VTV THERAPEUTICS INC. As used in this Quarterly Report on Form 10-Q, the "Company", the "Registrant", "we" or "us" refer tovTv Therapeutics Inc. and "vTv LLC" refers tovTv Therapeutics LLC . The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes that appear elsewhere in this report. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, assumptions and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report under "Part II, Other Information-Item 1A, Risk Factors." Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and operations, financing plans, potential growth opportunities, potential market opportunities, potential results of our drug development efforts or trials, and the effects of competition. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as "anticipates," "believes," "could," "seeks," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "will," "would" or similar expressions and the negatives of those terms. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management's plans, estimates, assumptions and beliefs only as of the date of this report. Except as required by law, we assume no obligation to update these forward-looking statements publicly or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Overview
We are a clinical-stage pharmaceutical company focused on treating metabolic and
inflammatory diseases to minimize their long-term complications and improve the
lives of patients. We have an innovative pipeline of first-in-class small
molecule clinical and pre-clinical drug candidates. Our lead program is TTP399,
an orally administered, small molecule, liver-selective glucokinase activator
("GKA") for the treatment of type 1 diabetes.
Recent Developments
InOctober 2021 , we appointedDeepa Prasad to the role of President and CEO and as a director.Ms. Prasad is a recognized healthcare leader with more than 20 years of experience across startup funding, operations, investment banking, and healthcare policy. In conjunction with her appointment, we plan to implement a strategy to focus our efforts on the continued development of TTP399 as a potential treatment for patients with type 1 diabetes ("T1D") and TTP273 as a potential treatment for patients with cystic fibrosis related diabetes, as well as continuing to support our currently partnered programs. Given the strategic focus on these programs, we plan to pause our development activities inthe United States on HPP737 while we evaluate strategic options for it. As part of this planned strategic focus we are also evaluating cost reductions which may include reductions in our workforce. In addition to our internal development programs, we are continuing to further the development of five partnered programs: a small molecule GLP-1r agonist (in certain Asian territories excludingJapan ), the PDE4 inhibitor, HPP737 (in certain Asian territories excludingJapan ), a PPAR-? agonist, an Nrf2 activator, and the RAGE antagonist, azeliragon, through collaborations with pharmaceutical partners via licensing arrangements 23 --------------------------------------------------------------------------------
The following table summarizes our drug candidates, their partnership status and their respective stages of development:
[[Image Removed]]Our Type 1 Diabetes Program -TTP399
InOctober 2021 , we announced positive results of a mechanistic study of TTP399 in patients with T1D. The study demonstrated that patients with T1D taking TTP399 experienced no increase in ketone levels relative to placebo during a period of acute insulin withdrawal, indicating no increased risk of ketoacidosis. Consistent with previous clinical studies, improved fasting plasma glucose levels and fewer hypoglycemic events were observed in the TTP399 treated group during the week of treatment prior to the insulin withdrawal test. TheU.S. Food and Drug Administration ("FDA") has declined to approve SGLT2 inhibitors as an adjunctive therapy in T1D, with concerns over the potential risks of diabetic ketoacidosis ("DKA") in focus. DKA can lead to hospitalization and, if untreated, death. In order to address these concerns, vTv, following theFDA's recommendation, conducted this mechanistic study to demonstrate that treatment with TTP399, a liver-selective glucokinase activator, will not result in increased production of ketones, a precursor to ketoacidosis. InApril 2021 , we announced that the FDA granted Breakthrough Therapy Designation ("BTD") for TTP399 as an adjunctive therapy to insulin for the treatment of type 1 diabetes. This designation provides a sponsor with added support and the potential to expedite development and review timelines for a promising new investigational medicine. With the receipt of this designation, we are in continuing discussions with the FDA regarding the optimal design for the registrational studies and plan to initiate those in the first half of 2022.
Our Psoriasis Program - HPP737
InSeptember 2021 , we announced the results of a multiple ascending dose Phase 1 study of HPP737, an orally administered phosphodiesterase type 4 ("PDE4") inhibitor, to assess the pharmacokinetics, pharmacodynamics, safety and tolerability of HPP737 in healthy volunteers as part of our psoriasis development program. The trial enrolled 12 subjects in each of two dose cohorts, 15mg and 20mg, randomized to receive HPP737 or placebo (3:1) orally once daily for 14 days. Dose escalation up to 20mg once per day demonstrated dose proportional increases in exposure, while maintaining a favorable safety and tolerability profile with no dose limiting safety or tolerability findings observed. There were no serious adverse events and no discontinuations due to treatment emergent adverse events.
With the planned implementation of our strategic focus on TTP399, discussed
further above, we plan to halt our current development activities in
Holding Company StructurevTv Therapeutics Inc. is a holding company, and its principal asset is a controlling equity interest in vTvTherapeutics LLC ("vTv LLC"), the principal operating subsidiary. We have determined that vTv LLC is a variable-interest entity ("VIE") for accounting purposes and thatvTv Therapeutics Inc. is the primary beneficiary of vTv LLC because (through its managing member interest in vTv LLC and the fact that the senior management ofvTv Therapeutics Inc. is also the senior management of vTv LLC) it has the power to direct all of the activities of vTv LLC, which include those that most significantly impact vTv LLC's economic performance.vTv Therapeutics Inc. has therefore consolidated vTv LLC's results under the VIE accounting model in its consolidated financial statements. 24 --------------------------------------------------------------------------------
Financial Overview Revenue To date, we have not generated any revenue from drug sales. Our revenue has been primarily derived from up-front proceeds and research fees under collaboration and license agreements. In the future, we may generate revenue from a combination of product sales, license fees, milestone payments and royalties from the sales of products developed under licenses of our intellectual property. We expect that any revenue we generate will fluctuate from quarter to quarter as a result of the timing and amount of license fees, milestone and other payments, and the amount and timing of payments that we receive upon the sale of our products, to the extent any are successfully commercialized. If we fail to complete the development of our drug candidates in a timely manner or obtain regulatory approval for them, our ability to generate future revenue and our results of operations and financial position will be materially adversely affected.
Research and Development Expenses
Since our inception, we have focused our resources on our research and
development activities, including conducting preclinical studies and clinical
trials, manufacturing development efforts and activities related to regulatory
filings for our drug candidates. We recognize research and development expenses
as they are incurred. Our direct research and development expenses consist
primarily of external costs such as fees paid to investigators, consultants,
central laboratories and clinical research organizations ("CRO(s)") in
connection with our clinical trials, and costs related to acquiring and
manufacturing clinical trial materials. Our indirect research and development
costs consist primarily of cash and share-based compensation costs, the cost of
employee benefits and related overhead expenses for personnel in research and
development functions. Since we typically use our employee and infrastructure
resources across multiple research and development programs such costs are not
allocated to the individual projects.
From our inception, including our predecessor companies, through September 30,
2021 , we have incurred approximately $599.0 million in research and development
expenses.
Our research and development expenses by project for the three and nine months
ended
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Direct research and development
expense:
Azeliragon $ - $ 1,027 $ 887 $ 5,008
TTP399 729 449 1,365 776
HPP737 482 - 2,249 102
Other projects 97 59 329 545
Indirect research and
development expense 1,074 233 3,092 2,050
Total research and development
expense $ 2,382 $ 1,768 $ 7,922 $ 8,481
We plan to continue to incur significant research and development expenses for the foreseeable future as we continue the development of TTP399 and further advance the development of our other drug candidates, subject to the availability of additional funding.
The successful development of our clinical and preclinical drug candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of any of our clinical or preclinical drug candidates or the period, if any, in which material net cash inflows from these drug candidates may commence. This is due to the numerous risks and uncertainties associated with the development of our drug candidates, including:
• the uncertainty of the scope, rate of progress and expense of our ongoing,
as well as any additional, clinical trials and other research and
development activities;
• the potential benefits of our candidates over other therapies;
• our ability to market, commercialize and achieve market acceptance for any
of our drug candidates that we are developing or may develop in the
future;
• future clinical trial results;
• our ability to enroll patients in our clinical trials;
• the timing and receipt of regulatory approvals, if any; and
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• the filing, prosecuting, defending and enforcing of patent claims and
other intellectual property rights, and the expense of doing so.
A change in the outcome of any of these variables with respect to the
development of a drug candidate could mean a significant change in the costs and
timing associated with the development of that drug candidate. For example, if
the FDA or another regulatory authority were to require us to conduct clinical
trials beyond those that we currently anticipate will be required for the
completion of clinical development of a drug candidate, or if we experience
significant delays in enrollment in any of our clinical trials, we could be
required to expend significant additional financial resources and time with
respect to the development of that drug candidate.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits and related costs for employees in executive, finance, corporate development, human resources and administrative support functions. Other significant general and administrative expenses include accounting and legal services, expenses associated with obtaining and maintaining patents, cost of various consultants, occupancy costs and information systems.
Interest Expense
For periods prior toDecember 31, 2020 , interest expense primarily consists of cash and non-cash interest expense related to our Venture Loan and Security Agreement (the "Loan Agreement") with Horizon Technology Finance Corporation andSilicon Valley Bank . Cash interest on the Loan Agreement is recognized at a floating interest rate equal to 10.5% plus the amount by which the one-month London Interbank Offer Rate ("LIBOR") exceeds 0.5%. Non-cash interest expense represents the amortization of the costs incurred in connection with the Loan Agreement, the allocated fair value of the warrants to purchase shares of our Class A Common Stock issued in connection with the Loan Agreement (the "Warrants") and the accretion of the final interest payments (which are required to be paid in cash upon maturity), all of which are recognized in our Condensed Consolidated Statement of Operations using the effective interest method.
Other Income/(Expense)
Other income/expense primarily consists of unrealized gains or losses attributable to the changes in fair value of the equity investments held in our licensees as well the recognition of changes in fair value of the warrants to purchase shares of our Class A common stock held by a related party.
Results of Operations
Comparison of the three months ended
The following table sets forth certain information concerning our results of operations for the periods shown:
(dollars in thousands) Three Months Ended September 30, Statement of operations data: 2021 2020 Change Revenue$ 3,000 $ 7$ 2,993 Operating expenses: Research and development 2,382 1,768 614 General and administrative 2,221 1,071 1,150 Total operating expenses 4,603 2,839 1,764 Operating loss (1,603 ) (2,832 ) 1,229 Interest expense (6 ) (235 ) 229 Other income, net 244 814 (570 ) Loss before income taxes (1,365 ) (2,253 ) 888 Income tax provision 100 - 100 Net loss before noncontrolling interest (1,465 ) (2,253 ) 788 Less: net loss attributable to noncontrolling (378 ) (720 ) 342 interest Net loss attributable to vTv Therapeutics Inc.$ (1,087 ) $ (1,533 ) $ 446 Revenue Revenue for the three months endedSeptember 30, 2021 included increases to the transaction prices for the license performance obligations under the license agreement withNewsoara Biopharma Co., Ltd. , ("Newsoara") (the "Newsoara License Agreement") and Reneo Pharmaceuticals, Inc. ("Reneo") (the "Reneo License Agreement") due to the satisfaction of development milestones. Revenue for the three months endedSeptember 30, 2020 was insignificant. 26 --------------------------------------------------------------------------------
Research and Development Expenses
Research and development expenses were$2.4 million and$1.8 million for the three months endedSeptember 30, 2021 and 2020, respectively. The increase in research and development expenses during the period of$0.6 million , or 34.7%, was primarily driven by higher spending on TTP399 and HPP737 in the 2021 periods due to the ongoing conduct of the DKA mechanistic and multiple-ascending dose studies for those candidates, respectively. These increases were offset by a decrease in clinical trial costs of$1.0 million for azeliragon which was mainly driven by discontinuance of its development as a potential treatment of Alzheimer's disease in patients with type 2 diabetes. Additionally, compensation costs in the 2020 period were$0.7 million lower due to the reversal of certain performance-based compensation accruals in that period.
General and Administrative Expenses
General and administrative expenses were$2.2 million and$1.1 million for the three months endedSeptember 30, 2021 and 2020, respectively. The increase of$1.2 million has been primarily driven by the impact of a reversal of certain performance-based compensation accruals in the 2020 period due to the expectation that they would not be paid coupled with higher professional fees incurred in the 2021 period.
Other Income / (Expense)
Other income was$0.2 million for the three months endedSeptember 30, 2021 and is related to the unrealized gain recognized related to the change in fair value of the outstanding warrants in our own stock held by a related party of approximately$1.3 million which was offset by a loss of approximately$1.1 million related to the change in fair value of the Company's investment in Reneo. During the three months endedSeptember 30, 2020 , we recognized a$0.8 million gain due to the change in fair value of the outstanding warrants in our own stock held by a related party.
Interest Expense
Interest expense was$0.2 million for the three months endedSeptember 30, 2020 and was related to the cash and non-cash interest for our previous Loan Agreement. Since the Loan Agreement was fully repaid inDecember 2020 , the Company's interest expense incurred during the three months endedSeptember 30, 2021 was insignificant.
Comparison of the nine months ended
The following table sets forth certain information concerning our results of operations for the periods shown:
(dollars in thousands) Nine Months Ended September 30, Statement of operations data: 2021 2020 Change Revenue$ 3,996 $ 15 $ 3,981 Operating expenses: Research and development 7,922 8,481 (559 ) General and administrative 6,627 5,216 1,411 Total operating expenses 14,549 13,697 852 Operating loss (10,553 ) (13,682 ) 3,129 Interest income 1 12 (11 ) Interest expense (6 ) (625 ) 619 Other income (expense), net 2,425 (114 ) 2,539 Loss before income taxes (8,133 ) (14,409 ) 6,276 Income tax provision 115 - 115 Net loss before noncontrolling interest (8,248 ) (14,409 ) 6,161 Less: net loss attributable to noncontrolling (2,312 ) (4,784 ) 2,472 interest Net loss attributable to vTv Therapeutics Inc.$ (5,936 ) $ (9,625 ) $ 3,689 Revenue Revenue for the nine months endedSeptember 30, 2021 relates to the reallocation of revenue to the license and technology transfer performance obligation made in connection with the First Huadong Amendment as well as increases to the transaction prices for the license performance obligations under the Newsoara and Reneo License Agreements due to the satisfaction of development milestones. Revenue for the nine months endedSeptember 30, 2020 was insignificant. 27 --------------------------------------------------------------------------------
Research and Development Expenses
Research and development expenses were$7.9 million and$8.5 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The decrease in research and development expenses during the period of$0.6 million , or 6.6%, was primarily due to a decrease in clinical trial costs of$4.1 million for azeliragon which was mainly driven by discontinuance of its development as a potential treatment of Alzheimer's disease in patients with type 2 diabetes. This decrease was offset primarily by the following: • increased spending of$2.2 million for the development of HPP737 as we were conducting a Phase 1 multiple-ascending dose study for this drug candidate during the nine months endedSeptember 30, 2021 ;
• increases of
spending on the mechanistic study and compound manufacturing during the
nine months ended September 30, 2021 ; and
• increases in compensation expense of
driven by the impact of a reversal of certain performance-based
compensation accruals in the 2020 period due to the expectation that they
would not be paid and increases in share-based compensation expense in the
2021 period.
General and Administrative Expenses
General and administrative expenses were$6.6 million and$5.2 million for the nine months endedSeptember 30, 2021 and 2020, respectively. The increase of$1.4 million has been primarily driven by the impact of a reversal of certain performance-based compensation accruals and asset retirement obligations during the nine months endedSeptember 30, 2020 due to the expectation that they would not be paid. Other Income / (Expense) Other income was$2.4 million for the nine months endedSeptember 30, 2021 and is driven by an unrealized gain recognized related to the Company's investment in Reneo as well as the change in fair value of the outstanding warrants in our own stock. During the nine months endedSeptember 30, 2020 , we recognized a$0.1 million loss due to the change in fair value of the outstanding warrants in our own stock. Interest Expense Interest expense was$0.6 million for the nine months endedSeptember 30, 2020 and was related to the cash and non-cash interest for our previous Loan Agreement. Interest expense during the nine months endedSeptember 30, 2021 was insignificant.
Liquidity and Capital Resources
Liquidity and Going Concern
As ofSeptember 30, 2021 , we have an accumulated deficit of$259.0 million as well as a history of negative cash flows from operating activities. We anticipate that we will continue to incur losses for the foreseeable future as we continue our clinical trials. Further, we expect that we will need additional capital to continue to fund our operations. As ofSeptember 30, 2021 , we had cash and cash equivalents of$19.6 million . To meet our future funding requirements into the fourth quarter of 2022, based on our current operating plans, we plan to rely on the remaining availability of$37.9 million under our Controlled Equity OfferingSM Sales Agreement (the "Sales Agreement") withCantor Fitzgerald & Co. ("Cantor Fitzgerald") pursuant to which we could offer and sell, from time to time shares of our Class A Common Stock (the "ATM Offering") and our ability to sell approximately 9.4 million shares of Class A Common Stock toLincoln Park Capital Fund, LLC ("Lincoln Park") pursuant and subject to the limitations of the purchase agreement (the "LPC Purchase Agreement"). However, the ability to use these sources of capital is dependent on a number of factors, including the prevailing market price of and the volume of trading in our Class A Common Stock. These factors raise substantial doubt about our ability to continue as a going concern.
ATM Offering
We have entered into the Sales Agreement withCantor Fitzgerald pursuant to which we may offer and sell, from time to time, through or toCantor Fitzgerald , as sales agent or principal, shares of our Class A Common Stock having an aggregate offering price of up to$68.5 million . We are not obligated to sell any shares under the Sales Agreement. Under the terms of the Sales Agreement, we will payCantor Fitzgerald a commission of up to 3% of the aggregate proceeds from the sale of shares and reimburse certain legal fees or other disbursements. As ofSeptember 30, 2021 , we have sold$30.6 million worth of Class A Common Stock under the ATM Offering for net proceeds of$29.6 million , leaving$37.9 million available to be sold. 28 --------------------------------------------------------------------------------
Lincoln Park Purchase Agreement
We have entered into the LPC Purchase Agreement, pursuant to which we have the right to sell to Lincoln Park shares of the Company's Class A Common Stock having an aggregate value of up to$47.0 million . As ofSeptember 30, 2021 , we have issued 5,331,306 of these shares for gross proceeds of approximately$11.1 million . Over the 36-month term of the LPC Purchase Agreement, we have the right, but not the obligation, from time to time, in our sole discretion, to direct Lincoln Park to purchase up to 250,000 shares per day (the "Regular Purchase Share Limit") of the Class A Common Stock (each such purchase, a "Regular Purchase"). The Regular Purchase Share Limit will increase to 275,000 shares per day if the closing price of the Class A Common Stock on the applicable purchase date is not below$4.00 per share and will further increase to 300,000 shares per day if the closing price of the Class A Common Stock on the applicable purchase date is not below$5.00 per share. In any case, Lincoln Park's maximum obligation under any single Regular Purchase will not exceed$2,000,000 . The purchase price for shares of Class A Common Stock to be purchased by Lincoln Park under a Regular Purchase will be equal to the lower of (in each case, subject to the adjustments described in the LPC Purchase Agreement): (i) the lowest sale price for the Class A Common Stock on the applicable purchase date and (ii) the arithmetic average of the three lowest closing sales prices for the Class A Common Stock during the 10 consecutive trading days prior to the purchase date. If we direct Lincoln Park to purchase the maximum number of shares of Class A Common Stock that we may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the LPC Purchase Agreement, we may direct Lincoln Park to make an "accelerated purchase" and an "additional accelerated purchase", each of an additional number of shares of Class A Common Stock which may not exceed the lesser of: (i) 300% of the number of shares purchased pursuant to the corresponding Regular Purchase and (ii) 30% of the total number of shares of the Common Stock traded during a specified period on the applicable purchase date as set forth in the LPC Purchase Agreement. The purchase price for such shares will be the lesser of (i) 97% of the volume weighted average price of the Class A Common Stock over a certain portion of the date of sale as set forth in the LPC Purchase Agreement and (ii) the closing sale price of the Class A Common Stock on the date of sale (an "Accelerated Purchase"). Under certain circumstances and in accordance with the LPC Purchase Agreement, we may direct Lincoln Park to purchase shares in multiple Accelerated Purchases on the same trading day. The LPC Purchase Agreement also prohibits us from directing Lincoln Park to purchase any shares of its Class A Common Stock if those shares, when aggregated with all other shares of Class A Common Stock then beneficially owned by Lincoln Park and its affiliates, would result inLincoln Park and its affiliates having beneficial ownership, at any single point in time, of more than 9.99% of the then total outstanding shares of Class A Common Stock as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended, and Rule 13d-3 thereunder. Cash Flows Nine Months Ended September 30, 2021 2020 (dollars in thousands) Net cash used in operating activities$ (12,891 ) $ (15,788 ) Net cash provided by financing activities 26,710
13,338
Net increase (decrease) in cash and cash equivalents
Operating Activities For the nine months endedSeptember 30, 2021 , our net cash used in operating activities decreased$2.9 million from the nine months endedSeptember 30, 2020 due lower net loss and working capital changes.
Investing Activities
There were no cash flows from investing activities for the nine months ended
Financing Activities For the nine months endedSeptember 30, 2021 , net cash provided by financing activities increased by$13.4 million from the nine months endedSeptember 30, 2020 , driven by decreases in payments on loans due to the full repayment of the Loan Agreement inDecember 2020 and higher sales of shares of our Class A Common Stock during the nine months endedSeptember 30, 2021 . 29 --------------------------------------------------------------------------------
Future Funding Requirements
To date, we have not generated any revenue from drug product sales. We do not know when, or if, we will generate any revenue from drug product sales. We do not expect to generate revenue from drug sales unless and until we obtain regulatory approval of and commercialize any of our drug candidates. At the same time, we expect our expenses to continue or to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our drug candidates. In addition, subject to obtaining regulatory approval of any of our drug candidates, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We anticipate that we will need substantial additional funding in connection with our continuing operations. We plan to finance our operations into the fourth quarter of 2022 through the use of our cash and cash equivalents and the ability to sell shares of our Class A Common Stock pursuant to the ATM Offering and LPC Purchase Agreement. However, the ability to use these sources of capital is dependent on a number of factors, including the prevailing market price of and the volume of trading in the Company's Class A Common Stock. We are also evaluating additional financing strategies to fund the clinical trials of TTP399 and HPP737, including direct equity investments and future public offerings of our common stock. The timing and availability of such financing are not yet known and we cannot be certain that additional financing will be available on acceptable terms, or at all. Even if we are able to obtain additional debt or equity financing, it may contain restrictions on our operations or cause substantial dilution to our stockholders. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our drug candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of our drug candidates.
Our future capital requirements will depend on many factors, including:
• The progress, costs, results and timing of our planned trials to evaluate
TTP399 as a potential treatment of type 1 diabetes;
• the willingness of the FDA to rely upon our completed and planned clinical
and preclinical studies and other work, as the basis for review and
approval of our drug candidates;
• the outcome, costs and timing of seeking and obtaining FDA and any other
regulatory approvals;
• the number and characteristics of drug candidates that we pursue,
including our drug candidates in preclinical development;
• the ability of our drug candidates to progress through clinical
development successfully;
• our need to expand our research and development activities;
• the costs associated with securing, establishing and maintaining
commercialization capabilities;
• the costs of acquiring, licensing or investing in businesses, products,
drug candidates and technologies;
• our ability to maintain, expand and defend the scope of our intellectual
property portfolio, including the amount and timing of any payments we may
be required to make, or that we may receive, in connection with the
licensing, filing, prosecution, defense and enforcement of any patents or
other intellectual property rights;
• our need and ability to hire additional management and scientific and
medical personnel;
• the effect of competing technological and market developments;
• our need to implement additional internal systems and infrastructure,
including financial and reporting systems;
• the economic and other terms, timing and success of our existing licensing
arrangements and any collaboration, licensing or other arrangements into
which we may enter in the future;
• the amount of any payments we are required to make to M&F TTP Holdings Two
LLC in the future under the Tax Receivable Agreement; and
• the impact and duration of the COVID-19 outbreak / pandemic.
Until such time, if ever, as we can generate substantial revenue from drug
sales, we expect to finance our cash needs through a combination of equity
offerings, debt financings, marketing and distribution arrangements and other
collaborations, strategic alliances and licensing arrangements. We do not
currently have any committed external source of funds other than those available
through the ATM Offering and LPC Purchase Agreement. We are evaluating several
financing strategies to fund the on-going and future clinical trials of TTP399,
including direct equity investments and future public offerings of our common
stock. To the extent that we raise additional capital through the sale of equity
or convertible debt securities, the ownership interests of our common
stockholders will be
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diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect the rights of our common stockholders. Debt
financing and preferred equity financing, if available, may involve agreements
that include covenants that will further limit or restrict our ability to take
specific actions, such as incurring additional debt, making 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 be required to relinquish valuable rights to our
technologies, future revenue streams or drug candidates or grant licenses on
terms that may not be favorable to us. If we are unable to obtain additional
funding, we could be forced to delay, reduce or eliminate our research and
development programs or commercialization efforts, or pursue one or more
alternative strategies, such as restructuring, any of which could adversely
affect our business prospects.
Off-Balance Sheet Arrangements
As of
Discussion of Critical Accounting Policies
For a discussion of our critical accounting policies and estimates, please refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . There have been no material changes to our critical accounting policies and estimates in 2021.
Forward-Looking Statements
This quarterly report includes certain forward-looking statements within the meaning of the federal securities laws regarding, among other things, our management's intentions, plans, beliefs, expectations or predictions of future events, which are considered forward-looking statements. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These statements often include words such as "may," "will," "should," "believe," "expect," "outlook", "anticipate," "intend," "plan," "estimate" or similar expressions. These statements are based upon assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. As you read this quarterly report, you should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions, including those described under the heading "Risk Factors" under Item 1A of Part I in our Annual Report on Form 10-K for the year endedDecember 31, 2020 . Although we believe that these forward-looking statements are based upon reasonable assumptions, you should be aware that many factors, including those described under the heading "Risk Factors" under Item 1A of Part I in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. Our forward-looking statements made herein are made only as of the date of this quarterly report. We expressly disclaim any intent, obligation or undertaking to update or revise any forward-looking statements made herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this quarterly report.
Effect of Recent Accounting Pronouncements
See discussion of recent accounting pronouncements in Note 2, "Summary of Significant Accounting Policies", to the Condensed Consolidated Financial Statements in this Form 10-Q.
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