The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q ("Quarterly Report") and our audited financial statements
included in our Annual Report on Form 10-K for the year ended
Overview
We are a clinical-stage cell therapy company developing a pipeline of novel T cell therapies for patients suffering from cancer by powering the T cell receptor (TCR) with our proprietary, first-in-class TCR Fusion Construct T cells (TRuC-T cells). Designed to overcome the limitations of current cell therapy modalities, our TRuC-T cells specifically recognize and kill cancer cells by harnessing the entire TCR signaling complex, which we believe is essential for T cell therapies to be effective in patients with solid tumors.
Since our inception in
To date, we have funded our operations with proceeds from the sale of our
preferred and common stock. Through
Since our inception, we have incurred significant operating losses. Our ability
to generate product revenue sufficient to achieve profitability will depend
heavily on the successful development and eventual commercialization of one or
more of our product candidates. As of
• conduct additional preclinical studies for our product candidates; • initiate and conduct clinical trials for our product candidates; • continue to discover and develop additional product candidates; • acquire or in-license other product candidates and technologies; • maintain, expand and protect our intellectual property portfolio; • hire additional clinical and scientific personnel; • expand our manufacturing capabilities with third parties and establish manufacturing capabilities in-house; • seek regulatory approvals for any product candidates that successfully complete clinical trials; and • add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts, as well as to support our transition to a public reporting 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
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for any of our product candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. Additionally, we expect to incur significant expenses if we acquire and establish our own commercial manufacturing facility, which will be a costly and time-consuming process, and in our operations as a public company.
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 may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.
Recent Developments Equity Offering
On
Rockville facility
In
Because we are involved in the construction project and are responsible for
paying a significant portion of the costs of normal finish work and structural
elements of the facility, we are deemed for accounting purposes to be the owner
of the building during the construction period under build to suit lease
accounting guidance under ASC 840, Leases. Therefore, we recorded project
construction costs during the construction period incurred by the landlord as a
construction-in-progress asset and a related construction financing obligation
on our consolidated balance sheets in the amount of
Impact of the COVID-19 Pandemic
On
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We have been carefully monitoring the COVID-19 pandemic and its potential impact on our business and have taken important steps to help ensure the safety of employees and their families and to reduce the spread of COVID-19 in our communities while balancing our commitment to conduct our clinical trials. We have requested that our employees work from home if they are able to perform their duties remotely and limited the number of on-site employees to allow for proper social distancing in our offices and laboratories. For those employees on-site, we have implemented stringent safety measures designed to comply with applicable federal, state and local guidelines instituted in response to the COVID-19 pandemic. We have also maintained efficient communication with our partners and clinical sites as the COVID-19 situation has progressed. We have taken these precautionary steps while maintaining business continuity so that we can continue to progress our programs. COVID-19 has significantly impacted the global healthcare system, including the conduct of clinical trials as medical institutions prioritize the treatment of those afflicted with COVID-19. We continue to closely monitor the adverse impact of the COVID-19 pandemic on our operations and ongoing clinical and preclinical development.
The effect of the COVID-19 pandemic on our development timelines for gavo-cel and TC-110, and its effect on our ability to manufacture for our clinical trials is uncertain. We believe that we have been able, as of the date of this Quarterly Report, to mitigate some of the impact from the COVID-19 pandemic on our ongoing clinical programs, however, we have been affected.
The future impact of the COVID-19 pandemic on our industry, the healthcare
system, clinical trials and our current and future operations and financial
condition will depend on future developments, which are highly uncertain and
cannot be predicted with confidence, including the scope, severity and duration
of the pandemic, the actions taken to contain the pandemic or mitigate its
impact, as well as the prevalence of vaccination efforts, the effect of any
relaxation of current restrictions within the
Components of Our Results of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts and the development of our product candidates, which include:
• employee-related expenses, including salaries, benefits and stock-based compensation; • expenses incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with third parties, such as consultants, contractors and contract research organizations (CROs); • the cost of acquiring and manufacturing preclinical and clinical trial materials, including under agreements with third parties, such as consultants, contractors and contract manufacturing organizations (CMOs); • consultant fees and expenses associated with outsourced professional scientific development services; • facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and • payments made under third-party licensing agreements.
We expense research and development costs as incurred. Any 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.
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We typically use our employee, consultant and infrastructure resources across our development programs. We track certain outsourced development costs by product candidate, but we do not allocate personnel costs or other internal costs to specific product candidates.
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 and manufacturing activities in the near term and in the future. At this time, we cannot reasonably 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 and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:
• the timing and progress of our preclinical studies and clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; • the number and scope of preclinical and clinical programs we decide to pursue; • the progress of the development efforts of parties with whom we may enter into collaboration arrangements; • our ability to maintain our current research and development programs and to establish new ones;
• our ability to establish licensing or collaboration arrangements;
• our ability to complete investigational new drug application (IND)-enabling studies and successfully submit IND or comparable applications; • whether we are required by theU.S. Food and Drug Administration (FDA) or similar foreign regulatory authorities to conduct additional clinical trials or other studies beyond those planned to support the approval and commercialization of our product candidates or any future product candidates; • the timely receipt of necessary marketing approvals from the FDA and similar foreign regulatory authorities; • our ability and the ability of third parties with whom we contract to manufacture adequate clinical and commercial supplies of our product candidates or any future product candidates, remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with current good manufacturing practices (cGMP); • our ability to demonstrate to the satisfaction of the FDA and similar foreign regulatory authorities the safety, potency, purity and acceptable risk to benefit profile of our product candidates or any future product candidates; • the prevalence, duration and severity of potential side effects or other safety issues experienced with our product candidates or future product candidates, if any; • our ability to establish and enforce intellectual property rights in and to our product candidates or any future product candidates; • our ability to successfully develop a commercial strategy and thereafter commercialize our product candidates or any future product candidates inthe United States and internationally, if licensed for marketing, reimbursement, sale and distribution in such countries and territories, whether alone or in collaboration with others; • the willingness of physicians, operators of clinics and patients to utilize or adopt any of our product candidates or future product candidates to treat solid and hematologic cancers; • patient demand for our product candidates and any future product candidates, if licensed;
• competition with other products; and
• continued acceptable safety profile of our product candidates following approval.
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
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product candidate. 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 associated with operating as a public company.
Interest Income, net
Interest income, net consists of interest earned on our cash equivalents and investment balances, net of investment charges.
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