The beneath dialogue must be learn together with Management's Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated monetary statements and notes thereto for the 12 months endedDecember 31, 2021 included in our Annual Report on Form 10-Okay for the 12 months endedDecember 31, 2021 and with the monetary statements and the notes thereto contained elsewhere on this report. Certain info contained within the dialogue and evaluation set forth beneath contains forward-looking statements that contain dangers and uncertainties.
Overview
We are a clinical-stage biopharmaceutical firm centered on leveraging our in depth growth and oncology experience to advance new therapies meant to deal with unmet medical wants for the therapy of most cancers. Our present pipeline is completely derived from the Bayer License Agreement, pursuant to which we have now been granted an unique, royalty-bearing, worldwide license beneath sure Bayer patents and know-how to develop, use, manufacture, commercialize, sublicense and distribute (i) a clinical-stage and follow-on small molecule drug program and (ii) a preclinical stage bioconjugation platform, which incorporates next-generation antibody-drug conjugates and small molecule drug conjugates. We intend to make use of these product candidates to deal with numerous cancers in a patient-specific, focused strategy. We consider that these product candidates are differentiated from present applications concentrating on related most cancers biology and, if accredited, could enhance medical outcomes of sufferers with most cancers. Despite a number of a long time of advances in focused therapies, most cancers continues to be the second main trigger of demise inthe United States inhabitants per theNational Center for Health Statistics . Cancer will not be a single illness however quite a constellation of maladies with every requiring a novel strategy to conquer it. Our imaginative and prescient is to deal with the unmet medical wants of sufferers with most cancers with a various pipeline of focused medicines. Our small molecule drug program contains enitociclib, which is a extremely selective, clinical-stage PTEFb/CDK9 inhibitor. Our ADC platform contains VIP943 and VIP924, that are next-generation ADC compounds addressing recognized and novel oncology targets that we consider may ship a higher security and efficacy profile than present ADC compounds. The bioconjugation program additionally contains VIP236, an SMDC for stable tumors. In addition to our lead merchandise, we acquired the rights to extra product candidates which can be nonetheless within the preclinical stage.
License Agreement with Bayer
Following the closing of the Business Combination, we paid Bayer a$5.0 million upfront license price beneath the Bayer License Agreement. In addition, we shall be answerable for vital growth and industrial milestone funds to Bayer in addition to ongoing royalties on industrial gross sales. See the dialogue beneath beneath "Liquidity and Capital Resources."
Basis of Presentation
We at the moment conduct our enterprise via one working phase. As a pre-revenue firm with no industrial operations, our actions thus far have been restricted and have been performed primarily inthe United States . Our historic outcomes are reported beneath GAAP and inU.S. {dollars}. 15
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Components of Results of Operations
We are a analysis and growth stage firm and our historic outcomes could not be indicative of our future outcomes for causes that could be tough to anticipate. Accordingly, the drivers of our future monetary outcomes, in addition to the elements of such outcomes, might not be similar to our historic outcomes of operations. Revenue To date, we have now not acknowledged any income from any sources, together with from product gross sales, and we don't count on to generate any income from the sale of merchandise within the foreseeable future. If our growth efforts for our product candidates are profitable and end in regulatory approval, or license agreements with third events, we could generate income sooner or later from product gross sales. However, there could be no assurance as to once we will generate such income, if in any respect.
Research and Development Expense
Research and growth bills consist or will consist of preclinical growth of our product candidates and discovery efforts (together with conducting preclinical research), manufacturing growth efforts, making ready for and conducting medical trials, and actions associated to regulatory filings for our product candidates. Research and growth bills are acknowledged as incurred and funds made previous to the receipt of items or providers for use in analysis and growth are capitalized till the products or providers are acquired. Costs incurred in acquiring expertise licenses via asset acquisitions are charged to analysis and growth expense if the licensed expertise has not reached technological feasibility and has no various future use. Research and growth bills embrace or may embrace: • employee-related bills, together with salaries, bonuses, advantages, stock-based compensation and different associated prices for these staff concerned in analysis and growth efforts; • exterior analysis and growth bills incurred beneath agreements with medical analysis organizations, investigative websites and consultants to conduct our preclinical research;
• prices associated to manufacturing materials for preclinical research and
medical trials, together with charges paid to contract manufacturing organizations; • laboratory provides and analysis supplies; • prices associated to compliance with regulatory necessities; and
• amenities, depreciation and different allotted bills, which embrace
direct and allotted bills for hire, upkeep of
amenities,
insurance coverage and gear. Research and growth actions are central to our enterprise mannequin. Product candidates in later levels of medical growth typically have larger growth prices than these in earlier levels of medical growth, primarily as a result of elevated dimension and period of later-stage medical trials. We anticipate that our analysis and growth bills will enhance within the future as we proceed to develop our product candidates and manufacturing processes and conduct discovery and analysis actions for our preclinical and medical applications. We can not decide with certainty the timing of initiation, the period or the completion prices of present or future preclinical research and medical trials of our product candidates as a result of inherently unpredictable nature of preclinical and medical growth. Clinical and preclinical growth timelines, the likelihood of success and growth prices can differ materially from expectations. We anticipate that we'll make determinations as to which product candidates to pursue and how a lot funding to direct to every product candidate on an ongoing foundation in response to the outcomes of ongoing and future preclinical research and medical trials, regulatory developments and our ongoing assessments as to every product candidate's industrial potential. We might want to elevate substantial extra capital in the long run. Our medical growth prices are anticipated to extend considerably as we begin, proceed and broaden our medical trials. Our future bills could differ considerably every interval primarily based on elements reminiscent of: • bills incurred to conduct preclinical research required to advance our product candidates into medical trials, together with the affect of elements reminiscent of inflation, provide chain disruptions and the continued COVID-19 pandemic; • per affected person medical trial prices, together with primarily based on the quantity of doses that sufferers obtain and the fee of drug merchandise for mixture therapies; • the quantity of sufferers who enroll in every medical trial; • the quantity of medical trials required for approval; • the quantity of websites included within the medical trials; • the international locations wherein the medical trials are performed; • the size of time required to enroll eligible sufferers; 16
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Table of Contents • the drop-out or discontinuation charges of sufferers;
• potential extra security monitoring requested by regulatory businesses;
• the period of affected person participation within the medical trials and follow-up; • the section of growth of the product candidate;
• third get together contractors failing to adjust to regulatory necessities
or meet their contractual obligations to us in a well timed
method, or at all;
• the fee of insurance coverage, together with product legal responsibility insurance coverage, in
reference to medical trials; • regulators or institutional overview boards requiring that we or our investigators droop or terminate medical growth for numerous causes, together with noncompliance with regulatory necessities or a discovering that the members are being uncovered to unacceptable well being dangers; and • the efficacy and security profile of our product candidates.
General and Administrative Expenses
General and administrative bills consist or will consist principally of salaries and associated prices for personnel in govt and administrative capabilities, together with stock-based compensation, journey bills and recruiting bills. Other normal and administrative bills embrace skilled charges for authorized, accounting and tax-related providers and insurance coverage prices. We anticipate that our normal and administrative bills will enhance within the future as we broaden our operations and infrastructure to assist the initiation, continuation and growth of our preclinical research and medical trials for our product candidates. We additionally anticipate that our normal and administrative bills will enhance because of this of funds for accounting, audit, authorized and consulting providers, in addition to prices related to sustaining compliance with Nasdaq itemizing guidelines andSEC necessities, director and officer legal responsibility insurance coverage, investor and public relations actions and different bills related to working as a public firm.
Change in Fair Value of Warrant Liabilities
Certain of our personal warrants are categorized as liabilities pursuant to ASC 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity. The change in honest worth of warrant liabilities consists of the change in honest worth of these personal warrants. 17
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Results of Operations
Comparison of the Three and Six Months Ended
The following tables set forth our historic working outcomes for the intervals
indicated (quantities in 1000’s):
For the three months ended June 30, 2022 2021 Amount Change Operating bills: General and administrative$ 4,722 $ 6,695 $ (1,973 ) Research and growth 13,742 10,698 3,044 Restructuring 1,159 - 1,159 Total working bills 19,623 17,393 2,230 Loss from operations (19,623 ) (17,393 ) (2,230 ) Other earnings Change in honest worth of warrant liabilities 1,202 15,359 (14,157 ) Total different earnings 1,202 15,359 (14,157 ) Net loss$ (18,421 ) $ (2,034 ) $ (16,387 ) For the six months ended June 30 2022 2021 Amount Change Operating bills: General and administrative$ 10,378 $ 11,486 $ (1,108 ) Research and growth 29,713 15,532 14,181 Restructuring 1,159 - 1,159 Total working bills 41,250 27,018 14,232 Loss from operations (41,250 ) (27,018 ) (14,232 ) Other earnings (expense) Change in honest worth of warrant liabilities 6,413 18,708 (12,295 ) Other expense (8 ) - (8 ) Total different earnings (expense) 6,405 18,708 (12,303 ) Net loss$ (34,845 ) $ (8,310 ) $ (26,535 )
Research and Development
Research and growth bills elevated by roughly$3.0 million and$14.2 million , respectively, for the three and six months endedJune 30, 2022 in comparison with the three and six months endedJune 30, 2021 . The enhance for the six months endedJune 30, 2022 in comparison with the identical interval in 2021 primarily associated to will increase in manufacturing providers of roughly$5.5 million , together with the initiation of manufacturing related to our ADC program, new worker salaries of roughly$2.4 million , third get together analysis and preclinical work of roughly$4.6 million , and medical providers of roughly$3.1 million , partially offset by a decline in stock-based compensation of roughly$1.4 million .
General and Administrative
General and administrative bills decreased by roughly$2.0 million and$1.1 million , respectively, for the three and six months endedJune 30, 2022 in comparison with the three and six months endedJune 30, 2021 , primarily because of this of declines in stock-based compensation expense of$1.1 million and$1.3 million for the three- and six-month intervals, respectively. Restructuring OnJune 4, 2022 , the Board of Directors of the Company accredited a strategic plan to prioritize and focus its assets on its ongoing enitociclib medical research for double-hit diffuse massive B-cell lymphoma and persistent lymphocytic leukemia and its subsequent technology bioconjugation platform and streamline and realign its assets to assist these prioritized research. This plan features a discount of the Company's full-time staff by 33% and different value discount measures. Affected staff have been provided separation advantages, together with severance and reimbursement of healthcare premium funds.
We have incurred roughly
via
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Change in Fair Value of Warrant Liabilities
The change in honest worth of warrant liabilities was primarily as a result of
lower within the closing worth of our frequent inventory from
2021
Liquidity and Capital Resources
To date, we have now not generated any income from any supply, together with the industrial sale of accredited drug merchandise, and we don't count on to generate income within the foreseeable future. If we fail to finish the event of our product candidates in a well timed method or fail to acquire their regulatory approval, our skill to generate future income shall be adversely affected. We have no idea when, or if, we are going to generate any income from our product candidates, and we don't count on to generate income except and till we acquire regulatory approval of, and commercialize, our product candidates. We count on our bills to extend in reference to our ongoing actions, notably as we proceed the analysis and growth and preclinical research of, provoke, proceed and broaden medical trials of, and search advertising approval for, our product candidates. In addition, if we acquire approval for any of our product candidates, we count on to incur vital commercialization bills associated to gross sales, advertising, manufacturing and distribution. Furthermore, we count on to incur extra prices related to working as a public firm. We can even be answerable for vital funds to Bayer beneath the Bayer License Agreement. We paid Bayer an upfront license price of$5.0 million following the closing of the Business Combination. In addition, we can even be accountable to Bayer for vital future contingent funds beneath the Bayer License Agreement upon the achievement of sure growth and industrial gross sales milestones in addition to ongoing royalties on web industrial gross sales. The dimension and timing of these milestone funds will differ vastly relying on elements reminiscent of the actual licensed product, whether or not it entails a PTEFb licensed product or a bioconjugation licensed product (and which bioconjugation program), the quantity of distinct illness indications, the quantity of completely different international locations with respect to which the milestone is achieved and the extent of web industrial gross sales, and it's subsequently tough to estimate the whole funds that would grow to be payable to Bayer and when these funds could be due. If we obtain all of the milestones for every of the international locations and illness indications, we'd be obligated to pay growth and industrial milestone funds that vary from$110.0 million to as much as$318.0 million per licensed product, and upon profitable commercialization of no less than 5 licensed merchandise, we might be required to pay mixture milestone funds in extra of$1.0 billion . We shall be required to pay sure of these milestone funds previous to the time at which we're in a position to generate ample income, if any, from industrial gross sales of any of our product candidates. In addition to milestone funds, we're additionally required to pay Bayer beneath the Bayer License Agreement ongoing royalties within the single digit to low double-digit share vary on web industrial gross sales of licensed merchandise. We subsequently anticipate that we'll want substantial extra funding in reference to our persevering with operations. AtJune 30, 2022 , we had roughly$80.9 million in money. We intend to commit our capital assets to the preclinical and medical growth of our product candidates, our public firm compliance prices and sure of the milestone funds beneath the Bayer License Agreement. InJune 2022 , our board of administrators accredited a strategic plan to prioritize and focus our assets on our ongoing enitociclib medical research for double-hit DLBCL and CLL and our subsequent technology bioconjugation platform and to streamline and realign our assets, together with a 33% workforce discount, to assist these prioritized research and applications and lengthen our estimated money runway. Based on our present enterprise plans and assumptions, we consider our current money will allow us to fund our working bills and capital necessities into late 2024. Our estimate as to how lengthy we count on our capital to have the ability to fund our working bills and capital necessities is predicated on plans and assumptions that will show to be fallacious, and we may use our obtainable capital assets prior to we at the moment count on. Changing circumstances, some of which can be past our management, may end in much less money obtainable to us or trigger us to devour capital considerably quicker than we at the moment anticipate, and we could want or select to hunt extra funds prior to deliberate. Because of the quite a few dangers and uncertainties related to analysis, growth, manufacturing, medical trials and commercialization of pharmaceutical drug merchandise, we're unable to estimate the precise quantity of our working capital necessities. Our future funding necessities will rely on many elements, together with, however not restricted to:
• the extent to which we develop,
in-license or purchase different product candidates and applied sciences in our product candidate pipeline;
• the prices and timing of analysis actions, medical trials, course of
growth and manufacturing scale-up actions related to our product candidates and different applications as we advance them via preclinical and medical
growth;
• the quantity and growth necessities of product candidates that we
could pursue; • the prices, timing and final result of regulatory overview of our product candidates; • the timing and quantity of our milestone funds to Bayer beneath the Bayer License Agreement; 19
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• our headcount progress and related prices as we broaden our analysis and growth capabilities and set up and broaden our industrial infrastructure and operations; • the prices and timing of future commercialization actions, together with product manufacturing, advertising, gross sales and distribution, for any of our product candidates for which we obtain advertising approval; • royalty funds to Bayer beneath the Bayer License Agreement; • the prices and timing of making ready, submitting and prosecuting patent functions, sustaining and imposing our mental property rights and defending any mental property-related claims;
• the income, if any, acquired from industrial gross sales of our product
candidates for which we obtain advertising approval; and • the prices of working as a public firm. Identifying potential product candidates and conducting preclinical research and medical trials is a time-consuming, costly and unsure course of that takes a few years to finish, and we could by no means generate the mandatory information or outcomes required to acquire advertising approval and obtain product gross sales. In addition, our product candidates, if accredited, could not obtain industrial success. Our industrial revenues, if any, shall be derived from gross sales of product candidates that we don't count on to be commercially obtainable within the close to time period, if in any respect. Accordingly, we might want to proceed to depend on extra financing to attain our enterprise goals. To the extent that we elevate extra capital via the sale of fairness or convertible debt securities, the possession curiosity of our stockholders shall be or might be diluted, and the phrases of these securities could embrace liquidation or different preferences that adversely have an effect on the rights of our stockholders. Any future debt financing and fairness financing, if obtainable, could contain covenants limiting and proscribing our skill to take particular actions, reminiscent of incurring extra debt, making capital expenditures, getting into into profit-sharing or different preparations or declaring dividends. If we elevate extra funds via collaborations, strategic alliances or advertising, distribution or licensing preparations with third events, we could also be required to relinquish invaluable rights to our applied sciences, future income streams, analysis applications or product candidates or to grant licenses on phrases that might not be favorable to us, or in any respect, notably in gentle of present financial or market circumstances. We shouldn't have any dedicated exterior supply of funds. Market volatility ensuing from the COVID-19 pandemic, present financial and market circumstances and the Russian invasion ofUkraine , or different elements, may additionally adversely affect our skill to entry capital as and when wanted. Our failure to boost capital as and when wanted or on acceptable phrases would have a destructive affect on our monetary situation and our skill to pursue our enterprise technique, and we could need to delay, scale back the scope of, droop or get rid of a number of of our research-stage applications, medical trials or future commercialization efforts.
The
COVID-19
pandemic continues to evolve, and because of this, we're persevering with to evaluate the impact that it may have on our enterprise and operations. The extent to which COVID-19 could affect our enterprise and operations will rely on future developments that are extremely unsure and can't be predicted with confidence, reminiscent of period of the pandemic, the emergence and severity of new variants of the virus, extra or modified authorities actions, new info regarding the severity and affect of the virus, the timing, availability, efficacy, adoption and distribution of vaccines or different preventative remedies, journey restrictions, quarantines, social distancing necessities and enterprise closures, and different actions taken to comprise the virus or handle its affect. We don't but know the complete extent of potential delays or impacts on our enterprise and operations, our medical trials, our analysis applications, healthcare techniques or the worldwide financial system. While the potential financial affect introduced by, and the period of, COVID-19 could also be tough to evaluate or predict, it may end in a recession or different vital disruption of world monetary markets, decreasing our skill to entry capital, which may negatively have an effect on our liquidity, our enterprise and the worth of our frequent inventory.
Cash Flows
The following desk supplies a abstract of our money circulation information for the intervals
indicated (quantities in 1000’s):
For the six months endedJune 30, 2021 2021
Net money utilized in working actions
Net money utilized in investing actions $ –
Net money supplied by financing actions
Cash Flows from Operating Activities
Our money flows utilized in working actions thus far have been primarily comprised of payroll and skilled service charges associated to analysis and growth, medical trials and normal and administrative actions. As we proceed to broaden medical trials of, and search advertising approval for, our product candidates, we count on our money utilized in working actions to extend earlier than we begin to generate any materials money flows from our enterprise. 20
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Net money utilized in working actions was roughly$30.9 million for the six months endedJune 30, 2022 , consisting primarily of funds to medical and manufacturing service suppliers, inner payroll prices and third-party skilled providers as we construct our public firm infrastructure and put together for and conduct our medical trials. Our web loss throughout the six months endedJune 30, 2022 was roughly$34.8 million , which included roughly$8.6 million associated to stock-based compensation and offset by roughly$6.4 million associated to the change in honest worth of warrant liabilities. Off-Balance Sheet Arrangements We aren't a celebration to any off-balance sheet preparations, as outlined beneathSEC guidelines.
Critical Accounting Policies and Estimates
Our dialogue and evaluation of our monetary situation and outcomes of operations are primarily based on our monetary statements, which have been ready in accordance with GAAP. The preparation of these monetary statements requires us to make estimates and judgments that have an effect on our reported quantities of belongings, liabilities, revenues and bills. On an ongoing foundation, we consider our estimates and judgments, together with these associated to spinoff liabilities, accrued bills and stock-based compensation. We primarily based our estimates on historic expertise and on numerous different assumptions that we consider to be affordable beneath the circumstances, the outcomes of which type the premise for making judgments in regards to the carrying values of belongings and liabilities and the reported quantities of revenues and bills that aren't readily obvious from different sources. Actual outcomes may differ from these estimates, notably given the numerous social and financial disruptions and uncertainties related to the continued COVID-19 pandemic and the opposite dangers and uncertainties set forth on this report within the part entitled "Risk Factors." Our important accounting insurance policies and vital estimates are detailed in our Annual Report on Form 10-Okay for the 12 months endedDecember 31, 2021 . Our important accounting insurance policies and vital estimates haven't modified considerably from these beforehand disclosed in our Annual Report on Form 10-Okay for the 12 months endedDecember 31, 2021 .
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