PROTAGONIST THERAPEUTICS, INC. Overview
We are a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly known as PN-235) in different stages of development, all derived from our proprietary discovery technology platform. Our clinical programs fall into two broad categories of diseases; (i) hematology and blood disorders, and (ii) inflammatory and immunomodulatory diseases.
Rusfertide
Our most advanced clinical asset, rusfertide (generic name for PTG-300), is an
injectable hepcidin mimetic in development for the potential treatment of
erythrocytosis, iron overload and other blood disorders and is wholly owned.
Hepcidin is a key hormone in regulating iron equilibrium and is critical to the
proper development of red blood cells. Rusfertide mimics the effect of the
natural hormone hepcidin, but with greater potency, solubility and stability.
Data from our rusfertide Phase 2 clinical trials presented at medical
conferences in 2021 and 2022 provided evidence regarding the potential of
rusfertide for managing hematocrit, reducing thrombotic risk and improving iron
deficiency symptoms. Rusfertide has a unique mechanism of action in the
potential treatment of the blood disorder polycythemia vera ("PV"), which may
enable it to specifically decrease and maintain hematocrit levels within the
range of recommended clinical guidelines without causing the iron deficiency
that can occur with frequent phlebotomy. Our rusfertide Phase 2 clinical trials
include the following:
REVIVE, a Phase 2 proof of concept ("POC") trial, was initiated in the fourth
quarter of 2019. We completed enrollment of patients in the first quarter of
? 2022 with a target of approximately 50 patients to be enrolled through the end
of the randomization portion of the trial, which was completed during the first
quarter of 2023, and will continue in open label extension.
PACIFIC, another Phase 2 trial for rusfertide patients diagnosed with PV and
? with routinely elevated hematocrit levels (>48%), was initiated during the
first quarter of 2021 and completion of the 52-week trial is expected during
the second quarter of 2023.
At theJune 2022 American Society of Clinical Oncology ("ASCO") Annual Meeting, we presented updated interim results for REVIVE and PACIFIC demonstrating the effects of dosing interruption and resumption. Rusfertide dosing interruption led to loss of effect, including increased phlebotomy rate and increases in hematocrit and red blood cells. Rusfertide restart restored therapeutic benefits. Following the brief clinical hold described below, over 90% of patients in the REVIVE trial provided reconsent and returned to rusfertide treatment after dosing interruption and reinitiation. At theJune 2022 European Hematology Association Congress , we presented interim data as ofMay 2022 showing that rusfertide treatment interruption reverses hematologic gains and re-initiation of treatment restores therapeutic benefits in patients with PV. At theDecember 2022 American Society of Hematology meeting, we presented data as ofOctober 2022 related to rusfertide, including a subgroup of analyses of the adverse event profile from the REVIVE trial. These preliminary results indicated that 84% of treatment-emergent adverse events ("TEAEs") were Grade 2 or below. 16% of patients experienced Grade 3 TEAEs and there were no Grade 4 TEAEs.
On
The double-blind, placebo-controlled, 12-week randomized withdrawal portion was
included as Part 2 of the REVIVE trial study to evaluate rusfertide in PV
patients with frequent phlebotomy requirements. In the REVIVE trial, subjects
were initially enrolled in the 28-week open label dose-titration and efficacy
evaluation Part 1 of the study, followed by 1:1 randomization of 53 subjects to
placebo versus rusfertide therapy for a subsequent duration of 12 weeks.
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More subjects receiving rusfertide during the blinded randomized withdrawal portion of the REVIVE trial were responders compared with placebo (69.2% versus 18.5%, p=0.0003). A study subject was defined as a responder if the subject completed 12 weeks of double-blind treatment while maintaining hematocrit control without phlebotomy eligibility and without phlebotomy. During the 12 weeks of the blinded randomized withdrawal, only 2 of 26 subjects on rusfertide were phlebotomized. VERIFY, a global Phase 3 clinical trial of rusfertide in PV for approximately 250 patients, was initiated in the first quarter of 2022. Significant efforts have been taken toward the goal of full enrollment and a high degree of interest has been observed from physicians and patient communities. We expect enrollment completion in the fourth quarter of 2023. OnSeptember 16, 2021 , theU.S. Food and Drug Administration ("FDA") placed a clinical hold on our then ongoing rusfertide clinical trials following our submission to the FDA of findings in a 26-week rasH2 transgenic mouse carcinogenicity study. InOctober 2021 , we submitted a Complete Response to the FDA related to the clinical hold, and the FDA removed the clinical hold onOctober 8, 2021 . In our Complete Response, we provided the individual patient clinical safety reports the FDA requested for human cancers observed in rusfertide clinical trials, updated the investigator brochure and patient informed consent forms for ongoing rusfertide trials, proposed new safety and stopping rules in trial protocols for our ongoing rusfertide clinical trials, and performed a comprehensive review of our rusfertide safety database. Dosing of patients and enrollment in ongoing clinical trials with rusfertide resumed in the fourth quarter of 2021. The FDA granted orphan drug designation for rusfertide for the treatment of PV inJune 2020 , and Fast Track designation for rusfertide for the treatment of PV inDecember 2020 . The EMA granted orphan drug designation for rusfertide for treatment of PV inOctober 2020 . The FDA granted Breakthrough Therapy Designation for rusfertide for the treatment of PV inJune 2021 . InApril 2022 , we received a letter from the FDA indicating theFDA's intent to rescind Breakthrough Therapy Designation for rusfertide in PV. InJune 2022 , we voluntarily withdrew our Breakthrough Therapy Designation following correspondence with FDA and based on our internal analysis of the relative utility of Breakthrough Therapy Designation for Phase 3 trials and beyond. The FDA correspondence relating to the Breakthrough Therapy designation does not address the rusfertide Fast Track Designation, which remains active. In keeping with our organizational prioritization of rusfertide in PV, plans to initiate trials of rusfertide in additional disease indications have been paused. This decision was influenced in part by the enactment of the Inflation Reduction Act ("IRA") inthe United States and includes previously planned trials of rusfertide in the subset of hereditary hemochromatosis patients with chronic arthropathy.
JNJ-2113 (formerly known as PN-235)
Our partnered Interleukin-23 receptor ("IL-23R") antagonist compound JNJ-2113 is
an orally delivered investigational drug that is designed to block biological
pathways currently targeted by marketed injectable antibody drugs. Our orally
stable peptide approach may offer a targeted therapeutic approach for
gastrointestinal ("GI") and systemic compartments as needed. We believe that,
compared to antibody drugs, JNJ-2113 has the potential to provide clinical
improvement in an oral medication with increased convenience and compliance and
the opportunity for the earlier introduction of targeted oral therapy.
In May 2017 , we entered into a worldwide license and collaboration agreement
with Janssen Biotech, Inc. ("Janssen"), a Johnson & Johnson company, to
co-develop and co-detail our IL-23R antagonist compounds, including PTG-200
(JNJ-67864238) and certain related compounds for all indications, including
inflammatory bowel disease ("IBD"). PTG-200 was a first-generation
investigational, orally delivered, IL-23R antagonist for the treatment of IBD.
The agreement with Janssen was amended in May 2019 to expand the collaboration
by supporting efforts towards second-generation IL-23R antagonists; and in July
2021 to, among other things, enable Janssen to independently research and
develop collaboration compounds for multiple indications in the IL-23 pathway
and further align our financial interests.
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During the fourth quarter of 2021, following a pre-specified interim analysis criteria, a portfolio decision was made by Janssen to advance second-generation product candidate JNJ-2113 (JNJ-77242113) based on its superior potency and overall pharmacokinetic and pharmacodynamic profile. A JNJ-2113 Phase 1 trial was completed in the fourth quarter of 2021. InFebruary 2022 , Janssen initiated FRONTIER1, a 255-patient Phase 2b clinical trial of JNJ-2113 in moderate-to-severe plaque psoriasis, which was completed inDecember 2022 . FRONTIER1 was a randomized, multicenter, double-blind, placebo-controlled study that evaluated three once-daily dosages and two twice-daily dosages of JNJ-2113 taken orally. The primary endpoint of the study is the proportion of patients achieving PASI-75 (a 75% improvement in skin lesions as measured by the Psoriasis Area and Severity Index) at 16 weeks. InMarch 2023 , we announced positive topline results from the trial. JNJ-2113 achieved the study's primary efficacy endpoint, with a statistically significant greater proportion of patients who received JNJ-2113 achieving PASI-75 responses compared to placebo at Week 16 in all five of the study's treatment groups. A clear dose response was observed across an eight-fold dose range. Treatment was well tolerated, with no meaningful difference in frequency of adverse events across treatment groups versus placebo. It is our expectation that JNJ-2113 will progress into a Phase 3 registrational study in plaque psoriasis on the strength of the FRONTIER1 data. Advancement of JNJ-2113 into a Phase 3 study and meeting the primary endpoint in that study would qualify us for milestone payments of$50 million and$115 million , respectively. Data will be presented from various pre-clinical and clinical studies on JNJ-2113 at medical conferences beginning in the second quarter of 2023. Other Phase 2 studies of JNJ-2113 that Janssen has initiated include the SUMMIT study of JNJ-2113 for the treatment of moderate-to-severe plaque psoriasis expected to be completed in the second quarter of 2023 and FRONTIER2, a long-term extension study. A Phase 1 trial of an immediate release formulation of JNJ-2113 in healthy Japanese and Chinese adult participants is currently recruiting. Following the completion of Phase 2 studies of JNJ-2113 in plaque psoriasis, we expect Janssen to initiate a separate Phase 2 trial of JNJ-2113 in a second indication. Additional indications may include any or all of psoriatic arthritis, UC and CD. During the fourth quarter of 2021, we received a$7.5 million milestone payment from Janssen triggered by the completion of data collection for JNJ-2113 Phase 1 activities. In the second quarter of 2022, we received a$25.0 million milestone payment in connection with the dosing of a third patient in FRONTIER1 during the first quarter of 2022. We will be eligible to receive a$10.0 million milestone payment in connection with the dosing of a third patient in the second Phase 2 trial of a second-generation candidate, a$50 million milestone upon dosing of a third patient in a Phase 3 trial for a second-generation compound for any indication, and a$115.0 million milestone payment upon a Phase 3 clinical trial for a second-generation compound for any indication meeting its primary clinical endpoint. We remain eligible for up to approximately$855.0 million in future development and sales milestone payments, in addition to the$112.5 million in nonrefundable payments from Janssen received to date. We also remain eligible to receive tiered royalties on net product sales at percentages ranging from mid-single digits to ten percent.
PN-943
PN-943 is a wholly owned, investigational, orally delivered, gut-restricted
alpha 4 beta 7 ("?4?7") specific integrin antagonist for IBD. During the second
quarter of 2020, we initiated IDEAL, a 159 patient Phase 2 trial evaluating the
safety, tolerability and efficacy of PN-943 in patients with moderate to severe
UC. Enrollment in IDEAL was completed during the first quarter of 2022. The
trial includes a 12-week induction period, which has been completed, and a
40-week extended treatment period. With the exception of completing the 40-week
extended treatment period for eligible patients in the IDEAL trial, which is
expected to be completed in the first quarter of 2023, we do not intend to
dedicate further internal resources to clinical development or contract
manufacturing activities for our PN-943 clinical program.
Discovery Platform
Our clinical assets are all derived from our proprietary discovery platform. Our
platform enables us to engineer novel, structurally constrained peptides that
are designed to retain key advantages of both orally delivered small molecules
and injectable antibody drugs in an effort to overcome many of their limitations
as therapeutic agents.
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Importantly, constrained peptides can be designed to potentially alleviate the fundamental instability inherent in traditional peptides to allow different delivery forms, such as oral, subcutaneous, intravenous, and rectal. We continue to use our peptide technology platform to discover product candidates against targets in disease areas with significant unmet medical needs. For example, we have a pre-clinical stage program to identify an orally active hepcidin mimetic, which we believe will be complementary to the injectable rusfertide for offering the best treatment options for PV, hereditary hemochromatosis and other potential erythropoietic and iron imbalance disorders.
Business Outlook
We are subject to risks and uncertainties as a result of the prolonged nature of the COVID-19 pandemic and emergent variants with increased transmissibility, even in those who are fully vaccinated. Some of the workforce trends starting during the pandemic have continued to lead to staffing shortages in settings such as clinical trial sites and healthcare offices. The future impact of COVID-19 on our activities will depend on a number of factors, including, but not limited to, the scope and magnitude of any resurgences in the outbreak and the spread of COVID-19 variants; the timing, extent, effectiveness and durability of COVID-19 vaccine programs or other treatments; and new travel and other restrictions and public health measures. We have experienced delays in our existing and planned clinical trials due to the worldwide impacts of the pandemic. Our future results of operations and liquidity could be adversely impacted by further delays in existing and planned clinical trials, continued difficulty in recruiting patients for these clinical trials, delays in manufacturing and collaboration activities, supply chain disruptions and the ongoing impact on our operating activities and employees. In addition, a recession or market correction related to or amplified by COVID-19 could materially affect our business. We are currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by domestic and global monetary and fiscal policy, geopolitical instability, the ongoing military conflict betweenRussia andUkraine and the rising tensions betweenChina andTaiwan , a recessionary environment and historically high domestic and global inflation. In particular, the conflict inUkraine has exacerbated market disruptions, including significant volatility in commodity prices, as well as supply chain interruptions, and has contributed to record inflation globally. TheU.S. Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time. Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs and transportation costs may adversely affect our operating results. Also, the failure ofSilicon Valley Bank and other banks inthe United States inMarch 2023 has given rise to uncertainty in the security of amounts in deposit accounts uninsured by theFederal Deposit Insurance Corporation . We continue to monitor these events and the potential impact on our business. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may be adversely affected in the future due to domestic and global monetary and fiscal policy, supply chain constraints, consequences associated with COVID-19 and the ongoing conflict betweenRussia andUkraine , and such factors may lead to increases in the cost of manufacturing our product candidates and delays in initiating trials.
Operations
We have incurred net losses in each year since inception and we do not anticipate achieving sustained profitability in the foreseeable future. Our net losses were$127.4 million ,$125.6 million and$66.2 million for the years endedDecember 31, 2022 , 2021 and 2020, respectively. As ofDecember 31, 2022 , we had an accumulated deficit of$536.8 million . Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant research and development expenses and other expenses related to our ongoing operations, product development, and pre-commercialization activities. As a result, we expect to continue to incur losses in the future as we continue our development of, and seek regulatory approval for, our product candidates. 57
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Janssen License and Collaboration Agreement
OnJuly 27, 2021 , we entered into the Restated Agreement with Janssen, which amends and restates the Original Agreement, as amended by the First Amendment. Janssen is a related party to us asJohnson & Johnson Innovation - JJDC, Inc. , a significant stockholder of ours, and Janssen are both subsidiaries of Johnson & Johnson. Upon the effectiveness of the Original Agreement, we received a non-refundable, upfront cash payment of$50.0 million from Janssen. Upon the effectiveness of the First Amendment, we received a$25.0 million payment from Janssen in 2019. In the first quarter of 2020, we received a$5.0 million payment triggered by the successful nomination of a second-generation IL-23R antagonist development compound. In the fourth quarter of 2021, we received a$7.5 million milestone payment from Janssen triggered by completion of the data collection for JNJ-2113 Phase 1 activities. In the second quarter of 2022, we received a$25.0 million milestone payment in connection with the dosing of a third patient in FRONTIER1 during the first quarter of 2022. See Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information.
Critical Accounting Polices and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance withUnited States generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements, as well as the reported revenue generated, and the expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, and the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management's judgments and estimates.
Use of Estimates
The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, accruals for research and development activities, stock-based compensation, income taxes, marketable securities and leases. Estimates related to revenue recognition include actual costs incurred versus total estimated costs of our deliverables to determine percentage of completion in addition to the application and estimates of potential revenue constraints in the determination of the transaction price under its license and collaboration agreements. We base these estimates on historical and anticipated results, trends and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to forecasted amounts and future events. Due to the COVID-19 pandemic, military conflict betweenUkraine andRussia , rising tensions betweenChina andTaiwan and inflationary pressures, among other factors, there has been uncertainty and disruption in the global economy and financial markets. We have taken into consideration any known impacts in our accounting estimates to date and are not aware of any additional specific events or circumstances that would require any additional updates to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of the date of the filing of this Annual Report on Form 10-K. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. Revenue Recognition Under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers ("ASC 606"), we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the 58
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consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, we assess the goods or services promised within each contract, determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligations when (or as) the performance obligations are satisfied. We constrain our estimate of the transaction price up to the amount (the "variable consideration constraint") that a significant reversal of recognized revenue is not probable. Licenses of intellectual property: If a license to our intellectual property is determined to be distinct from the other performance obligations identified in an arrangement, we recognize revenue from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring proportional performance for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of proportional performance each reporting period and, if necessary, adjust the measure of performance and related revenue recognition. Milestone payments: At the inception of each arrangement or amendment that includes development, regulatory or commercial milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price. ASC 606 suggests two alternatives to use when estimating the amount of variable consideration: the expected value method and the most likely amount method. Under the expected value method, an entity considers the sum of probability-weighted amounts in a range of possible consideration amounts. Under the most likely amount method, an entity considers the single most likely amount in a range of possible consideration amounts. Whichever method is used should be consistently applied throughout the life of the contract; however, it is not necessary for us to use the same approach for all contracts. We expect to use the most likely amount method for development and regulatory milestone payments. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the control of the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. If there is more than one performance obligation, the transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis. We recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability or achievement of each such milestone and any related constraint, and if necessary, adjust our estimates of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.
Any potential milestone payments that we determine are not associated with performance obligations as defined under the contract are excluded from the transaction price and are recognized as the triggering event occurs.
Royalties: For arrangements that include sales-based royalties, including
milestone payments based on the level of sales, where the license is deemed to
be the predominant item to which the royalties relate, we recognize revenue at
the later of (i) when the related sales occur, or (ii) when the performance
obligation to which some or all of the royalty has been allocated has been
satisfied (or partially satisfied).
Upfront payments and fees are recorded as deferred revenue upon receipt or when
due and may require deferral of revenue recognition to a future period until we
perform our obligations under these arrangements. Amounts payable to us are
recorded as accounts receivable when our right to consideration is
unconditional. Amounts payable to us and not yet billed to the collaboration
partner are recorded as contract assets. We do not assess whether a contract has
a significant financing component if the expectation at contract inception is
such that the period between payment by the customer and the transfer of the
promised goods or services to the customer will be one year or less.
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Contractual cost sharing payments made to a customer or collaboration partner are accounted for as a reduction to the transaction price if such payments are not related to distinct goods or services received from the customer or collaboration partner. Contracts may be amended to account for changes in contract specifications and requirements. Contract modifications exist when the amendment either creates new, or changes existing, enforceable rights and obligations. When contract modifications create new performance obligations and the increase in consideration approximates the standalone selling price for goods and services related to such new performance obligations, as adjusted for specific facts and circumstances of the contract, the modification is considered to be a separate contract and revenue is recognized prospectively. If a contract modification is not accounted for as a separate contract, we account for the promised goods or services not yet transferred at the date of the contract modification (the remaining promised goods or services) prospectively, as if it were a termination of the existing contract and the creation of a new contract, if the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification. We account for a contract modification as if it were a part of the existing contract if the remaining goods or services are not distinct and, therefore, form part of a single performance obligation that is partially satisfied at the date of the contract modification. In such case the effect that the contract modification has on the transaction price, and on the entity's measure of progress toward complete satisfaction of the performance obligation, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) at the date of the contract modification (the adjustment to revenue is made on a cumulative catch-up basis).
Research and Development Costs
Research and development costs are expensed as incurred, unless there is an alternate future use in other research and development projects or otherwise. Research and development costs include salaries and benefits, stock-based compensation expense, laboratory supplies and facility-related overhead, outside contracted services, including clinical trial costs, manufacturing and process development costs for both clinical and pre-clinical materials, research costs, development milestone payments under license and collaboration agreements, and other consulting services. We accrue for estimated costs of research and development activities conducted by third-party service providers, which include the conduct of pre-clinical studies and clinical trials, and contract manufacturing activities. We record the estimated costs of research and development activities based upon the estimated services provided but not yet invoiced and we include these costs in accrued expenses and other payables in our consolidated balance sheets and within research and development expense in our consolidated statements of operations. We accrue for these costs based on various factors such as estimates of the work completed and in accordance with agreements established with our third-party service providers. As actual costs become known, we adjust our accrued liabilities. We have not experienced any material differences between accrued liabilities and actual costs incurred. However, the status and timing of actual services performed, number of patients enrolled, the rate of patient enrollment and the number and location of sites activated may vary from our estimates and may result in adjustments to our research and development expenses in future periods. Changes in these estimates that result in material changes to our accruals could materially affect our results of operations.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements applicable to us is included in Note 2 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Components of Our Results of Operations
License and Collaboration Revenue
Our license and collaboration revenue is derived from payments we receive under the Janssen License and Collaboration Agreement. See Note 3 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K
for
additional information.
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Research and Development Expenses
Research and development expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred unless there is an alternative future use in other research and development projects or otherwise. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received, rather than when payment has been made. In instances where we enter into agreements with third parties to provide research and development services to us, costs are expensed as services are performed. Amounts due under such arrangements may be either fixed fee or fee for service and may include upfront payments, monthly payments, and payments upon the completion of milestones or the receipt of deliverables.
Research and development expenses consist primarily of the following:
? expenses incurred under agreements with clinical study sites that conduct
research and development activities on our behalf;
? employee-related expenses, which include salaries, benefits and stock-based
compensation;
? laboratory vendor expenses related to the preparation and conduct of
pre-clinical, non-clinical, and clinical studies;
? costs related to production of clinical supplies and non-clinical materials,
including fees paid to contract manufacturers;
? license fees and milestone payments under license and collaboration agreements;
and
facilities and other allocated expenses, which include expenses for rent and
? maintenance of facilities, information technology, depreciation and
amortization expense and other supplies.
We recognize the amounts related to our Australian research and development
refundable cash tax incentive that are not subject to refund provisions as a
reduction of research and development expenses. The research and development tax
incentives are recognized when there is reasonable assurance that the incentives
will be received, the relevant expenditure has been incurred and the amount of
the consideration can be reliably measured. We evaluate our eligibility under
the tax incentive program as of each balance sheet date and make accruals and
related adjustments based on the most current and relevant data available. We
may alternatively be eligible for a taxable credit in the form of a non-cash tax
incentive. We recognize the amounts from grants under government programs as a
reduction of research and development expenses when the related research costs
are incurred.
We allocate direct and indirect costs incurred to product candidates when they
enter clinical development. For product candidates in clinical development,
direct costs consist primarily of clinical, pre-clinical, and drug discovery
costs, costs of supplying drug substance and drug product for use in clinical
and pre-clinical studies, including clinical manufacturing costs, contract
research organization fees, and other contracted services pertaining to specific
clinical and pre-clinical studies. Indirect costs allocated to our product
candidates on a program-specific basis include research and development employee
salaries, benefits, and stock-based compensation, and indirect overhead and
other administrative support costs. Program-specific costs are unallocated when
the clinical expenses are incurred for our early-stage research and drug
discovery projects as our internal resources, employees and infrastructure are
not tied to any one research or drug discovery project and are typically
deployed across multiple projects. As such, we do not provide financial
information regarding the costs incurred for early stage pre-clinical and drug
discovery programs on a program-specific basis prior to the clinical development
stage.
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We expect our research and development expenses to decrease in the near term as
we continue to de-prioritize our PN-943 clinical program and streamline certain
discovery programs to focus our resources toward progressing our rusfertide
program into later stage clinical trials and preparing for commercialization.
The process of conducting research, identifying potential product candidates and
conducting pre-clinical and clinical trials necessary to obtain regulatory
approval and commencing pre-commercialization activities is costly and time
intensive. We may never succeed in achieving marketing approval for our product
candidates regardless of our costs and efforts. The probability of success of
our product candidates may be affected by numerous factors, including
pre-clinical data, clinical data, competition, manufacturing capability, our
cost of goods to be sold, our ability to receive, and the timing of, regulatory
approvals, market conditions, and our ability to successfully commercialize our
products if they are approved for marketing. As a result, we are unable to
determine the duration and completion costs of our research and development
projects or when and to what extent we will generate revenue from the
commercialization and sale of any of our product candidates. Our research and
development programs are subject to change from time to time as we evaluate our
priorities and available resources. With the exception of completing the 40-week
extended treatment period for eligible patients in the Phase 2 IDEAL trial,
which we expect to be completed in the first quarter of 2023, we do not intend
to dedicate further internal resources to clinical development or contract
manufacturing activities for our PN-943 clinical program. We will continue to
explore out-licensing opportunities globally.
General and Administrative Expenses
General and administrative expenses consist of personnel costs, allocated facilities costs and other expenses for outside professional services, including legal, human resources, audit and accounting services, and pre-commercialization expenses, including selling and marketing costs. Personnel costs consist of salaries, benefits and stock-based compensation. Allocated expenses consist of expenses for rent and maintenance of facilities, information technology, depreciation and amortization expense and other administrative supplies. We expect to continue to incur expenses supporting our continued operations as a public company, including expenses related to compliance with the rules and regulations of theSEC and those of the national securities exchange on which our securities are traded, insurance expenses, investor relations expenses, audit fees, professional services and general overhead and administrative costs.
Interest Income
Interest income consists of interest earned on our cash, cash equivalents, and marketable securities, which is comprised of contractual interest, premium amortization and discount accretion.
Interest Expense
Interest expense consists of interest recognized on our long-term debt, which is comprised of contractual interest, amortization of origination fees and other issuance costs, and accretion of final payment fees.
Loss on Early Repayment of Debt
Loss on early repayment of debt consists of prepayment and final payment fees paid upon the early repayment of our long-term debt.
Other Expense, Net
Other expense, net consists primarily of amounts related to foreign exchange gains and losses and related items.
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Results of Operations
Year Ended December 31, Dollar %
2022 2021 Change Change
(Dollars in thousands)License and collaboration revenue - related party$ 26,581 $ 27,357 $ (776) (3) Operating expenses: Research and development (1) 126,215 126,006 209 - General and administrative (2) 31,739 27,196 4,543 17 Total operating expenses 157,954 153,202 4,752 3 Loss from operations (131,373) (125,845) (5,528) 4 Interest income 4,060 443 3,617 * Other expense, net (80) (149) 69 (46) Net loss$ (127,393) $ (125,551) $ (1,842) 1
(1) Includes
(2) Includes
*Percentage not meaningful
License and Collaboration Revenue
License and collaboration revenue decreased$0.8 million , or 3%, from$27.4 million for the year endedDecember 31, 2021 to$26.6 million for the year endedDecember 31, 2022 . The decrease in revenue was primarily due to a decrease in services under the Janssen License and Collaboration Agreement recognized based on proportional performance. We completed our performance obligation pursuant to the collaboration as ofJune 30, 2022 . We determined that the final transaction price of the initial performance obligation under the Restated Agreement is$131.7 million as ofDecember 31, 2022 , an increase of$25.2 million from the transaction price of$106.5 million as ofDecember 31, 2021 . In order to determine the transaction price, we evaluated all payments to be received during the duration of the contract, net of development costs reimbursement expected to be payable to Janssen. The transaction price as ofDecember 31, 2022 includes$112.5 million of nonrefundable payments received as ofJune 30, 2022 ,$17.9 million of reimbursement from Janssen for services performed for IL-23 receptor antagonist compound research and other services, and variable consideration consisting of$8.2 million of development cost reimbursement from Janssen, partially offset by$6.9 million of net cost reimbursement due to Janssen for services performed.
Research and Development Expenses
Research and Development Expenses
Year Ended December 31, Dollar %
2022 2021 Change Change
(Dollars in thousands)
Clinical and development expense - rusfertide (PTG-300) $ 64,789 $ 55,382 $ 9,407 17
Clinical and development expense - PN-943 36,906 37,655 (749) (2)
Clinical and development expense - JNJ-2113 (PN-235) 201 4,777 (4,576) (96)
Clinical and development expense - PN-232 356 2,037 (1,681) (83)
Clinical and development expense - PTG-200 53 23 30 130
Clinical and development expense - PTG-100 248 374 (126) (34)
Preclinical and drug discovery research expense 23,704 24,943 (1,239) (5)
Milestone payment obligation to former collaboration partner - 4,000 (4,000) (100)
Grants and tax incentives expense reimbursement, net (42) (3,185) 3,143 (99)
Total research and development expenses $ 126,215 $ 126,006 $ 209 -
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We had 82 and 92 full-time equivalent research and development employees as of
December 31, 2022 and 2021, respectively. Research and development expenses for
the year ended December 31, 2022 included increases of $5.7 million in
stock-based compensation expense and $4.7 million of other personnel-related
expenses compared to the year ended December 31, 2021 .
General and Administrative Expenses
General and administrative expenses increased$4.5 million , or 17%, from$27.2 million for the year endedDecember 31, 2021 to$31.7 million for the year endedDecember 31, 2022 , primarily due to increases of$2.2 million in personnel-related expenses and$2.3 million in other expenses to support the growth of our business. The increase in personnel-related expenses was primarily due to an increase of$2.1 million in stock-based compensation expense.
We had 23 and 26 full-time equivalent general and administrative employees as of
Interest Income
Interest income increased$3.6 million , from$0.4 million for the year endedDecember 31, 2021 to$4.1 million for the year endedDecember 31, 2022 . This increase was primarily due to higher yields on invested balances during a period of increasing interest rates compared to the prior year period.
Comparison of the Years Ended
Year Ended December 31, Dollar %
2021 2020 Change Change
(Dollars in thousands)License and collaboration revenue - related party$ 27,357 $ 28,628 $ (1,271) (4) Operating expenses: Research and development (1) 126,006 74,506 51,500 69 General and administrative (2) 27,196 18,638 8,558 46 Total operating expenses 153,202 93,144 60,058 64 Loss from operations (125,845) (64,516) (61,329) 95 Interest income 443 900 (457) (51) Interest expense - (598) 598 (100) Loss on early repayment of debt - (585) 585 (100) Other expense, net (149) (46) (103) 224 Loss before income tax expense (125,551) (64,845) (60,706) 94 Income tax expense - (1,305) 1,305 (100) Net loss$ (125,551) $ (66,150) $ (59,401) 90
(1) Includes
(2) Includes
License and Collaboration Revenue
License and collaboration revenue decreased$1.3 million , or 4%, from$28.6 million for the year endedDecember 31, 2020 to$27.4 million for the year endedDecember 31, 2021 . The decrease in license and collaboration revenue was primarily related to a decrease in services provided under the Janssen License and Collaboration Agreement recognized based on proportional performance, partially offset by an$8.0 million cumulative catch-up amount recognized during the year endedDecember 31, 2021 . This cumulative catch-up was primarily the result of an 64 Table of Contents acceleration of our cumulative performance completed, following the execution of the Restated Agreement, which reduced our remaining performance obligation. Revenue for the year endedDecember 31, 2020 included an update in the amounts forecasted for future services remaining to be performed under the Janssen License and Collaboration Agreement which correspondingly increased our overall cumulative percentage of completion of our performance obligation during year endedDecember 31, 2020 , along with continued performance and delivery of services under the Janssen License and Collaboration Agreement. We determined that the transaction price of the initial performance obligation under the Restated Agreement was$106.5 million as ofDecember 31, 2021 , an increase of$7.9 million from the transaction price of$98.6 million as ofDecember 31, 2020 , under the Original Agreement. In order to determine the transaction price, we evaluated all payments expected to be received during the duration of the contract, net of development costs reimbursement expected to be payable to Janssen. We determined that the transaction price included$87.5 million of nonrefundable payments received as ofDecember 31, 2021 ,$17.9 million of reimbursement from Janssen for services performed for IL-23 receptor antagonist compound research and other services and estimated variable consideration consisting of$8.2 million of development cost reimbursement from Janssen, partially offset by$7.1 million of net cost reimbursement due to Janssen for services performed. The increase in transaction price fromDecember 31, 2020 toDecember 31, 2021 was due primarily to reductions in both the remaining services to be performed by us under the Restated Agreement and the remaining shared development costs under the Restated Agreement.
Research and Development Expenses
Year Ended December 31, Dollar %
2021 2020 Change Change
(Dollars in thousands)
Clinical and development expense - rusfertide (PTG-300) $ 55,382 $ 32,395 $ 22,987 71
Clinical and development expense - PN-943 37,655 23,354 14,301 61
Clinical and development expense - JNJ-2113 (PN-235) 4,777 317 4,460 *
Clinical and development expense - PN-232 2,037 - 2,037 *
Clinical and development expense - PTG-200 23 925 (902) (98)
Clinical and development expense - PTG-100 374 540 (166) (31)
Pre-clinical and drug discovery research expense 24,943 18,453 6,490 35
Milestone payment obligation to former collaboration partner 4,000 - 4,000 *
Grants and tax incentives expense reimbursement, net (3,185) (1,478) (1,707) 115
Total research and development expenses $ 126,006 $ 74,506 $ 51,500 69
*Percentage not meaningful
Research and development expenses increased $51.5 million , or 69%, from $74.5
million for the year ended December 31, 2020 to $126.0 million for the year
ended December 31, 2021 . The increase was primarily due to an increase of $23.0
million in rusfertide clinical trial and development costs as clinical trials
have enrolled and progressed, including the ongoing REVIVE and PACIFIC Phase 2
trials in PV, which began in December 2019 and the first quarter of 2021,
respectively, and HH, which began in early 2020, and clinical and contract
manufacturing activities incurred in 2021 in support of the REVIVE and PACIFIC
Phase 2 trials and planned VERIFY global Phase 3 clinical trial of rusfertide in
PV; an increase of $14.3 million in PN-943 clinical trial and development costs
and contract manufacturing costs primarily related to the Phase 2 IDEAL trial in
UC initiated during the second quarter of 2020; an increase of $6.5 million in
preclinical and drug discovery research expenses; an increase of $4.5 million of
clinical trial and development costs for the Phase 1 JNJ-2113 initiated in
December 2020 ; an increase of $4.0 million of expenses related to milestone
payments and obligations under the Zealand Agreement for rusfertide pursuant to
the resolution of related arbitration; and an increase of $2.0 million of
clinical trial and development costs for the Phase 1 PN-232 study initiated in
May 2021 . These increases were partially offset by a $1.7 million increase in
grant and accrued refundable cash tax incentives and a decrease of $0.9 million
in PTG-200 clinical trial and development expenses under the Janssen License
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and Collaboration Agreement due to our delivery of substantially all agreed-upon services for the PTG-200 Phase 2 clinical trial prior to 2021.
We had 92 and 59 full-time equivalent research and development employees as ofDecember 31, 2021 and 2020, respectively. Research and development expenses for the year endedDecember 31, 2021 included increases of$4.9 million in stock-based compensation expense and$5.3 million of other personnel-related expenses compared to the year endedDecember 31, 2020 .
General and Administrative Expenses
General and administrative expenses increased$8.6 million , or 46%, from$18.6 million for the year endedDecember 31, 2020 to$27.2 million for the year endedDecember 31, 2021 , primarily due to increases of$5.2 million in personnel-related expenses,$1.6 million in consulting expenses,$0.9 million in market research expenses,$0.5 million in recruiting expenses to support the growth of our business, and$0.3 million in insurance expense. The increase in personnel-related expenses was primarily due to an increase of$3.6 million in stock-based compensation expense and$1.6 million in wages and salaries.
We had 26 and 20 full-time equivalent general and administrative employees as of
Interest Income
Interest income decreased$0.5 million , or 51%, from$0.9 million for the year endedDecember 31, 2020 to$0.4 million for the year endedDecember 31, 2021 . This decrease was primarily due to the low interest rate environment in 2021 and a change in the mix of marketable securities compared to the prior year period, despite higher interest-earning asset balances.
Interest Expense
Interest expense of
Loss on Early Repayment of Debt
Loss on early repayment of debt of$0.6 million for the year endedDecember 31, 2020 was comprised of prepayment and final payment fees paid in connection with the early repayment of our term loan inJune 2020 . We had no debt outstanding atDecember 31, 2021 . Other Expense, Net
Other expense, net was
Income Tax Expense
Income tax expense decreased$1.3 million , or 100%, from$1.3 million for the year endedDecember 31, 2020 to zero for the year endedDecember 31, 2021 . Our effective income tax rate was 0% for the year endedDecember 31, 2021 as compared to 2.0% for the year endedDecember 31, 2020 . Our effective income tax rate differed from our federal statutory rate of 21% primarily because our losses could not be benefited due to our full valuation allowance position. During the second quarter of 2020, ourAustralia subsidiary sold beneficial rights to discovery intellectual property to ourU.S. entity, and theU.S. entity reimbursed theAustralia subsidiary for certain direct development costs. 66 Table of Contents
Upon completion of the sale, we analyzed tax planning strategies and future income and concluded that a valuation allowance was necessary for ourAustralia subsidiary. Income tax expense for the year endedDecember 31, 2020 reflected the sale of intellectual property rights, cost reimbursements and related adjustments to the deferred tax asset, establishment of a valuation allowance and certain uncertain tax position liabilities. We maintained a full valuation allowance on our tax position atDecember 31, 2021 .
Liquidity and Capital Resources
Liquidity and Capital Expenditures
Sources of Liquidity
Historically, we have funded our operations primarily from net proceeds from the sale of shares of our common stock and receipt of payments under collaboration agreements. InAugust 2022 , we entered into an Open Market Sale AgreementSM (the "Sales Agreement"), pursuant to which we may offer and sell up to$100.0 million of shares of our common stock from time to time in "at-the-market" offerings (the "2022 ATM Facility"). As ofDecember 31, 2022 , no sales were made under the 2022 ATM Facility. InJune 2021 , we completed an underwritten public offering of 3,046,358 shares of common stock at a public offering price of$37.75 per share and issued an additional 456,953 shares of common stock at a public offering price of$37.75 per share following the underwriters' exercise of their option to purchase additional shares. Net proceeds, after deducting underwriting commission and offering costs paid by us, were$123.8 million . InDecember 2020 , we completed an underwritten public offering of 4,761,904 shares of common stock at a public offering price of$21.00 per share and issued an additional 714,285 shares of our common stock at a price of$21.00 per share following the underwriters' exercise of their option to purchase additional shares. Net proceeds, after deducting underwriting commissions and offering costs paid by us, were$107.6 million . InMay 2020 , we completed an underwritten public offering of 7,000,000 shares of our common stock at a public offering price of$14.00 per share, and we issued an additional 1,050,000 shares of our common stock at a price of$14.00 per share following the underwriters' exercise of their option to purchase additional shares. Net proceeds, after deducting underwriting commissions and offering costs paid by us, were$105.3 million . InNovember 2019 , we entered into an Open Market Sale AgreementSM (the "Prior Sales Agreement"), pursuant to which we could offer and sell up to$75.0 million of shares of our common stock from time to time in "at-the-market" offerings (the "2019 ATM Facility"). During the year endedDecember 31, 2020 , we sold 2,483,719 shares under the 2019 ATM Facility for net proceeds of$41.9 million . No shares were sold under the 2019 ATM Facility during the year endedDecember 31, 2021 . During the year endedDecember 31, 2022 , we sold 422,367 shares of our common stock under the 2019 ATM Facility for net proceeds of$14.6 million . The Prior Sales Agreement was terminated in connection with and replaced by the Sales Agreement inAugust 2022 .
We have received a total of
? Upon effectiveness of the Original Agreement, we received a non-refundable,
upfront cash payment of
Upon effectiveness of the First Amendment, we became eligible to receive a
?
quarter of 2019;
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In
? triggered by the successful nomination of a second-generation development
compound, which was received during the first quarter of 2020;
In
? from Janssen triggered by completion of the data collection for JNJ-2113
(formerly known as PN-235) Phase 1 activities, which was received during the
fourth quarter of 2021; and
In
? in connection with the dosing of the third patient in the Phase 2b clinical
trial of JNJ-2113 in moderate-to-severe plaque psoriasis during the first
quarter of 2022, which was received during the second quarter of 2022.
We also expect to receive payments for services provided under the collaboration agreement and we may make in-kind payment reimbursements to Janssen for certain costs they have incurred pursuant to the cost sharing terms of the agreement.
Pursuant to the Restated Agreement, we may be eligible to receive clinical development, regulatory and sales milestones, if and when achieved. Upcoming potential development milestones for second-generation products include:
? clinical trial for any second-generation product for a second indication (i.e.,
an indication different than the indication which triggered the
milestone payment received during the first quarter of 2022 described above);
?
for a second-generation compound for any indication;
?
for a second-generation compound for a second indication; and
?
for any indication meeting its primary clinical endpoint.
Capital Requirements
As ofDecember 31, 2022 , we had$237.4 million of cash, cash equivalents and marketable securities and an accumulated deficit of$536.8 million . Our capital expenditures were$0.8 million ,$1.1 million and$0.5 million for the years endedDecember 31, 2022 , 2021 and 2020, respectively. Our primary uses of cash are to fund our operating expenses, primarily related to our research and development expenditures, general and administrative costs and pre-commercialization costs. Cash used in operating activities is impacted by the timing of when we pay these expenses. As of the date of this filing, we believe, based on our current operating plan and assumptions that our existing cash, cash equivalents and marketable securities will be sufficient to meet our anticipated operating and capital expenditure requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong. We could utilize our available capital resources sooner than we currently expect if, for instance, our planned pre-clinical and clinical trials are successful or expanded, our product candidates enter new and more advanced stages of clinical development, we experience significant delays or difficulties in commencing, enrolling or completing clinical studies, our newer product clinical trials advance beyond the discovery stage, or various other factors. We expect that our cash burn will be lower in 2023 due to our research and development expenses decreasing in the near term as we continue to de-prioritize our PN-943 clinical program and streamline certain discovery programs to focus our resources toward progressing our rusfertide program into later stage clinical trials and preparing for commercialization. 68
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We anticipate that we will need to raise substantial additional funding to advance rusfertide through clinical development and toward potential regulatory approval and to develop, acquire, or in-license other potential product candidates. Our future funding requirements will depend on many factors, including:
the progress, timing, scope, results and costs of advancing our clinical trials
? for our product candidates, including the ability to enroll patients in a
timely manner for our clinical trials;
? the costs of and our ability to obtain clinical and commercial supplies and any
other product candidates we may identify and develop;
? our ability to successfully commercialize the product candidates we may
identify and develop;
the selling and marketing costs associated with our current product candidates
? and any other product candidates we may identify and develop, including the
costs and timing of expanding our sales and marketing capabilities;
the achievement of development, regulatory and sales milestones resulting in
? payments to us from Janssen under the Restated Agreement or other such
arrangements that we may enter into, and the timing of such payments, if any;
the timing, receipt and amount of royalties under the Restated Agreement on
? worldwide net sales of IL-23 receptor antagonist compounds, upon regulatory
approval or clearance, if any;
the amount and timing of sales and other revenues from our current product
? candidates and any other product candidates we may identify and develop,
including the sales price and the availability of adequate third-party
reimbursement;
? the cash requirements of any future acquisitions or discoveries of product
candidates;
? the time and costs necessary to respond to technological and market
developments;
? the extent to which we may acquire or in-license other product candidates and
technologies;
? the costs necessary to attract, hire and retain qualified personnel;
? the costs of maintaining, expanding and protecting our intellectual property
portfolio; and
? the costs of ongoing general and administrative activities to support the
growth of our business.
Such additional funding may come from various sources, including raising
additional capital, seeking access to debt, and seeking additional collaborative
or other arrangements with partners, but such funding may not be available on
terms acceptable to us, if at all. As discussed in Part I, Item1A."Risk
Factors", we are currently operating in a period of economic uncertainty and
capital markets disruption, which has been significantly impacted by domestic
and global monetary and fiscal policy, and geopolitical instability, among other
factors. A future recession or market correction related to COVID-19 or due to
other factors, including significant geopolitical or macroeconomic events, could
materially affect our business and our access to credit and financial markets.
Any failure to raise capital as and when needed could have a negative impact on
our financial condition and on our ability to pursue our business plans and
strategies. Further, our operating plans may change, and we may need additional
funds to meet operational needs and capital requirements for clinical trials,
other research and development activities and pre-commercialization costs. If we
do raise additional capital through public or private equity offerings or
convertible debt securities, the ownership interest of our existing stockholders
could be diluted, and the terms of these securities
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could include liquidation or other preferences that could adversely affect our
stockholders' rights. If we raise additional capital through debt financing, we
could be subject to covenants limiting or restricting our ability to take
specific actions, such as incurring additional debt, making capital expenditures
or declaring dividends. Because of the numerous risks and uncertainties
associated with the development and commercialization of our product candidates,
we are unable to fully estimate the amounts of increased capital outlays and
operating expenditures associated with our current and anticipated product
development programs. For additional information, see Part I, Item 1A, Risk
Factors-"Risks Related to our Financial Position and Capital Requirements".
The following table includes our cash flow data for the periods indicated (in
thousands):
Year Ended December 31 ,Consolidated Statements of Cash Flows Data: 2022 2021
2020
(Dollars in thousands)
Cash used in operating activities$ (108,137) $ (107,865) $ (72,484) Cash provided by (used in) investing activities$ 91,468 $ (15,860) $ (90,965) Cash provided by financing activities$ 18,838 $ 129,923 $ 247,626 Stock-based compensation$ 24,202 $ 16,395 $ 7,899
Cash Used in Operating Activities
Cash used in operating activities during the year endedDecember 31, 2022 , was$108.1 million , consisting primarily of our net loss of$127.4 million and a net change of$7.8 million in net operating assets and liabilities, partially offset by certain non-cash items, including$24.2 million of stock-based compensation expense. The$0.3 million increase in cash flow used in operating activities during the year endedDecember 31, 2022 , as compared to the year endedDecember 31, 2021 , was primarily due to a$1.8 million increase in our net loss, a$4.5 million net change in net operating assets and liabilities, and a$1.8 million net change in other non-cash items, partially offset by a$7.8 million increase in stock-based compensation expense. Cash used in operating activities during the year endedDecember 31, 2021 , of$107.9 million consisted primarily of our net loss of$125.6 million , partially offset by certain non-cash items including$16.4 million of stock-based compensation expense. The$35.4 million increase in cash flow used in operating activities during the year endedDecember 31, 2021 , as compared to the year endedDecember 31, 2020 , was primarily due to a$59.4 million increase in our net loss, partially offset by certain non-cash items including an increase of$8.5 million of stock-based compensation expense, and a$14.2 million change in decrease in deferred revenue.
Cash Provided by (Used in) Investing Activities
Cash provided by investing activities for the year endedDecember 31, 2022 , was$91.5 million , consisting of proceeds from maturities of marketable securities of$307.1 million , partially offset by purchases of marketable securities of$214.9 million and purchases of property and equipment of$0.8 million . The$107.3 million increase in cash provided by investing activities for the year endedDecember 31, 2022 , as compared to the year endedDecember 31, 2021 , was primarily related to a decrease of$71.7 million in purchases of marketable securities and an increase of$35.3 million in proceeds from maturities of marketable securities. Purchases of property and equipment were primarily related to purchases of laboratory and computer equipment. Cash used in investing activities for the year endedDecember 31, 2021 , was$15.9 million , consisting of purchases of marketable securities of$286.6 million and purchases of property and equipment of$1.1 million , partially offset by proceeds from maturities of marketable securities of$271.8 million . The$75.1 million decrease in cash used in investing activities for the year endedDecember 31, 2021 , as compared to the year endedDecember 31, 2020 , was primarily due to an increase of$82.3 million in proceeds from maturities of marketable securities. Purchases of property and equipment were primarily related to purchases of laboratory equipment, furniture and computer equipment. 70 Table of Contents
Cash Provided by Financing Activities
Cash provided by financing activities for the year endedDecember 31, 2022 , was$18.8 million , consisting primarily of net cash proceeds from sales of$14.6 million under the 2019 ATM Facility and proceeds from the issuance of common stock upon the exercise of stock options and purchases of common stock under our employee stock purchase plan of$4.4 million . The$111.1 million decrease in cash provided by financing activities for the year endedDecember 31, 2022 , as compared to the year endedDecember 31, 2021 , was primarily due to a$123.8 million decrease in cash proceeds from our public offerings of common stock, and a$1.8 million decrease in proceeds from the issuance of common stock upon exercise of stock options and purchases of common stock under our employee stock purchase plan. These decreases were partially offset by$14.6 million increase in cash proceeds from ATM sales. Cash provided by financing activities for the year endedDecember 31, 2021 , was$129.9 million , consisting primarily of cash proceeds from our public offerings of common stock of$123.8 million and proceeds from the issuance of common stock upon the exercise of stock options and purchases of common stock under our employee stock purchase plan of$6.3 million . The$117.7 million decrease in cash provided by financing activities for the year endedDecember 31, 2021 , as compared to the year endedDecember 31, 2020 , was primarily due to an$89.5 million decrease in cash proceeds from our public offerings of common stock, a$42.1 million decrease in cash proceeds from ATM sales. These decreases were partially offset by$10.5 million related to the early repayment of long-term debt in 2020 and a$3.5 million increase in proceeds from the issuance of common stock upon exercise of stock options and purchases of common stock under our employee stock purchase plan.
Contractual Obligations and Other Commitments
In the normal course of business, we enter into agreements with contract service providers to assist in the performance of our research and development activities and clinical and commercial manufacturing activities. Subject to required notice periods and our obligations under binding commitments, we can elect to discontinue the work under these agreements at any time. We expect to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier agreements and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources. Our contractual obligations include minimum lease payments under our operating lease obligations. OnJuly 2, 2021 , we entered into a second amendment to our facility lease agreement dated as ofMarch 2017 , to lease approximately 15,000 square feet of additional office space inNewark, California . See Note 10 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10-K for additional information. Under the Restated Agreement, we share with Janssen certain development, regulatory and compound supply costs. The actual amounts that we pay Janssen or that Janssen pays us will depend on numerous factors, some of which are outside of our control and some of which are contingent upon the success, if achieved, of certain development and regulatory activities. See Note 3 to the Consolidated Financial Statements elsewhere in this Annual Report on Form 10- K for additional information. InJune 2012 , we entered into the Zealand Agreement to identify, optimize and develop novel disulfide-rich peptides to discover a hepcidin mimetic. We amended the Zealand Agreement onFebruary 28, 2014 , at which point we assumed responsibility for the development program. OnJanuary 23, 2020 , we initiated arbitration proceedings with theInternational Court of Arbitration of theInternational Chamber of Commerce against Zealand. OnAugust 4, 2021 , we and Zealand agreed to resolve the dispute and reached an Arbitration Resolution Agreement. See Note 7 and Note 11 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for additional information. 71 Table of Contents
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