TRICIDA, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, include forward-looking statements that involve risks and uncertainties. Investors in our securities should review Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q and Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Our goal is to slow the progression of chronic kidney disease, or CKD, in patients with metabolic acidosis and CKD. We are a pharmaceutical company focused on the development and commercialization of our investigational drug candidate, veverimer (also known as TRC101), a non-absorbed, orally-administered polymer designed to treat metabolic acidosis and slow CKD progression by binding and removing acid from the gastrointestinal tract. Metabolic acidosis is a serious condition commonly caused by CKD and is believed to accelerate the progression of kidney deterioration. It can also lead to bone loss, muscle wasting and impaired physical function. Metabolic acidosis in patients with CKD is typically a chronic disease and, as such, requires long-term treatment to mitigate its deleterious consequences. We are currently conducting a renal outcomes clinical trial, VALOR-CKD (also known as TRCA-303), to determine if veverimer slows CKD progression in patients with metabolic acidosis and CKD. Our VALOR-CKD trial is a randomized, double-blind, placebo-controlled, time-to-event trial. The primary endpoint of the VALOR-CKD trial is the time to first occurrence of any event in the composite of renal death, end-stage renal disease, or ESRD, or a confirmed ? 40% reduction in estimated glomerular filtration rate, or eGFR, which is also known as DD40. The VALOR-CKD trial is a multi-national trial that is being conducted at over 200 sites worldwide. Enrollment of patients in the VALOR-CKD trial was completed at the end of 2021 with 1,480 subjects randomized. As ofMay 9, 2022 , the average duration of treatment in the VALOR-CKD trial was approximately 25 months and the trial had accrued 233 subjects with positively adjudicated primary endpoint events. We currently anticipate that the VALOR-CKD trial will be terminated early, through an administrative stop, to occur in the second quarter of 2022, with continued accrual of primary endpoint events into the third quarter of 2022. The reporting of top-line results from the VALOR-CKD trial is anticipated to occur early in the fourth quarter of 2022. There are currently no therapies approved by theU.S. Food and Drug Administration , or FDA, to slow progression of kidney disease by correcting chronic metabolic acidosis in patients with CKD. We estimate that metabolic acidosis affects approximately 4.3 million patients with CKD inthe United States , and we believe that slowing the progression of CKD in patients with metabolic acidosis and CKD represents a significant unmet medical need and market opportunity. In addition, considering that acid retention is thought to occur in patients with CKD prior to clinical diagnosis of metabolic acidosis (serum bicarbonate less than 22 mEq/L), we believe there may be potential to pursue a development pathway for veverimer which, with additional data, could expand the market opportunity beyond metabolic acidosis to include patients with CKD and eubicarbonatemic acidosis, or latent acidosis, who may also benefit from a therapy that aids in acid removal. Veverimer is a non-absorbed, low-swelling, spherical polymer bead that is approximately 100 micrometers in diameter. It is a single, high molecular weight, crosslinked polyamine molecule. The size of veverimer prevents systemic absorption from the GI tract. The high degree of cross-linking within veverimer limits swelling and the overall volume in the GI tract, with the goal of facilitating good GI tolerability. The high amine content of veverimer provides proton binding capacity of approximately 10 mEq/gram of polymer. The size exclusion built into the three-dimensional structure of the polymer enables preferential binding of chloride versus larger inorganic and organic anions, including phosphate, citrate, fatty acids and bile acids. This size exclusion mechanism allows a majority of the binding capacity to be used for hydrochloric acid binding. Veverimer is an in-house discovered, new chemical entity. We have a broad intellectual property estate that we believe will provide patent protection for veverimer until at least 2038 inthe United States , at least 2035 inAustralia ,Europe ,Hong Kong ,Israel ,Japan ,Mexico andRussia , and at least 2034 inSouth Korea and certain other markets. 15 -------------------------------------------------------------------------------- Veverimer drug substance manufacturing is conducted for us byPatheon Austria GmbH & Co KG , or Patheon, in their Linz,Austria facility. At this time, we believe we have sufficient drug substance and access to sufficient drug product manufacturing capacity to supply the anticipated demand of our ongoing VALOR-CKD trial through conclusion of the trial. We are in regular communication with Patheon andPCI Pharma Services , our drug product manufacturer and, to our knowledge, there have not been business disruptions at these sites due to COVID-19 affecting the production of veverimer drug substance and drug product. At this time, we have not experienced any material disruption in the distribution network for veverimer, including the provision of raw materials, the shipping of drug substance and drug product and the provision of clinical trial supplies to trial participants, other than inUkraine . We have no products approved for marketing, and we have not generated any revenue from product sales or other arrangements. From our inception in 2013 throughMarch 31, 2022 , we have primarily funded our operations through the sale of$152.4 million of convertible preferred stock, gross proceeds of$255.6 million ($237.7 million , net) from our initial public offering, or IPO, onJuly 2, 2018 , gross proceeds of$231.8 million ($217.9 million , net) from our underwritten public offering onApril 8, 2019 , issuance of$200.0 million aggregate principal amount of 3.50% convertible senior notes due 2027, or the Convertible Senior Notes, ($193.3 million , net) onMay 22, 2020 , gross proceeds of$42.0 million ($41.5 million , net) from our Registered Direct Equity Financing onNovember 15, 2021 and gross borrowings of$75.0 million ($72.1 million , net) under the Loan and Security Agreement, or Term Loan, entered into with Hercules Capital Inc., or Hercules, onFebruary 28, 2018 . We have incurred losses in each year since our inception in 2013. Our net losses were$29.6 million and$53.4 million for the three months endedMarch 31, 2022 and 2021, respectively. As ofMarch 31, 2022 , we had an accumulated deficit of$827.7 million . Substantially all of our operating losses resulted from expenses incurred in connection with advancing veverimer through development activities and general and administrative costs associated with pre-commercialization activities and administrative functions. Our business operations and those of our business partners, vendors, government regulators and other third parties may be affected by global or regional events, such as the on-going COVID-19 outbreak and the Russian invasion ofUkraine . At this time, COVID-19 has not materially impacted our current financial resources or our outlook. Our VALOR-CKD trial has sixteen sites located inUkraine , which include approximately 15% of the patients randomized in the trial. Actions taken by theRussian Federation , beginning inFebruary 2022 , inUkraine and surrounding areas may have a material adverse effect on our ability to adequately conduct VALOR-CKD clinical trial procedures and maintain compliance with the trial protocol inUkraine , due to the prioritization of hospital resources away from clinical trials, reallocation or evacuation of site staff and subjects, or as a result of government-imposed curfews, warfare, violence or other governmental action or events that restrict movement. We may not be able to access sites for monitoring and we may not be able to obtain data from affected sites going forward. We could also experience disruptions in our supply chain or limits to our ability to obtain sufficient investigational materials inUkraine and surrounding regions. If our access to VALOR-CKD trial sites and data were to experience significant disruption due to these risks or for other reasons, it could have a material adverse effect on the VALOR-CKD trial and our financial runway. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We expect our expenses will continue in connection with our ongoing activities as we:
•conduct clinical studies of veverimer, including the ongoing VALOR-CKD trial;
•continue to optimize the manufacturing processes and manufacture drug substance and drug product to support the ongoing VALOR-CKD trial and the commercial launch, if approved;
•increase our research and development efforts;
•create additional infrastructure to support our product development;
•seek regulatory approval for veverimer, including any activities necessary for the resubmission of the New Drug Application, or NDA, for veverimer;
•maintain, expand and protect our intellectual property portfolio; and
•maintain operational, financial and management information systems to support ongoing operations, including operating as a public company.
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We do not expect to generate any revenue from product sales until we
successfully complete development and obtain regulatory approval for veverimer.
If we obtain regulatory approval for veverimer, we expect to incur significant
commercialization expenses related to product sales, marketing, manufacturing
and distribution. Accordingly, we will seek to fund our operations through
available cash from our prior equity offerings and the Convertible Senior Note
issuance, and, as necessary, through additional public or private equity or debt
financings or other sources. However, we may be unable to raise additional funds
or enter into such other arrangements when needed on favorable terms or at all.
Our failure to raise capital or enter into such other arrangements when needed
would have a negative impact on our financial condition and ability to develop
and, if approved, commercialize veverimer. We believe that our existing cash,
cash equivalents and investments are not likely to be sufficient to fund our
operations through the second quarter of 2023.
Components of Our Results of Operations
Research and Development Expense
Research and development expense consists primarily of costs associated with the development of veverimer and includes salaries, bonuses, benefits, travel and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions; expenses incurred under agreements with clinical research organizations, or CROs, investigative sites and consultants that conduct our nonclinical and clinical studies; manufacturing processes optimization and the cost of manufacturing drug substance for commercial and clinical use as well as drug product to support the ongoing VALOR-CKD trial; payments to consultants engaged in the development of veverimer, including stock-based compensation, travel and other expenses; costs related to compliance with quality and regulatory requirements; research and development facility-related expenses, which include direct and allocated expenses, and other related costs. Research and development expense is charged to operations as incurred when these expenditures relate to our research and development efforts and have no alternative future uses. Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. All of our research and development expense to date has been incurred in connection with veverimer. We expect our research and development expense to increase for the foreseeable future as we optimize our manufacturing processes and advance veverimer through clinical development, including our ongoing VALOR-CKD trial. The process of conducting clinical studies necessary to obtain regulatory approval is costly and time consuming and the successful development of veverimer 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 commercialization and sale of veverimer, if approved. Therefore, we are unable to estimate with any certainty the costs we will incur in the continued development of veverimer. The degree of success, timelines and cost of development can differ materially from expectations. We may never succeed in achieving regulatory approval for veverimer.
General and Administrative Expense
General and administrative expense consists primarily of salaries, bonuses,
benefits, travel, stock-based compensation expense and facility-related expenses
for personnel in finance and administrative functions. General and
administrative expense also includes professional fees for legal, patent,
consulting, accounting and audit services, pre-commercial preparation, medical
affairs costs and recruiting services for the potential launch of veverimer and
other related costs.
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Results of Operations
The following table presents our results of operations for the three months
ended
Three Months Ended
March 31, Change
(in thousands) 2022 2021 $ %
Operating expenses:
Research and development $ 18,504 $ 32,175 $ (13,671) (42) %
General and administrative 9,170 9,895 (725) (7) %
Total operating expenses 27,674 42,070 (14,396) (34) %
Loss from operations (27,674) (42,070) 14,396 (34) %
Other income (expense), net 8 445 (437) (98) %
Interest expense (1,973) (5,613) 3,640 (65) %
Loss on early extinguishment of Term Loan - (6,124) 6,124 (100) %
Net loss $ (29,639) $ (53,362) $ 23,723 (44) %
Research and Development Expense
The following table presents our research and development expense for the three
months ended
Three Months Ended
March 31, Change
(in thousands) 2022 2021 $ %
Clinical development costs $ 11,980 $ 25,675 $ (13,695) (53) %
Personnel and related costs 2,830 3,173 (343) (11) %
Stock-based compensation expense 2,785 2,406 379 16 %
Other research and development costs 909 921
(12) (1) %
Total research and development expense
Research and development expense was$18.5 million and$32.2 million for the three months endedMarch 31, 2022 and 2021, respectively. The decrease of$13.7 million was primarily due to decreased activities in connection with our veverimer clinical development program, resulting in a decrease of clinical development costs of$13.7 million related to drug substance manufacturing costs and other clinical trial costs related to our VALOR-CKD trial.
General and Administrative Expense
The following table presents our general and administrative expense for the
three months ended
Three Months Ended
March 31, Change
(in thousands) 2022 2021 $ %
Personnel and related costs $ 2,336 $ 2,560 $ (224) (9) %
Stock-based compensation expense 3,739 3,636 103 3 %
Other general and administrative costs 3,095 3,699 (604) (16) %
Total general and administrative expense $ 9,170 $ 9,895 General and administrative expense was$9.2 million and$9.9 million for the three months endedMarch 31, 2022 and 2021, respectively. The decrease of$0.7 million was primarily due to a decrease in other general and administrative costs of$0.6 million related to a reduction in legal and consulting fees. 18 --------------------------------------------------------------------------------
Non-Operating Income (Expense)
The following table presents our non-operating income (expense) for the three
months ended
Three Months Ended
March 31, Change
(in thousands) 2022 2021 $ %
Other income (expense), net $ 8 $ 445 $ (437) (98) %
Interest expense (1,973) (5,613) 3,640 (65) %
Loss on early extinguishment of Term Loan - (6,124) 6,124 (100) %
Other income (expense), net decreased by $0.4 million for the three months ended
March 31, 2022 due to decreased interest income from investments and changes in
compound derivative liability. Interest expense decreased $3.6 million for the
three months ended March 31, 2022 due the effect of the adoption ASU No.
2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) on
January 1, 2022 , which resulted in reduced non-cash interest expense due to the
de-recognition of the remaining debt discount associated with the equity
component of the Convertible Senior Notes and the repayment of the Term Loan in
March 2021 . The loss on early extinguishment of Term Loan was recognized in
March 2021 on repayment of the Term Loan.
Liquidity and Capital Resources
Sources of Liquidity
From our inception in 2013 throughMarch 31, 2022 , we have primarily funded our operations through the sale of$152.4 million of convertible preferred stock, gross proceeds of$255.6 million ($237.7 million , net) from our IPO onJuly 2, 2018 , gross proceeds of$231.8 million ($217.9 million , net) from our underwritten public offering onApril 8, 2019 , issuance of$200.0 million Convertible Senior Notes ($193.3 million , net) onMay 22, 2020 , gross proceeds of$42.0 million ($41.5 million , net) from our Registered Direct Equity Financing onNovember 15, 2021 and gross borrowings of$75.0 million ($72.1 million , net) under the Term Loan with Hercules onFebruary 28, 2018 . As ofMarch 31, 2022 , we had cash, cash equivalents and investments of$123.7 million .
Convertible Senior Notes
OnMay 22, 2020 , we issued$200.0 million aggregate principal amount of Convertible Senior Notes pursuant to an indenture, dated as ofMay 22, 2020 , or the Indenture, between us andU.S. Bank National Association , as trustee. Net proceeds from the offering were$193.3 million after deducting underwriting discounts, commissions and other offering costs of approximately$6.7 million . Our Convertible Senior Notes are senior unsecured obligations, and interest is payable semi-annually in arrears at a rate of 3.5% per year onMay 15 andNovember 15 of each year, beginning onNovember 15, 2020 . The Convertible Senior Notes mature onMay 15, 2027 , unless earlier repurchased, redeemed or converted and are not redeemable prior toMay 20, 2024 . We may redeem for cash all or any portion of the Convertible Senior Notes, at our option, on or afterMay 20, 2024 and on or before the 40th scheduled trading day immediately prior to the maturity date, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Senior Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. We are not required to provide and no sinking fund is provided for the Convertible Senior Notes. The Convertible Senior Notes are convertible into cash, shares of our common stock or a combination of cash and shares of our common stock at our election at an initial conversion rate of 30.0978 shares of our common stock per$1,000 principal amount of the Convertible Senior Notes, which is equivalent to an initial conversion price of approximately$33.23 per share of our common stock. The conversion rate is subject to customary adjustments for certain events as described in the Indenture. It is our current intent to settle conversions through combination settlement, which involves repayment of the principal portion in cash and any excess of the conversion value over 19 --------------------------------------------------------------------------------
the principal amount in shares of our common stock. As of
Registered Direct Equity Financing
OnNovember 15, 2021 , we consummated a registered direct equity financing pursuant to which we sold an aggregate of 4,666,667 shares of our common stock, pre-funded warrants to purchase up to 2,333,333 shares of our common stock and common warrants to purchase up to 7,000,000 shares of our common stock. Each share of common stock and accompanying common warrant and each pre-funded warrant and accompanying common warrant were sold together at a combined offering price of$6.00 . The pre-funded warrants are immediately exercisable at a nominal exercise price of$0.001 . The common warrants are exercisable at an exercise price of$11.00 on or afterMay 15, 2022 . Net proceeds were approximately$41.5 million , after deducting offering costs of$0.5 million . The pre-funded warrants have an expiration date of the earliest of (i)November 15, 2026 , (ii) the date the pre-funded warrants are exercised in full and (iii) immediately prior to the consummation of a fundamental transaction. The common warrants are exercisable commencing onMay 15, 2022 until their expiration date, which will be the earliest of: (a) the third anniversary of the date of issuance, (b) immediately prior to the closing of certain fundamental transactions or (c) five business days after written notice following certain events, including (i) submission of the NDA for veverimer with the FDA, or (ii) six weeks following the issuance of a press release reporting the results of the primary analysis of the VALOR-CKD trial, (aa) the completion of a common stock financing resulting in not less than$75.0 million in gross proceeds at an offering price of not less than$13.50 per share, or (bb) the volume weighted average share price of our common stock is greater than$15.00 per share with certain multiple-day trading volume requirements.
Funding Requirements
We have incurred losses and negative cash flows from operations since our inception in 2013 and anticipate that we will continue to incur net losses for the foreseeable future. As ofMarch 31, 2022 , we had an accumulated deficit of$827.7 million . Existing cash, cash equivalents and investments are not likely to be sufficient to fund our operations through the second quarter of 2023 as we expect to incur additional losses in the future to conduct research and development and pre-commercialization activities. We recognize that we will need to raise additional capital to fully implement our business plan. We plan to evaluate obtaining additional capital prior to the end of 2022. In addition, we have common warrants outstanding that are eligible for exercise at the discretion of the holders starting onMay 15, 2022 .
Such future capital requirements are difficult to forecast and will depend on many factors, including:
•the progress, outcome and results of our ongoing VALOR-CKD trial;
•the impact of termination of our VALOR-CKD trial;
•the costs and timing of resubmission of our NDA and, as necessary, our success in addressing the deficiencies identified by the FDA in the Complete Response Letter and issues raised in the Appeal Denied Letter related to our NDA for veverimer;
•our ability to obtain approval of our NDA for veverimer from the FDA under either traditional approval or the Accelerated Approval Program, if at all;
•the findings of the FDA during their routine inspections of our facility and the facilities of our contract manufacturers and clinical trial sites during the NDA review process and our ability to promptly and adequately address any such findings;
•the revenue, if any, received from commercial sales of veverimer should we receive regulatory approval;
•our ability to maintain and enforce our intellectual property rights and defend any intellectual property-related claims;
•the costs, timing and success of the scale-up and optimization of the process of manufacturing veverimer, and our minimum and maximum commitments under the Manufacturing and Commercial Supply Agreement we entered into with Patheon onOctober 4, 2019 , as the same may be amended from time to time; 20 -------------------------------------------------------------------------------- •the costs, timing and success of future commercialization activities, including product manufacturing, marketing, sales and distribution, for veverimer if we receive regulatory approval and do not partner for commercialization;
•the cost of fulfilling our minimum contractual obligations to our suppliers and vendors; and
•the extent to which we acquire or in-license other products and technologies.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic partnerships and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. If we raise additional funds through collaborations, strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to veverimer, associated intellectual property, our other technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. However, there can be no assurance that we will be successful in securing additional funding at levels sufficient to fund our operations or on terms acceptable to us. If we are unsuccessful in our efforts to raise additional financing, we could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate some of our development programs or our future commercialization efforts, out-license intellectual property rights to our investigational drug candidates and sell unsecured assets, cease operations altogether or a combination of the above, any of which may have a material adverse effect on our business, results of operations, financial condition and/or our ability to fund our scheduled obligations on a timely basis or at all. Cash Flows
The following table presents a summary of the net cash flow activity for the
three months ended
Three Months Ended
March 31,
(in thousands) 2022 2021
Net cash provided by (used in):
Operating activities $ (26,402) $ (30,978)
Investing activities 23,191 16,816
Financing activities (190) (83,185)
Net decrease in cash and cash equivalents
Cash Used in Operating Activities
During the three months endedMarch 31, 2022 , cash used in operating activities was$26.4 million , which consisted of a net loss of$29.6 million , adjusted by non-cash charges of$6.8 million and changes in cash used in operating assets and liabilities of$3.5 million . Non-cash charges consisted primarily of stock-based compensation of$6.5 million , accretion of Convertible Senior Notes of$0.2 million and depreciation and amortization of$0.1 million . Changes in cash used in our operating assets and liabilities were primarily due to a decrease in accounts payable of$4.5 million , partially offset by a decrease in prepaid expenses and other assets of$0.7 million and an increase in accrued expenses and other current liabilities of$0.2 million . During the three months endedMarch 31, 2021 , cash used in operating activities was$31.0 million , which consisted of a net loss of$53.4 million , adjusted by non-cash charges of$15.2 million and changes in cash used in our operating assets and liabilities of$7.2 million . The non-cash charges consisted primarily of loss on early extinguishment of Term Loan of$6.1 million , stock-based compensation of$6.0 million , accretion of Term Loan and Convertible Senior Notes of$2.6 million , non-cash operating lease costs of$0.2 million , net amortization of premiums and discounts on investments of$0.2 million and depreciation and amortization of$0.1 million , partially offset by changes in fair value of compound derivative liability of$0.2 million . The changes in cash used in our operating assets and liabilities were primarily due to an increase in accrued expenses and other current liabilities of$3.9 million , an increase in accounts payable of$1.8 million and a decrease in prepaid expenses and other assets of$1.5 million . 21
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Cash Provided by Investing Activities
Net cash provided by investing activities was$23.2 million and$16.8 million for the three months endedMarch 31, 2022 and 2021, respectively. Net cash provided by investing activities during the three months endedMarch 31, 2022 was due to maturities of investments of$55.3 million , partially offset by purchases of investments of$32.1 million . Net cash provided by investing activities during the three months endedMarch 31, 2021 was due to maturities of investments of$76.8 million , partially offset by purchases of investments of$59.9 million and purchases of property and equipment of$0.1 million .
Cash Used in Financing Activities
Net cash used in financing activities was$0.2 million and$83.2 million for the three months endedMarch 31, 2022 and 2021, respectively. Net cash used in financing activities during the three months endedMarch 31, 2022 was primarily due payments for taxes related to net share settlement of equity awards of$0.2 million . Net cash used in financing activities during the three months endedMarch 31, 2021 was primarily due to cash paid for early extinguishment of Term Loan of$83.3 million , partially offset by proceeds from the issuance of common stock under equity award plans of$0.1 million .
Contractual Obligations and Commitments
We have contractual obligations relating to our manufacturing and service contracts, Convertible Senior Notes, lease obligations and other research and development activities. We also enter into other contracts in the normal course of business with CROs, contract development and manufacturing organizations and other service providers and vendors. These contracts generally provide for termination on short notice and are cancelable contracts. Our existing cash, cash equivalents and investments as ofMarch 31, 2022 are not likely to be sufficient to meet our contractual obligations through the second quarter of 2023, as we expect to incur additional losses in the future to conduct research and development and pre-commercialization activities and recognize that we will need to raise additional capital to fully implement our business plan.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of financial condition and results of operations is based on our condensed financial statements, which have been prepared in accordance with generally accepted accounting principles inthe United States . The preparation of these condensed 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 financial statements, as well as the reported expenses during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on 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. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ significantly from these estimates under different assumptions or conditions. There have been no material changes to the critical accounting estimates discussed in our Annual Report on Form 10-K for the year endedDecember 31, 2021 .
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