SPRINGWORKS THERAPEUTICS, INC. The following discussion and analysis of the financial condition and results of operations ofSpringWorks Therapeutics, Inc. should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, or Quarterly Report, and our consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 , or 2021 Form 10-K, filed with theSecurities and Exchange Commission , orSEC , onFebruary 24, 2022 . Unless the context otherwise requires, all references to "we," "us," "our," "SpringWorks," or the "Company" refer toSpringWorks Therapeutics, Inc. , together with its subsidiaries. This discussion and analysis contains forward-looking statements based upon current expectations that involve risks and uncertainties. We caution you that forward-looking statements are not guarantees of future performance, and that our actual results of operations, financial condition and liquidity, and the developments in our business and the industry in which we operate, may differ materially from the results discussed or projected in the forward-looking statements contained in this Quarterly Report. We discuss risks and other factors that we believe could cause or contribute to these potential differences elsewhere in this Quarterly Report, including under Item 1A. "Risk Factors" and under "Special Note Regarding Forward-Looking Statements". In addition, even if our results of operations, financial condition and liquidity, and the developments in our business and the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods. We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of theSecurities and Exchange Commission , orSEC , to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
Overview
We are a clinical-stage biopharmaceutical company applying a precision medicine approach to acquiring, developing and commercializing life-changing medicines for underserved patient populations suffering from devastating rare diseases and cancer. We have a differentiated portfolio of small molecule targeted oncology product candidates and are advancing two potentially registrational clinical trials in rare tumor types, as well as several other programs addressing highly prevalent, genetically defined cancers. Our strategic approach and operational excellence across research, translational science, and clinical development have enabled us to rapidly advance our two lead product candidates into late-stage clinical trials while simultaneously entering into multiple shared-value partnerships with industry leaders to expand our portfolio. From this foundation, we are continuing to build a differentiated global biopharmaceutical company intensely focused on understanding patients and their diseases in order to develop transformative targeted medicines. Our most advanced product candidate, nirogacestat, is an oral, small molecule gamma secretase inhibitor currently in development for the treatment of desmoid tumors, a rare and often debilitating and disfiguring soft tissue tumor for which there are currently no therapies approved by theU.S. Food and Drug Administration , or FDA. We believe nirogacestat may address the significant limitations associated with existing treatment options and has the potential to become the first therapy approved by the FDA for both newly diagnosed and previously treated desmoid tumors. Since we licensed nirogacestat from Pfizer Inc., or Pfizer, inAugust 2017 , the FDA has granted us Orphan Drug Designation, Fast Track Designation and Breakthrough Therapy Designation for this indication, and theEuropean Commission granted Orphan Drug Designation to nirogacestat for the treatment of soft tissue sarcoma. InMay 2019 , we announced the initiation of the DeFi trial, a potentially registrational, double-blind, placebo-controlled Phase 3 trial evaluating the efficacy, safety and tolerability of nirogacestat for the treatment of adult patients with progressing desmoid tumors, and inMay 2022 , we announced positive topline results from the DeFi trial. The DeFi trial met its primary endpoint of improving progression-free survival, or PFS, demonstrating a statistically significant improvement for nirogacestat over placebo, with a 71% reduction in the risk of disease progression (hazard ratio (HR) = 0.29 (95% CI: 0.15, 0.55); p < 0.001). In addition, the trial met all key secondary endpoints, with nirogacestat demonstrating statistically significant improvements as compared to placebo in objective response rate, or ORR, and patient-reported outcomes, or PROs. Nirogacestat was generally well tolerated with a manageable safety profile. The majority of women of childbearing potential had adverse events consistent with ovarian dysfunction. Other adverse events were generally consistent with previously reported data. Additional data are expected to be presented at a medical conference in the second half of 2022, and SpringWorks plans to submit a New Drug Application, or NDA, to the FDA in the second half of 2022. Our second product candidate is mirdametinib, an oral, small molecule MEK inhibitor currently in development for the treatment of neurofibromatosis type 1-associated plexiform neurofibromas, or NF1-PN, a rare tumor of the peripheral nerve sheath that causes significant pain and disfigurement, and that most often manifests in children. We believe that mirdametinib has the potential to offer a best-in-class profile in order to enable the long-term treatment required for this patient population, as compared to other MEK inhibitors. As with nirogacestat, we licensed mirdametinib from Pfizer inAugust 2017 ; since then, the FDA has granted mirdametinib both Orphan Drug Designation and Fast Track Designation for NF1-PN, and theEuropean Commission has granted mirdametinib Orphan Drug Designation for NF1. InOctober 2019 , we announced the initiation of the 17 -------------------------------------------------------------------------------- Table of Contents ReNeu trial, a potentially registrational Phase 2b clinical trial of mirdametinib for pediatric and adult patients with NF1-PN. InFebruary 2021 , we reported interim clinical data from the first 20 adult patients enrolled in the Phase 2b ReNeu trial, and updated interim clinical data from these patients were presented inJune 2021 at theChildren's Tumor Foundation NF Conference . InNovember 2021 , we announced full enrollment of the ReNeu trial. We are also evaluating mirdametinib for the treatment of solid tumors harboring mitogen activated protein kinase, or MAPK, aberrations, in both monotherapy and combination approaches. InJune 2021 , we announced the initiation of Phase 1/2 clinical trial of mirdametinib in children and young adults with low-grade glioma. The study is sponsored bySt. Jude Children's Research Hospital and supported by SpringWorks. InAugust 2021 , we announced the evaluation of mirdametinib in a Phase 1b/2a platform study sponsored byMemorial Sloan Kettering Cancer Center and supported by SpringWorks to explore the compound both as a monotherapy and as a combination therapy in advanced solid tumors harboring MAPK-activating mutations. The trial, which initiated in the third quarter of 2021, is initially exploring mirdametinib in two patient cohorts: the first in combination with fulvestrant, a selective estrogen receptor degrader, in patients with estrogen receptor-positive metastatic breast cancer with MAPK alterations (particularly inactivating mutations in NF1), and as a monotherapy in advanced solid tumors harboring oncogenic MEK1 or MEK2 mutations. In addition to our late-stage programs in rare oncology indications, we have expanded our portfolio to develop targeted therapies for the treatment of highly prevalent hematologic malignancies and genetically defined metastatic solid tumors. To advance this strategy, we are taking a precision medicine approach in collaboration with industry leaders. In hematologic malignancies, we have announced collaborations with GSK plc, formerlyGlaxoSmithKline plc , or GSK,Janssen Biotech, Inc. , Pfizer, Allogene Therapeutics, Inc., Precision BioSciences, Inc., Seagen, Inc., AbbVie Inc and Regeneron Pharmaceuticals, Inc., or Regeneron, to develop novel combination regimens of nirogacestat alongside our collaborators' B-cell maturation antigen, or BCMA, directed therapies for the treatment of multiple myeloma. In addition to our industry collaborations with leading BCMA-directed therapy developers, we are working with theFred Hutchinson Cancer Research Center andDana-Farber Cancer Institute to further explore nirogacestat's ability to potentiate BCMA-directed therapies as part of sponsored research agreements. InOctober 2021 , we announced an update from our ongoing clinical collaboration with GSK evaluating nirogacestat in combination with BLENREP (belantamab mafodotin-blmf) in patients with relapsed or refractory multiple myeloma, or RRMM; the initiation of an expanded Phase 2 cohort from the first combination dose level that evaluated 0.95 mg/kg dose of BLENREP every three weeks plus nirogacestat based on encouraging preliminary data observed in the Phase 1 cohort. We also announced the addition of two new sub-studies that will explore BLENREP plus nirogacestat in combination with (i) pomalidomide plus dexamethasone and (ii) lenalidomide plus dexamethasone in patients with RRMM. InJune 2022 , initial clinical data from the Phase 1/2 study evaluating nirogacestat in combination with BLENREP in patients with RRMM were presented at the 2022American Society of Clinical Oncology , or ASCO, Annual Meeting. At the time of data cut-off, the ORR at low-dose (0.95 mg/kg) BLENREP plus nirogacestat across the dose exploration, or DE, and cohort expansion, or CE, arms was 38% in 24 patients, with 17% of patients achieving a very good partial response, or VGPR, or better. The ORR of the BLENREP monotherapy control arm was 50% in 14 patients, with 0% of patients achieving a VGPR or better. An encouraging safety profile for the combination was observed, with Grade 3 ocular adverse events occurring in 1/14 (7%) patients in the low-dose BLENREP plus nirogacestat combination compared to 7/14 patients (50%) in the BLENREP monotherapy arm, using the Keratopathy Visual Acuity ocular toxicity grading scale. The DE cohort utilized the CTCAE-5 ocular toxicity grading scale; the low-dose BLENREP plus nirogacestat combination demonstrated Grade 3 ocular adverse events in 2/10 (20%) patients. In genetically defined metastatic solid tumors, our current clinical-stage efforts center on the MAPK pathway. In collaboration with BeiGene, Ltd., or BeiGene, we are exploring the combination of mirdametinib with BeiGene's lifirafenib in RAS mutated and other MAPK aberrant cancers. In addition, we are exploring the use of BGB-3245 in a distinct set of genetically defined BRAF mutated tumors viaMapKure, LLC , or MapKure, an entity jointly owned by us and BeiGene. InJune 2022 , we presented initial clinical data from the ongoing Phase 1/2 study evaluating mirdametinib in combination with lifirafenib in patients with advanced solid tumors with MAPK-activating mutations and the ongoing Phase 1 study evaluating BGB-3245 in patients with advanced solid tumors with BRAF or RAS mutations, providing evidence of a manageable safety profile and clinical activity in a variety of solid tumor types with MAPK-activating mutations for each program. Together, we believe that our portfolio provides multiple opportunities for value creation across three distinct categories of oncology programs, each of which has the potential to provide meaningful clinical benefit to patients suffering from severe rare diseases and cancer. In our late-stage rare oncology programs, we believe that our two potentially registrational trials with nirogacestat and mirdametinib each have best-in-class potential for the patient populations in which they are being advanced. In our malignant hematology programs, we believe that nirogacestat has the potential to become a cornerstone of BCMA combination therapy in multiple myeloma and we are seeking to achieve this goal by working with partners developing BCMA-targeted agents across modalities. In our biomarker defined metastatic solid tumor programs, we believe that our precision medicine approach to cancers harboring mutations in key MAPK pathway genes, such as RAS and BRAF, provides the opportunity for meaningful clinical benefit for biomarker defined patient populations.
Furthermore, we intend to continue to build our portfolio by licensing additional programs with strong biological rationales and validated mechanisms of action, such as the TEA Domain, or TEAD, inhibitor program that we in-licensed from Katholieke
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Universiteit Leuven, or KU Leuven and the Flanders Institute for Biotechnology ,
and the portfolio of epidermal growth factor receptor small molecule inhibitors
that we in-licensed from Dana-Farber Cancer Institute . We also plan to continue
using shared-value partnerships to maximize the potential of our therapies to
serve patients. We continue to invest in building leading preclinical
development, clinical development and commercial capabilities and have focused
on structuring innovative partnerships that seek to align incentives and
optimize business outcomes for each party involved. We believe that this
approach will continue to allow us to expand our shared-value relationships with
innovators, maximize the potential of our existing and future portfolio, and
support the building of a scalable and sustainable business focused on the
efficient advancement and commercialization of product candidates that hold the
potential to transform the lives of patients living with severe rare diseases
and cancer.
Recent Developments
In June 2022 , as described in greater detail above, initial clinical data from
the Phase 1/2 study evaluating nirogacestat in combination with BLENREP
(belantamab mafodotin-blmf), GSK's antibody drug conjugate targeting BCMA, in
patients with RRMM were presented at the 2022 ASCO Annual Meeting. Long-term
follow-up data from a Phase 2 study sponsored by the National Cancer Institute ,
or NCI, evaluating nirogacestat in patients with progressing desmoid tumors were
also presented at the 2022 ASCO Annual Meeting.
In June 2022 , we made an additional investment in MapKure and purchased
4,200,000 Series B preferred units of MapKure for $4.2 million pursuant to the
terms of a Series B preferred unit purchase agreement. Pursuant to the
agreement, we are obligated to purchase an additional 2,800,000 Series B
preferred units of MapKure for $2.8 million at a second closing to be held in
the first quarter of 2023.
In May 2022 , as described in greater detail above, we announced positive topline
results from the DeFi trial, a double-blind, placebo-controlled Phase 3 trial
evaluating the efficacy, safety and tolerability of nirogacestat in adult
patients with progressing desmoid tumors.
In April 2022 , we entered into a clinical trial collaboration and supply
agreement with Regeneron to evaluate nirogacestat in combination with REGN5458,
Regeneron's investigational bispecific antibody targeting CD3 and BCMA, in
patients with RRMM. Pursuant to the terms of the agreement, other than expenses
related to the manufacturing and supply of nirogacestat and certain expenses
related to intellectual property rights, Regeneron is responsible for the
clinical development and will assume all costs associated with the study.
COVID-19 Impact
InDecember 2019 , a novel strain of coronavirus, severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, was identified inWuhan, China . OnMarch 11, 2020 , theWorld Health Organization designated the outbreak of COVID-19, the disease associated with SARS-CoV-2, as a global pandemic. The disease continues to spread, including emerging variant strains of COVID-19, in the areas in which we operate. Governments and businesses around the world have taken unprecedented actions to mitigate the spread of COVID-19, including, but not limited to, shelter- in-place orders, quarantines, significant restrictions on travel, as well as restrictions that prohibit many employees from going to work. Since the onset of the COVID-19 pandemic, we have undertaken a number of business continuity measures to mitigate potential disruption to our operations and in order to preserve the integrity of our research and development programs. To date, we have not experienced any material disruptions to the execution of the research and development activities that we currently have underway; however, as a result of the COVID-19 pandemic, or any impacts of emerging variant strains of the COVID-19 virus, stagnant vaccination rates and related factors, we may experience disruptions that could impact our research and development timelines and outcomes. We will continue to evaluate the impact of the ongoing COVID-19 pandemic, along with the impact of emerging variants, on our business. While the extent to which COVID-19 impacts our future results will depend on future developments, including the duration, spread and intensity of the pandemic (including any resurgences), the impact of emerging variant strains of the COVID-19 virus and the rollout of COVID-19 vaccines, all of which remain uncertain and difficult to predict, it is possible that the global pandemic and its associated economic impacts could result in a material impact to our business, future financial condition, results of operations and cash flows. Based on our cash, cash equivalents and marketable securities balance as ofJune 30, 2022 , of$334.5 million , management estimates that its current liquidity position will enable it to meet operating expenses through at least twelve months after the date this Quarterly Report is filed. For further details on our liquidity position, see the "Results of Operations."
Components of our results of operations
Revenue
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We have not generated any commercial revenue from the sale of products. If our development efforts for our current product candidates or additional product candidates that we may develop in the future are successful and can be commercialized, we may generate revenue in the future from product sales. We may enter into collaboration and license agreements from time to time that provide for certain payments due to us. Accordingly, we may generate revenue from such collaboration or license agreements in the future.
Operating expenses
Research and development expenses
Our research and development expenses consist of expenses incurred in connection with the development of our product candidates. These expenses include:
•employee-related expenses, which include salaries, benefits and stock-based compensation for our research and development personnel; •fees paid to consultants for services directly related to our research and development programs; •expenses incurred under agreements with third-party contract research organizations, or CROs, investigative clinical trial sites, academic institutions and consultants that conduct research and development activities on our behalf or in collaboration with us; •costs associated with preclinical studies and clinical trials; •costs associated with the manufacture of drug substance and finished drug product for preclinical testing and clinical trials; •costs associated with technology and intellectual property licenses; and •an allocated portion of facilities and facility-related costs, which include expenses for rent and other facility-related costs and other supplies. External costs for research and development expenses are tracked on a program-by-program basis. Internal costs for research and development expenses, such as compensation-related costs for our research and development employees, as well as depreciation and other indirect costs, are not tracked on a program-by-program basis. Expenditures for clinical development, including upfront licensing fees and milestone payments associated with our product candidates, are charged to research and development expense as incurred. These expenses consist of expenses incurred in performing development activities, including salaries and benefits, materials and supplies, preclinical expenses, clinical trial and related clinical manufacturing expenses, depreciation of equipment, contract services and other outside expenses. Costs for certain development activities, such as manufacturing and clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using either time-based measures or data such as information provided to us by our vendors on actual activities completed or costs incurred. We expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in activities related to developing our product candidates and our preclinical programs, and as certain product candidates advance into later stages of development, including the DeFi trial and the ReNeu trial. The process of conducting the necessary clinical trials to obtain regulatory approval is costly and time-consuming, and the successful development of our product candidates is highly uncertain. 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.
General and administrative expenses
General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, corporate, commercial, business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and administrative consulting services; insurance costs; administrative travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support the continued development of our product candidates and expand operations to support the organization.
Interest and other income
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Interest and other income consists primarily of interest income. Interest income consists of interest earned on our cash, cash equivalents and available-for-sale marketable securities. Equity investment loss
The equity investment loss represents the Company's share of losses from the MapKure investment, which is accounted for using the equity method of accounting.
Results of Operations
Comparison of the three months ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Operating Expenses:
Research and development $ 38,024 $ 32,091 $ 5,933 18 %
General and administrative 30,987 14,930 16,057 108 %
Total operating expenses 69,011 47,021 21,990 47 %
Loss from operations (69,011) (47,021) (21,990) 47 %
Interest and other income (expense):
Other expense, net (24) (41) 17 (41) %
Interest income, net 372 211 161 76 %
Total interest and other income $ 348 $ 170 $ 178 105 %
Equity investment loss (387) (159) (228) 143 %
Net loss $ (69,050) $ (47,010) $ (22,040) 47 %
Research and Development
Research and development expense increased by $5.9 million to $38.0 million for
the three months ended June 30, 2022 from $32.1 million for the three months
ended June 30, 2021 , an increase of 18%.
The increase in research and development expense was primarily attributable to a
$11.4 million increase in internal costs driven by the growth in employee costs
associated with increases in the number of personnel, including an increase in
stock-based compensation expense, and an increase of $5.3 million in external
costs related to drug manufacturing, clinical trial and other research,
partially offset by an $11.0 million decrease in licensing costs related to the
nonrefundable upfront payment to KU Leuven and VIB LLC , or VIB, for the
in-licensing of the TEAD inhibitor program in May 2021 .
General and Administrative
General and administrative expense was$31.0 million for the three months endedJune 30, 2022 , an increase of$16.1 million from$14.9 million for the three months endedJune 30, 2021 . The increase in general and administrative expense was primarily attributable to a$8.2 million increase in internal costs driven by the growth in employee costs associated with increases in the number of personnel, including an increase in stock-based compensation expense as we continue to expand our operations to support the organization, and a$7.2 million increase in information technology costs and consulting and professional services, including legal, regulatory and compliance, as we continue to build new capabilities, including commercial. 21
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Comparison of the six months ended
The following table summarizes our results of operations for the six months
ended
Six Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Operating Expenses:
Research and development $ 72,127 $ 49,466 $ 22,661 46 %
General and administrative 58,353 27,311 31,042 114 %
Total operating expenses 130,480 76,777 53,703 70 %
Loss from operations (130,480) (76,777) (53,703) 70 %
Interest and other income (expense):
Other expense, net (217) (38) (179) 471 %
Interest income, net 570 438 132 30 %
Total interest and other income $ 353 $ 400 $ (47) (12) %
Equity investment loss (724) (420) (304) 72 %
Net loss $ (130,851) $ (76,797) $ (54,054) 70 %
Research and Development
Research and development expense increased by$22.7 million to$72.1 million for the six months endedJune 30, 2022 from$49.5 million for the six months endedJune 30, 2021 , an increase of 46%. The increase in research and development expense was primarily attributable to a$21.9 million increase in internal costs driven by the growth in employee costs associated with increases in the number of personnel, including an increase in stock-based compensation expense, and an increase of$11.1 million in external costs related to drug manufacturing, clinical trial and other research, partially offset by an$11.0 million decrease in licensing costs related to the nonrefundable upfront payment to KU Leuven and VIB for the in-licensing of the TEAD inhibitor program inMay 2021 .
General and Administrative
General and administrative expense was$58.4 million for the six months endedJune 30, 2022 , an increase of$31.0 million or 114% from$27.3 million for the six months endedJune 30, 2021 . The increase in general and administrative expense was primarily attributable to a$17.7 million increase in internal costs driven by the growth in employee costs associated with increases in the number of personnel, including an increase in stock-based compensation expense as we continued to expand our operations to support the organization, and a$12.0 million increase in information technology costs and consulting and professional services, including legal, regulatory and compliance, as we continue to build new capabilities, including commercial.
Liquidity and Capital Resources
Sources of Liquidity
We have incurred operating losses and experienced negative operating cash flows since our inception and anticipate that we will continue to incur losses for at least the foreseeable future. Our net loss was$130.9 million and$76.8 million for the six months endedJune 30, 2022 and 2021, respectively. We had an accumulated deficit of$423.4 million and$292.5 million as ofJune 30, 2022 andDecember 31, 2021 , respectively. Based on our cash, cash equivalents and marketable securities balances as ofJune 30, 2022 , management estimates that our liquidity position will enable it to meet operating expenses through at least twelve months after the date that this Quarterly Report is filed. Our marketable securities consist of high-quality, highly liquid available-for-sale debt securities including corporate debt securities,U.S. government securities, non-U.S. government securities, and commercial paper.
Cash Flows
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The following table provides information regarding our cash flows for the six
months ended
Six Months Ended June 30,
(in thousands) 2022 2021
Net cash used in operating activities $ (87,759) $ (54,632)
Net cash provided by (used in) investing activities 53,181 (8,374)
Net cash provided by financing activities 173 488
Net decrease in cash and cash equivalents (34,405) (62,518)
Cash and cash equivalents including Restricted cash, beginning of period
104,526 147,654
Cash and cash equivalents including Restricted cash, end of period
$
70,121
Net cash used in operating activities was$87.8 million for the six months endedJune 30, 2022 , which was driven by a net loss of$130.9 million , partially offset by stock-based compensation expense of$35.5 million , a net decrease from changes in operating assets and liabilities of$6.0 million , non-cash operating lease expense of$0.6 million and an equity investment loss of$0.7 million . Net cash used in operating activities was$54.6 million for the six months endedJune 30, 2021 , driven by a net loss of$76.8 million offset by stock-based compensation expense of$15.9 million , a net increase from changes in operating assets and liabilities of$5.2 million , non-cash operating lease expense of$0.5 million and an equity investment loss of$0.4 million .
Net Cash Provided by and Used in Investing Activities
Net cash provided by investing activities was$53.2 million for the six months endedJune 30, 2022 and net cash used in investing activities was$8.4 million for the six months endedJune 30, 2021 . Net cash provided by investing activities for the six months endedJune 30, 2022 related to the sale and maturities of available-for-sale debt securities of$130.2 million , partially offset by purchases of available-for-sale debt securities of$68.0 million , capital expenditures of$4.9 million and ourJune 2022 investment in MapKure of$4.2 million . Net cash used in investing activities for the six months endedJune 30, 2021 related to the purchase of available-for-sale debt securities of$140.9 million and capital expenditures of$0.2 million , offset by the proceeds from the sale and maturity of available-for-sale debt securities of$132.7 million .
Net Cash Provided by Financing Activities
Net cash provided by financing activities for the six months endedJune 30, 2022 consisted of proceeds from stock option exercises, partially offset by stock repurchased to satisfy employee tax withholding obligations on restricted stock releases. Net cash provided by financing activities for the six months endedJune 30, 2021 consisted of proceeds from stock option exercises.
Funding Requirements
Our primary use of cash is to fund operating expenses, primarily our research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
Our future funding requirements will depend on many factors, including the following:
•the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our product candidates, including the DeFi trial and the ReNeu trial; •the clinical development plans we establish for our product candidates; •the number and characteristics of product candidates that we develop; •the outcome, timing and cost of meeting regulatory requirements established by the FDA, theEuropean Medicines Agency , or EMA, and other comparable foreign regulatory authorities; •the terms of our existing and any future license or collaboration agreements we may choose to enter into, including the amount of upfront, milestone and royalty obligations; •the other costs associated with in-licensing new technologies, such as any increased costs of research and development and personnel; •the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; 23 -------------------------------------------------------------------------------- Table of Contents •the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates; •the effect of competing technological and market developments; •the cost and timing of completion of commercial-scale outsourced manufacturing activities; •the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own; and •the degree of commercial success achieved following the successful completion of development and regulatory approval activities for a product candidate. We will need additional funds to meet operational needs and capital requirements for clinical trials, other research and development expenditures, commercial activities and business development efforts. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, current ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations
InOctober 2018 , we entered into a lease for our corporate headquarters inStamford, CT . InJanuary 2022 , we amended this lease agreement to extend the lease term throughApril 2028 , with two five-year renewal options or one ten-year renewal option. Pursuant to the amendment, we are entitled to$0.5 million in tenant allowances, which may be used to offset certain future capital expenditures, and the lease payments increase by 2.5% in each year commencingDecember 1, 2022 . The amendment was treated as a modification and the lease liability and operating lease right-of-use asset were updated to reflect minimum lease payments and any other adjustments.
As of
(in thousands) Operating Leases 2022 $ 213 2023 1,262 2024 1,155 2025 1,184 2026 and thereafter 2,881 Total lease payments 6,695 Less: imputed interest (913) Present value of lease liabilities $ 5,782 During the six months endedJune 30, 2022 , there were no other material changes to our contractual obligations and commitments than those described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations" in Part II Item 6. of our 2021 Form 10-K. We enter into contracts in the normal course of business for clinical trials, preclinical studies, manufacturing 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. 24
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Critical Accounting Policies and Use of Estimates
This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted inthe United States . The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and the related disclosures in the financial statements and accompanying notes. These accounting policies involve critical accounting estimates because they are particularly dependent on estimates and assumptions made by management about matters that are uncertain at the time the accounting estimates are made. We base our estimates on historical experience, known trends and other market-specific or relevant factors that we believe to be reasonable under the circumstances, the results of which form the basis of making judgments; However, because future events and their effects cannot be determined with certainty, actual results may differ from those estimates, judgments or assumptions, and such differences could be material. On an ongoing basis, we evaluate our estimates, judgments and assumptions, and adjust those estimates, judgments and assumptions when facts or circumstances change. Changes in estimates are recorded in the period in which they become known. Although we believe that these estimates are reasonable actual results could differ. We describe our significant accounting policies in Note 3, Summary of Significant Accounting Policies, of the notes to the financial statements included in our 2021 Form 10-K. We discuss our critical accounting estimates in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, in our 2021 Form 10-K. There have been no changes in our significant accounting policies or critical accounting estimates during the six months endedJune 30, 2022 .
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