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OFFON

KURA ONCOLOGY, INC.

(KURA)
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KURA ONCOLOGY : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

08/05/2021 | 04:23pm EDT
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, 2020 and the related Management's
Discussion and Analysis of Financial Condition and Results of Operations, both
of which are contained in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2020 filed with the Securities and Exchange Commission, or
SEC, on February, 24, 2021.

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 for which we own global commercial rights,
tipifarnib and KO-539, as well as additional programs that are at a discovery
stage. 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, 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 currently conducting a global, multi-center, open-label,
non-comparative 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 reflected
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 pandemic caused by the coronavirus disease 2019, or
COVID-19, and the additional patients required for the trial, we anticipate we
will continue to face delays in our timelines and

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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 has been granted Breakthrough
Therapy Designation from the U.S. Food and Drug Administration, or 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 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 or PIK3CA mutation and/or
amplification. We plan to commence a Phase 1/2 open-label, biomarker-defined
cohort study, which we call the KURRENT trial, in the fourth quarter of 2021 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 will sponsor the KURRENT trial
and supply tipifarnib, and Novartis will supply alpelisib.

Although we believe tipifarnib has potential to modulate the CXCR4-expressing
primary tumor cells in angioimmunoblastic T-cell lymphoma, or AITL, peripheral
T-cell lymphomas, or PTCL, and other diseases such as relapsed or refractory
acute myeloid leukemia, or AML, chronic myelomonocytic leukemia, diffuse large
B-cell lymphoma, cutaneous T-cell lymphoma and pancreatic cancer, we suspended
the initiation of a planned registration-directed study for tipifarnib in T-cell
lymphoma and of a planned Phase 2 clinical trial for tipifarnib in pancreatic
cancer as a result of a strategic review conducted in the spring of 2020. We
have continued preclinical work to validate tipifarnib in the CXCR4 receptor
pathway and to assess the timing and strategy for further development.

Our second product candidate, KO-539, 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 KO-539 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 KO-539 targets epigenetic
dysregulation and removes a key block to cellular differentiation to drive
anti-tumor activity. We believe KO-539 has the potential to address
approximately 35% of 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 KO-539 for the treatment of AML from the
FDA in July 2019. We initiated our menin-KMT2A Phase 1/2 clinical trial of
KO-539 in relapsed or refractory AML which we call the Kura Oncology MEnin-KMT2A
Trial, or KOMET-001, in September 2019. The KOMET-001 trial has an accelerated
design and was initially designed to determine a recommended Phase 2 dose and
schedule, or RP2D, using a modified toxicity probability interval model.

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, KO-539 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.



                                       14
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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 KO-539 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) - will be comprised of NPM1-mutant and KMT2A-rearranged relapsed/refractory
AML patients. Both doses demonstrated preliminary evidence of activity and were
determined to be safe and 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 recommended Phase 2 dose will contribute to the registrational
patient population. We expect to complete enrollment of the 12 patients in each
of the Phase 1b expansion cohorts and determine a RP2D by the first quarter of
2022.



Pending determination of the RP2D, we are preparing to conduct a comprehensive
clinical development plan for KO-539, 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.



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 investigational new
drug-enabling studies. We intend to direct this development candidate at
innovative biology and larger disease indications in combination with other
targeted therapies, and we expect to submit an investigational new drug
application for KO-2806 by the end of 2022.

Liquidity Overview


As of June 30, 2021, we had cash, cash equivalents and short-term investments of
$567.5 million. We have an at-the-market issuance sales agreement with SVB
Leerink LLC and Stifel, Nicolaus & Company, Incorporated, or 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 $75.0 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 June 30, 2021, 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

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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.

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, corporate activities and
allocated facilities.

Other Income (Expense), Net

Other income (expense), net consists primarily of interest income and interest expense. Interest expense mainly consists of interest on long-term debt.

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                       Six Months Ended
                                     June 30,                                June 30,
                                 2021          2020        Change        2021         2020        Change
Research and development
expenses                      $   21,074     $ 13,697     $  7,377     $ 41,398     $ 26,272     $ 15,126
General and administrative
expenses                          12,573        7,476        5,097       

23,145 15,101 8,044 Other income (expense), net (16 ) 686 (702 ) 186 1,676 (1,490 )



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Comparison of the Three Months Ended June 30, 2021 and 2020


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
                                                 June 30,
                                             2021          2020       Change
Tipifarnib-related costs                  $    7,545     $  7,071     $   474
KO-539-related costs                           5,401          556       4,845
Discovery stage programs                       1,066          454         612
Personnel costs and other expenses             5,215        5,171          

44

Share-based compensation expense               1,847          445       

1,402

Total research and development expenses $ 21,074 $ 13,697 $ 7,377



The increase in tipifarnib-related research and development expenses for the
three months ended June 30, 2021 compared to the same period in 2020 was
primarily due to increases in patient screening costs and other clinical costs
related to our registration-directed trial of tipifarnib. The increase in
KO-539-related research and development expenses for the three months ended June
30, 2021 compared to the same period in 2020 was primarily due to increases in
costs related to our Phase 1/2 clinical trial of KO-539 which was initiated in
September 2019 and manufacturing development activities. The increase in
discovery stage program research and development expenses for the three months
ended June 30, 2021 compared to the same period in 2020 was primarily due to
increased research activities for new programs. Personnel costs and other
expenses include employee salaries and related expenses, facilities expenses,
overhead expenses and costs related to the terminated ERK inhibitor program. We
expect our research and development expenses to increase in future periods as we
continue clinical development activities for tipifarnib and KO-539.

General and Administrative Expenses. The increase in general and administrative
expenses for the three months ended June 30, 2021 compared to the same period in
2020 was primarily due to increases of $2.0 million in non-cash share-based
compensation expense, $1.7 million in personnel costs due to additional
headcount and $0.7 million in professional fees. We expect our general and
administrative expenses to increase in future periods to support our planned
increase in research and development activities.

Other income (expense), net. The decrease in other income (expense), net for the three months ended June 30, 2021 compared to the same period in 2020 was primarily due to a decrease in interest income.

Comparison of the Six Months Ended June 30, 2021 and 2020


Research and Development Expenses. The following table illustrates the
components of our research and development expenses for the periods presented,
in thousands:

                                            Six Months Ended
                                                June 30,
                                            2021         2020        Change
Tipifarnib-related costs                  $ 17,723     $ 12,863     $  4,860
KO-539-related costs                         8,062        1,444        6,618
Discovery stage programs                     1,835          854          981

Personnel costs and other expenses 10,560 9,496 1,064 Share-based compensation expense

             3,218        1,615        

1,603

Total research and development expenses $ 41,398 $ 26,272 $ 15,126



The increase in tipifarnib-related research and development expenses for the six
months ended June 30, 2021 compared to the same period in 2020 was primarily due
to increases in companion diagnostics development activities, patient screening
costs and other clinical costs related to our registration-directed trial of
tipifarnib. The increase in KO-539-related research and development expenses for
the six months ended June 30, 2021 compared to the same period in 2020 was
primarily due to increases in costs related to our Phase 1/2 clinical trial of
KO-539 which was initiated in September 2019 and manufacturing development
activities. The increase in discovery stage program research and development
expenses for the six months ended June 30, 2021 compared to the same period in
2020 was primarily due to increased research activities for new programs. The
increase in personnel costs and other expenses for the six months ended June 30,
2021 compared to the same period in 2020

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was to support our registration-directed clinical trial of tipifarnib and Phase
1/2 clinical trial of KO-539, partially offset by a reduction in costs due to
the termination of the ERK inhibitor program in 2020. Personnel costs and other
expenses include employee salaries and related expenses, facilities expenses,
overhead expenses and costs related to the terminated ERK inhibitor program.

General and Administrative Expenses. The increase in general and administrative
expenses for the six months ended June 30, 2021 compared to the same period in
2020 was primarily due to increases of $3.8 million in non-cash share-based
compensation expense, $3.2 million in personnel costs due to additional
headcount and $0.4 million in professional fees.

Other income (expense), net. The decrease in other income (expense), net for the
six months ended June 30, 2021 compared to the same period in 2020 was primarily
due to a decrease in interest income.

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 March 2019, 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 $75.0 million. We have not yet sold
any shares of our common stock under the ATM facility.

In November 2018, we entered into a loan and security agreement with Silicon
Valley Bank, or the SVB Loan Agreement, providing for up to $20.0 million in a
series of term loans. Upon entering into the SVB Loan Agreement, we borrowed
$7.5 million, or the Term Loan. The Term Loan had a scheduled maturity date
of May 1, 2023. On May 19, 2021, we paid $6.6 million to repay all amounts owed
under the Term Loan, which included a final payment of $0.6 million,
representing 7.75% of the Term Loan, and a prepayment fee of $30,000.

We have incurred operating losses and negative cash flows from operating
activities since inception. As of June 30, 2021, we had an accumulated deficit
of $366.9 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. Furthermore, we expect to continue to incur additional
costs associated with operating as a public company. 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 June 30, 2021, we had cash, cash equivalents and short-term investments of
$567.5 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 into 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;


                                       18
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   •  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, 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:




                                              Six Months Ended June 30,
                                               2021                2020            Change
Net cash used in operating activities     $      (56,591 )     $    (34,556 )   $    (22,035 )
Net cash (used in) provided by investing
activities                                      (223,441 )            5,774         (229,215 )
Net cash (used in) provided by financing
activities                                        (6,487 )          137,615 

(144,102 )



Operating Activities. The increase in net cash used in operating activities for
the six months ended June 30, 2021 compared to the same period in 2020 was
primarily due to the increase of $24.7 million in net loss, $2.2 million in
changes in accounts payable and accrued expenses, $1.8 million in changes in
prepaid expenses and other current assets and $1.7 million in changes in other
long-term assets, partially offset by increases of $5.4 million in non-cash
share-based compensation expense and $2.1 million in amortization of premiums
and accretion of discounts on marketable securities, net.

Investing Activities. The increase in net cash used in investing activities for
the six months ended June 30, 2021 compared to the same period in 2020 was
primarily due to an increase of $256.3 million in purchases of marketable
securities, partially offset by an increase of $26.1 million in maturities of
marketable securities and a decrease of $0.9 million in purchases of property
and equipment.

Financing Activities. Net cash used in financing activities for the six months
ended June 30, 2021 primarily related to the repayment of all amounts owed under
the Term Loan, including a final payment and prepayment fees, totaling $7.9
million, partially offset by proceeds of $1.4 million from exercises of stock
options and purchases under our employee stock purchase plan. Net cash provided
by financing activities for the six months ended June 30, 2020 consisted of
proceeds of $135.2 million from our sale of common stock from our public
offering in May 2020 and $2.4 million from exercises of stock options and
purchases under our employee stock purchase plan.

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Contractual Obligations


The following is a summary of our significant contractual obligations as of June
30, 2021, in thousands:



                                        Payments Due by Period
                                 Less than        1-3         3-5        More than
                     Total        1 Year         Years       Years        5 Years

Operating leases(1) $ 8,578 $ 2,242 $ 4,751 $ 1,585 $

      -


______________________

(1) Future minimum lease payments under our office and lab leases in San Diego,

California and Boston, Massachusetts.



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 of 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. These payments are not included in the table of contractual
obligations above.

Excluded from the table above are milestone or contractual payment obligations
contingent upon the achievement of certain milestones or events if the amount
and timing of such obligations are unknown or uncertain. 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 $80.2 million in milestone payments,
plus sales royalties, in the event that regulatory and commercial milestones
under the in-license agreements are achieved.

Off-Balance Sheet Arrangements

As of June 30, 2021, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

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 estimates and
judgments, including those related to accrued expenses and share-based
compensation. 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 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 inform 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, 2020.

                                       20

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