You should read the following discussion and analysis of our financial condition
and results of operations together with our financial statements and the notes
to those statements included elsewhere in this Quarterly Report on Form 10-Q. In
addition to historical financial information, this discussion and analysis
contains forward-looking statements that reflect our plans, estimates and
beliefs. You should not place undue reliance on these forward-looking
statements, which involve risks and uncertainties. As a result of many factors,
including but not limited to those set forth under ''Risk Factors,'' our actual
results may differ materially from those anticipated in these forward-looking
statements. See "Cautionary Note Regarding Forward-Looking Statements."
Overview
Zosano Pharma Corporation is a clinical-stage biopharmaceutical company focused
on providing rapid systemic administration of therapeutics and other bioactive
molecules to patients using our proprietary transdermal microneedle system (the
"System"). Our System is designed to facilitate rapid drug absorption into the
bloodstream, which can result in an improved pharmacokinetic ("PK") profile
compared to original dosage forms. The System consists of a 3cm2 to 6cm2 array
of titanium microneedles approximately 200-350 microns in length, coated with a
hydrophilic formulation of drug, mounted on an adhesive patch. The patch is
applied with a reusable hand-held applicator that presses the microneedles into
the skin to a uniform depth in each application, close to the capillary bed,
allowing for dissolution and absorption of the drug, but not deep enough to
contact the nerve endings in the skin. The microneedles penetrate the stratum
corneum to allow the drug to be absorbed into the microcapillary system of the
skin. We are focused on developing products for indications in which we believe
rapid onset, ease of use and stability may offer significant therapeutic and
practical advantages, and on developing products where rapid administration of
approved drugs with established safety and efficacy profiles provides an
increased benefit to patients, in markets where patients remain underserved by
existing therapies. We anticipate that many of our current and future
development programs may enable us to utilize a regulatory pathway that would
streamline clinical development and accelerate the path towards potential
commercialization.
Our development efforts are currently focused on our product candidate, M207,
our proprietary formulation of zolmitriptan delivered utilizing our System.
Previously, M207 was known as Qtrypta, which we no longer intend to use as the
proprietary name of M207. We are currently in the process of identifying an
alternative proprietary name for M207. Zolmitriptan is one of a class of
serotonin receptor agonists known as triptans and is used as an acute treatment
for migraine. Migraine is a debilitating neurological disease, symptoms of which
include moderate to severe headache pain, nausea and vomiting, and abnormal
sensitivity to light and sound. M207 was developed with the intent of providing
faster onset of efficacy and sustained freedom from migraine symptoms. M207 is
designed for rapid absorption of zolmitriptan into the bloodstream without
dependence on the gastrointestinal ("GI") tract.
We submitted a 505(b)(2) New Drug Application ("NDA") for M207 to the U.S. Food
and Drug Administration (the "FDA") on December 20, 2019, and on October 20,
2020, we received a Complete Response Letter ("CRL") from the FDA with respect
to the NDA. The CRL cited inconsistent zolmitriptan exposure levels observed
across clinical pharmacology studies, which had been previously identified in
the FDA's discipline review letter that we received on September 29, 2020.
Specifically, the CRL noted differences in zolmitriptan exposures observed
between subjects receiving different lots of M207 in our clinical trials and
inadequate PK bridging between the lots that made interpretation of some safety
data unclear. The CRL referenced unexpected high plasma concentrations of
zolmitriptan observed in five study subjects enrolled in our PK studies. The FDA
recommended that we conduct a repeat bioequivalence study comparing lots
manufactured with the equipment used during development. The CRL noted that
additional product quality validation data, which were planned to be submitted
following approval, if received, were required to be submitted with the
application. In addition, the CRL mentioned that due to U.S. Government and/or
Agency-wide restrictions on travel, inspections of our contract manufacturing
facilities were not able to be conducted but would be required before the
application may be approved.
On January 29, 2021, we held a Type A meeting with the FDA Division of Neurology
II (the "Division") regarding the requirements for resubmission of the M207 NDA.
Based on feedback from the Type A meeting held with the Division, we are
conducting an additional PK study for inclusion in an NDA resubmission package.
During the meeting, the Division did not request that we conduct any further
clinical efficacy studies to support the resubmission. On February 19, 2021, we
received the official Type A meeting minutes from the FDA. The Type A meeting
minutes were generally consistent with our expectations to conduct an additional
PK study for inclusion in an NDA resubmission package. In a post-meeting
comment, the FDA recommended a skin assessment on patients in the PK study to
generate additional safety information. This assessment was included in the
proposed study protocol submitted to the FDA for review.
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On April 12, 2021, we received FDA comments and recommendations to our proposed
PK study protocol for M207. We have made the recommended changes to the study
protocol and established an agreement with a contract research organization to
conduct the PK study required to support the resubmission of the M207 505(b)(2)
NDA. The study is expected to involve 48 healthy volunteers to generate
comparative PK and safety data. We initiated the PK study in June 2021 and
expect to complete it during the third quarter of 2021. Subject to positive
data, we expect to resubmit the NDA for M207 by the end of 2021. There is no
guarantee that we will be able to adequately address the issues raised to the
FDA's satisfaction.
Recent Developments
On July 20, 2021, we were granted an additional patent covering method of use of
M207 with the issuance of U.S. Patent No. 11,058,630 titled Method of Rapidly
Achieving Therapeutic Concentrations of Triptans for the Treatment of Migraines.
The newly issued patent covers methods for the release of active drug from our
microneedle system in about one minute and reaching potentially therapeutic
levels as quickly as 30 minutes upon application. This latest patent adds to our
M207 patent portfolio, which now includes two U.S. patents with claims covering
composition of matter and method of use for M207 with expirations in 2037.
In October 2019, we announced that we had begun enrolling patients in our Acute
Treatment of Cluster Headache placebo-controlled Phase 2/3 clinical trial to
evaluate the efficacy of C213 for the acute treatment of cluster headache. Like
M207 for the potential acute treatment of migraine, C213 for the potential acute
treatment of cluster headache consists of our investigational proprietary
formulation of zolmitriptan delivered utilizing our proprietary transdermal
microneedle system. Due to the COVID-19 pandemic, new enrollment into the
clinical trial was temporarily suspended between March 2020 and June 2020.
Subject enrollment resumed in July 2020, however, at a rate slower than
originally anticipated. In November 2020, we decided to end enrollment of new
subjects into the clinical trial as of December 31, 2020. Subjects enrolled in
the Phase 2/3 trial prior to December 31, 2020, were randomized to receive 1.9
mg of C213, 3.8 mg of C213, or placebo in a 1:1:1 fashion. The co-primary
endpoints of the study are the proportion of patients who achieve pain relief at
15 minutes and the proportion of patients whose pain relief is sustained from 15
minutes to 60 minutes. A total of 42 subjects were randomized in the trial. Of
the subjects randomized, 23 subjects treated a cluster attack with C213 and of
those who treated, 22 had post-treatment self-reported diary data. Of the
treated subjects, eight received placebo, nine received 1.9 mg of C213 and five
received 3.8 mg of C213. The percentage of subjects who were positive for both
co-primary endpoints (pain relief at 15 minutes and pain relief at 15 minutes
sustained to 60 minutes) were 37.5% placebo, 44.4% C213 1.9 mg and 100% C213 3.8
mg. There were five adverse events, all mild in intensity, reported by one
placebo subject and three C213 1.9 mg subjects. The number of subjects who
treated a cluster attack was not sufficient to perform pre-planned statistical
comparisons.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with United States generally accepted accounting principles ("U.S.
GAAP"). The preparation of these 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 results of operations
during the reporting periods. Our estimates are based on our 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 values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ from these estimates under different
assumptions or conditions.
There have been no changes to our critical accounting policies which are
included in Note 2. Summary of Significant Accounting Policies to the financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 2020, filed with the U.S. Securities and Exchange Commission (the
"SEC") on March 11, 2021.
Financial Operations Overview
General
As of June 30, 2021, we had an accumulated deficit of approximately $346.5
million. We have incurred significant losses and expect to incur significant and
increasing losses in the foreseeable future as we advance our M207 product
candidate into later stages of development and, if approved, commercialization.
We cannot assure you that we will receive additional capital or collaboration
revenue in the future, as a result of any partnership that we might pursue.
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We expect our pre-commercialization expenses related to our M207 product
candidate to increase as we continue to advance this program towards regulatory
approval and, if approved, commercialization. Because of the numerous risks and
uncertainties associated with our technology and drug development, we cannot
forecast with any degree of certainty the timing or amount of expenses incurred
or when, or if, we will be able to achieve profitability. We do not anticipate
realizing product revenues unless and until the FDA approves our M207 NDA and we
begin commercializing M207, which may never occur.
We will require additional capital to undertake our planned research and
development activities, pre-commercialization activities, and to meet our
operating requirements in and beyond 2021. We intend to raise such capital
through the issuance of additional equity through public or private offerings,
debt financings, strategic alliances, or any combination of the above. However,
if such financing is not available at adequate levels or on acceptable terms, we
could be required to further reduce our operating expenses and suspend, delay or
reduce the scope of our M207 development program, out-license intellectual
property rights to our transdermal delivery technology, or a combination of the
above, 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.
We are actively seeking opportunities to evaluate collaborations with strategic
partners to further the clinical and commercial development of our technology.
We cannot forecast with any degree of certainty if we will enter into
collaborations for M207 or any other potential future use of our technology or
how such arrangements would affect our development plans or capital
requirements. As a result of these uncertainties, we are unable to determine the
duration and completion of costs of our research and development projects or if,
when and to what extent we will generate revenue from their commercialization
and sale. Additionally, a future collaborative partner may only be interested in
applying our technology in the development and advancement of their own product
candidates.
The process of conducting the necessary clinical trials to obtain regulatory
approval is costly and time consuming. We consider the active management and
development of our clinical pipeline to be crucial to our long-term success. The
actual probability of success for each product candidate and clinical program
may be affected by a variety of factors, including, but not limited to: the
quality of the product candidate, early clinical data, investment in the
program, competition, manufacturing capability and commercial viability. In
situations in which third parties have control over the clinical development of
a product candidate, the estimated completion dates are largely under the
control of such third parties and not under our control.
Service revenue
Service revenue is related to feasibility studies in which we provide research
and development services to customers to determine the feasibility of using our
System in connection with the customers' pharmaceutical agents. In the three and
six months ended June 30, 2021, we recognized revenue on agreements with three
pharmaceutical companies for such studies. We expect service revenue to
fluctuate based on the volume and activity of the feasibility studies.
Cost of service revenue
Cost of service revenue consists of personnel and material costs associated with
feasibility studies. In the three and six months ended June 30, 2021, we
incurred costs related to three such studies. We expect cost of service revenue
to fluctuate in 2021 based on the volume and activity of the feasibility
studies.
Research and development expenses
Research and development expenses consist primarily of:
•Salaries and related expenses for personnel in research and development
functions, including stock-based compensation;
•Expenses related to the production of our System, including the purchase of
active pharmaceutical ingredients and raw materials as well as fees paid to
contract manufacturing organizations;
•Expenses related to the performance of drug formulation and clinical trials and
studies, including fees paid to CROs, clinical consultants, clinical trial sites
and vendors, including Institutional Review Boards, in conjunction with
implementing and monitoring our clinical trials and acquiring and evaluating
clinical trial data, including all related fees, such as for investigator
grants, patient screening fees, laboratory work and statistical compilation and
analysis; and
•Allocation of certain shared costs, such as facilities-related costs.
In the three and six months ended June 30, 2021, our research and development
efforts and resources focused primarily on advancing the development of M207.
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General and administrative expenses
General and administrative expenses consist principally of personnel-related
costs, professional fees for legal, consulting, audit and tax services and other
general operating expenses not otherwise included in research and development.
We expect that our general and administrative expenses will increase as we move
toward commercialization of our product candidate, M207, if approved.
Other income and expense
Interest income. Interest income consists primarily of interest, amortization of
purchase premiums and accretion of purchase discounts, if any, related to our
investments in marketable securities.
Interest expense. Interest expense consists primarily of interest costs and
associated amortization of debt discounts and issuance costs, if any, related to
debt financing.
Other income (expense). Other income (expense), net consists of miscellaneous
income and expenses that are not included in other categories of the statement
of operations.
Results of Operations
Comparison of the three months ended June 30, 2021 and 2020
                                        Three Months Ended June 30,                    Change
                                             2021                    2020        Amount         %
                                           (unaudited; in thousands, except percentages)
 Service revenue               $            188                    $     -      $   188           N/A
 Operating expenses:
 Cost of service revenue       $            202                    $     -      $   202           N/A
 Research and development      $          5,000                    $ 4,932      $    68          1  %
 General and administrative    $          2,958                    $ 2,766      $   192          7  %

 Other income (expense):
 Interest income               $              -                    $     5      $    (5)      (100) %
 Interest expense              $            (22)                   $  (190)     $   168        (88) %
 Other income (expense), net   $          1,850                    $   (12)     $ 1,862             *




* Not meaningful.
Service revenue
For the three months ended June 30, 2021, service revenue related to agreements
with three pharmaceutical companies for feasibility studies. We expect service
revenue to fluctuate based on the volume and activity of feasibility studies.
Cost of service revenue
For the three months ended June 30, 2021, cost of service revenue related to
three feasibility studies. We expect cost of service revenue to fluctuate in
2021 based on the volume and activity of feasibility studies.
Research and development expenses
Research and development expenses increased approximately $0.1 million, or 1%,
for the three months ended June 30, 2021, as compared to the same period in
2020. The increase was primarily due to an increase of $0.2 million in
manufacturing costs related to the scale up and technology transfer to our
commercial manufacturing organizations and $0.2 million in increased spending
for clinical trials. These increases were partially offset by a decrease of $0.3
million in employee and consulting costs.
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General and administrative expenses
General and administrative expenses increased approximately $0.2 million, or 7%,
for the three months ended June 30, 2021, as compared to the same period in
2020. The increase was primarily due to an increase of $0.2 million in employee
costs, primarily due to stock compensation.
Other income and expense
Interest income. For the three months ended June 30, 2020, interest income
resulted primarily from interest recognized related to investments in marketable
securities. The decrease for the three months ended June 30, 2021 as compared to
the same period in 2020 resulted from lower interest rates.
Interest expense. For the three months ended June 30, 2021 and 2020, interest
expense consisted primarily of interest and amortization of debt discount. The
decrease in interest expense resulted from a lower outstanding balance on our
build-to-suit obligation with Trinity Funding 1, LLC (successor to Trinity
Capital Fund III, L.P.) ("Trinity") during the three months ended June 30, 2021
as compared to the three months ended June 30, 2020. For the three months ended
June 30, 2021 and 2020, we capitalized a portion of interest paid to Trinity as
construction-in-progress.
Other income (expense), net. Other income (expense), net consists of
miscellaneous income and expenses that are not included in other categories of
the statement of operations. For the three months ended June 30, 2021, other
income (expense), net consisted primarily of a gain on the forgiveness of our
loan issued under the Paycheck Protection Program ("PPP Loan").
Comparison of the six months ended June 30, 2021 and 2020
                                                      Six Months Ended June 30,                         Change
                                                       2021                2020              Amount                 %
                                                                (unaudited; in thousands, except percentages)
Service revenue                                   $       446          $       -          $     446                      N/A
Operating expenses:
Cost of service revenue                           $       364          $       -          $     364                      N/A
Research and development                          $    10,330          $  10,446          $    (116)                   (1) %
General and administrative                        $     5,772          $   5,848          $     (76)                   (1) %

Other income (expense):
Interest income                                   $         1          $      15          $     (14)                  (93) %
Interest expense                                  $      (119)         $    (396)         $     277                   (70) %
Other income (expense), net                       $     1,852          $      91          $   1,761                        *




* Not meaningful.
Service revenue
For the six months ended June 30, 2021, service revenue related to agreements
with three pharmaceutical companies for feasibility studies. We expect service
revenue to fluctuate based on the volume and activity of feasibility studies.
Cost of service revenue
For the six months ended June 30, 2021, cost of service revenue related to three
feasibility studies. We expect cost of service revenue to fluctuate in 2021
based on the volume and activity of the feasibility studies.
Research and development expenses
Research and development expenses decreased approximately $0.1 million, or 1%,
for the six months ended June 30, 2021, as compared to the same period in 2020.
The decrease was primarily due to a reduction of $0.9 million in employee and
temporary employee costs due to lower employee and consulting costs and employee
costs recorded as cost of service for work performed on our feasibility
agreements. This decrease was partially offset by increases of $0.4 million of
additional depreciation related to assets placed into service at our contract
manufacturing organizations, $0.3 million in production and
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manufacturing costs due to the scale up and technology transfer to our
commercial manufacturing organizations and $0.1 million in clinical trial costs.
General and administrative expenses
General and administrative expenses decreased approximately $0.1 million, or 1%,
for the six months ended June 30, 2021, as compared to the same period in 2020.
The decrease was primarily due to a decrease of $0.3 million in professional
service fees, partially offset by increases of $0.1 million in employee costs,
primarily due to stock compensation and $0.1 million in increased insurance
costs.
Other income and expense
Interest income. For the six months ended June 30, 2021 and 2020, interest
income resulted primarily from interest recognized related to investments in
marketable securities. The decrease for the six months ended June 30, 2021 as
compared to the same period in 2020 resulted from lower interest rates.
Interest expense. For the six months ended June 30, 2021 and 2020, interest
expense consisted primarily of interest and amortization of debt discount. The
decrease in interest expense resulted from a lower outstanding balance on our
build-to-suit obligation with Trinity during the six months ended June 30, 2021
as compared to the six months ended June 30, 2020. For the six months ended June
30, 2021 and 2020, we capitalized a portion of interest paid to Trinity as
construction-in-progress.
Other income (expense), net. Other income (expense), net consists of
miscellaneous income and expenses that are not included in other categories of
the statement of operations. For the six months ended June 30, 2021, other
income (expense), net consisted primarily of a gain on the forgiveness of our
PPP Loan.
Liquidity and Capital Resources
Our liquidity and capital resources are summarized as follows:
                                     June 30, 2021             December 31, 2020
                               (unaudited; in thousands)         (in thousands)
Cash and cash equivalents     $                   22,058      $           35,263
Working capital*              $                   12,430      $           21,205
Accumulated deficit           $                 (346,476)     $         (332,190)




* We define working capital as current assets less current liabilities. See our
financial statements and the related notes included elsewhere in this Quarterly
Report on Form 10-Q for further details regarding our current assets and current
liabilities.
As of June 30, 2021, we had approximately $22.1 million in cash and cash
equivalents, $12.4 million of working capital and an accumulated deficit of
$346.5 million. The decrease in cash and cash equivalents and working capital as
of June 30, 2021 as compared to December 31, 2020 was primarily the result of
our loss from operations, investments made in property and equipment and our
payments to Trinity, offset primarily by cash received from the sale of shares
of our common stock through our at-the-market offering program with BTIG and
warrant exercises. Presently, we do not have sufficient cash and cash
equivalents to enable us to fund our anticipated level of operations and meet
our obligations as they become due during the twelve months following the date
of filing of this Quarterly Report on Form 10-Q, and we will need to obtain
additional capital resources through equity offerings, debt financings, a
license or collaboration agreement, or through a combination of such sources of
capital. The aforementioned factors raise substantial doubt about our ability to
continue as a going concern.
We filed a shelf registration statement on Form S-3 with the SEC, which was
declared effective by the SEC on April 16, 2020 (the "2020 Shelf Registration
Statement"). The 2020 Shelf Registration Statement provides us with the ability
to issue common stock and other securities as described in the registration
statement from time to time up to an aggregate amount of $74.5 million, of which
approximately $3.7 million was available at June 30, 2021.
Additionally, we filed a shelf registration statement on Form S-3 with the SEC,
which was declared effective by the SEC on July 14, 2021 ("2021 Shelf
Registration Statement"). The 2021 Shelf Registration Statement provides us with
the ability to issue common stock and other securities as described in the
registration statement from time to time up to an aggregate amount of
$150.0 million.
Our ability to complete the sale of equity securities and access the market as a
source of liquidity is dependent on investor demand, market conditions and other
factors. Therefore, we can provide no assurance that any such offering will be
on terms
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favorable to us or our stockholders, or that such offering will be successful at
all. Our inability to obtain required funding in the near future or our
inability to obtain funding on favorable terms will have a material adverse
effect on our operations and strategic development plan for future growth. If we
cannot successfully raise additional capital and implement our strategic
development plan, our liquidity, financial condition and business prospects will
be materially and adversely affected, and we may have to cease operations.
We expect to incur additional losses in the future and will require additional
financing to develop our M207 product candidate, conduct pre-commercialization
manufacturing activities and fund our operations. If we are unable to raise
additional funds when needed, we may be required to suspend, delay, reduce or
terminate our development programs and clinical trials. We may also be required
to sell or license our technologies, clinical product candidates, or programs,
if any, that we would prefer to develop and commercialize ourselves.
We anticipate that we will need to raise substantial additional capital, the
requirements of which will depend on many factors, including:
•the scope, progress, expansion and costs of manufacturing our product
candidates;
•the timing of and costs involved in obtaining regulatory approvals;
•the scope, progress, expansion, costs and results of our clinical trials;
•the type, number, costs and results of the product candidate development
programs which we are pursuing or may choose to pursue in the future;
•our ability to establish and maintain development partnering arrangements;
•the timing, receipt and amount of contingent, royalty and other payments from
any of our future development partners;
•the emergence of competing technologies and other adverse market developments;
•the costs of maintaining, expanding and protecting our intellectual property
portfolio, including potential litigation costs and liabilities;
•the economic and global financial market uncertainty resulting from the
COVID-19 pandemic;
•the resources we devote to marketing and commercializing our product
candidates, if approved; and
•the costs associated with being a public company.
The COVID-19 pandemic has caused volatility in the global financial markets and
threatened a slowdown in the global economy, which may adversely affect our
ability to raise additional capital on attractive terms or at all. A recession,
depression or other sustained adverse market event resulting from the spread of
COVID-19 may also limit our ability to obtain financing for our operations.
Cash Flows
                                                                            Six Months Ended June 30,
                                                                             2021                  2020
                                                                            (unaudited; in thousands)
Net cash provided by (used in):
Operating activities                                                   $      (15,444)         $ (16,443)
Investing activities                                                           (4,423)            (4,707)
Financing activities                                                            6,662             25,381

Net (decrease) increase in cash, cash equivalents, and restricted cash $

(13,205) $ 4,231




Operating Cash Flow: Net cash used in the six months ended June 30 in both 2021
and 2020 was primarily related to personnel, manufacturing, facility and
technology transfer and development costs in conjunction with services performed
by our contract manufacturers, clinical development and trial costs, other
pre-commercial activities and other administrative expenses incurred in the
course of our continuing operations. The changes in net cash used in operating
activities were primarily related to our net loss, working capital fluctuations
and changes in our non-cash expenses, all of which are highly variable.
Net cash used in operating activities for the six months ended June 30, 2021 of
$15.4 million was primarily due to our net loss of $14.3 million, adjusted for
non-cash items of $0.8 million, consisting primarily of a gain on forgiveness of
debt of $1.6
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million offset by $0.9 million of stock-based compensation, $0.9 million of
depreciation and amortization and $0.6 million of change in operating lease
right-of-use assets. Additionally, we used cash of $1.3 million for changes in
prepaid expenses and $0.7 million for changes in operating lease liabilities.
Net cash used in operating activities for the six months ended June 30, 2020 of
$16.4 million was primarily due to our net loss of $16.6 million, adjusted for
non-cash items of $1.9 million consisting primarily of $0.7 million of
stock-based compensation, $0.5 million of depreciation and amortization and $0.5
million of change in operating lease right-of-use assets. Additionally, we used
cash of approximately $2.0 million for changes in accounts payable and operating
lease liabilities.
Investing Cash Flow: Net cash used in investing activities of $4.4 million and
$4.7 million for the six months ended June 30, 2021 and 2020, respectively, was
the result of property and equipment purchases to support our
pre-commercialization activities.
Financing Cash Flow: Net cash provided by financing activities of $6.7 million
for the six months ended June 30, 2021 was primarily due to the proceeds from
the issuance of common stock under our 2020 at-the-market offering program of
$5.6 million and from the exercise of warrants of $3.4 million. These proceeds
were offset by repayments on the Trinity build-to-suit obligation of $2.3
million. See below for a further discussion of our equity activity during the
first six months of 2021. Net cash provided by financing activities for the six
months ended June 30, 2020 was primarily due to $10.2 million of net proceeds
from a registered direct offering, $8.4 million of net proceeds from a public
underwritten offering, $4.0 million of net proceeds from an at-the-market
offering program, $2.6 million from the exercise of warrants and $1.6 million of
proceeds from a PPP loan offset by $1.5 million in principal payments on our
build-to-suit obligation with Trinity.
2021 Issuance of Shares
At-the-Market Offering Program - 2021
On June 28, 2021, we entered into a Controlled Equity Offering Sales Agreement
with Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (together, the
"Sales Agents") to establish an at-the-market offering program ("2021 ATM"),
under which we may sell from time to time, at our option, up to an aggregate of
$30.0 million of shares of our common stock. Shares sold under the 2021 ATM will
be issued pursuant to our 2020 Shelf Registration Statement and a prospectus
supplement dated June 28, 2021. We are required to pay the Sales Agents a
commission of 3% of the gross proceeds from the sale of shares and have also
agreed to provide the Sales Agents with customary indemnification rights. As of
June 30, 2021, we had sold no shares under the 2021 ATM. From July 1, 2021
through August 6, 2021, we issued and sold 2,261,458 shares of our common stock
at an average price of $0.81 per share under the 2021 ATM for aggregate net
proceeds of $1.7 million after deducting commissions and offering expenses
payable by us. As of the date of this Quarterly Report on Form 10-Q, we have
approximately $28.2 million available to be offered and sold under the 2021 ATM.
At-the-Market Offering Program - 2020
On June 8, 2020, we entered into a sales agreement with BTIG, LLC ("BTIG") as
sales agent to establish an at-the-market offering program ("2020 ATM"), under
which we were permitted to offer and sell, from time to time, shares of common
stock having a maximum aggregate offering price of up to $20.0 million. We were
required to pay BTIG a commission of 3% of the gross proceeds from the sale of
shares and also agreed to provide BTIG with customary indemnification rights.
During the three months ended June 30, 2021, we issued and sold 6,848,672 shares
of our common stock at an average price of $0.83 per share under the 2020 ATM
for aggregate net proceeds of $5.5 million after deducting commissions and
offering expenses payable by us. During the six months ended June 30, 2021, we
issued and sold 6,931,607 shares of our common stock at an average price of
$0.84 per share under the 2020 ATM for aggregate net proceeds of $5.5 million
after deducting commissions and offering expenses payable by us. The shares were
sold pursuant to our 2020 Shelf Registration Statement and a prospectus
supplement dated June 8, 2020. As of June 30, 2021, no shares remain available
for sale under the 2020 ATM.
Registered Direct Offering - March 2020
On March 4, 2020, we entered into a securities purchase agreement with certain
institutional investors for the issuance and sale in a registered direct
offering (the "March 2020 Offering") of (i) 11,903,506 shares of our common
stock and (ii) Series E Warrants to purchase up to a total of 11,903,506 shares
of common stock at an offering price of $0.9275 per share and accompanying
warrant. The Series E Warrants have an exercise price of $0.8025 per share, were
immediately exercisable and expire five years from the date of issuance. During
the six months ended June 30, 2021, Series E Warrants to purchase 4,078,667
shares of common stock were exercised at an exercise price of $0.8025 per share
for aggregate proceeds of approximately $3.3 million. No Series E Warrants were
exercised during the three months ended June 30, 2021. The shares were sold
pursuant to an effective shelf registration statement and a prospectus
supplement dated March 4, 2020. As of the date of this Quarterly Report on Form
10-Q, we have Series E Warrants to purchase 630,835 shares of our common stock
outstanding.
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Table of Contents



Public Offering - February 2020
On February 14, 2020, we closed an underwritten offering (the "February 2020
Offering") for the issuance and sale of (i) 10,146,154 Class A Units, each
consisting of one share of common stock and one Series C Warrant to purchase one
share of common stock, at a public offering price of $0.65 per Class A Unit, and
(ii) 2,161,539 Class B Units, each consisting of one Series D Pre-Funded Warrant
to purchase one share of common stock and one Series C Warrant to purchase one
share of common stock, at a public offering price of $0.6499 per Class B Unit.
The Series C Warrants have an exercise price of $0.65 per share, were
immediately exercisable and will expire five years from the date of issuance.
The Series D Pre-Funded Warrants had an exercise price of $0.0001 per share and
were fully exercised in connection with the closing of the offering. We granted
the underwriter a 30-day option to purchase up to an additional 1,846,153 shares
of common stock and/or additional Series C Warrants to purchase up to 1,846,153
shares of common stock. The underwriter fully exercised its option to purchase
the shares and the Series C Warrants. During the six months ended June 30, 2021,
Series C Warrants to purchase 145,000 shares of common stock were exercised at
an exercise price of $0.65 per share for aggregate proceeds of approximately
$0.1 million. No Series C Warrants were exercised during the three months ended
June 30, 2021. The shares were sold pursuant to an effective shelf registration
statement and a prospectus supplement dated February 12, 2020. As of the date of
this Quarterly Report on Form 10-Q, we have Series C Warrants to purchase 22,700
shares of our common stock outstanding.
Contractual Obligations
During the six months ended June 30, 2021, there were no material changes to our
contractual obligations described under Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in Part II, Item 7 of
our Annual Report on Form 10-K for our fiscal year ended December 31, 2020,
filed with the SEC on March 11, 2021, other than the fulfillment of existing
obligations in the ordinary course of business. See Note 10. Commitments and
Contingencies of the Notes to Financial Statements included in Item 1 of this
Quarterly Report on Form 10-Q for more information regarding our contractual
obligations.
Recently Issued Accounting Pronouncements
See Note 2. Summary of Significant Accounting Policies of the Notes to Financial
Statements included in Item 1 of this Quarterly Report on Form 10-Q for a
summary of Recent Accounting Pronouncements.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet arrangements and do not have any
holdings in variable interest entities.

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