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 endedDecember 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 endedDecember 31, 2020 filed with theSecurities and Exchange Commission , orSEC , 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 theSEC . 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 ourSEC 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
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. InJuly 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 13
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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.
OnFebruary 24, 2021 , we announced that tipifarnib has been granted Breakthrough Therapy Designation from theU.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 theJournal of Clinical Oncology onJune 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. OnJuly 6, 2021 , we announced a clinical collaboration withNovartis 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 inJuly 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, inSeptember 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. OnDecember 5, 2020 , we announced preliminary results from our KOMET-001 trial at an oral presentation at the 2020American 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
-------------------------------------------------------------------------------- OnMay 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. OnJune 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. InJune 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 ofJune 30, 2021 , we had cash, cash equivalents and short-term investments of$567.5 million . We have an at-the-market issuance sales agreement withSVB Leerink LLC andStifel, 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 ofJune 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 15
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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
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
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
The increase in tipifarnib-related research and development expenses for the three months endedJune 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 endedJune 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 inSeptember 2019 and manufacturing development activities. The increase in discovery stage program research and development expenses for the three months endedJune 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 endedJune 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$0.7 million in professional fees. We expect our general and administrative expenses to increase in future periods to support our planned increase in research and development activities.
Other income (expense), net. The decrease in other income (expense), net for the
three months ended
Comparison of the Six Months Ended
Research and Development Expenses. The following table illustrates the components of our research and development expenses for the periods presented, in thousands: Six Months Ended June 30, 2021 2020 Change Tipifarnib-related costs$ 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
The increase in tipifarnib-related research and development expenses for the six months endedJune 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 endedJune 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 inSeptember 2019 and manufacturing development activities. The increase in discovery stage program research and development expenses for the six months endedJune 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 endedJune 30, 2021 compared to the same period in 2020 17 -------------------------------------------------------------------------------- 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 endedJune 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 endedJune 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. InMarch 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. InNovember 2018 , we entered into a loan and security agreement withSilicon 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 ofMay 1, 2023 . OnMay 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 ofJune 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 ofJune 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 endedJune 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 endedJune 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 endedJune 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 endedJune 30, 2020 consisted of proceeds of$135.2 million from our sale of common stock from our public offering inMay 2020 and$2.4 million from exercises of stock options and purchases under our employee stock purchase plan. 19
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Contractual Obligations
The following is a summary of our significant contractual obligations as ofJune 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)
- ______________________
(1) Future minimum lease payments under our office and lab leases in
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
Critical Accounting Policies and Management Estimates
TheSEC 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 withU.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
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