SQZ BIOT You should read the following discussion and analysis of our financial condition
and results of operations together with our consolidated financial statements
and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and
our Annual Report on Form 10-K for the year ended
Overview
We are a clinical-stage biotechnology company developing cell therapies for patients in multiple therapeutic areas, including cancer, infectious diseases and other serious conditions. We use our proprietary technology, Cell Squeeze®, to physically squeeze cells through a microfluidic chip, temporarily opening the cell membrane and enabling biologic material of interest, or cargo, to diffuse into the cell. This technology allows us to create a broad pipeline of product candidates for different diseases. We believe our Cell Squeeze technology has the potential to create well-tolerated cell therapies that can provide therapeutic benefit for patients. Our potential differentiation includes accelerated timelines with production time under 24 hours, compared to four to six weeks for other existing cell therapies, improved patient experience by eliminating the need for pre-conditioning or lengthy hospital stays, and broadened therapeutic impact. Our goal is to use the Cell Squeeze approach to establish a new paradigm for cell therapies.
We are currently using Cell Squeeze to create multiple cell therapy platforms
focused on directing specific immune responses. Our most advanced platform in
development, SQZTM Antigen Presenting Cells, or SQZ APCs, is currently in a
Phase 1 trial Human Papillomavirus positive, or HPV+, tumors. We presented
initial results from the first three cohorts of this ongoing Phase 1 clinical
trial of SQZ-PBMC-HPV at the 2021
Since our inception, we have focused substantially all of our resources on
building our Cell Squeeze technology, establishing and protecting our
intellectual property portfolio, conducting research and development activities,
developing our manufacturing process and manufacturing product candidate
materials, preparing for and initiating clinical trials of our product
candidates, organizing and staffing our company, business planning, raising
capital and providing general and administrative support for these operations.
We do not have any products approved for sale and have not generated any revenue
from product sales. Through
Since our inception, we have incurred significant operating losses. Our ability
to generate any product revenue or product revenue sufficient to achieve
profitability will depend on the successful development and eventual
commercialization of one or more of our product candidates. We reported a net
loss of
18
--------------------------------------------------------------------------------
Table of Contents
? conduct clinical trials for our product candidates, including our ongoing Phase 1 clinical trial of SQZ-PBMC-HPV and SQZ-AAC-HPV; ? further develop our Cell Squeeze technology; ? continue to develop additional product candidates; ? maintain, expand and protect our intellectual property portfolio; ? hire additional clinical, scientific manufacturing and commercial personnel; ? expand external and/or establish internal commercial manufacturing sources and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval; ? acquire or in-license other product candidates and technologies; ? seek regulatory approvals for any product candidates that successfully complete clinical trials; ? establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval; and ? add operational, financial and management information systems and personnel to support our product development, clinical execution and planned future commercialization efforts, as well as to continue to support our status as a public company.
We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, and distribution.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we would have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.
Because of the numerous risks and uncertainties associated with cell therapy product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements through the first half of 2023. See "-Liquidity and Capital Resources."
Impact of the COVID-19 Coronavirus
In
The COVID-19 pandemic has impacted and may continue to impact personnel at third-party manufacturing facilities or the availability or cost of materials, which would disrupt our supply chain. It also has affected and may continue to affect our ability to enroll patients in and timely complete our ongoing Phase 1 clinical trials of SQZ-PBMC-HPV and SQZ-AAC-HPV and delay the initiation of future clinical trials, disrupt regulatory activities or have other adverse effects on our business and operations. For example, we have experienced delays in receiving supplies of raw materials for our preclinical activities due to the impact of COVID-19 on our suppliers' ability to timely manufacture these materials, and we have experienced an increase in the transportation cost of our product candidates due to the decreased availability of commercial flights. In addition, we have experienced delays in opening clinical trial sites and sites that are open may also have challenges enrolling patients due to the COVID-19 pandemic. Further, staff shortages, including staff that are required to conduct certain testing, such as biopsies, at the Company's clinical sites or at third-party vendors have resulted in delays in site initiations and in such tests not being properly or timely performed or being delayed. In response to the public health directives and to help reduce the risk to our employees, we took precautionary measures, including implementing work-from-home policies for our administrative employees and staggered work times for our lab employees. We plan to continue these measures and are assessing when and how to resume normal operations. The effects of the public health directives and our work-from-home policies may negatively
19
--------------------------------------------------------------------------------
Table of Contents
impact productivity, disrupt our business and delay our clinical programs and timelines and future clinical trials, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, results of operations and financial condition, including our ability to obtain financing.
The pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds to support our operations. Moreover, the pandemic has significantly impacted economies worldwide and could result in adverse effects on our business and operations. We are monitoring the potential impact of the COVID-19 pandemic on our business and financial statements. To date, we have not incurred impairment losses in the carrying values of our assets as a result of the pandemic and we are not aware of any specific related event or circumstance that would require us to revise our estimates reflected in our interim condensed consolidated financial statements. We cannot be certain what the overall impact of the COVID-19 pandemic will be on our business and people. The extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations, financial condition, and liquidity, including planned and future clinical trials and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19, the actions taken to contain or treat it, and the duration and intensity of the related effects.
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales and do not expect to do so for the next several years. All of our revenue to date has been derived from three collaboration agreements with Roche, which we entered into in 2015, 2017 and 2018, and, to a lesser extent, from government grants.
If our development efforts for our product candidates are successful and result in regulatory approval, or in license or additional collaboration agreements with third parties, we may generate revenue in the future from product sales, payments from additional collaboration or license agreements that we may enter into with third parties, or any combination thereof. We expect that our revenue for the next several years will be derived primarily from our collaboration agreements with Roche as well as any additional collaborations that we may enter into in the future. We cannot provide assurance as to the timing of future milestone or royalty payments or that we will receive any of these payments at all.
Collaboration Revenue
2017 License and Collaboration Agreement with Roche
In
Under the agreement, we received an upfront payment of
We assessed our accounting for the 2017 Roche Agreement under Accounting Standards Codification, or ASC, 606, Revenue from Contracts with Customers, or ASC 606, and identified the following promises under the agreement: (i) a non-exclusive license granted to Roche to perform research related to and use our Cell Squeeze technology for gene editing of immune cells; (ii) specified research and development services related to gene editing of immune cells through the research term; (iii) manufacturing activities to support the specified research plan; and (iv) participation on a joint research committee, or JRC. We concluded at the outset of the 2017 Roche Agreement that the first three promises should be combined into a single performance obligation and that the JRC participation had an immaterial impact on the accounting model.
We received the upfront payment of
We recognize revenue associated with the performance obligation as the research and development services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy the performance obligation. The amounts received from Roche that have not yet been recognized as revenue are deferred as a contract liability in our
20
--------------------------------------------------------------------------------
Table of Contents
consolidated balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied.
During the three and nine months ended
As of
2018 License and Collaboration Agreement with Roche
In
Under the 2018 Roche Agreement, Roche was granted option rights to obtain an
exclusive license to develop APC products or products derived from the
collaboration programs on a product-by-product basis and to develop a Tumor Cell
Lysate, or TCL, product. For each of the APC products and TCL product, once
Roche exercises its option and pays a specified incremental amount, Roche will
receive worldwide, exclusive commercialization rights for the licensed products.
Through
Under the 2018 Roche Agreement, we received an upfront payment of
We identified three performance obligations at the outset of the 2018 Roche Agreement: (1) the license to our intellectual property, the research and development activities related to HPV through Phase 1 clinical trials under a specified research plan, and the manufacturing of our SQZ APC platform and equipment in order to support the HPV research plan (the "first performance obligation"); (2) the license to our intellectual property and the research and development activities on next-generation APCs (the "second performance obligation"); and (3) the license to our intellectual property and the research and development activities on TCL (the "third performance obligation").
In addition, we determined that the upfront payment of
During the second quarter of 2019, we received a payment of
21
--------------------------------------------------------------------------------
Table of Contents
We separately recognize revenue associated with each of the three performance obligations as the research, development and manufacturing services are provided using an input method, based on the cumulative costs incurred compared to the total estimated costs expected to be incurred to satisfy each performance obligation. The amounts received from Roche that have not yet been recognized as revenue are deferred as a contract liability in our consolidated balance sheet and will be recognized over the remaining research and development period until each performance obligation is satisfied.
During the fourth quarter of 2019, we evaluated our overall program priorities
and determined that we would continue to focus our resources on progressing the
specified APC programs related to the 2018 Roche Agreement as well as our SQZ
AAC and SQZ TAC platforms. As a result of its continuing focus on these specific
programs, we reduced the level of priority of the TCL research activities under
the 2018 Roche Agreement and expect to perform such TCL research activities over
a longer time period than as originally expected under the specified research
plan of the agreement. Since the fourth quarter of 2019, we have classified
During the three and nine months ended
As of
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including development of our product candidates and costs incurred under our collaboration arrangements with Roche, which include:
? employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions; ? expenses incurred in connection with the preclinical and clinical development of our product candidates and research programs, including under agreements with third parties, such as consultants, contractors and contract research organizations, or CROs; ? the costs of developing and scaling our manufacturing process and of manufacturing our product candidates for use in our preclinical studies and clinical trials, including the costs under agreements with third parties, such as consultants, contractors and contract manufacturing organizations, or CMOs; ? laboratory and consumable materials and research materials; ? facilities, depreciation and other expenses, which include direct and allocated expenses for rent and utilities; and ? payments made under third-party licensing agreements.
We expense research and development costs as incurred. Nonrefundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered. Upfront payments under license agreements are expensed upon receipt of the license, and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.
Our direct research and development expenses are tracked on a program-by-program basis and consist of external costs and fees paid to consultants, contractors, CMOs and CROs in connection with our preclinical and clinical development and manufacturing activities. Such program costs also include the external costs of laboratory and consumable materials and costs of raw materials that are directly attributable to and incurred for any single program. We do not allocate employee costs, costs associated with our platform development
22
--------------------------------------------------------------------------------
Table of Contents
and discovery efforts, payments made under third-party licensing agreements, costs of laboratory supplies and consumable materials that are not directly attributable to any single program, and facilities expenses, including rent, depreciation and other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform technology and, as such, are not separately classified.
Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and in the future, particularly should Roche determine not to exercise its options and we decide to continue clinical development of a product candidate. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. The successful development of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following:
? the timing and progress of preclinical and clinical development activities, including geographic expansion of our clinical sites intoEurope andAsia ; ? the number and scope of preclinical and clinical programs we decide to pursue; ? raising additional funds necessary to complete preclinical and clinical development of our product candidates; ? the progress of the development efforts of parties with whom we have entered, or may enter, into collaboration arrangements; ? our ability to maintain our current research and development programs and to establish new ones; ? our ability to establish new licensing or collaboration arrangements; ? the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; ? the receipt and related terms of regulatory approvals from applicable regulatory authorities; ? the availability of specialty raw materials for use in production of our product candidates; ? our ability to consistently manufacture our product candidates for use in clinical trials; ? our ability to establish and operate a manufacturing facility, or secure manufacturing supply through relationships with third parties; ? our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both inthe United States and internationally; and ? our ability to protect our rights in our intellectual property portfolio.
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. In addition, we may never succeed in obtaining regulatory approval for 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 and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.
Other Income (Expense)
Interest Income
Interest income consists of interest earned on our cash equivalents and marketable securities balances.
Other Income (Expense), Net
Other income (expense), net consists of miscellaneous income and expense unrelated to our core operations.
23
--------------------------------------------------------------------------------
Table of Contents
Income Taxes
Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each year or for our earned research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credit carryforwards will not be realized.
On
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
SEPTEMBER 30,
2021 2020 CHANGE
(in thousands)
Collaboration revenue $4,755 $6,121 $(1,366)
Operating expenses:
Research and development 20,520 13,910 6,610
General and administrative 6,691 4,612 2,079
Total operating expenses 27,211 18,522 8,689
Loss from operations (22,456) (12,401) (10,055)
Other income (expense):
Interest income 8 56 (48)
Other income (expense), net (2) (6) 4
Total other income, net 6 50 (44)
Net loss $(22,450) $(12,351) $(10,099)
Revenue
Collaboration revenue decreased by
?
a decrease of
Research and Development Expenses
THREE MONTHS ENDED
SEPTEMBER 30,
2021 2020 CHANGE
(in thousands)
Direct research and development expenses by
program:
SQZ-PBMC-HPV $4,187 $3,908 $279
SQZ-AAC-HPV 895 2,893 (1,998)
eAPC 6,393 399 5,994
Other programs 1,369 864 505
Unallocated research and development
expenses:
Personnel related (including stock-based
compensation) 5,317 3,792 1,525
Facility related 1,251 1,204 47
Laboratory and consumable materials 389 218 171
Platform-related external services and other 719 632 87
Total research and development expenses $20,520 $13,910 $6,610 Research and development expenses increased by
24
--------------------------------------------------------------------------------
Table of Contents
? SQZ-PBMC-HPV program costs increased by$0.3 million primarily as a result of an increase in clinical batch manufacturing and patient costs. ? SQZ-AAC-HPV costs decreased by$2.0 million primarily as a result of a decrease in start up manufacturing costs which were primarily incurred in 2020. ? eAPC costs increased by$6.0 million due to higher manufacturing and materials costs incurred. ? Other program costs increased by$0.5 million due to spending on our infectious disease program, as well as other manufacturing costs. ? The increase in personnel-related costs of$1.5 million was primarily due to a$1.1 million increase in stock-based compensation expense and a$0.4 million increase in salary and benefit costs as a result of increased headcount in our research and development function. ? Laboratory and consumable materials expenses increased by$0.2 million as a result of expected fluctuations from period to period based on the timing of our purchases made. ? Platform-related external services and other costs increased by$0.1 million as a result of higher consulting, equipment and information technology costs.
General and Administrative Expenses
THREE MONTHS ENDED
SEPTEMBER 30,
2021 2020 CHANGE
(in thousands)
Personnel related (including stock-based
compensation) $3,207 $2,026 $1,181
Professional, consultant and patent
related costs 1,709 1,673 36
Facility related and other 1,775 913 862
Total general and administrative expenses
General and administrative expenses increased by
?
an increase of
Comparison of the Nine Months Ended
The following table summarizes our results of operations for the nine months
ended
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020 CHANGE
(in thousands)
Revenue:
Collaboration revenue
(56,938 ) (33,443 ) (23,495 )
Other income (expense):
Interest income 28 533 (505 )
Other income (expense), net (9 ) (10 ) 1
Total other income, net 19 523 (504 )
Net loss $ (56,919 ) $ (32,920 ) $ (23,999 )
Revenue
Collaboration revenue decreased by
?
a decrease of
25
--------------------------------------------------------------------------------
Table of Contents
The above decrease was partially offset by:
?
an increase of
Research and Development Expenses
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020 CHANGE
(in thousands)
Direct research and development expenses by
program:
SQZ-PBMC-HPV $ 11,314 $ 11,501 $ (187 )
SQZ-AAC-HPV 3,005 5,322 (2,317 )
eAPC 11,607 1,365 10,242
Other programs 5,870 2,357 3,513
Unallocated research and development
expenses:
Personnel related (including stock-based
compensation) 13,991 10,530 3,461
Facility related 3,816 3,806 10
Laboratory and consumable materials 985 748 237
Platform-related external services and
other 2,354 2,186 168
Total research and development expenses
Research and development expenses increased by
? SQZ-PBMC-HPV costs decreased by$0.2 million primarily as a result of our transferring certain externally performed services in-house. ? SQZ-AAC-HPV costs decreased by$2.3 million primarily as a result of the timing of materials and manufacturing costs. ? eAPC costs increased by$10.2 million due to higher manufacturing costs incurred. ? Other program costs increased by$3.5 million due to spending on our infectious disease program and expenses incurred on developing a point-of-care solution to manufacture our product candidates. ? an increase of$3.5 million in personnel-related costs was primarily due to a$1.6 million increase in salary and benefit costs as a result of increased headcount and salary costs in our research and development function, and a$1.9 million increase in stock-based compensation expense. ? Laboratory and consumable materials costs increased by$0.2 million as a result of expected fluctuations from period to period based on the timing of our purchases made. ? Platform-related external services increased by$0.2 million due to an increase in professional services costs.
General and Administrative Expenses
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020 CHANGE
(in thousands)
Personnel related (including stock-based
compensation) $ 9,141 $ 6,195 $ 2,946
Professional, consultant and patent
related costs 4,398 5,417 (1,019 )
Facility related and other 5,205 2,527 2,678
Total general and administrative expenses
General and administrative expenses increased by
? an increase of$2.9 million in personnel-related costs due to a$2.1 million increase in stock-based compensation expense and a$0.8 million increase in salary and benefit costs as a result of increased headcount. ? a decrease of$1.0 million in professional, consultant and patent related costs as the costs incurred in the prior year period were primarily incurred to support our preparation to become a public company. ? an increase of$2.7 million in facility-related and other costs primarily due to an increase in insurance expense as a public company for the nine months endedSeptember 30, 2021 . 26
--------------------------------------------------------------------------------
Table of Contents
Interest Income
Interest income for the nine months ended
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses. We have not
yet commercialized any of our product candidates and we do not expect to
generate revenue from sales of any product candidates for the next several
years, if at all. Through
Cash Flows
The following table summarizes our sources and uses of cash for each of the
periods presented:
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020
(in thousands)
Net cash used in operating activities $ (61,117 ) $ (23,912 )
Net cash (used in) provided by investing activities (613 ) 49,946
Net cash provided by financing activities 55,627 41,757
Net increase in cash, cash equivalents and restricted cash
Operating Activities
During the nine months ended
During the nine months ended
In all periods presented, other changes in prepaid expenses and other current assets, accounts receivable, accounts payable, accrued expenses and other liabilities not described above were generally due to growth in our business, the advancement of our research programs and the timing of vendor invoicing and payments. In all periods presented, decreases in operating lease liabilities were primarily due to our recurring payments made under recorded operating lease liabilities, including those arising from embedded leases.
Investing Activities
During the nine months ended
During the nine months ended
The purchases of property and equipment in each period were primarily for equipment purchases and leasehold improvements related to the expansion of our research and development activities and the growth of our business.
27
--------------------------------------------------------------------------------
Table of Contents
Financing Activities
During the nine months ended
During the nine months ended
Funding Requirements
We expect that our expenses will increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials for our product candidates in development. The timing and amount of our operating and capital expenditures will depend largely on:
? the timing and progress of preclinical and clinical development activities, including geographic expansion of our clinical sites intoEurope andAsia ; ? the commencement, enrollment or results of the planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates; ? the timing and outcome of regulatory review of our product candidates; ? our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial as well as Roche's decision whether to exercise its options; ? changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals; ? adverse developments concerning our manufacturers; ? our ability to obtain materials to produce adequate product supply for any approved product or inability to do so at acceptable prices; ? our ability to establish collaborations if needed; ? the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we obtain marketing approval; ? the legal patent costs involved in prosecuting patent applications and enforcing patent claims and other intellectual property claims; ? additions or departures of key scientific or management personnel; ? unanticipated serious safety concerns related to the use of our product candidates; ? the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder; and ? the severity, duration and impact of the COVID-19 pandemic, which may adversely impact our business.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements through the first half of 2023. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through 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, a current common stockholder's interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of a common stockholder. 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 would be required to delay, scale back or discontinue 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.
28
--------------------------------------------------------------------------------
Table of Contents
Contractual Obligations and Commitments
There have been no material changes to our contractual obligations from those described in our 2020 Form 10-K. For additional information, see Note 9 to our consolidated financial statements appearing in this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Significant Judgments and Estimates
Our financial statements are prepared in accordance with generally accepted
accounting principles in
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012 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 until those standards would otherwise apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
© Edgar Online, source
