RAPT THERAPEUTICS, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs, and involve risks and uncertainties. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those discussed in the section titled "Risk Factors" included under Part I, Item 1A and elsewhere in this Annual Report. See "Special Note Regarding Forward-Looking Statements" in this Annual Report.
Overview
We are a clinical-stage immunology-based biopharmaceutical company focused on
discovering, developing and commercializing oral small molecule therapies for
patients with significant unmet needs in oncology and inflammatory diseases.
Utilizing our proprietary drug discovery and development engine, we are
developing highly selective small molecules designed to modulate the critical
immune responses underlying these diseases. We have discovered and advanced into
clinical development two unique drug candidates each targeting C-C motif
chemokine receptor 4 ("CCR4"): FLX475 for the treatment of a range of tumors and
RPT193 for the treatment of inflammatory diseases. We are also pursuing a range
of targets that are in the discovery stage of development.
Financial Overview
We commenced operations in 2015, and have since devoted substantially all of our efforts and financial resources to building our research and development capabilities, identifying product candidates, undertaking preclinical studies, conducting clinical trials and establishing our corporate infrastructure. As a result, we have incurred net losses since inception. As ofDecember 31, 2020 , we had an accumulated deficit of$214.8 million . We have incurred net losses of$52.9 million and$43.0 million for the years endedDecember 31, 2020 and 2019, respectively. We do not expect to generate product revenue unless and until we obtain approval for the commercialization of a drug candidate, and we cannot assure you that we will ever generate significant revenue or profits. Since inception, we have financed our operations primarily through the sale of equity securities. InFebruary 2020 , we completed an underwritten follow-on public offering of 2,500,000 shares of our common stock for net proceeds of$69.8 million . InDecember 2020 , we sold 188,700 shares of common stock for net proceeds of$3.8 million in "at-the-market" offerings pursuant to a Controlled Equity OfferingSM Sales Agreement ("ATM Sales Agreement") withCantor Fitzgerald & Co. andStifel, Nicolaus & Company, Incorporated . As ofDecember 31, 2020 , we had cash and cash equivalents and marketable securities of$111.5 million and working capital of$103.9 million . We believe our current cash and cash equivalents and marketable securities will be sufficient to fund our planned operations for a period of at least 12 months following the filing date of this report. We expect to incur substantial expenditures in the foreseeable future as we expand our pipeline and advance our drug candidates through clinical development, undergo the regulatory approval process and, if approved, launch commercial activities. Specifically, in the near term we expect to incur substantial expenses relating to our ongoing and planned clinical trials, the development and validation of our manufacturing processes and other development activities. We will need substantial additional funding to support our continuing operations and pursue our development strategy. Until such time as we can generate significant revenue from sales of our drug candidates, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of our drug candidates or delay our efforts to expand our product pipeline. We may also be required to sell or license to other parties rights to develop or commercialize our drug candidates that we would prefer to retain. 106 --------------------------------------------------------------------------------
Impact of COVID-19 Pandemic
We have been impacted and may continue to be impacted by the global pandemic of the disease referred to as COVID-19 and the responses by government entities to combat the pandemic. We have been closely monitoring and continue to monitor the impact of COVID19 on all aspects of our business and operations. Both the outbreak of the disease and the actions to slow its spread have had an adverse impact on our operations by, among other things, delaying our clinical trials, limiting our employees from coming to work at our facility and delaying services from third-party service providers. Our operations are limited by protocols implemented to protect the health of our employees. Depending on how long the pandemic continues or if it intensifies, it is possible that these or other challenges may have a larger impact on our operations. Additionally, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets, which has adversely impacted, and may continue to adversely impact, our stock price and our ability to access capital markets. The situation surrounding COVID-19 remains fluid, and we are actively managing our response and assessing potential impacts to our financial condition and other operations, employees, results of operations and our ability to access capital. The magnitude of any such adverse impact cannot currently be determined due to numerous uncertainties surrounding COVID-19 (refer to Item 1A. Risk Factors for related risks).
Components of Operating Results
Revenue
Revenue recognized during the periods presented relate to the Collaboration and
License Agreement (the "Hanmi Agreement") that we entered into with
Research and Development Expenses
We expense both internal and external research and development costs as such
expenses are incurred. We track the external research and development costs
incurred for each of our drug candidates. However, we do not track our internal
research and development costs by drug candidate, as the related efforts and
their costs are typically spread across multiple drug candidates.
We account for non-refundable advance payments for goods or services that will
be used in future research and development activities as expenses when the goods
have been received or when the service have been performed rather than when the
payment is made.
Clinical trial costs are a component of research and development expenses. We
expense costs for our clinical trial activities performed by third parties,
including clinical research organizations ("CROs") and other service providers,
as they are incurred, based upon estimates of the work completed over the life
of the individual study in accordance with the associated agreements. We use
information received from internal personnel and outside service providers to
estimate the clinical trial costs incurred.
External research and development expenses consist primarily of costs incurred for the development of our drug candidates and include:
• costs incurred under agreements with CROs, investigative sites and
consultants to conduct our clinical trials and preclinical and
non-clinical studies;
• costs to acquire, develop and manufacture supplies for clinical trials
and other studies, including fees paid to contract manufacturing
organizations ("CMOs"); and
• costs related to compliance with drug development regulatory requirements.
Internal research and development costs include:
• salaries and related costs, including stock-based compensation and
travel expenses, for personnel in our research and development
functions; and
• depreciation and other allocated facility-related and overhead expenses.
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We expect our research and development expenses to increase substantially during
the next few years as we seek to complete existing and initiate additional
clinical trials, pursue regulatory approval of FLX475 and RPT193 and advance
other programs into clinical development. Over the next few years, we expect our
preclinical, clinical and contract manufacturing expenses to increase
significantly relative to what we have incurred to date. Predicting the timing
or the final cost to complete our clinical program or validation of our
manufacturing and supply processes is difficult and delays may occur because of
many factors.
General and Administrative Expenses
General and administrative expenses consist principally of personnel-related costs including payroll and stockbased compensation for personnel in executive, finance, human resources, business and corporate development and other administrative functions; professional fees for legal, consulting and accounting services; rent and other facilities costs, depreciation and other general operating expenses not otherwise classified as research and development expenses.
We anticipate that our general and administrative expenses will increase substantially during the next few years as a result of staff expansion and additional occupancy costs, as well as costs associated with being a public company, including higher professional fees for legal, consulting and accounting services, investor relations costs, higher insurance premiums and other compliance costs.
Other Income, Net
Our cash and cash equivalents and marketable securities are invested in money market funds, corporate debt securities, commercial paper andU.S. government agency securities. Other income, net, consists primarily of interest earned on our cash and cash equivalents and marketable securities and remeasurement gains and losses on foreign currency transactions.
Critical Accounting Policies, Significant Judgments and Use of Estimates
Our consolidated financial statements have been prepared in accordance withU.S. generally accepted accounting principles ("GAAP"). 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 assets and liabilities at the date of the consolidated financial statements, as well as the reported 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, 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.
While our significant accounting policies are described in the notes to our consolidated financial statements, we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.
Revenue
Our license and collaborative agreements consist of license, milestone and
royalty payments generated through agreements with strategic partners for the
development and commercialization of certain product candidates. The terms of an
agreement may include a non-refundable upfront fee, payments based upon
achievement of milestones and royalties on net product sales. If a portion of
the nonrefundable upfront fee or other payments received is allocated to
continuing performance obligations under the terms of an agreement, such portion
is recorded as deferred revenue and recognized as revenue when (or as) the
underlying performance obligation is satisfied.
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We recognize revenue when we transfer promised goods or services to customers or
counterparties in an amount that reflects the consideration to which we expect
to be entitled in exchange for those goods or services. In determining the
appropriate amount of revenue to be recognized, we perform the following steps:
(i) identification of the promised goods or services in the agreement; (ii)
determination of whether the promised goods or services are performance
obligations, including whether they are distinct in the context of the
agreement; (iii) measurement of the transaction price, including any constraint
on variable consideration; (iv) allocation of the transaction price to
performance obligations based on estimated selling prices; and (v) recognition
of revenue when (or as) we satisfy each performance obligation.
Licenses: If a license to our intellectual property is determined to be distinct
from the other performance obligations identified in an agreement, we will
recognize revenue from the nonrefundable, upfront fee allocated to the license
when the license is transferred to the licensee and the licensee is able to use
and benefit from the license. If a license is bundled with other performance
obligations, we utilize judgment to assess the nature of the combined
performance obligations to determine whether the combined performance
obligations are satisfied over time or at a point in time and, if over time, the
appropriate method of measuring progress for purposes of recognizing revenue. We
evaluate the measure of progress each reporting period and, if necessary, adjust
the measure of performance and related revenue recognition.
Milestone payments: If an agreement includes event-based or milestone payments,
we evaluate whether the events or milestones are considered likely to be
achieved and estimate the amount to be included in the transaction price using
the most likely amount method. If it is unlikely that a significant revenue
reversal would occur, the value of the associated event-based or milestone
payments is included in the transaction price. Event-based or milestone payments
that are not within our control are not included in the transaction price until
they become likely to be achieved.
Royalties: If an agreement includes sales-based royalties and the license is
deemed to be the predominant item to which the royalties relate, we will
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).
As of December 31, 2020 and 2019, we recorded deferred revenue of $5.0 million
and $4.0 million , respectively, on the consolidated balance sheet related to our
license and collaboration agreement with Hanmi. As of December 31, 2020 we
recognized revenue of $5.0 million .
Research and Development Expenses
Research and development costs are expensed as incurred. Research and
development costs consist primarily of salaries and benefits of research and
development personnel, costs related to research activities, preclinical
studies, clinical trials, drug manufacturing and allocated overhead and
facility-related costs. We account for non-refundable advance payments for goods
or services that will be used in future research and development activities as
expenses when the related goods have been received or when the service has been
performed rather than when the payment is made.
Clinical trial costs are a component of research and development expenses. We
expense costs for our clinical trial activities performed by third parties,
including CROs and other service providers, as they are incurred, based upon
estimates of the work completed over the life of the individual study in
accordance with associated agreements. We use information we receive from
internal personnel and outside service providers to estimate the progress of
services performed and the associated clinical trial costs incurred.
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--------------------------------------------------------------------------------Stock-Based Compensation Expense
We account for stock-based compensation arrangements with employees and
non-employees in accordance with ASC 718, Stock Compensation. Stock-based awards
issued by us have been primarily stock options with time-based vesting or
performance-based vesting. ASC 718 requires the recognition of compensation
expense, using a fair value-based method, for costs related to all stock-based
awards. To determine the grant-date fair value of stock-based awards with
time-based vesting, we utilize the Black-Scholes option pricing model, which is
impacted by the fair value of our common stock as well as other variables
including, but not limited to, expected term that stock-based awards will remain
outstanding, expected common stock price volatility over the term of the
stock-based awards, risk-free interest rates and expected dividends. Prior to
our initial public offering ("IPO"), there had been no public market for our
common stock. As such, the estimated fair values of our common stock underlying
our stock-based awards were determined at each grant date by our board of
directors, with input from management, based on the information known to us on
the grant date, including a review of any recent events and their potential
impact on the estimated per share fair value of our common stock. Valuations of
our common stock were prepared by a third-party valuation firm in accordance
with the guidance outlined in the American Institute of Certified Public
Accountants Technical Practice Aid , Valuation of Privately Held Company Equity
Securities Issued as Compensation (the "Practice Aid"). Following our IPO, the
fair value of each share of common stock underlying stock option grants is based
on the closing price of our common stock on the Nasdaq Global Market as reported
on the date of grant.
For stock-based awards with time-based vesting, stock-based compensation is
recognized over the period during which an awardee is required to provide
services in exchange for the stock-based award, known as the requisite service
period (usually the vesting period), on a straight-line basis. For stock-based
awards with performance-based vesting, the fair value of the award is recognized
as expense when the achievement of the associated performance criteria becomes
probable, using an accelerated attribution method. For both time-based and
performance-based stock-based awards, stock-based compensation expense is
recognized based on the fair value determined on the date of grant.
Estimates of the fair value of stock-based awards as of the grant date using the
Black-Scholes option pricing model are affected by assumptions regarding a
number of complex variables. Changes in the assumptions can materially affect
the fair value and ultimately how much stock-based compensation expense is
recognized. These inputs are subjective and generally require significant
analysis and judgment to develop. These inputs are:
Expected term - The expected term represents the period that our stock-based
awards granted is expected to be outstanding and is determined using the
simplified method (based on the mid-point between the vesting date and the end
of the contractual term). We have very limited historical information to develop
reasonable expectations about future exercise patterns and post-vesting
employment termination behavior for our stock-based awards.
Expected volatility - Since we have only recently become a public company and
have only a limited trading history for our common stock, the expected
volatility was estimated based on the average volatility for comparable publicly
traded biopharmaceutical companies over a period, where available, equal to the
expected term of the stock-based awards. The comparable companies were chosen
based on their similar size, life cycle stage or area of specialty.
Risk-Free Interest Rate - The risk-free interest rate is based on the
Expected Dividend - We have never paid dividends on our common stock and have no plans to pay dividends on our common stock. Therefore, we use an expected dividend yield of zero.
The fair value of each purchase under the employee stock purchase plan ("ESPP")
is estimated at the beginning of the offering period using the Black-Scholes
option pricing model.
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Assumptions we used in applying the Black-Scholes option-pricing model to determine the estimated fair value of our stock options granted involve inherent uncertainties and the application of significant judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our equity-based compensation could be materially different.
Common Stock Valuations
Prior to our IPO, the grant date fair value of our common stock was determined by our board of directors with the assistance of management and an independent third-party valuation specialist. The grant date fair value of our common stock was determined using valuation methodologies that utilize certain assumptions, including probability weighting of events, volatility, time to liquidation, a risk-free interest rate and a discount for lack of marketability (Level 3 inputs). In determining the fair value of our common stock, the methodologies used to estimate our enterprise value were performed using methodologies, approaches and assumptions consistent with the Practice Aid. The methodology to determine the fair value of our common stock included estimating the fair value of the enterprise using a market approach, which estimates our fair value by including an estimation of the value of the business based on guideline public companies under a number of different scenarios. The assumptions used to determine the estimated fair value of our common stock are based on numerous objective and subjective factors, combined with management judgment, including external market conditions affecting the pharmaceutical and biotechnology industry and trends within the industry; our stage of development; the rights, preferences and privileges of our convertible preferred stock relative to those of our common stock; the prices at which we sold shares of our convertible preferred stock; our financial condition and operating results, including our levels of available capital resources; the progress of our research and development efforts, our stage of development and business strategy; equity market conditions affecting comparable public companies; general U.S. market conditions; and the lack of marketability of our common stock.
Following our IPO, our board of directors determines the fair value of our common stock based on the closing price of our common stock on the date of grant.
Income Taxes
We provide for income taxes under the asset and liability method. Current income
tax expense or benefit represents the amount of income taxes expected to be
payable or refundable for the current year. Deferred income tax assets and
liabilities are determined based on differences between the financial statement
reporting and tax bases of assets and liabilities and net operating loss and
credit carryforwards, and are measured using the enacted tax rates and laws that
will be in effect when such items are expected to reverse. Deferred income tax
assets are reduced, as necessary, by a valuation allowance when management
determines it is more likely than not that some or all of the tax benefits will
not be realized.
In accordance with the accounting standards for uncertain tax positions, we
evaluate the recognition threshold and measurement attribute criteria for the
financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. We assess all material positions taken in
any income tax return, including all significant uncertain positions, in all tax
years that are still subject to assessment or challenge by relevant taxing
authorities. Assessing an uncertain tax position begins with the initial
determination of the position's sustainability and is measured at the largest
amount of benefit that is greater than fifty percent likely of being realized
upon ultimate settlement. As of each balance sheet date, unresolved uncertain
tax positions must be reassessed, and we will determine whether (i) the factors
underlying the sustainability assertion have changed and (ii) the amount of the
recognized tax benefit is still appropriate. The recognition and measurement of
tax benefits requires significant judgment. Judgments concerning the recognition
and measurement of a tax benefit might change as new information becomes
available.
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As of December 31, 2020 , our total deferred tax assets were $47.1 million . Due
to our lack of earnings history and uncertainties surrounding our ability to
generate future taxable income, the net deferred tax assets have been fully
offset by a valuation allowance. The deferred tax assets were primarily
comprised of federal and state tax net operating loss carryforwards ("NOLs").
Utilization of NOLs may be limited by the "ownership change" rules, as defined
in Section 382 of the Internal Revenue Code. Similar rules may apply under state
tax laws. Our ability to use our remaining NOLs may be further limited if we
experience an ownership change as a result of future changes in our stock
ownership.
Results of Operations
Comparison of the Years Ended
The following table summarizes our results of operations for the periods
indicated (in thousands):
Year Ended
December 31,
2020 2019 $ Change % Change
Revenue $ 5,042 $ - $ 5,042 *
Operating expenses:
Research and development 45,485 34,910 10,575 30 %
General and administrative 12,771 8,719 4,052 46 %
Total operating expenses 58,256 43,629 14,627 34 %
Loss from operations (53,214 ) (43,629 ) (9,585 ) 22 %
Other income, net 1,312 1,292 20 2 %
Net loss before taxes (51,902 ) (42,337 ) (9,565 ) 23 %
Provision for income taxes 990 660 330 *
Net loss $ (52,892 ) $ (42,997 ) $ (9,895 ) 23 %
*: Percentage not meaningful
Research and Development Expenses
Research and development expenses increased$10.6 million , or 30%, to$45.5 million for the year endedDecember 31, 2020 from$34.9 million for the year endedDecember 31, 2019 . The increase in research and development expenses was primarily due to an increase of$1.3 million in clinical trial costs relating to RPT193, an increase of$3.7 million in clinical trial costs relating to FLX475, an increase of$1.2 million in costs relating to preclinical programs, an increase of$3.6 million in stock-based compensation expense,$1.6 million in higher personnel and other costs, offset by a decrease of$0.3 million in laboratory supply expenses, a decrease of$0.2 million in consulting costs and a decrease of$0.3 million in travel costs due to travel restrictions resulting from the COVID-19 pandemic. We expect our research and development expenses to increase substantially during the next few years as we seek to complete existing and initiate additional clinical trials, pursue regulatory approval of FLX475 and RPT193 and advance other programs into the clinic.
The following is a comparison of research and development expenses for the years
ended
Year Ended
December 31,
2020 2019
External development expenses:
FLX475 $ 10,232 $ 6,542
RPT193 6,592 5,265
Other Programs 1,908 685
Internal research and development expenses 26,753 22,418
Total research and development expenses $ 45,485 $ 34,910
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General and Administrative Expenses
General and administrative expenses increased$4.1 million , or 47%, to$12.8 million for the year endedDecember 31, 2020 from$8.7 million for the year endedDecember 31, 2019 . The increase was primarily due to an increase of$1.2 million in insurance and corporate fees as a result of being a public company, an increase of$3.0 million in stock-based compensation expense, an increase of$0.4 million in higher personnel and other costs and an increase of$0.3 million in facilities cost, offset by a decrease of 0.4 million in professional services and$0.4 million in travel costs due to travel restrictions resulting from the COVID-19 pandemic. We expect our general and administrative expenses to increase substantially during the next few years as a result of staff expansion, costs associated with being a public company, including higher insurance premiums, legal and accounting fees and other compliance costs associated with operating a public company. Other Income, Net Other income, net was$1.3 million for both years endedDecember 31, 2020 and 2019. Although our cash balance increased during 2020, interest rates declined during 2020, resulting in comparable other income, net for both years.
Liquidity and Capital Resources
We had cash and cash equivalents and marketable securities of$111.5 million and working capital of$103.9 million as ofDecember 31, 2020 . Our cash and cash equivalents and marketable securities are invested in money market funds, corporate debt securities, commercial paper andU.S. government agency securities. Since inception, we have incurred net losses and negative cash flows from operations. AtDecember 31, 2020 , we had an accumulated deficit of$214.8 million . In addition, we expect to incur substantial costs in order to conduct research and development activities necessary to develop and commercialize a product. Additional capital will be needed to undertake these activities and we intend to raise such capital through the issuance of additional equity, borrowings and strategic alliances with other companies. However, if such capital is not available at adequate levels or on acceptable terms, we could be required to significantly reduce operating expenses and delay or reduce the scope of or eliminate some of our development programs. We believe our current cash and cash equivalents and marketable securities will be sufficient to fund our anticipated level of operations through at least the next 12 months following the filing date of this report. We will continue to require additional capital to develop our drug candidates and fund operations for the foreseeable future. We may seek to raise capital through private or public equity or debt financings, collaborative or other arrangements with other companies, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:
• the scope, rate of progress and costs of our drug discovery, preclinical
development activities, laboratory testing and clinical trials for our
drug candidates;
• the number and scope of clinical programs we decide to pursue;
• the scope and costs of manufacturing development and commercial
manufacturing activities;
• the extent to which we acquire or in-license other drug candidates and
technologies;
• the cost, timing and outcome of regulatory review of our drug candidates;
• the cost and timing of establishing sales and marketing capabilities, if
any of our drug candidates receive marketing approval;
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• the costs of preparing, filing and prosecuting patent applications,
obtaining, maintaining and enforcing our intellectual property rights
and defending intellectual property-related claims;
• our ability to establish and maintain collaborations on favorable terms,
if at all;
• our efforts to enhance operational systems and our ability to attract,
hire and retain qualified personnel, including personnel to support the
development of our drug candidates;
• the costs associated with being a public company; and
• the cost associated with commercializing our drug candidates, if they
receive marketing approval.
See "Risk Factors" for additional risks associated with our substantial capital requirements.
If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any equity or debt financing may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to other parties' rights to develop or commercialize our drug candidates that we would prefer to retain.
Summary Consolidated Statements of Cash Flows
The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands):
Year Ended December 31,
2020 2019Net cash (used in) provided by:
Operating activities$ (40,491 ) $ (35,474 ) Investing activities (87,435 ) (843 ) Financing activities 75,461 49,902
Net (decrease) increase in cash and cash equivalents
Operating Activities Net cash used in operating activities was$40.5 million for the year endedDecember 31, 2020 , reflecting a net loss of$52.9 million , partially offset by non-cash charges for depreciation, amortization and stock-based compensation expense totaling$10.1 million and net cash provided by changes in operating assets and liabilities of$2.3 million . Net cash used in operating activities was$35.5 million for the year endedDecember 31, 2019 , reflecting a net loss of$43.0 million , partially offset by non-cash charges for depreciation, amortization and stock-based compensation expense totaling$3.4 million , and net cash provided by changes in operating assets and liabilities of$4.1 million .
Investing Activities
Cash used in investing activities was$87.4 million and$0.8 million for years endedDecember 31, 2020 and 2019, respectively, and primarily resulted from the purchase of marketable investment securities. 114 --------------------------------------------------------------------------------
Financing Activities
Net cash provided by financing activities was$75.5 million for the year endedDecember 31, 2020 , primarily from the receipt of$69.8 million in net proceeds from ourFebruary 2020 follow-on offering and$3.8 million in net proceeds from sales of common stock under our ATM Sales Agreement. Net cash provided by financing activities was$49.9 million for the year endedDecember 31, 2019 , primarily from our IPO and the issuance of our convertible preferred stock.
Contractual Obligations and Commitments
The following table summarizes our contractual obligations as ofDecember 31, 2020 (in thousands): Less than More than 1 year 1-3 years 4-5 years 5 years Total Contractual obligations: Operating lease obligations$ 1,969 $ 4,146 $
4,442
As ofDecember 31, 2020 , our commitments consisted of operating leases for our facilities of approximately 36,754 square feet. Under the terms of the agreements, we will have lease obligations of$12.7 million from 2021 through 2026. We enter into contracts in the normal course of business with third-party contract organizations for clinical trials, non-clinical studies and testing, and other services and products for operating purposes. These contracts generally provide for termination following a certain period after notice and, therefore, we believe that our non-cancelable obligations under these agreements are not material and are not included in the table above.
Off-Balance Sheet Arrangements
We currently have not entered into and do not have any relationships with unconsolidated entities or financial collaborations, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purpose.
Indemnification
As permitted underDelaware law and in accordance with our bylaws, we indemnify our officers and directors for certain events or occurrences while the officer or director is or was serving in such capacity pursuant to indemnification agreements. We believe the fair value of the indemnification rights and agreements is minimal. Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as ofDecember 31, 2020 and 2019.
JOBS Act Accounting Election
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), permits
an "emerging growth company" such as us to take advantage of an extended
transition period to comply with new or revised accounting standards applicable
to public companies. We are choosing to elect the extended transition period for
complying with new or revised accounting standards pursuant to Section 107(b) of
the JOBS Act until the earlier of the date we (i) are no longer an emerging
growth company or (ii) affirmatively and irrevocably opt out of the extended
transition period provided in the JOBS Act. As a result, our financial
statements may not be comparable to companies that comply with new or revised
accounting pronouncements as of public company effective dates.
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We will remain an emerging growth company until the earliest of (1) the last day of our first fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue of at least$1.07 billion , or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds$700.0 million of the priorJune 30th and (2) the date on which we have issued more than$1.0 billion in non-convertible debt securities during the prior three-year period.
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