The condensed consolidated financial statements (unaudited) included in this
Quarterly Report on Form 10-Q and this Management’s Discussion and Analysis of
Financial Condition and Results of Operations should be read in conjunction with
the financial statements and notes thereto for the year ended
and the related Management’s Discussion and Analysis of Financial Condition and
Results of Operations, contained in the Annual Report on Form 10-K filed with
the
and analysis or set forth elsewhere in this Quarterly Report, including
information with respect to our plans and strategy for our business, includes
forward-looking statements that involve risks and uncertainties. As a result of
many factors, including those factors set forth in the “Risk Factors” section of
this Quarterly Report, our actual results could differ materially from the
results described in, or implied by, the forward-looking statements contained in
the following discussion and analysis. All amounts in this report are in
dollars, 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 proprietary product pipeline is comprised of
fully human mAbs targeting specific pathogens associated with life threatening
bacterial and viral infections, primarily hospital acquired pneumonia, or HAP,
ventilator associated pneumonia, or VAP, cystic fibrosis, and COVID-19 Our
clinical stage product candidates have exhibited promising preclinical data and
clinical data.
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.
Current clinical development activities are focused on AR-301, AR-320, AR-701,
and AR-501. Our lead product candidates, AR-301 and AR-320, target gram positive
bacteria Staphylococcus aureus, or S. aureus, a common pathogen associated with
HAP and VAP. 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
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.
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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 infections associated with cystic fibrosis. In
announced positive 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
Fibrosis Foundation
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 the second half of 2022.
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 intent 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.
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.
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,
AR-701 and AR-501. Our expenses and resulting cash burn during the three months
ended
associated with the Phase 3 study of AR-301 for the treatment of VAP caused by
the S. aureus bacteria, preclinical development of AR-701 COVID-19 mAbs, 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
year ended
approximately
deficit of approximately
have resulted 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.
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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 condensed 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, license agreements, fees for services performed, issuances of
convertible debt and the sale of our common and 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;
? 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
? risks associated with delays, increased costs and funding shortages caused by
or resulting from the COVID-19 pandemic;
? Experience continued global disruptions associated with the conflict between
Russian and
We expect to continue to incur significant expenses and increasing 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.
Our management’s discussion and analysis of our financial condition and results
of operations is based on our condensed consolidated financial statements, which
we have prepared in accordance with generally accepted accounting principles in
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The preparation of our condensed 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 life 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.
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 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 condensed consolidated balance
sheet. Amounts recognized as revenue, but not yet received or invoiced are
recorded within other receivables on the condensed consolidated balance sheet.
Amounts are recorded as other receivables on the condensed 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.
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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
? 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.
The significant accounting policies used in the preparation of our condensed
consolidated financial statements are as follows:
General and Administrative Expenses
General and administrative expenses consist primarily of costs related to
executive, finance, corporate development and administrative support functions,
including stock-based compensation expenses and benefits for personnel in
general and administrative functions. Other significant, general and
administrative expenses include rent, accounting and legal services, obtaining
and maintaining patents or other intellectual property rights, the cost of
various consultants, occupancy costs, insurance premiums and information systems
costs.
We expect that our general and administrative expenses will increase as we
continue to operate as a public company, continue to conduct our clinical trials
and prepare for commercialization. We believe that these increases will likely
include increased costs for director and officer liability insurance, costs
related to the hiring of additional personnel to support product
commercialization efforts and increased fees for outside consultants, attorneys
and accountants. We also expect to incur increased costs to comply with
corporate governance, internal controls, investor relations and disclosures, and
similar requirements applicable to public companies.
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.
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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.
Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended
March 31,
2022 2021 Change $
(unaudited) (unaudited)
Revenue:
Grant revenue $ 1,187 $ - $ 1,187
Operating expenses:
Research and development 6,450 4,955 1,495
General and administrative 2,161 1,944 217
Total operating expenses 8,611 6,899 1,712
Loss from operations (7,424) (6,899) (525)
Other income (expense):
Interest income, net (248) 1 (249)
Other income 22 7 15
Change in fair value of note payable (116) - (116)
Net loss $ (7,766) $ (6,891) $ (875)
Grant Revenue. Grant revenue was
ended
months ended
Research and Development Expenses. Research and development expenses increased
by approximately
months ended
ended
? an increase of approximately
our Phase 3
? clinical trial evaluating AR-320 for the prevention of VAP; an increase of
approximately
the initiation of the AR-320 Phase 3 clinical trial; and an increase of
? approximately
initiation of a Phase 1 clinical trial evaluating AR-701 for the treatment of
COVID-19.
These increases were partially offset by:
a decrease of approximately
? activities and drug manufacturing expenses for the Phase 3 study of our AR-301
program; and
? a decrease of approximately
clinical trial evaluating AR-501 for the treatment of cystic fibrosis.
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General and Administrative Expenses. General and administrative expenses
increased by approximately
three months ended
months ended
related costs and professional service fees.
Interest Expense, Net. Interest expense, net increased by approximately
from
for the three months ended
ended
primarily due to the original issue discount on the Note Purchase Agreement with
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
Other Income. Other income increased by approximately
the three months ended
months ended
income from a sublease agreement we entered into with a tenant on
to sublet a small portion of our
Liquidity, Capital Resources and Going Concern
As of
equivalents and had an accumulated deficit of approximately
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
fair value of approximately
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
condensed consolidated statement of changes in stockholders’ deficit for the
year ended
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
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).
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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
Agreement with
the Lender on
which are substantially similar to the first Note except the maturity date is
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
balance sheet.
We have had recurring losses from operations since inception and negative cash
flows from operating activities during the three months ended
the three months ended
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 will not be
sufficient to fund our planned expenditures and meet our obligations for at
least the one-year period following our condensed 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):
Three Months Ended
March 31,
2022 2021
Net cash provided by (used in): (unaudited) (unaudited)
Operating activities $ (10,166) $ (4,007)
Investing activities (21) (335)
Financing activities 4,443 6,582
Net increase (decrease) in cash, cash equivalents and
restricted cash
$ (5,744) $ 2,240
Cash Flows from Operating Activities.
Net cash used in operating activities was approximately
three months ended
approximately
payable, an increase of approximately
receivables, and a decrease of approximately
accrued liabilities,. The cash used in operating activities was partially offset
by an increase of approximately
agreement, and the non-cash charges of approximately
stock-based compensation, approximately
amortization, approximately
and approximately
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Net cash used in operating activities was approximately
three months ended
approximately
offset by an increase of approximately
increase of approximately
Kermode Agreement, an increase of approximately
and other, and a decrease of approximately
receivables, and the non-cash charges of approximately
stock-based compensation and approximately
amortization.
Cash Flows from Investing Activities.
Net cash used in investing activities of approximately
months ended
diagnostic use in clinical trials.
Net cash used in investing activities of approximately
months ended
diagnostic use in clinical trials, and improvements to our new leased facility
during the first quarter of 2021.
Cash Flows from Financing Activities.
Net cash provided by financing activities of approximately
the year ended
loan from
payment on financing of insurance premium during the first quarter of 2022.
Net cash provided by financing activities of approximately
the quarter ended
registered direct offering of our common stock in
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.
Recently Issued Accounting Pronouncements
Please refer to section “Recently Issued Accounting Pronouncements not yet
adopted as of
Consolidated Financial Statements.
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