OMEGA THERAPEUTICS, INC.
You should read the following discussion and analysis of our financial condition
and results of operations together with our unaudited condensed financial
statements and related notes appearing elsewhere in this Quarterly Report on
Form 10-Q, or Quarterly Report, and our final prospectus for our initial public
offering ("Prospectus"), dated August 2, 2021 and filed with the United States
Securities and Exchange Commission , or SEC , pursuant to Rule 424(b)(4) under the
Securities Act of 1933, as amended, or the Securities Act. Some of the
information contained in this discussion and analysis or set forth elsewhere in
this Quarterly Report, including information with respect to our plans and
strategy for our business and related financing, includes forward-looking
statements that involve risks and uncertainties. As a result of many factors,
including those factors set forth in the "Risk Factors" section of this
Quarterly Report, our actual results could differ materially from the results
described in or implied by the forward-looking statements contained in the
following discussion and analysis. Please also see the "Special Note Regarding
Forward-Looking Statements" section of this Quarterly Report.
Overview
Omega Therapeutics is pioneering a new systematic approach to use mRNA
therapeutics as programmable epigenetic medicines by leveraging our OMEGA
Epigenomic Programming platform ("OMEGA platform"). mRNA refers to Messenger
RNA, a single-stranded RNA (ribonucleic acid that carries instructions for the
synthesis of proteins) corresponding to the sequence of a gene. Our OMEGA
platform harnesses the power of epigenetics, the mechanism that controls gene
expression and every aspect of an organism's life from cell genesis, growth and
differentiation to cell death. We have deciphered the three-dimensional
architecture of the human genome and its accompanying regulators, which are
organized into distinct and evolutionarily conserved structures called Insulated
Genomic Domains, or IGDs. IGDs are the fundamental structural and functional
units of gene control and cell differentiation and act as the "control room" of
biology. Most diseases are caused by aberrant gene expression rooted in
alterations in IGDs. The OMEGA platform has enabled us to systematically
identify and validate thousands of novel DNA-sequence-based epigenomic "zip
codes" within IGDs. We call these epigenomic targets EpiZips. We rationally
design and engineer our mRNA therapeutics, which are modular and programmable
epigenetic medicines, called Omega Epigenomic Controllers, or OECs, to target
EpiZips for Precision Genomic Control. This enables us to precisely tune genes
to a desired level of expression and to control the duration of expression.
Through this approach, we believe that the OMEGA platform has broad potential
applicability across a range of diseases and conditions. Our pipeline currently
consists of early-stage, preclinical programs that span regenerative medicine,
multigenic diseases including immunology, oncology, and select monogenic
diseases. We have conducted in vivo preclinical studies of our OECs in multiple
disease models for various indications, including hepatocellular carcinoma, or
HCC, non-small cell lung cancer, or NSCLC, and acute respiratory distress
syndrome, or ARDS, and we expect to conduct in vivo preclinical studies for
multiple additional programs. If successful, we plan to initiate investigational
new drug ("IND") enabling studies for multiple programs beginning in 2021, and
we expect to submit an IND for our OEC candidate for the treatment of HCC in the
first half of 2022. We are also targeting the identification of additional OEC
development candidates in the first half of 2022 and an additional IND filing
for another OEC candidate for the second half of 2022 or early 2023.
Since our inception, we have incurred significant operating losses. We have not
commercialized any products and have never generated any revenue from product
sales. We have devoted almost all of our financial resources to research and
development, including our preclinical development activities and preparing for
clinical trials of our product candidates. To date, we have funded our
operations primarily with proceeds from sales of equity securities and
borrowings under our loan and security agreement.
As of September 30, 2021 , we had cash and cash equivalents of $234.3 million . In
August 2021 , we completed our initial public offering ("IPO") pursuant to which
we issued and sold 8,300,976 shares of our common stock, including 900,976
shares pursuant to the partial exercise of the underwriters' option to purchase
additional shares, at a public offering price of $17.00 per share, for aggregate
gross proceeds of $141.1 million . We received approximately $128.1 million in
net proceeds after deducting underwriting discounts and commissions and other
offering expenses payable by us.
Our ability to generate product revenue will depend on the successful
development, regulatory approval, and eventual commercialization of one or more
of our product candidates. Until such time, if ever, as we can generate
substantial product revenue, we expect to finance our operations through equity
offerings, debt financings, marketing and distribution arrangements and other
collaborations, strategic alliances and licensing arrangements, or other
sources. Additional sources of financing might not be available to us on
favorable terms, if at all. If we are unable to raise additional
25
--------------------------------------------------------------------------------funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
We expect to continue to incur significant additional operating losses for the foreseeable future as we seek to advance product candidates through clinical development, continue preclinical development, expand our research and development activities, develop new product candidates, complete preclinical studies and clinical trials, seek regulatory approval and, if we receive regulatory approval, commercialize our products. Our expenses will also increase substantially if or as we:
• continue our research and development efforts and submit INDs for our product candidates;
• initiate and conduct clinical trials of our product candidates;
• continue to engineer and develop additional product candidates;
• continue to develop the OMEGA platform;
• seek regulatory and marketing approvals for product candidates that successfully complete clinical trials, if any;
• establish manufacturing and supply chain capacity sufficient to provide clinical and, if applicable, commercial quantities of product candidates, including building our own manufacturing facility;
• establish a sales, marketing, internal systems and distribution infrastructure to commercialize any products for which we may obtain regulatory approval, if any, in geographies in which we plan to commercialize our products ourselves;
• maintain, expand, protect and enforce our intellectual property estate;
• hire additional staff, including clinical, scientific, technical, regulatory, operational, financial, commercial, and support personnel, to execute our business plan and support our product development and potential future commercialization efforts;
• enter into collaborations or licenses for new technologies;
• make royalty, milestone, or other payments under our current and any future in-license agreements;
• incur additional legal, accounting, and other expenses in operating our business; and
• continue to operate as a public company.
Impact of COVID-19 on our business
The worldwide COVID-19 pandemic, including the identification of new variants of
the virus, may affect our ability to initiate and complete preclinical studies,
delay the initiation of our future clinical trials, or have other adverse
effects on our business, results of operations, financial condition, and
prospects. In addition, the pandemic has caused substantial disruption in the
financial markets and may adversely impact economies worldwide, both of which
could adversely affect our business, operations and ability to raise funds to
support our operations.
To date, we have not experienced material business disruptions as a result of
the pandemic. We are following, and plan to continue to follow, recommendations
from federal, state and local governments regarding workplace policies,
practices and procedures. To provide a safe work environment for our employees,
we have implemented various measures to promote for social distancing, increase
sanitization of our facilities and provide personal protective equipment for our
employees. In addition, the third-party contract research organizations, or
CROs, and contract development and manufacturing organizations, or CDMOs, that
we engage have faced in the past and may face in the future disruptions that
could affect our ability to initiate and complete preclinical studies, including
disruptions in procuring items that are essential for our research and
development activities, such as, for example, raw materials used in the
manufacture of our product candidates and laboratory supplies for our
preclinical studies, for which there may be shortages because of ongoing efforts
to address the COVID-19 pandemic.
We cannot be certain what the overall impact of the COVID-19 pandemic, or the variants of the virus, will be on our business, and the pandemic has the potential to adversely affect our business, financial condition, results of operations, and prospects.
26
--------------------------------------------------------------------------------
Components of our results of operations
Revenue
To date, we have not generated any revenue from any sources, including product
sales, and do not expect to generate any revenue from the sale of products for
the foreseeable future. If our development efforts for our product candidates
are successful and result in regulatory approval or collaboration or license
agreements with third parties, we may generate revenue in the future from
product sales, payments from collaboration or license agreements that we may
enter into with third parties or any combination thereof. We cannot predict if,
when or to what extent we will generate revenue from the commercialization and
sale of our product candidates. We may never succeed in obtaining regulatory
approval for any of our product candidate.
Operating expenses
Research and development expenses
Research and development expenses consist primarily of costs incurred in performing research and development activities, which include:
• personnel-related expenses, including salaries, bonuses, benefits, and stock-based compensation for employees engaged in research and development functions;
• expenses incurred in connection with the discovery and preclinical development of our research programs, including under agreements with third parties, such as consultants, contractors, CROs and CDMOs that manufacture material for use in our discovery and preclinical development;
• laboratory supplies and research materials;
• costs of licensing technology; and
• facilities, depreciation, and other expenses which include direct and allocated expenses.
We expense research and development costs as incurred. Costs for research and development activities are recognized based on an evaluation of the progress to completion of specific tasks. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our unaudited condensed financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed. We do not track the research and development expenses on a program-by-program basis for our product candidates, and we do not allocate costs associated with our discovery efforts, laboratory supplies and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and the OMEGA platform. We use internal resources primarily to conduct our research and discovery activities as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and our technology platform and, therefore, we do not track these costs by program. We expect that our research and development expenses will continue to increase as we continue our current discovery and research programs, initiate new research programs, continue preclinical development of our product candidates and conduct future clinical trials for any of our product candidates.
General and administrative expenses
General and administrative expenses consist primarily of salaries and other
related costs such as bonuses and benefits, including stock-based compensation,
for personnel in our executive, finance, legal, human resources, corporate
business development, and administrative functions. General and administrative
expenses also include professional fees for legal, patent, accounting,
information technology, auditing, tax, consulting services, and facility-related
expenses, which include direct depreciation costs and allocated expenses for
rent and maintenance of facilities and other operating costs.
We expect that our general and administrative expenses will increase in the
future as we increase our headcount to support our continued research and
development and potential commercialization of our product candidates. We also
expect to continue to incur increased expenses associated with being a public
company, including costs of accounting, audit, legal, regulatory, and tax
compliance services, directors' and officers' liability insurance costs, and
investor and public relations costs.
27
--------------------------------------------------------------------------------Related party expense, net
Related party expense, net consists primarily of fees paid to Flagship Pioneering, or Flagship, for their management services provided to us, as well as reimbursements for certain expenses, including insurance and benefits, partner and related fees, and software licenses incurred on our behalf. Additionally, our principal office and laboratory space is leased with an affiliate of Flagship, and we also sublease our other office and laboratory space to two other parties which are affiliates of Flagship. The rent expense and costs related to our principal office and laboratory space, including real estate taxes, insurance, and normal maintenance costs, are considered as related party expenses. Such related party expenses are offset with sublease income received from our related parties, which is comprised of base rent and costs related to the subleased premises such as real estate taxes, cost of operations, maintenance, repair, replacement, and property management.
Other expense, net
Interest expense, net
Interest expense, net primarily consists of interest payments as well as the amortization of the debt discount related to our loan and security agreement.
Other expense, net
Other expense, net primarily consists of the remeasurement gains or losses
associated with changes in the fair value of the warrant liability and the
success fee obligation related to our loan and security agreement, as amended.
Until settlement, fluctuations in the fair value of our warrant liability and
success fee obligation are based on the remeasurement at each reporting period.
Results of operations
Comparison for the three months ended
The following table summarizes the results of our operations for the three
months ended
Three Months Ended September 30, $ Increase /
2021 2020 (Decrease) % Change
Operating expenses:
Research and development $ 12,289 $ 5,505 $ 6,784 123 %
General and administrative 4,459 2,047 2,412 118 %
Related party expense, net 473 493 (20 ) (5 )%
Total operating expenses 17,221 8,045 9,176 114 %
Loss from operations (17,221 ) (8,045 ) 9,176 114 %
Other expense, net:
Interest expense, net (339 ) (196 ) 143 73 %
Change in fair value of warrant liability (970 ) 1 971 NM
Other income (expense), net 2 (1 ) (3 ) NM
Total other expense, net (1,307 ) (196 ) 1,111 566 %
Net loss and comprehensive loss $ (18,528 ) $ (8,241 ) $ 10,287
NM - Not meaningful
28
--------------------------------------------------------------------------------
Research and development expenses
Research and development expenses were$12.3 million and$5.5 million for the three months endedSeptember 30, 2021 and 2020, respectively. The following table summarizes our research and development expenses by nature (in thousands). Three Months Ended September 30, 2021 2020 Personnel-related expenses $ 2,973 $ 1,869 Discovery and preclinical development costs, including third-party costs (consultants, contractors, and CDMO) 6,579 1,545 Other research and development costs, including laboratory materials and supplies 1,711 1,316 Facilities and overhead expenses 1,026 775 Total research and development expenses $ 12,289 $ 5,505
Research and development expenses increased by
• Increase of$1.1 million in personnel-related expenses due to an increase in the number of employees in the research and development functions to support business growth. • Increase of$5.0 million in discovery and preclinical development costs and$0.4 million in laboratory materials and supplies attributable to the increasing external manufacturing and research efforts to support the advancement of our pipeline and discovery portfolio, including the initiation of IND-enabling studies.
General and administrative expenses
General and administrative expenses increased by$2.4 million to$4.4 million for the three months endedSeptember 30, 2021 , from$2.0 million for the three months endedSeptember 30, 2020 . The$2.4 million increase was primarily driven by an increase of$1.6 million in personnel-related expenses, including recruiting fees and the related stock-based compensation to support business growth. The remaining$0.8 million increase was primarily attributable to higher professional fees related to audit and consulting services associated with ongoing business activities and increased directors' and officers' liability insurance cost as a result of ourAugust 2021 IPO.
Related party expense, net
Related party expense, net was$0.5 million for both the three-month periods endedSeptember 30, 2021 and 2020. During the three months endedSeptember 30, 2021 , the related party expense, net primarily consisted of the lease expense and related costs incurred for our principal office and laboratory space, management services and other reimbursable expenses to Flagship and certain fees payable to our non-employee directors after we became a public company, offset by the income earned from our sublessees. During the three months endedSeptember 30, 2020 , the related party expense, net primarily consisted of the lease expense and related costs incurred for our principal office and laboratory space and management services and other reimbursable expenses to Flagship, offset by the income earned from our sublessees.
Interest expense, net
Interest expense, net was$0.3 million and$0.2 million for the three months endedSeptember 30, 2021 and 2020, respectively. The increase of$0.1 million was primarily attributed to the write-off of the unamortized debt discount attributed to the success fee obligation which we paid upon the closing of the IPO inAugust 2021 .
Change in fair value of warrant liability
During the three months endedSeptember 30, 2021 , we recorded a$1.0 million expense related to the change in fair value of warrant liability as compared to an immaterial amount of expense recorded for the three months endedSeptember 30, 2020 , primarily as a result of the increase in the fair value of our common stock compared to the fair value of our preferred stock underlying the outstanding warrants. Upon the closing of the IPO, the warrants for the purchase of 29
-------------------------------------------------------------------------------- preferred stock automatically became warrants for the purchase of common stock, and we reclassified the carrying value of the warrants from liability to additional paid-in capital in our balance sheet. InAugust 2021 , the holders of such warrants completed a cashless exercise of the warrants, and we issued 82,193 shares of our common stock.
Other expense, net
Other expense, net was not significant for both of the three-month periods ended
Comparison for the nine months ended
The following table summarizes the results of our operations for the nine months endedSeptember 30, 2021 and 2020, together with the changes in those items in thousands of dollars and as a percentage. Nine Months Ended September 30, $ Increase / 2021 2020 (Decrease) % Change Operating expenses: Research and development$ 33,222 $ 13,921 $ 19,301 139 % General and administrative 10,911 4,422 6,489 147 % Related party expense, net 1,235 1,060 175 17 % Total operating expenses 45,368 19,403 25,965 134 % Loss from operations (45,368 ) (19,403 ) 25,965 134 % Other expense, net: Interest expense, net (741 ) (584 ) 157 27 % Change in fair value of warrant liability (1,310 ) 5 1,315 NM Other expense, net (7 ) - 7 100 % Total other expense, net (2,058 ) (579 ) 1,479 255 % Net loss and comprehensive loss$ (47,426 ) $ (19,982 ) $ 27,444 NM - Not meaningful
Research and development expenses
Research and development expenses were$33.2 million and$13.9 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The following table summarizes our research and development expenses by nature (in thousands). Nine Months Ended September 30, 2021 2020 Personnel-related expenses $ 6,872 $ 4,528 Discovery and preclinical development costs, including third-party costs (consultants, contractors, and CDMO) 17,534 3,747 Other research and development costs, including laboratory materials and supplies 4,704 3,518 Costs of licensing technology 1,458 - Facilities and overhead expenses 2,654 2,128 Total research and development expenses$ 33,222 $ 13,921 Research and development expenses increased by$19.3 million to$33.2 million for the nine months endedSeptember 30, 2021 , from$13.9 million for the nine months endedSeptember 30, 2020 . The increase was primarily driven by the following: • Increase of$2.3 million in personnel-related expenses due to an increase in the number of employees in the research and development functions to support business growth. • Increase of$13.8 million in discovery and preclinical development costs and$1.2 million in laboratory materials and supplies attributable to the increasing external manufacturing and research efforts to support the advancement of our pipeline and discovery portfolio, including the initiation of IND-enabling studies.
• Increase of
30
--------------------------------------------------------------------------------General and administrative expenses
General and administrative expenses increased by$6.5 million to$10.9 million for the nine months endedSeptember 30, 2021 , from$4.4 million for the nine months endedSeptember 30, 2020 . The$6.5 million increase was primarily driven by an increase of$4.5 million in personnel-related expenses, including recruiting fees and the related stock-based compensation to support business growth. The remaining$2.0 million increase is primarily attributable to higher legal, audit and consulting services and an increase in directors' and officers' liability insurance cost as a result of ourAugust 2021 IPO.
Related party expense, net
Related party expense, net was$1.2 million and$1.1 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The increase of$0.1 million was primarily driven by the higher lease expense and related costs incurred for our principal office and laboratory space compared to the prior year period, in addition to certain fees payable to our non-employee directors after we became a public company. Interest expense, net Interest expense, net was$0.7 million and$0.6 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The increase of$0.1 million was primarily attributed to the write-off of the unamortized debt discount attributed to the success fee obligation which we paid upon the closing of the IPO inAugust 2021 .
Change in fair value of warrant liability
During the nine months endedSeptember 30, 2021 , we recorded a$1.3 million expense related to the change in fair value of warrant liability as compared to an immaterial amount of expense recorded for the nine months endedSeptember 30, 2020 , primarily as a result of the increase in the fair value of our common stock compared to the fair value of our preferred stock underlying the outstanding warrants. Upon the closing of the IPO, the warrants for the purchase of preferred stock automatically became warrants for the purchase of common stock and we reclassified the carrying value of the warrants from liability to additional paid-in capital in our balance sheet. InAugust 2021 , the holders of such warrants completed a cashless exercise of the warrants, and we issued 82,193 shares of our common stock.
Other expense, net
Other expense, net was not significant for both of the nine-month periods ended
Liquidity and capital resourcesSources of liquidity
Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we support our continued research activities and development of our programs and platform. We have not yet commercialized any products, and we do not expect to generate product revenue for several years, if at all. To date, we have funded our operations primarily with proceeds from sales of equity securities, including our IPO, and borrowings under our loan and security agreement. InAugust 2021 , we completed our IPO pursuant to which we issued and sold 8,300,976 shares of our common stock, including 900,976 shares pursuant to the partial exercise of the underwriters' option to purchase additional shares, at a public offering price of$17.00 per share, for aggregate gross proceeds of$141.1 million . We received approximately$128.1 million in net proceeds after deducting underwriting discounts and commissions and other offering expenses payable by us. 31
--------------------------------------------------------------------------------
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):
Nine Months Ended September 30,
2021 2020
Net cash used in operating activities $ (41,653 ) $ (17,833 )
Net cash used in investing activities (1,267 ) (1,285 )
Net cash provided by financing activities 254,244 48,572
Net increase in cash, cash equivalents, and
restricted cash 211,324 29,454
Operating activities
Net cash used in operating activities totaled $41.7 million in the nine months
ended September 30, 2021 compared to net cash used in operating activities of
$17.8 million in the nine months ended September 30, 2020 . The $23.9 million
increase in operating cash outflows was primarily attributable to $27.4 million
higher net loss recognized during the nine months ended September 30, 2021 ,
offset by the non-cash charges consisting primarily of change in fair value of
warrant liability and stock-based compensation expense.
Investing activities
Net cash used in investing activities totaled
Financing activities
Net cash provided by financing activities for the nine months endedSeptember 30, 2021 consisted primarily of the proceeds from our IPO of$128.8 million , net of underwriting discounts and payments for offering costs, and net proceeds from the issuance of Series C redeemable convertible preferred stock of$125.4 million inMarch 2021 . Net cash provided by financing activities for the nine months endedSeptember 30, 2020 consisted primarily of the net proceeds from the issuance of Series B redeemable convertible preferred stock of$48.5 million during the period. Loan and security agreement InMarch 2018 , we entered into the loan and security agreement, or Loan Agreement, withPacific Western Bank , or PWB, under which we borrowed$8.0 million pursuant to Tranche I and Tranche II. InSeptember 2019 , we entered into an amendment to the Loan Agreement, or First Amendment, in which PWB made an additional term loan to us in an aggregate principal amount of$12.0 million . The proceeds of the First Amendment were first applied to the repayment in full of all outstanding principal and accrued interest on the outstanding term loan of$8.0 million under Tranche I and Tranche II, and the remaining cash proceeds of$4.0 million were used for general working capital and for capital expenditures purposes. InDecember 2020 , we entered into a further amendment to extend the principal repayment date. The maturity date of the term loan isDecember 31, 2023 , and it is to be repaid beginning onDecember 31, 2021 in twenty-four equal installments, including interest at a floating annual rate equal to the greater of (i) 0.75% above the prime rate then in effect and (ii) 6.00%, due monthly starting the first month afterDecember 30, 2020 . As ofSeptember 30, 2021 , the interest rate applicable to the term loan was 6.0% and the interest payment on the outstanding term loan was less than$0.1 million per month.
Borrowings under the Loan agreement, as amended, are collateralized by substantially all of our personal property, other than our intellectual property. There are no financial covenants associated with the Loan Agreement, as amended; however, we are subject to certain affirmative and negative covenants to which we will remain subject until maturity.
Funding requirements
As of
32
--------------------------------------------------------------------------------
clinical trials for our product candidates in development. In addition, we will
continue to incur additional costs associated with operating as a public
company. The timing and amount of our operating and capital expenditures will
depend largely on:
• the scope, progress, results, and costs of our preclinical studies and any future clinical trials;
• the timing of, and the costs involved in, obtaining marketing approvals for our current and future product candidates in regions where we choose to commercialize any products;
• the number of future product candidates and potential additional indications that we may pursue and their development requirements;
• the stability, scale, yield, and cost of our manufacturing process as we scale-up production and formulation of our product candidates for clinical trials, in preparation for regulatory approval and in preparation for commercialization, including our ability to build our own manufacturing facility;
• the costs of commercialization activities for any approved product, including the costs and timing of establishing product sales, marketing, distribution, and manufacturing capabilities;
• revenue, if any, received from commercial sales of our products, should any of our product candidates receive marketing approval;
• the costs and timing of changes in pharmaceutical pricing and reimbursement infrastructure;
• the costs and timing of changes in the regulatory environment and enforcement rules;
• our ability to compete with other therapeutics in the indications we target;
• the effect of competing technological and market developments;
• the extent to which we enter into collaborations or licenses for products, product candidates, or technologies;
• our headcount growth and associated costs as we expand our research and development capabilities and establish a commercial infrastructure;
• the costs of preparing, filing, and prosecuting patent applications and maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property-related claims;
• the costs of operating as a public company; and
• the severity, duration, and impact of the COVID-19 pandemic, which may adversely impact our business.
We believe that the net proceeds from our IPO, together with our existing cash
and cash equivalents, will enable us to fund our operating expenses and capital
expenditure requirements for at least the next 12 months from the filing date of
the Quarterly Report. We have based this estimate on assumptions that may prove
to be incorrect, and we could utilize our available capital resources sooner
than we expect. Until such time, if ever, as we can generate substantial product
revenue, we expect to finance our operations through equity offerings, debt
financings, marketing and distribution arrangements and other collaborations,
strategic alliances and licensing arrangements, or other sources.
Contractual obligations
There have been no material changes to our contractual obligations as of
Critical accounting policies and estimates
Our 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 accounting principles generally accepted
in the U.S. , or GAAP. The preparation of these unaudited condensed financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, costs and expenses. On an ongoing basis, we
evaluate these estimates and judgments, including those described below. We base
our estimates on historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. These estimates and
assumptions form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual
results and experiences may differ materially from these estimates.
33
--------------------------------------------------------------------------------
Our critical accounting policies are described under the heading "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Critical Accounting Policies and Estimates" in our Prospectus and the
notes to the unaudited condensed financial statements appearing elsewhere in
this Quarterly Report on Form 10-Q. During the nine months ended September 30,
2021 , there were no material changes to our critical accounting policies from
those discussed in our Prospectus.
Recently Issued Accounting PronouncementsWe have reviewed all recently issued accounting pronouncements and have determined that, other than as disclosed in Note 2 - Summary of Significant Accounting Policies in the Notes to audited financial statements included in the Prospectus, such standards will not have a material impact on our financial statements or do not otherwise apply to our current operations.
Emerging growth company status
We qualify as an "emerging growth company" as defined in the Jumpstart Our
Business Startups Act of 2012, or the JOBS Act. As a result, we may take
advantage of specified reduced disclosure and other reporting requirements that
are otherwise applicable generally to public companies. In particular, the JOBS
Act provides that an emerging growth company can take advantage of an extended
transition period for complying with new or revised accounting standards. We
have elected not to "opt out" of such extended transition period, which means
that when a standard is issued or revised and it has different application dates
for public or private companies, we may adopt the new or revised standard at the
time private companies adopt the new or revised standard and may do so until
such time that we either (i) irrevocably elect to "opt out" of such extended
transition period or (ii) no longer qualify as an emerging growth company.
© Edgar Online, source
