MOLECULAR TEMPLATES, INC. This Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the unaudited financial
information and the notes thereto included in this Quarterly Report on Form 10-Q
and the audited financial information and the notes thereto included in the
Annual Report on Form 10-K for the year ended
Certain matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, words such as "may," "will," "anticipate," "estimate," "expects," "projects," "intends," "plans," "believes" and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.
Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods.
The following information and any forward-looking statements should be
considered in light of factors discussed elsewhere in this Quarterly Report on
Form 10-Q and under "Risk Factors" in Part I, Item 1A of our Annual Report on
Form 10-K for the year ended
We caution readers not to place undue reliance on any forward-looking statements
made by us, which speak only as of the date they are made. We disclaim any
obligation, except as specifically required by law and the rules of the
You should read the following discussion and analysis of financial condition and results of operations together with Part I, Item 1, "Financial Statements," which includes our financial statements and related notes, elsewhere in this Quarterly Report on Form 10-Q. In preparing this Management's Discussion and Analysis of Financial Condition and Results of Operations, we presume that readers have access to and have read the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K, pursuant to Instruction 2 to paragraph (b) of Item 303 of Regulation S-K.
Overview
Business
ETBs use a genetically engineered version of the SLTA. In its wild-type form, Shiga-like Toxin or "SLT" is thought to induce its own entry into a cell when proximal to the cell surface membrane, self-route to the cytosol, and enzymatically and irreversibly shut down protein synthesis via ribosome inactivation. SLTA is normally coupled to its cognate Shiga-like Toxin B subunit, or SLTB, to target the CD77 cell surface marker, a non-internalizing glycosphingolipid. In our scaffold, a genetically engineered SLTA with no cognate SLTB component is genetically fused to antibody domains or fragments specific to a target, resulting in a biologic therapeutic that can identify the particular target and specifically kill the cell. The antibody domains may be substituted with other antibody domains having different specificities to allow for the rapid development of new drugs to selected targets in cancer and other serious diseases.
ETBs combine the specificity of an antibody with SLTA's potent mechanism of cell destruction. Based on the disease setting, we have created ETBs that have reduced immunogenicity and are capable of delivering additional payloads into a target cell. Immunogenicity is the ability of a foreign substance to provoke an immune response in a host. ETBs have relatively predictable pharmacokinetic, or PK, and absorption, distribution, metabolism and excretion, or ADME, profiles and can be rapidly screened for desired activity in robust cell-based and animal-model assays. Because SLTA can induce internalization against non- and poorly-internalizing receptors, the universe of targets for ETBs should be substantially larger than that seen with antibody drug conjugates, or ADCs, which are not likely to be effective if the target does not readily internalize the ADC payload.
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ETBs have a differentiated mechanism of cell kill in cancer therapeutics (the inhibition of protein synthesis via ribosome destruction), and we have preclinical and clinical data demonstrating the utility of these molecules in chemotherapy-refractory cancers. ETBs have shown good tolerability in multiple animal models as well as a generally favorable tolerability profile in our clinical studies to date. We believe the target specificity of ETBs, their ability to self-internalize, their potent and differentiated mechanism of cell kill and their tolerability profile provide opportunities for the clinical development of these agents to address multiple cancer types.
Our initial approach to drug development in oncology involves the selection of lead compounds to validated targets in cancer. We have developed ETBs for various targets, including CD38, HER2, and PD-L1. HER2 is clinically validated as a target for the treatment of solid tumors including breast and gastric cancer. CD38 has been validated as a meaningful clinical target in the treatment of multiple myeloma. PD-L1 is central to immune checkpoint pathways and is a target expressed in a variety of solid tumor cancers.
We filed an IND for MT-5111, our ETB targeting HER2, in
As of our
We are encouraged by the safety profile to date in these heavily pretreated subjects and believe the study has reached clinically active dose levels.
In
MT-0169 is in an ongoing Phase 1 study in relapsed/refractory multiple myeloma
and non-Hodgkins lymphoma with dose escalation planned through six dose cohorts,
in which the first subject was dosed in
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We filed an IND for MT-6402, our ETB targeting PD-L1, in
We expect to provide an update on MT-5111, MT-0169 and MT-6402 by the end of this year and expect to provide periodic updates throughout 2022. We continue to advance our pipeline of next-generation ETBs targeting CTLA-4, TIGIT, TROP2, SLAMF-7, CD20, and CD45.
Our trials and plans for our ETB product candidates, including MT-5111, MT-0169,
and MT-6402, which utilize next-generation ETB technology, are not affected by
the discontinuation of our first-generation ETB, MT-3724, which occurred in
We have built up multiple core competencies around the creation and development of ETBs. We developed the ETB technology in-house and continue to make iterative improvements in the scaffold and identify new uses of the technology. We also developed the proprietary process for manufacturing ETBs under Current Good Manufacturing Process, or cGMP regulatory standards and continue to make improvements to its manufacturing processes.
We have conducted multiple cGMP manufacturing runs with our compounds and believe this process is robust and could support commercial production with gross margins that are similar to those seen with antibodies.
Impact of COVID-19
In
We are carefully and continually evaluating the potential individual patient risk associated with continuing to enroll in our existing clinical studies during the ongoing COVID-19 pandemic, in accordance with FDA and foreign regulatory authorities' recommendations for clinical trials. Our Phase 1 studies for MT-5111, MT-0169 and MT-6402 are open and able to treat enrolled subjects and screen new subjects.
The decision to continue our ongoing studies throughout the COVID-19 pandemic was predicated on the treating investigator determining that the potential benefit to the patient of investigational therapy outweighs the potential risk of contracting COVID-19 as the subjects enrolled in our trials had relapsed or refractory incurable malignancies with few or no standard-of-care therapeutic options and limited life expectancy.
Overall, COVID-19 led to a significant slowdown in the pace of site initiations
and patient enrollment into our clinical trials. The degree of disruption was,
and continues to be, variable by geography and individual clinical site, with
some sites screening and enrolling only subjects with an urgent need for
treatment, and some attempting to operate as usual. The COVID-19 pandemic
resulted in a significant slowdown in the pace of site initiations and patient
enrollment across the MT-0169 program, which had a temporary pause in the
activation of new study sites and new patient enrollment (along with most of
Takeda's other early-stage studies) due to COVID-19 and was reinitiated in the
fourth quarter of 2020. To date, screening and enrollment for the MT-5111 Phase
I study, which remained open throughout the pandemic, has been less adversely
affected than the MT-0169 studies were during 2020. Our Phase 1 study of MT-6402
was recently initiated in
The extent to which the COVID-19 pandemic may impact our business, financial condition and results of operations will depend on the manner in which this pandemic continues to evolve and future developments in response thereto, which are highly uncertain and cannot be predicted with confidence and which may include, among other things, the ultimate severity, intensity and duration of this pandemic (including any resurgences); impact of the new COVID-19 variants, the rollout of COVID-19 vaccines? governmental, business or other actions that have been, or will be, taken in response to this pandemic, including restrictions on travel and mobility,
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business closures and imposition of social distancing measures? impacts of the pandemic on the vendors or distribution channels in our or our partners' supply chain and ability to continue to manufacture our investigational products? impacts of the pandemic on the conduct of our clinical trials, including with respect to enrollment rates, availability of investigators and clinical trial sites or monitoring of data? and impacts of the pandemic on the regulatory agencies with which we interact in the development, review, approval and commercialization of our therapeutic products.
Collaboration Agreements
On
Pursuant to the
In
In
Takeda Multi-Target Agreement
In
Under the Takeda Multi-Target Agreement, Takeda has an option during an option period to obtain an exclusive license under our intellectual property to develop, manufacture, commercialize and otherwise exploit ETBs against the designated targets. The option period for each target ends three months after the completion of the evaluation of such designated target.
We received an upfront fee of
The Takeda Multi-Target Agreement also provides for potential additional future
payments based upon the exercise by Takeda of certain options and our
achievement of various development, regulatory and sales milestone events, and
potential royalty payments and contingency fees as further described in Note 3
"Research and Development Agreements", of our previously filed Annual Report on
Form 10-K for the year ended
The Takeda Multi-Target Agreement will expire on the expiration of the option period (within three months after the completion of the evaluation of each designated target) for the designated targets if Takeda does not exercise its options, or, following exercise of
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the option, on the later of the expiration of patent rights claiming the licensed ETB or ten years from first commercial sale of a licensed ETB. The Takeda Multi-Target Agreement might be sooner terminated by Takeda for convenience or upon a change of control in our ownership, or by either party for an uncured material breach of the agreement.
Vertex Pharmaceuticals
On
Pursuant to the terms of and upon the Company's entry into the Vertex
Collaboration Agreement, Vertex paid us an upfront payment of
We also had the opportunity, for each target under the Vertex Collaboration
Agreement, to receive up to an additional
We would have been responsible for conducting the research activities through
the designation of one or more development candidates. If Vertex had exercised
its option for a development candidate, Vertex would have been responsible for
all development, manufacturing, regulatory and commercialization activities with
respect to that development candidate. In connection with the Company's entry
into the Vertex Collaboration Agreement, we and Vertex entered into the SPA
pursuant to which Vertex purchased 1,666,666 shares of our common stock, par
value
In
For more information concerning our collaboration agreements, refer to Note 3,
"Research and Development Agreements" to our unaudited consolidated financial
statements for the three and nine months ended
Bristol Myers Squibb Company
On
Pursuant to the BMS Collaboration Agreement, Bristol Myers Squibb paid us an
upfront payment of
We will be responsible for conducting the research activities through the designation, if any, of one or more development candidates. Upon the exercise of its option for a development candidate, Bristol Myers Squibb will be responsible for all development, manufacturing, regulatory and commercialization activities with respect to that development candidate, subject to the terms and conditions of the BMS Collaboration Agreement.
For more information concerning this collaboration agreement, refer to Note 3,
"Research and Development Agreements" to our unaudited consolidated financial
statements for the three and nine months ended
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Grant Agreements CPRIT Grant Contract
In
In 2011, we were awarded a
Subject to the terms of the CD38 CPRIT Agreement, full ownership of any CPRIT funded technology and CPRIT funded intellectual property rights developed pursuant to the CD38 CPRIT Agreement will be retained by us, our Collaborators (as defined in the CD38 CPRIT Agreement) and, to the extent applicable, any participating third party (the "Project Results"). With respect to any Project Results, we agreed to grant to CPRIT a nonexclusive, irrevocable, royalty-free, perpetual, worldwide license, solely for academic, research and other non-commercial purposes, under the Project Results and to exploit any necessary additional intellectual property rights, subject to certain exclusions.
We will pay to CPRIT, during the term of the CD38 CPRIT Agreement, certain payments equal to a percentage of revenue ranging from the low- to mid-single digits. These payments will continue up to and until CPRIT receives an aggregate amount of 400% of the sum of all monies paid to us by CPRIT under the CD38 CPRIT Agreement. If we are required to obtain a license from a third party to sell any such product, the revenue sharing percentages might be reduced. In addition, once we pay CPRIT 400% of the monies the Company has received under the CD38 CPRIT Agreement, we will continue to pay CPRIT a revenue-sharing percentage of 0.5%.
The CD38 CPRIT Agreement will terminate, with certain obligations extending
beyond termination, on the earlier of (a)
For more information about our grant agreements, please see Note 3, "Research
and Development Agreements" to our unaudited consolidated financial statements
for the three and nine months ended
Financial Operations Overview
Revenue
To date, we have not generated any revenue from product sales to customers. We do not expect to receive any revenue from any ETB candidates that we or our collaboration partners develop, including MT-5111, MT-0169, MT-6402 and other pre-clinical ETB candidates, until we obtain regulatory approval and commercialize such biologics. Our revenue consists principally of collaboration revenue and grant revenue.
Research and Development revenue primarily relates to our collaboration agreements with Takeda, Vertex and Bristol Myers Squibb which are accounted for using the percentage-of-completion cost-to-cost method.
Grant revenue relates to our CPRIT grant for a CD38 ETB (MT-0169). CPRIT grant funds for MT-0169 are provided to us in arrears as cost reimbursement where revenue is recognized as allowable costs are incurred. Revenue recognized in excess of amounts collected are recorded as unbilled revenue.
For more information about our revenue recognition policy, please see Note 1,
"Organization and Summary of Significant Accounting Policies" to our audited
consolidated financial statements for the year ended
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Research and Development Expenses
Research and development expenses consist principally of:
• salaries for research and development staff and related expenses,
including stock-based compensation expenses;
• costs for current good manufacturing practices, or cGMP, manufacturing of
drug substances and drug products by contract manufacturers;
• fees and other costs paid to clinical trials sites and clinical research
organizations, ("CROs"), in connection with the performance of clinical
trials and preclinical testing;
• costs for consultants and contract research;
• costs of laboratory supplies and small equipment, including maintenance; and
• depreciation of long-lived assets.
Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including the initiation and enrollment of subjects in clinical trials and manufacture of drug or biologic materials for clinical trials. We expect research and development expenses to increase as we advance the clinical development of MT-5111, MT-0169 and/or MT-6402 and further advance the research and development of our pre-clinical ETB candidates, and other earlier stage drugs or biologics. The successful development of our ETB candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing and estimated costs of the efforts that will be necessary to complete the development of, or the period, if any, in which material net cash inflows may commence from any of our ETB candidates. This is due to numerous risks and uncertainties associated with developing drugs, including the uncertainty of:
• the scope, rate of progress and expense of our research and development
activities;
• clinical trials and early-stage results;
• the terms and timing of regulatory approvals; and
• the ability to market, commercialize and achieve market acceptance for
MT-5111, MT-0169, MT-6402 or any other ETB candidate that we or our
collaboration partners may develop in the future.
Any of these variables with respect to the development of MT-5111, MT-0169, or
any other ETB candidate that we may develop could result in a significant change
in the costs and timing associated with the development of such candidates. For
example, if the FDA the
General and Administrative Expenses
Our general and administrative expenses consist principally of:
• salaries for employees other than research and development staff,
including stock-based compensation expenses;
• professional fees for auditors and other consulting expenses related to
general and administrative activities;
• professional fees for legal services related to the protection and
maintenance of our intellectual property and regulatory compliance;
• cost of facilities, communication and office expenses;
• information technology services; and
• depreciation of long-lived assets.
We expect that our general and administrative costs will increase in the future as our business expands and we increase our headcount to support the expected growth in our operating activities. Additionally, we expect these expenses will also increase in the future as we incur additional costs associated with operating as a public company. These increases will likely include additional legal fees, accounting and audit fees, management board and supervisory board liability insurance premiums and costs related to investor relations. In addition, we expect to grant stock-based compensation awards to key management personnel and other employees.
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Other Income (Expense)
Other income (expense) mainly includes interest income earned on our cash and marketable securities balances held, and interest expense on our outstanding borrowings.
Results of Operations Revenues
The table below summarizes our revenues as follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Research and development revenue,
related party $ - $ 1,566 $ 13,136 $ 4,962
Research and development revenue,
other 2,379 2,732 7,597 7,176
Grant revenue - - - 3,210
Total revenue $ 2,379 $ 4,298 $ 20,733 $ 15,348 Research and Development Revenue - from related party
The decrease in research and development revenue - from related parties for the
three months ended
For more information about our collaboration agreements, please see Note 3
"Research and Development Agreements" to our unaudited consolidated financial
statements for the three and nine months ended
Research and Development Revenue - other
The decrease for the three months ended
For more information about our collaboration agreements, please see Note 3
"Research and Development Agreements" to our unaudited consolidated financial
statements for the three and nine months ended
Grant Revenue
The decrease in grant revenue for the nine months ended
Operating Expenses
The table below summarizes our operating expenses as follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Research and development expenses
$ 31,908 $ 27,169 $ 91,506 $ 90,273 29
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Research and Development Expenses
The table below summarizes our research and development expenses as follows (in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Program costs $ 8,192 $ 7,554 $ 22,783 $ 35,938
Employee compensation 10,774 9,304 31,956 24,529
Laboratory costs 1,545 937 4,102 2,932
Other research and development costs 2,370 1,827 6,487 7,268
Total research and development expenses
Research and development ("R&D") expenses increased
Program costs increased
Headcount increased in R&D 8% from
Other R&D costs decreased
General and Administrative Expenses
General and administrative expenses increased
Nonoperating activities
The table below summarizes our nonoperating activities as follows (in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Interest and other income, net
(1,033 ) (521 ) (2,301 ) (1,229 )
Loss on extinguishment of debt - - - (1,237 )
Total nonoperating activities
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Interest and Other Income and Interest Expense
The increase in interest and other income for the three months ended
The increase in interest expense for the three and nine months ended
The decrease in loss on extinguishment of debt for the nine months ended
Liquidity and Capital Resources
Sources of Funds
We have devoted substantially all of our resources to developing our ETB candidates and platform technology, building our intellectual property portfolio, developing our supply chain, conducting business planning, raising capital and providing for general and administrative support for these operations. We plan to increase our research and development expenses for the foreseeable future as we continue to advance MT-5111, MT-0169, MT-6402 and our earlier-stage pre-clinical programs. At this time, due to the inherently unpredictable nature of preclinical and clinical development and given the early stage of our programs and drug or biologic candidates, we cannot reasonably estimate the costs we will incur and the timelines that will be required to complete development, obtain marketing approval and commercialize our drugs or biologics, if and when approved. For the same reasons, we are also unable to predict when, if ever, we will generate revenue from product sales or whether, or when, if ever, we may achieve profitability. Clinical and preclinical development timelines, the probability of success, and development costs can differ materially from expectations.
In addition, we cannot forecast which drugs or biologics, if and when approved, 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.
We expect to incur substantial additional losses in the future as we expand our
research and development cost-sharing activities with our collaboration
partners, we believe such investment is strategically aligned with increasing
the value of our technology. For the nine months ended
To date, we have financed our operations through public offerings of common and preferred stock, private placements of equity securities, a reverse merger, and upfront and milestone payments received from our collaboration agreements, as well as funding from governmental bodies and bank and bridge loans.
In
In
In
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In
We expect to incur significant expenses and operating losses for the foreseeable future as we advance our lead ETB candidates through clinical trials, progress our pipeline ETB candidates from discovery through pre-clinical development, and seek regulatory approval and pursue commercialization of our ETB candidates. In addition, if we obtain regulatory approval for any of our ETB candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. In addition, we may incur expenses in connection with the in-license or acquisition of additional technology to augment or enable development of future ETB candidates. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses that we did not incur as a private company.
As a result, we will need additional financing to support our continuing operations. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity and debt financings or other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenue to achieve profitability, and we may never do so.
At
Cash Flows
Comparison of Nine Months Ended
The table below summarizes our cash flows for the nine months ended
Nine Months Ended
September 30,
2021 2020
Net cash provided by/(used in) operating activities
(82,253 ) (47,869 )
Net cash provided by financing activities 92,554 58,787
Net increase (decrease) in cash, cash equivalents
and restricted cash $ 2,375 $ (51,373 ) The decrease in net cash used in operating activities for the nine months ended
The increase in net cash used in investing activities for the nine months ended
The increase in net cash provided by financing activities was primarily due to proceeds from issuance of common stock and debt.
Operating and Capital Expenditure Requirements
We have not achieved profitability since our inception and had an accumulated
deficit of
We expect our expenses to increase substantially in connection with our ongoing development activities related to MT-5111, MT-0169 and MT-6402, our collaboration with BMS, our pre-clinical programs, and expanding our operating capabilities. In addition, we expect to incur additional costs associated with operating as a public company. We anticipate that our expenses will increase substantially if and as we:
• support the ongoing Phase I study of MT-5111;
• continue clinical development of MT-0169, an ETB biologic candidate to
which we have full rights, and support the ongoing Phase I study;
• support the PD-L1 program and the ongoing Phase I study for MT-6402;
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• continue the research and development of our other ETB candidates, such as
other CD20 targeted molecules, including completing pre-clinical studies
and commencing clinical trials;
• research activities through the designation of the development
candidate(s) with Bristol Myers Squibb;
• seek to enhance our technology platform using our antigen-seeding
technology approach to immuno-oncology;
• seek regulatory approvals for any ETB candidates that successfully
complete clinical trials;
• potentially establish a sales, marketing and distribution infrastructure
and scale up manufacturing capabilities to commercialize any drugs for
which we may obtain regulatory approval;
• add clinical, scientific, operational, financial and management
information systems and personnel, including personnel to support our
product development and potential future commercialization efforts and to
support our increased operations;
• experience any delays or encounter any issues resulting from any of the
above, including but not limited to failed studies, complex results,
safety issues or other regulatory challenges;
• service long-term debt; and
• complete the expansion of the Company's research and development spaces.
Because of the numerous risks and uncertainties associated with the development of MT-5111, MT-0169 and MT-6402, our collaboration with Bristol Myers Squibb and our other pre-clinical programs, and because the extent to which we may enter into collaborations with third parties for development of these ETB candidates is unknown, we are unable to estimate the amount of increased capital outlays and operating expenses associated with completing the research and development of our ETB candidates. Our future capital requirements for MT-5111, MT-0169, MT-6402 or our other pre-clinical programs will depend on many factors, including:
• the progress, timing and completion of pre-clinical testing and clinical
trials for our current or any future ETB candidates;
• the number of potential new ETB candidates we identify and decide to develop;
• the costs involved in growing our organization to the size needed to allow
for the research, development and potential commercialization of our
current or any future ETB candidates;
• the costs involved in filing patent applications and maintaining and
enforcing patents or defending against claims or infringements raised by
third parties;
• the time and costs involved in obtaining regulatory approval for our ETB
candidates and any delays we may encounter as a result of evolving
regulatory requirements or adverse results with respect to any of these
ETB candidates;
• any licensing or milestone fees we might have to pay during future
development of our current or any future ETB candidates;
• selling and marketing activities undertaken in connection with the
anticipated commercialization of our current or any future ETB candidates
and costs involved in the creation of an effective sales and marketing
organization; and
• the amount of revenues, if any, we may derive either directly or in the
form of royalty payments from future sales of our ETB candidates, if
approved.
Identifying potential ETB candidates and conducting pre-clinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our ETB candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs or biologics that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.
Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, stockholders' ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect their rights as stockholders. Additional debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends and may require the issuance of warrants, which could potentially dilute stockholders' ownership interest.
If we raise additional funds through collaborations, governmental grants, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or ETB candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings
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when needed, we may be required to delay, limit, reduce or terminate our product development programs or any future commercialization efforts or grant rights to develop and market ETB candidates that we would otherwise prefer to develop and market ourselves.
Critical Accounting Policies and Use of Estimates
Our discussion and analysis of our financial condition and results of operations
are based on our unaudited condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in
Recently Adopted Accounting Pronouncements
For a discussion of recently adopted accounting pronouncements see the
discussion in our Annual Report on Form 10-K for the year ended
Recent Accounting Pronouncements Not Yet Adopted
For a discussion of recently issued accounting pronouncements and
interpretations not yet adopted by us, see Note 1, "Organization and Summary of
Significant Accounting Policies", to our unaudited condensed financial
statements for the
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
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