;
•
the costs of securing manufacturing arrangements for development activities and
commercial production;
•
the scope, prioritization and number of our research and development programs;
•
the extent to which we are obligated to reimburse, or entitled to reimbursement
of, clinical trial costs under future collaboration agreements, if any;
•
the extent to which we acquire or in-license other product candidates and
technologies;
•
the success of our current or future companion diagnostic test collaborations
for companion diagnostic tests; and
•
the costs of preparing, filing and prosecuting patent applications, maintaining
and enforcing our intellectual property rights and defending intellectual
property-related claims.
To date, we have not generated any revenues from product sales, and we do not
have any approved products. We do not know when, or if, we will generate any
revenues from product sales. We do not expect to generate significant revenues
from product sales unless and until we obtain regulatory approval of and
commercialize one of our current or future product candidates. We are subject to
all of the risks incident in the development of new therapeutic products, 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.
Until such time, if ever, as we can generate substantial product revenues, we
expect to finance our cash needs through a combination of stock offerings, debt
financings, collaborations, strategic partnerships or licensing arrangements. We
do not have any committed external source of funds. Additional capital may not
be available on reasonable terms, if at all. To the extent that we raise
additional capital through the sale of stock or convertible debt securities, the
ownership interest of our stockholders will be diluted, and the terms of these
securities may include liquidation or other preferences that adversely affect
the rights of our common stockholders. Debt financing, if available, may involve
agreements that include increased fixed payment obligations and covenants
limiting or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures, declaring dividends, selling or
licensing intellectual property rights and other operating restrictions that
could adversely impact our ability to conduct our business. If we raise
additional funds through collaborations,
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strategic partnerships or licensing arrangements with third parties, we may have
to relinquish valuable rights to our product candidates, including our other
technologies, future revenue streams or research programs, or grant licenses on
terms that may not be favorable to us. If we are unable to raise additional
funds when needed, we may be unable to carry out our business plan. As a result,
we may be required to delay, limit, reduce or terminate our product development
or future commercialization efforts or grant rights to develop and commercialize
our product candidates even if we would otherwise prefer to develop and
commercialize such product candidates ourselves, and our business, financial
condition and results of operations would be materially adversely affected.
The following table provides a summary of our net cash flow activities for the
periods presented, in thousands:
Three Months Ended
March 31,
2022 2021 Change
Net cash used in operating activities $ (32,181 ) $ (28,517 ) $ (3,664 )
Net cash used in investing activities (24,962 ) (186,220 ) 161,258
Net cash provided by financing activities 303
79 224
Operating Activities. The increase in net cash used in operating activities for
the three months ended March 31, 2022 compared to the same period in 2021 was
primarily due to the increase of $1.8 million in net loss, $3.8 million in
changes in accounts payable and accrued expenses, partially offset by an
increase of $1.6 million in non-cash share-based compensation expense.
Investing Activities. The decrease in net cash used in investing activities for
the three months ended March 31, 2022 compared to the same period in 2021 was
primarily due to a decrease of $171.8 million in purchases of marketable
securities, partially offset by a decrease of $10.5 million in maturities of
marketable securities.
Financing Activities. Net cash provided by financing activities for the three
months ended March 31, 2022 related to proceeds of $0.3 million from the
issuance of stock under our equity incentive plan. Net cash provided by
financing activities for the three months ended March 31, 2021 consisted of $0.8
million in proceeds from the issuance of stock under our equity incentive plan,
offset by $0.8 million in the repayment of long-term debt.
Contractual Obligations and Commitments
We lease certain office and laboratory space under non-cancelable operating
leases. The leases are also subject to additional variable charges for common
area maintenance, property taxes, property insurance and other variable costs.
See Note 6 of the unaudited condensed financial statements for additional detail
surrounding our lease obligations.
We enter into short-term and cancellable agreements in the normal course of
operations with clinical sites and contract research organizations, or CROs, for
clinical research studies, professional consultants and various third parties
for preclinical research studies, clinical supply manufacturing and other
services through purchase orders or other documentation, or that are
undocumented except for an invoice. Such short-term agreements are generally
outstanding for periods less than one year and are settled by cash payments upon
delivery of goods and services. The nature of the work being conducted under
these agreements is such that, in most cases, the services may be cancelled upon
prior notice of 90 days or less. Payments due upon cancellation generally
consist only of payments for services provided and expenses incurred, including
non-cancellable obligations of our service providers, up to the date of
cancellation.
Our in-license agreements are cancelable by us with written notice within 180
days or less. We may be required to pay up to approximately $80.1 million in
milestone payments, plus sales royalties, in the event that regulatory and
commercial milestones under the in-license agreements are achieved.
Critical Accounting Policies and Management Estimates
The SEC defines critical accounting policies as those that are, in management's
view, important to the portrayal of our financial condition and results of
operations and demanding of management's judgment. Management's discussion and
analysis of our financial condition and results of operations are based on our
unaudited condensed financial statements, which have been prepared in accordance
with U.S. generally accepted accounting principles. The preparation of these
unaudited condensed financial statements required estimates and judgments that
affect the reported amounts of assets, liabilities, and expenses and the
disclosure of contingent assets and liabilities in the unaudited condensed
financial statements. On an ongoing basis, we evaluate our critical accounting
estimates and judgments. We base our estimates on historical experience, known
trends and events, and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis
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for making judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. Though the impact of
the COVID-19 pandemic to our business and operating results presents additional
uncertainty, we continue to use the best information available to form our
critical accounting estimates.
There have been no material changes to our critical accounting policies and
estimates from the information provided in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Critical Accounting Policies and Management Estimates," included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2021.
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