MANAGEMENT’s DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and related notes included elsewhere in this
Annual Report. This discussion and analysis and other parts of this Annual
Report contain forward-looking statements based upon current beliefs, plans and
expectations that involve risks, uncertainties and assumptions, such as
statements regarding our plans, objectives, expectations, intentions and
projections. Our actual results and the timing of selected events could differ
materially from those anticipated in these forward-looking statements as a
result of several factors, including those set forth under “Risk Factors” and
elsewhere in this Annual Report. You should carefully read the “Risk Factors”
section of this Annual Report to gain an understanding of the important factors
that could cause actual results to differ materially from our forward-looking
statements. Please also see the section entitled “Cautionary Note Concerning
Forward-Looking Statements.” All amounts in this report are in
unless otherwise noted.
Overview
We are a late-stage biopharmaceutical company focused on the discovery and
development of novel anti-infectives. A significant focus of ours is on targeted
immunotherapy using fully human monoclonal antibodies, or mAbs, to treat
life-threatening infections. mAbs represent an innovative treatment approach
that harnesses the human immune system to fight infections and are designed to
overcome the deficiencies associated with current therapies, such as rise in
drug resistance, short duration of response, limited tolerability, negative
impact on the human microbiome, and lack of differentiation among the treatment
alternatives. The majority of our product candidates are derived by employing
our differentiated antibody discovery platforms. Our proprietary product
pipeline comprises fully human mAbs targeting specific pathogens associated with
life-threatening bacterial infections, primarily nosocomial pneumonia, and viral
infections such as COVID-19.
Our ?PEX™ production platform technology enables the screening of a large number
of antibody-producing B-cells from patients and generation of high mAb-producing
mammalian production cell line at a speed not previously attainable. As a
result, we can significantly reduce time for antibody discovery and
manufacturing compared to conventional approaches. This technology is being
applied to the development of COVID-19 mAbs.
In 2021, we announced the development of highly neutralizing monoclonal antibody
cocktails AR-712 and AR-701, discovered from convalescent COVID-19 patients,
that successfully eliminated all detectable SARS-CoV-2 virus in infected animals
at substantially lower doses than parenterally administered (injected) COVID-19
mAbs. The mAb cocktails broadly bind and neutralize SAR-COV-2 virus and the
mutant ‘E484K’ variant that is associated with the
SARS-CoV-2, SARS, MERS, and several seasonal ‘common cold’ coronaviruses. We
announced that AR-701 is replacing AR-712 as a clinical track program. The
potency of AR-701 and its direct delivery to the lungs by inhaled administration
may facilitate broader treatment coverage and dose sparing not achievable by
parenteral administration. A clinical Phase 1/2 study is expected to be launched
in the second half of 2022.
Our lead product candidate, AR-301 has exhibited promising preclinical data and
clinical data from a Phase 1/2a clinical study in patients. AR-301 targets the
alpha toxin produced by gram-positive bacteria Staphylococcus aureus, or S.
aureus, a common pathogen associated with HAP and VAP. In contrast to other
programs targeting S. aureus toxins, we are developing AR-301 as a treatment of
pneumonia, rather than prevention of S. aureus colonized patients from
progression to pneumonia. In
evaluating AR-301 for the treatment of HAP and VAP. The on-going COVID-19
pandemic has and continues to cause an impact on patient enrollment globally and
the rate of clinical site activation. We expect to report top line data from
this trial in the second half of 2022.
To complement and diversify our portfolio of targeted mAbs, we are developing a
broad spectrum small molecule non-antibiotic anti-infective agent gallium
citrate (AR-501). AR-501 is being developed in collaboration with the
Fibrosis Foundation
infections in cystic fibrosis patients. In 2018, AR-501 was granted Orphan Drug,
Fast Track and Qualified Infectious Disease Product (“QIDP”) designations by the
We initiated a Phase 1/2a clinical trial in
formulation of gallium citrate, which is being evaluated for the treatment of
chronic lung
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infections associated with cystic fibrosis. In
results from the Phase 1 portion of our Phase 1/2a clinical trial of AR-501 in
which healthy subjects were enrolled. The Safety Monitoring Committee (“SMC’)
and Data Safety Monitoring Board (“DSMB”) from the
supported that the study proceed at all dose levels to the Phase 2a portion of
the Phase 1/2a trial in adult subjects with cystic fibrosis (“CF”). We expect to
complete enrollment in mid-2022 and announce top line results in mid-2022.
In
wholly owned subsidiary of AstraZeneca, for the worldwide commercial rights of
suvratoxumab, which is a half-life extended human IgG1 monoclonal antibody that
also targets the alpha toxin produced by S. aureus. Suvratoxumab is a fully
human, IgG1 monoclonal antibody targeting S. aureus alpha toxin. This product is
given the product code ‘AR-320′. As with AR-301, AR-320’s mode of action is
independent of the antibiotic resistance profile of S. aureus, and it is active
against infections caused by both methicillin-resistant S. aureus (“MRSA”) and
methicillin-susceptible S. aureus (“MSSA”). Suvratoxumab and AR-301 are
complementary products. Suvratoxumab’s focus on preventive treatment of S.
aureus pneumonia complements Aridis’ AR-301 Phase 3 mAb program which is being
developed as a therapeutic treatment of S. aureus pneumonia. A multinational,
randomized, double blinded, placebo controlled Phase 2 study conducted by
AstraZeneca (n=196 patients) showed that mechanically ventilated ICU patients
colonized with S. aureus who are treated with suvratoxumab saw a relative risk
reduction of pneumonia by 32% in the overall intend to treat study population,
and by 47% in the prespecified under 65 year old population, which is the target
population in the planned Phase 3 study. The relative risk reduction in the
target population reached statistical significance, and was also associated with
a substantial reduction in the duration of care needed in the ICU and hospital
[see
https://www.thelancet.com/journals/laninf/article/PIIS1473-3099(20)30995-6/fulltext].
We believe that AR-320 will be first-line treatment, first to market,
first-in-class pre-emptive treatment of S. aureus colonized patients.
To date, we have devoted substantially all of our resources to research and
development efforts relating to our therapeutic candidates, including conducting
clinical trials and developing manufacturing capabilities, in-licensing related
intellectual property, protecting our intellectual property and providing
general and administrative support for these operations. We have generated
revenue from our payments under our collaboration strategic research and
development contracts and federal awards and grants, as well as awards and
grants from not-for-profit entities and fee for service to third-party entities.
Since our inception, we have funded our operations primarily through these
sources and the issuance of common stock, convertible preferred stock, and debt
securities. Current clinical development activities are focused on AR-301, AR712
and AR-501. Our expenses and resulting cash burn during the years ended
31, 2021
of AR-301 for the treatment of VAP caused by the S. aureus bacteria, preclinical
development of AR-01 COVID-19 mAbs, the preparation of AR-320 for a phase 3
clinical trial that is expected to be initiated in the first half of 2022 and
the Phase 1/2 study of AR-501 for the treatment of chronic lung infections
associated with cystic fibrosis.
Financial Overview
We have incurred losses since our inception. Our net losses were approximately
respectively. As of
cash, cash equivalents and restricted cash and had an accumulated deficit of
approximately
from costs incurred in connection with our research and development programs,
clinical trials, intellectual property matters, strengthening our manufacturing
capabilities, and from general and administrative costs associated with our
operations.
We have not yet achieved commercialization of our products and have a cumulative
net loss from our operations. We will continue to incur net losses for the
foreseeable future. Our consolidated financial statements have been prepared
assuming that we will continue as a going concern. We will require additional
capital to meet our long-term operating requirements. We expect to raise
additional capital through the sale of equity and/or debt securities.
Historically, our principal sources of cash have included proceeds from grant
funding, fees for services performed, issuances of debt and the sale of our
preferred stock. Our principal uses of cash have included cash used in
operations. We expect that the principal uses of cash in the future will be for
continuing operations, funding of research and development including our
clinical trials and general working capital requirements.
We anticipate that our expenses will increase substantially if and as we:
? continue enrollment in our ongoing clinical trials;
? initiate new clinical trials;
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? seek to identify, assess, acquire and develop other products, therapeutic
candidates and technologies;
? seek regulatory and marketing approvals in multiple jurisdictions for our
therapeutic candidates that successfully complete clinical studies;
? establish collaborations with third parties for the development and
commercialization of our products and therapeutic candidates;
? make milestone or other payments under our agreements, pursuant to which we
have licensed or acquired rights to intellectual property and technology;
? seek to maintain, protect, and expand our intellectual property portfolio;
? seek to attract and retain skilled personnel;
? incur the administrative costs associated with being a public company and
related costs of compliance;
? create additional infrastructure to support our operations as a commercial
stage public company and our planned future commercialization efforts;
? experience any delays or encounter issues with any of the above; and
? experience protracted COVID-19 related delays.
We expect to continue to incur significant expenses and losses for at least the
next several years. Accordingly, we anticipate that we will need to raise
additional capital in order to obtain regulatory approval for, and the
commercialization of, our therapeutic candidates. Until such time that we can
generate meaningful revenue from product sales, if ever, we expect to finance
our operating activities through public or private equity or debt financings,
government or other third-party funding and other collaborations, strategic
alliances and licensing arrangements or a combination of these approaches. If we
are unable to obtain funding on a timely basis, we may be required to
significantly curtail, delay or discontinue one or more of our research or
development programs or the commercialization of any approved therapies or
products or be unable to expand our operations or otherwise capitalize on our
business opportunities, as desired, which could adversely affect our business,
financial condition and results of operations.
SIBV License Agreement
In
(“SIBV”), an affiliate of
granted SIBV the option to license multiple programs from us and access our
MabIgX® platform technology for asset identification and selection. We received
an upfront cash payment of
In connection with the option agreement, SIBV made an equity investment whereby
we issued 801,820 shares of our restricted common stock in a private placement
to SIBV for total gross proceeds of
SAMR License Agreement
In
Agreement (the “License Agreement”) with Serum AMR Products (“SAMR”). Pursuant
to the License Agreement, we received upfront payments totaling
which
to above, and may receive milestone payments and royalty-based payments from
SAMR if certain milestones and sales levels as defined in the License Agreement
are met.
Given the equity investment by SIBV was negotiated in conjunction with the
option agreement, which resulted in the execution of the License Agreement, all
arrangements were evaluated as a single agreement and amounts were allocated to
the elements of the
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arrangement based on their fair value. We allocated the proceeds received from
the sale of the restricted common stock and upfront payment from the License
Agreement, net of issuance and contract costs, of approximately
accordingly:
we recorded approximately
? restricted common stock issued of
costs, to stockholders’ equity within our consolidated balance sheet;
we recorded approximately
?
we capitalized approximately
? approximately
approximately
Agreement. CFF License Agreement
Under the Development Program Letter Agreement with CFF (the “CFF Agreement”),
entered into in
for the development of our Inhaled Gallium Citrate Anti-Infective program, we
recognized revenue of approximately
2021
revenue we generate for the foreseeable future will fluctuate from period to
period as a result of the timing of when performance obligations and variable
consideration criteria under the contract are satisfied.
Kermode License Agreement
Under a product discovery agreement with
(“Kermode”), entered into in
candidates for African Swine Fever Virus (“ASFV”) with an option to include the
discovery of product candidates for swine influenza virus (“SIV”). For the year
ended
revenue related to the Kermode Agreement. The Company has recorded the remaining
portion of the nonrefundable upfront payment as a contract liability of
approximately
Gates Foundation License Agreement
On
and Melinda Gates Foundation
develop durable approaches to block the infection and transmission of pathogens.
For the year ended
approximately
for the remaining consideration of approximately
current, on its consolidated balance sheet as of
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results
of operations is based on our consolidated financial statements, which we have
prepared in accordance with generally accepted accounting principles in
United States
The preparation of our consolidated financial statements requires management 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
reported periods. We evaluate these estimates and judgments on an ongoing basis.
Such estimates include those related to the evaluation of our ability to
continue as a going concern, our best estimate of standalone selling price of
revenue deliverables, useful live of long lived assets, classification of
deferred revenue, income taxes, assumptions used in the Black Scholes Merton
(“BSM”) model to calculate the fair value of stock based compensation, deferred
tax asset valuation allowances, and preclinical study and clinical trial
accruals. 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. Our actual results
may differ from these estimates under different assumptions or conditions.
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We define our critical accounting policies as those accounting principles
generally accepted in
estimates and judgments about matters that are uncertain and are likely to have
a material impact on our financial condition and results of operations as well
as the specific manner in which we apply those principles. Our critical
accounting policies are primarily for revenue recognition and accrued research
and development costs. We believe the significant accounting policies used in
the preparation of our consolidated financial statements are as follows:
Revenue Recognition
We recognize revenue based on Accounting Standards Codification (“ASC”) 606,
Revenue from Contracts with Customers (“ASC 606”), which applies to all
contracts with customers, except for contracts that are within the scope of
other standards, such as leases, insurance, collaboration arrangements and
financial instruments.
To determine revenue recognition for arrangements that we determine are within
the scope of ASC 606, we perform the following five steps: (i) identify the
contract(s) with a customer; (ii) identify the performance obligations in the
contract; (iii) determine the transaction price; (iv) allocate the transaction
price to the performance obligations in the contract; and (v) recognize revenue
at a point in time, or over time, as the entity satisfies performance
obligations. We only apply the five-step model to contracts when it is probable
that we will collect the consideration it is entitled to in exchange for the
goods or services we transfer to the customer. At contract inception, once the
contract is determined to be within the scope of ASC 606, we assess the goods or
services promised within each contract, determine those that are performance
obligations, and assess whether each promised good or service is distinct. We
then recognize as revenue the amount of the transaction price that is allocated
to the respective performance obligation when (or as) the performance obligation
is satisfied.
As part of the accounting for customer arrangements, we must use judgment to
determine: a) the number of performance obligations based on the determination
under step (ii) above; b) the transaction price under step (iii) above; and c)
the standalone selling price for each performance obligation identified in the
contract for the allocation of the transaction price in step (iv) above. We use
judgment to determine whether milestones or other variable consideration should
be included in the transaction price.
The transaction price is allocated to each performance obligation on a relative
standalone selling price basis. In developing the standalone price for a
performance obligation, we consider applicable market conditions and relevant
entity-specific factors, including factors that were contemplated in negotiating
the agreement with the customer and estimated costs. We recognize revenue as or
when the performance obligations under the contract are satisfied. We receive
payments from our customers based on payment schedules established in each
contract. We record any amounts received prior to satisfying the revenue
recognition criteria as deferred revenue on the consolidated balance sheet.
Amounts recognized as revenue, but not yet received or invoiced are recorded
within other receivables on the consolidated balance sheet. Amounts are recorded
as other receivables on the consolidated balance sheet when our right to
consideration is unconditional. We do not assess whether a contract has a
significant financing component if the expectation at contract inception is such
that the period between payment by the customer and the transfer of a majority
of the promised goods or services to the customer will be one year or less.
Research and Development Expenses
We recognize research and development expenses to operations as they are
incurred. Our research and development expenses consist primarily of:
? salaries and related overhead expenses, which include stock-based compensation
and benefits for personnel in research and development functions;
fees paid to consultants and contract research organizations, or CROs,
including in connection with our preclinical studies and clinical trials and
? other related clinical trial fees, such as for investigator grants, patient
screening, laboratory work, clinical trial material management and statistical
compilation and analyses;
? costs related to acquiring and manufacturing clinical trial materials;
? costs related to compliance with regulatory requirements; and
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? payments related to licensed products and technologies.
Costs for certain development activities are recognized based on an evaluation
of the progress to completion of specific tasks using information and data
provided to us by our vendors and clinical sites. Nonrefundable advance payments
for goods or services to be received in future periods for use in research and
development activities are deferred and capitalized. The capitalized amounts are
then expensed as the related goods are delivered or when the services are
performed.
We plan to increase our research and development expenses for the foreseeable
future as we continue to develop our therapeutic programs, and subject to the
availability of additional funding, further advance the development of our
therapeutic candidates for additional indications and begin to conduct clinical
trials.
The process of conducting the necessary clinical research to obtain regulatory
approval is costly and time-consuming, and the successful development of our
therapeutic candidates 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 the
commercialization and sale of any of our therapeutic candidates.
Stock-Based Compensation
We recognize compensation expense for all stock-based awards based on the
grant-date estimated fair values, which we determine using the BSM option
pricing model, on a straight-line basis over the requisite service period for
the award. We account for forfeitures as they occur.
The BSM option pricing model incorporates various highly sensitive assumptions,
including the fair value of our common stock, expected volatility, expected term
and risk-free interest rates. The weighted average expected life of options was
calculated using the simplified method as prescribed by the
Accounting Bulletin, Topic 14 (“SAB Topic 14”). This decision was based on the
lack of relevant historical data due to our limited historical experience. In
addition, due to our limited historical data, the estimated volatility also
reflects the application of SAB Topic 14, incorporating the historical
volatility of comparable companies whose stock prices are publicly available.
The risk-free interest rate for the periods within the expected term of the
option is based on the
dividend yield was zero, as we have never declared or paid dividends and have no
plans to do so in the foreseeable future.
Income Taxes
We account for income taxes under the liability method. Under this method,
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary to
reduce deferred tax assets to the amounts expected to be realized. For the years
ended
recognized, primarily due to a full valuation allowance recorded against the net
deferred tax asset.
We assess all material positions taken in any income tax return, including all
significant uncertain positions, in all tax years that are still subject to
assessment or challenge by the relevant taxing authorities. Assessing an
uncertain tax position begins with the initial determination of the position’s
sustainability and is measured at the largest amount of benefit that is greater
than fifty percent likely of being realized upon ultimate settlement. At each
balance sheet date, unresolved uncertain tax positions must be reassessed, and
we determine whether (i) the factors underlying the sustainability assertion
have changed and (ii) the amount of the recognized benefit is still appropriate.
The recognition and measurement of tax benefits requires significant judgment.
Judgments concerning the recognition and measurement of a tax benefit might
change as new information becomes available.
Going Concern
We assess and determine our ability to continue as a going concern under the
provisions of ASC 205-40, Presentation of Financial Statements-Going Concern,
which requires us to evaluate whether there are conditions or events that raise
substantial doubt about our ability to continue as a going concern within
one year after the date that our annual and interim consolidated financial
statements are issued. Certain additional financial statement disclosures are
required if such conditions or events are identified. If and when an entity’s
liquidation becomes imminent, financial statements should be prepared under the
liquidation basis of accounting.
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Determining the extent, if any, to which conditions or events raise substantial
doubt about our ability to continue as a going concern, or the extent to which
mitigating plans sufficiently alleviate any such substantial doubt, as well as
whether or not liquidation is imminent, requires significant judgment by us. We
have determined that there is substantial doubt about our ability to continue as
a going concern for at least the one-year period following our consolidated
financial statements issuance date, which have been prepared assuming that we
will continue as a going concern. We have not made any adjustments to reflect
the possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of us to continue as a going concern.
Results of Operations
Comparison of the Years Ended
The following table summarizes our results of operations for the years ended
Year Ended
December 31,
2021 2020 Change
Revenue:
Grant revenue $ 1,535 $ 1,000 $ 535
Operating expenses:
Research and development 36,936 16,956 19,980
General and administrative 7,310 6,445 865
Total operating expenses 44,246 23,401 20,845
Loss from operations (42,711) (22,401) (20,310)
Other (expense) income:
Interest (expense) income, net (245) 77 (322)
Other income 74 - 74
Gain on extinguishment of Paycheck Protection Program loan 722 - 722
Change in fair value of note payable (33) - (33)
Share of loss from equity method investment - (9) 9
Net loss $ (42,193) $ (22,333) $ (19,860)
Grant Revenue. Grant revenue increased by approximately
year ended
from the CFF,
2020.
Research and Development Expenses. Research and development expenses increased
by approximately
from
? an increase of approximately
Medimmune;
? an increase of approximately
clinical trial oversight costs;
? an increase of approximately
license;
? an increase of approximately
? an increase of approximately
related costs;
General and Administrative Expenses. General and administrative expenses
increased by approximately
primarily to increases in professional service fees, franchise tax and
recruitment expense to attract talent.
Interest Expense, Net. Interest expense, net for the year ended
2021
Agreement with
primarily of interest earned on our cash balances for the year ended
31, 2020
Gain on extinguishment of Paycheck Protection Program loan. This relates to the
forgiveness of this loan during the year ended
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Change in fair value of note payable. This relates primarily to the change in
fair value of the note payable pursuant to the Note Purchase Agreement with
Share of Loss in
decreased by approximately
from
minority interest calculated under the equity method was limited to the
reduction of the net book value of the investment to zero as of
Other Income. Other income increased by approximately
year ended
sublease agreement we entered into with a tenant on
small portion of our
Liquidity, Capital Resources and Going Concern
As of
equivalents and restricted cash and had an accumulated deficit of approximately
In
(“SVB”) in the aggregate amount of approximately
to the Paycheck Protection Program (the “PPP”). The PPP, established as part of
the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provided
for loans to qualifying businesses for amounts up to 2.5 times of the average
monthly payroll expenses of the qualifying business. In
notification that the PPP Loan was ultimately forgiven and we were legally
released from being the Loan’s primary obligor. The extinguishment of the
liability was recognized in our consolidated statement of operations as an
extinguishment of debt gain.
In
2020
“Purchasers”), pursuant to which we agreed to offer, issue and sell to the
Purchasers, (i) in a registered direct offering, an aggregate of 1,134,470
shares (the “Shares”) of common stock, par value
Stock”) and (ii) in a concurrent private placement, Series A warrants (the
“Series A Warrants”) and Series B warrants (the “Series B Warrants” and
collectively, with the Series A Warrants, the “Warrants”) to purchase up to an
aggregate 567,234 shares (the “Warrant Shares”) of Common Stock, for aggregate
gross proceeds to us of approximately
offering expenses payable by us. We agreed to pay
equal to 3.5% of the aggregate purchase price of the shares of its common stock
sold in the offering to certain of the investors. In addition, we agreed to pay
the shares of its common stock sold in the offering.
In
institutional and individual investors, pursuant to which we agreed to offer,
issue and sell to these investors, in a registered direct offering, an aggregate
of 1,037,405 shares of our common stock for aggregate gross proceeds to us of
approximately
net proceeds were approximately
As a result of the
less than the
obligated to issue an additional 124,789 shares of unregistered common stock to
the investors in our
anti-dilutive provisions of the
in
as a credit to additional paid-in capital, and since we have an accumulated
deficit, the corresponding debit to additional paid-in capital, resulting in no
dollar impact within our consolidated statement of changes in stockholders’
equity (deficit).
On
institutional investor, pursuant to which we agreed to offer, issue and sell to
this investor, in a registered direct offering, 1,300,000 shares of our common
stock, pre-funded warrants to purchase up to an aggregate of 3,647,556 shares of
our common stock (the “Pre-Funded Warrants”), and warrants to purchase up to
2,473,778 shares of our common stock (the “Warrants”). The combined purchase
price of each share of common stock and accompanying Warrants is
share. The combined purchase price of each Pre-Funded Warrant and accompanying
Warrant is
stock and accompanying Warrant, minus
approximately
expenses and our estimated offering expenses, net proceeds were approximately
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As a result of the
less than the
share, we were obligated to issue an additional 634,600 shares of unregistered
common stock to the investors in our
direct offerings pursuant to the anti-dilutive provisions of the
and
shares to our common stockholders, who purchased in
with a fair value of approximately
additional paid-in capital, and since we have an accumulated deficit, the
corresponding debit to additional paid-in capital, resulting in no dollar impact
within our consolidated statement of changes in stockholders’ equity (deficit).
The Company entered into a Note Purchase Agreement with
LLC
promissory note (the “Note”) in the aggregate principal amount of
Closing occurred on
original issue discount of
per annum and matures on
discount fee were
The Company obtained financing for certain Director & Officer liability
insurance policy premiums from
taxes and fees financed is approximately
interest rate of 3.67%. At
approximately
balance sheet.
We have had recurring losses from operations since inception and negative cash
flows from operating activities during the years ended
2020. We anticipate that we will continue to generate operating losses and use
cash in operations through the foreseeable future. Management plans to finance
operations through equity or debt financings or other capital sources, including
potential collaborations or other strategic transactions. There can be no
assurances that, in the event that we require additional financing, such
financing will be available on terms which are favorable to us, or at all. If we
are unable to raise additional funding to meet our working capital needs in the
future, we will be forced to delay or reduce the scope of our research programs
and/or limit or cease our operations. We believe that our current available cash
and cash equivalents, along with the additional cash received in
from additional debt funding, will not be sufficient to fund our planned
expenditures and meet our obligations for at least the one-year period following
our consolidated financial statements issuance date. There is substantial doubt
about our ability to continue as a going concern unless we are able to
successfully raise additional capital.
Cash Flows
Our net cash flow from operating, investing and financing activities for the
periods below were as follows (in thousands):
December 31,
2021 2020
Net cash provided by (used in):
Operating activities $ (22,936) $ (20,476)
Investing activities (530) (367)
Financing activities 34,720 8,678
Net increase (decrease) in cash and cash equivalents
Cash Flows from Operating Activities.
Net cash used in operating activities was approximately
year ended
approximately
in accrued liabilities and other, an increase of approximately
accounts payables, an increase of approximately
and other receivables, an increase of approximately
issuance of common stock for licensing activities, and non-cash charges of
approximately
Net cash used in operating activities was approximately
the year ended
approximately
capitalized contract costs, resulting from the SAMR License Agreement entered
into in 2019, a decrease of approximately
other, a decrease of approximately
of approximately
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cash used in operating activities was partially offset by a decrease of
approximately
related to stock-based compensation and approximately
and amortization.
Cash Flows from Investing Activities.
Cash used in investing activities of approximately
ended
the purchase of lab equipment.
Cash used in investing activities of approximately
ended
diagnostic use in clinical trials, and improvements to our new leased facility
in
Cash Flows from Financing Activities.
Net cash provided by financing activities of approximately
the year ended
of common stock and common stock warrants of approximately
proceeds received from notes payable of approximately
Net cash provided by financing activities of approximately
the year ended
registered direct offering of our common stock and a concurrent private
placement of common stock warrants of approximately
received from the PPP Loan of approximately
our ATM Agreement of approximately
option exercises of approximately
Future Funding Requirements
To date, we have generated revenue from grants and contract services performed
and funding from the issuance of convertible preferred stock and common stock
sales. We do not know when, or if, we will generate any revenue from our
development stage therapeutic programs. We do not expect to generate any revenue
from sales of our therapeutic candidates unless and until we obtain regulatory
approval. At the same time, we expect our expenses 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 therapeutic candidates. We expect to incur additional costs associated with
operating as a public Company. In addition, subject to obtaining regulatory
approval of any of our therapeutic candidates, we expect to incur significant
commercialization expenses for product sales, marketing, manufacturing and
distribution. We anticipate that we will need additional funding in connection
with our continuing operations.
Our future funding requirements will depend on many factors, including:
? the progress, costs, results and timing of our clinical trials;
? FDA acceptance, if any, of our therapies for infectious diseases and for other
potential indications;
? the outcome, costs and timing of seeking and obtaining FDA and any other
regulatory approvals;
? the number and characteristics of product candidates that we pursue, including
our product candidates in preclinical development;
? the ability of our product candidates to progress through clinical development
successfully;
? our need to expand our research and development activities;
? the costs of acquiring, licensing or investing in businesses, products, product
candidates and technologies;
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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;
? the effect of the COVID-19 pandemic on our business and operations;
? our need and ability to hire additional management and scientific, medical and
administrative personnel;
? the effect of competing technological and market developments; and
? our need to implement additional internal systems and infrastructure, including
financial and reporting systems.
Until such time that we can generate meaningful revenue from the sales of
approved therapies and products, if ever, we expect to finance our operating
activities through public or private equity or debt financings, government or
other third-party funding, and other collaborations, strategic alliances and
licensing arrangements or a combination of these approaches. 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 diluted,
and the terms of these securities may include liquidation or other preferences
that adversely affect the rights of our common stockholders. Debt financing, if
available, may involve agreements that include conversion discounts or covenants
limiting or restricting our ability to take specific actions, such as incurring
additional debt, making capital expenditures or declaring dividends. If we raise
additional funds through government or other third-party funding, marketing and
distribution arrangements or other collaborations, or strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights to our technologies, future revenue streams, research programs or product
candidates or to grant licenses on terms that may not be favorable to us.
Off-Balance Sheet Arrangements
During the periods presented we did not have, nor do we currently have, any
off-balance sheet arrangements as defined under the rules of the
JOBS Act Accounting Election
The JOBS Act permits an “emerging growth Company” such as us to take advantage
of an extended transition period to comply with new or revised accounting
standards applicable to public companies. We are choosing to take advantage of
this provision and, as a result, we will adopt the extended transition period
available under the JOBS Act until the earlier of the date we (i) are no longer
an emerging growth Company or (ii) affirmatively and irrevocably opt out of the
extended transition period provided under the JOBS Act.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements applicable to us is
included in the notes to our consolidated financial statements included
elsewhere in this Annual Report on Form 10-K.
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