Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with the audited consolidated financial statements and the related notes for the fiscal year ended December 31, 2020 included in our final prospectus (the “Final Prospectus”) filed with the Securities and Exchange Commission (the “SEC”) on July 22, 2021 pursuant to Rule 424(b)(4)of the Securities Act of 1933, as amended (the “Securities Act”).
Special Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, future revenue, business strategy, prospects, product candidates, planned and ongoing preclinical studies and clinical trials, results of preclinical studies and clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.
As a result of many factors, including but not limited to risks related to our financial position and our ability to raise additional capital as needed to fund our operations and product candidate development; risks associated with the initiation, cost, timing, progress, and results of current and future research and development programs, preclinical studies, and clinical trials; risks related to our ability to obtain and maintain regulatory approval for our product candidates; risks that our product candidates, if approved, may not gain market acceptance due to negative public opinion and increased regulatory scrutiny of cell therapies involving genome editing; risks related to our ability to meet future regulatory standards with respect to our products; risks related to our ability to establish and/or maintain intellectual property rights covering our product candidates and genome-editing technology; risks of third parties asserting that our product candidates infringe their patents; risks related to developments of our competitors and our industry; risks related to our reliance on third parties to conduct our clinical trials and manufacture our product candidates; risks caused by the impact of COVID-19 on our business and operations; and other risks described in greater detail in the section of the Final Prospectus titled “Risk Factors,” the events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Overview
We are a clinical-stage biopharmaceutical company dedicated to transforming the lives of patients with devastating diseases by applying our novel CRISPR platform, CRISPR hybrid RNA-DNA (“chRDNA,” pronounced “chardonnay”), toward the development of next-generation, genome-edited cell therapies. Our renowned founders, including a Nobel laureate, are pioneers in CRISPR genome editing. Our chRDNA technology has demonstrated superior specificity and high efficiency in preclinical studies, which enables us to perform multiple, precise genome edits, while maintaining genomic integrity.
We believe that our technology has broad potential to generate gene and cell therapies in oncology and in therapeutic areas beyond oncology, including immune cell therapies, cell therapies derived from genome-edited induced pluripotent stem cells (“iPSCs”), and in vivo genome-editing therapies.
The genome-editing technologies currently used in the allogeneic cell therapy field generally have limited efficiency, specificity, and versatility for performing the multiple, precise genome edits necessary to address insufficient persistence. Our chRDNA technology is designed to address these genome-editing limitations and improve cell therapy activity. By applying this approach to allogeneic cell therapies, we believe we can unlock their full potential by improving upon their effectiveness and durability.
We are initially focused on advancing multiple proprietary allogeneic cell therapies for the treatment of both hematologic malignancies and solid tumors against cell surface targets for which autologous chimeric antigen receptor T cell (“CAR-T”) therapeutics have previously demonstrated clinical proof of concept, including both CD19 and B cell maturation antigen (“BCMA”), as well as new emerging targets. We use our chRDNA technology to enhance, or armor, our cell therapies by creating additional genome edits to improve persistence of antitumor activity.
23
Our lead product candidate, CB-010, is, to our knowledge, the first clinical-stage allogeneic anti-CD19 CAR-T cell therapy with programmed cell death protein 1 (“PD-1”) removed from the CAR-T cell surface by a genome-edited knockout of the PDCD1 gene. We have demonstrated in preclinical models that the PD-1 knockout improves the persistence of antitumor activity by disrupting a pathway that leads to rapid T cell exhaustion. Our ANTLER phase 1 clinical trial for CB-010 is a study in patients with relapsed or refractory B cell non-Hodgkin lymphoma, with initial data expected to be disclosed in 2022. We announced in July 2021 that we had dosed the first patient in this clinical trial, and we continue to enroll patients in our ANTLER phase 1 clinical trial for CB-010.
Our CB-011 product candidate is an allogeneic CAR-T cell therapy that is, to our knowledge, the first anti-BCMA CAR-T cell therapy incorporating an immune cloaking approach that includes both the removal of the endogenous beta-2-microglobulin protein and insertion of a beta-2-microglobulin–human-leukocyte-antigen-E–peptide transgene. This strategy is designed to blunt CAR-T cell rejection by both patient T cells and natural killer (“NK”) cells to enable more durable antitumor activity. CB-011 is in preclinical development for relapsed or refractory multiple myeloma with an investigational new drug (“IND”) filing expected in 2022.
Our CB-012 program is an allogeneic armored CAR-T cell therapy targeting CD371, currently in preclinical development for the treatment of relapsed or refractory acute myeloid leukemia (“AML”), with an IND filing expected in 2023. CD371 is an attractive target for AML due to its expression on myeloid cancer cells, its enrichment on leukemic stem cells, and its absence on hematopoietic stem cells.
We are also developing allogeneic CAR-NK cell therapies derived from genome-edited iPSCs for the treatment of solid tumors. CB-020 is our first CAR-NK product candidate and it will contain genome edits designed to overcome the challenges of targeting solid tumors including trafficking, heterogeneity, and the immunosuppressive tumor microenvironment.
We control a robust patent portfolio protecting our chRDNA technology as well as certain of our allogeneic cell therapy binders.
In February 2021, we entered into a Collaboration and License Agreement (the “AbbVie Agreement”) with AbbVie Manufacturing Management Unlimited Company (“AbbVie”) to develop two new CAR-T cell therapies for AbbVie. We view this collaboration as an external recognition of the potential for our chRDNA genome-editing technology to significantly improve genome-editing specificity and efficiency.
On July 27, 2021, we successfully completed our initial public offering (“IPO”) of common stock. On that date, we issued and sold an aggregate of 19,000,000 shares of our common stock at a price to the public of $16.00 per share for approximately $304.0 million in gross proceeds and approximately $282.7 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses. On August 9, 2021, we issued and sold an additional 2,850,000 shares of our common stock pursuant to the IPO underwriters’ full exercise of their over-allotment option to purchase additional shares at the public offering price of $16.00 per share. In total, we received an aggregate of approximately $349.6 million in gross proceeds from the IPO, including the exercise of the IPO underwriters’ over-allotment option, and approximately $321.0 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses. In addition, in connection with the closing of our IPO, all outstanding shares of our convertible preferred stock automatically converted into 26,234,654 shares of our common stock. Subsequent to the closing of our IPO, there are no shares of convertible preferred stock outstanding.
Since our founding in 2011, we have devoted substantially all of our resources to organizing and staffing, business planning, raising capital, developing our genome-editing platform technologies, developing our product candidates and building our pipeline, creating and maintaining our intellectual property portfolio, and establishing arrangements with third parties for the manufacture of our product candidates. We do not have any products approved for commercial sale and have not generated any revenue from product sales and have incurred net losses since commencement of our operations.
To date, we have primarily funded our operations through revenue from our license agreements, license and collaboration agreements, and a service agreement; the sale of shares of Intellia Therapeutics, Inc. (“Intellia”) common stock that we received as consideration for the License Agreement, dated July 16, 2014, as amended, between us and Intellia, LLC (now Intellia Therapeutics, Inc.) (the “Intellia License Agreement”); the issuance and sale of our Series A, Series A-1, Series B, and Series C convertible preferred shares; and the issuance and sale of common stock related to our IPO. As of September 30, 2021, we had approximately $435.3 million in cash and cash equivalents. Based on our current operating plan, we expect that our existing cash and cash equivalents, including net cash proceeds from the IPO of approximately $321.0 million received in July and August of 2021, will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this Quarterly Report. See “Liquidity, Capital Resources, and Capital Requirements.”
24
Our net losses for the three months ended September 30, 2021 and 2020 were $21.0 million and $7.9 million, respectively. Our net losses for the nine months ended September 30, 2021 and 2020 were $48.4 million and $19.6 million, respectively. We had accumulated deficits of $79.3 million and $30.9 million as of September 30, 2021 and December 31, 2020, respectively. Our net losses and operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses. In addition, we will incur increased costs associated with operating as a public company, including legal, audit, and accounting fees; regulatory costs related to maintaining compliance with the rules and regulations of the SEC and the Nasdaq Global Select Market; director and officer insurance premiums; costs for investor and public relations activities; and other accompanying compliance and governance costs. We anticipate that our expenses will increase substantially if and as we:
progress our ANTLER phase 1 clinical trial and advance further clinical development of our CB-010 product candidate;
continue our preclinical efforts and begin clinical development of our other product candidates, including CB-011, CB-012, and CB-020, and any other product candidates we identify and choose to develop;
hire additional clinical, quality control, and scientific personnel;
seek to identify additional research programs and additional product candidates;
further develop our genome-editing technologies;
acquire or in-license technologies;
expand, maintain, enforce, and defend our intellectual property portfolio;
seek regulatory and marketing approvals for our product candidates that successfully complete clinical trials, if any;
establish and expand manufacturing capabilities and supply chain capacity for our product candidates;
add operational, legal, financial, and management information systems and personnel;
experience any delays, challenges, or other issues associated with any of the above, including the failure of clinical trials to meet endpoints, the generation of unanticipated preclinical study results or clinical trial data subject to differing interpretations, or the occurrence of potential safety issues or other development or regulatory challenges;
make royalty, milestone, or other payments under current and any future in-license or assignment agreements;
establish a sales, marketing, and distribution infrastructure to commercialize any product candidates for which we obtain marketing approval; and
continue to operate as a public company.
We do not own or operate any manufacturing facilities and we outsource a substantial portion of our clinical trial studies to third parties. We use multiple contract manufacturing organizations (“CMOs”) to individually manufacture, under current good manufacturing processes (“cGMP”), the plasmids, chRDNA guides, Cas proteins, and AAV6 vectors used in the manufacture of our CAR-T cells as well as our CAR-T cell therapy product candidates. We expect to rely on our CMOs in the future for the manufacturing of our product candidates to expedite readiness for future clinical trials and most of these CMOs have demonstrated capability in preparation of materials for commercialization. Additionally, we may decide to build our own manufacturing facility in the future to provide us greater flexibility and control over our clinical or commercial manufacturing needs.
Because of the numerous risks and uncertainties associated with therapeutic product development, we may never achieve profitability and, unless and until we are able to develop and commercialize our product candidates, we will need to continue to raise additional capital. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through public or private equity or debt financings, collaborations, strategic alliances, and licensing arrangements with third parties. There are no assurances that we will be successful in obtaining an adequate level of financing to support our business plans when needed on acceptable terms, or at all. If we raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs, or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise capital as
25
and when needed or on attractive terms, we may have to significantly delay, reduce, or discontinue the development and commercialization of our product candidates or scale back or terminate our pursuit of new in-licenses and acquisitions.
Impact of the COVID-19 Pandemic
The COVID-19 pandemic has caused governments worldwide to implement measures to slow the spread of the outbreak through travel restrictions, business shutdowns, and other measures. In response to the COVID-19 pandemic, starting on March 17, 2020, our entire workforce began working remotely pursuant to state, county, and city requirements. Since May 2020, we have gradually brought back on site all of our research employees whose work must be performed in the lab and most of our non-research employees are currently working partially remotely and partially on site. At this point in time, we do not know if or when we will bring our off-site functions back on site full-time. We have experienced no significant workforce reduction as a result of the COVID-19 pandemic.
The COVID-19 pandemic did have an impact on our supply chain in the early months of the pandemic. For example, we experienced delays in receiving healthy donor cells used in the manufacture of our CB-010 product candidate. These issues have been largely alleviated in recent months and we are currently receiving adequate supplies of donor cells, however we could face similar obstacles in the future. Although vaccines are now being distributed and administered across many parts of the world, new variants of the virus have emerged, and may continue to emerge, that are more contagious. As a result of future developments in the COVID-19 pandemic, we and our CMOs, contract research organizations (“CROs”), clinical trial sites, and other third-party vendors may face disruptions that could delay or otherwise affect our ability to initiate and complete preclinical studies or clinical trials.
Since the start of the COVID-19 pandemic, we have been and will continue to be focused on the safety of our employees. In response to the COVID-19 pandemic, we have instituted on-site protocols and procedures in accordance with guidance provided by the Centers for Disease Control and the State of California and regulations and guidelines promulgated by the County of Alameda and the City of Berkeley. As of January 1, 2022, all of our employees will be required to be fully vaccinated against COVID-19 as a condition of employment with us. Employees will be considered to be fully vaccinated two weeks after receiving both doses of a two-dose vaccine or one dose of a single-dose vaccine. Individuals who are unable to be vaccinated, due to a religious belief, a medical condition, or disability that prevents them from being vaccinated, can request a reasonable accommodation.
In May 2020, we received a Paycheck Protection Plan (“PPP”) loan from the Small Business Administration (the “SBA”) in the amount of $1.6 million (the “PPP Loan”), which we used exclusively to pay employees’ salaries. In December 2020, we submitted an application to have our PPP Loan forgiven and, on May 22, 2021, our PPP Loan was forgiven in full by the SBA.
To the extent the COVID-19 pandemic adversely affects our business prospects, financial condition, and results of operation, it may also have the effect of exacerbating many of the other risks described or referenced in the section of the Final Prospectus titled “Risk Factors,” such as those relating to the timing and results of our planned and future clinical trials and our financing needs. See the section of the Final Prospectus titled “Risk Factors” for more information regarding the potential adverse impact of the COVID-19 pandemic on our business, results of operations, and financial condition.
Components of Results of Operations
Licensing and Collaboration Revenue
We have not generated any revenue from product sales to date and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval and commercialization, we may generate revenue in the future from product sales. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates if we succeed in obtaining regulatory approval for such product candidates.
To date, all of our revenue consists of licensing and collaboration revenue earned from collaboration and/or licensing agreements entered into with third parties, including related parties. Under these agreements, we license rights to certain intellectual property controlled by us. The terms of these arrangements typically include payments to us of one or more of the following: nonrefundable, upfront license fees or exclusivity fees; annual maintenance fees; regulatory and/or commercial milestone payments; research and development payments; and royalties on the net sales of products and/or services. Each of these payments results in licensing and collaboration revenue. Revenue under such licensing and collaboration agreements was $4.0 million and $1.2 million for the three months ended September 30, 2021 and 2020, respectively, and $7.0 million and $11.4 million for the nine months ended
26
September 30, 2021 and 2020, respectively. See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
For additional information about our revenue recognition policy related to our licensing and collaboration agreements, see Note 2 to the annual consolidated financial statements for the years ended December 31, 2019 and 2020 included in our Final Prospectus.
For the foreseeable future we expect substantially all of our revenue will be generated from licensing and collaboration agreements.
Operating Expenses
Research and Development Expenses
Our research and development expenses consist of internal and external expenses incurred in connection with the development of our product candidates, development of our platform technologies, and our in-licensing and assignment agreements.
External costs include:
costs associated with acquiring technology and intellectual property licenses that have no alternative future uses;
costs incurred in connection with the preclinical and clinical development of our product candidates, including under agreements with CROs and other third parties that conduct clinical trials on our behalf;
costs of supplying the components for, and the manufacturing of, our product candidates for use in our preclinical studies and clinical trials; and
other research and development costs, including laboratory materials and supplies, and consulting services.
Internal costs include:
employee-related costs, including salaries, benefits, and share-based compensation expense, for our research and development personnel; and
allocated facilities and other overhead expenses, including expenses for rent and facilities maintenance and depreciation.
We expense research and development costs as incurred. Costs of certain activities are recognized based on an evaluation of the progress to completion of specific tasks. However, payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized as prepaid expenses and other current assets on our condensed consolidated balance sheets. The capitalized amounts are recognized as expense as the goods are delivered or as related services are performed. Historically, we have not tracked external costs by clinical program. We intend to separately track certain external costs for each clinical program. However, we do not currently track, and do not intend to track, costs that are deployed across multiple programs.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially for the foreseeable future as we continue to implement our business strategy; advance our CB-010 product candidate through clinical trials and later stages of development; conduct preclinical studies and clinical trials for our other product candidates; seek regulatory approvals for any product candidates that successfully complete clinical trials; expand our research and development efforts and incur expenses associated with hiring additional personnel to support our research and development efforts; and seek to identify, in-license, acquire, and/or develop additional product candidates.
The successful development of our CB-010, CB-011, CB-012, and CB-020 product candidates, as well as other potential future product candidates, is highly uncertain. Accordingly, at this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of such product candidates. We are also unable to predict when, if ever, we will generate revenue and material net cash inflows from the commercialization and sale of any of our product candidates for which we may obtain marketing approval. We may never succeed in achieving regulatory approval for any of our
27
product candidates. The duration, costs, and timing of preclinical studies, clinical trials, and development of our product candidates will depend on a variety of factors, including:
sufficiency of our financial and other resources;
acceptance of our chRDNA genome-editing technology;
ability to develop differentiating features so that our products have a competitive edge;
completion of preclinical studies;
establishment, maintenance, enforcement, and defense of our patents and other intellectual property rights;
our ability to not infringe, misappropriate, or otherwise violate third-party intellectual property rights;
clearance of INDs to initiate clinical trials on product candidates;
successful enrollment in, and completion of, our clinical trials on our product candidates;
data from our clinical trials that support an acceptable risk-benefit profile of our product candidates for the intended patient populations and that demonstrate safety and efficacy;
entry into collaborations to further the development of our product candidates or for the development of new product candidates;
successful development of our internal process development and transfer to larger-scale facilities;
establishment of agreements with CMOs for clinical and commercial supplies and scaling up manufacturing processes and capabilities to support our clinical trials;
receipt of marketing approvals from applicable regulatory authorities;
grant of regulatory exclusivity for our product candidates;
establishment of sales, marketing, and distribution capabilities and commercial launch of our product candidates if and when approved, whether by us or in collaboration with third parties;
maintenance of a continued acceptable safety profile of our products post-approval;
acceptance of our product candidates, if and when approved by the applicable regulatory authorities, by patients, the medical community, and third-party payors;
ability of our products to compete with other therapies and treatment options;
establishment and maintenance of healthcare coverage and adequate reimbursement; and
expanded indications and patient populations for our products.
28
The following table summarizes our research and development expenses for the three and nine months ended September 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
|
(in thousands)
|
|
|
(in thousands)
|
|
|
External costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of technology and intellectual property licenses
|
|
$
|
359
|
|
|
$
|
480
|
|
|
$
|
3,644
|
|
|
$
|
1,291
|
|
|
Services provided by third-party CROs, CMOs, and other third parties that conduct preclinical studies and clinical trials on our behalf
|
|
|
7,515
|
|
|
|
1,897
|
|
|
|
14,210
|
|
|
|
9,029
|
|
|
Other research and development expenses
|
|
|
2,322
|
|
|
|
862
|
|
|
|
5,981
|
|
|
|
2,869
|
|
|
Total external costs
|
|
|
10,196
|
|
|
|
3,239
|
|
|
|
23,835
|
|
|
|
13,189
|
|
|
Internal costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll-related expenses
|
|
|
4,176
|
|
|
|
1,915
|
|
|
|
9,380
|
|
|
|
6,056
|
|
|
Facilities and other allocated expenses
|
|
|
1,461
|
|
|
|
1,026
|
|
|
|
3,929
|
|
|
|
3,156
|
|
|
Total external costs
|
|
|
5,637
|
|
|
|
2,941
|
|
|
|
13,309
|
|
|
|
9,212
|
|
|
Total research and development expenses
|
|
$
|
15,833
|
|
|
$
|
6,180
|
|
|
$
|
37,144
|
|
|
$
|
22,401
|
|
General and Administrative Expenses
Our general and administrative expenses consist primarily of payroll-related costs, intellectual property costs, consulting costs, and allocated overhead, including rent, equipment depreciation, and utilities. Payroll-related costs consist of salaries, benefits, and stock-based compensation for our general and administrative personnel. Intellectual property costs include expenses for filing, prosecuting, and maintaining patents and patent applications, including certain patents and patent applications that we license from third parties. We are entitled to receive reimbursement from third parties of a portion of the costs for filing, prosecuting, and maintaining certain patents and patent applications. We accrue for these reimbursements as the respective expenses are incurred and classify such reimbursements as a reduction of general and administrative expenses. During the three months ended September 30, 2021 and 2020, we recorded $1.6 million and $1.5 million, respectively, of patent cost reimbursements as a reduction to general and administrative expense. During the nine months ended September 30, 2021 and 2020, we recorded $6.1 million and $3.7 million, respectively, of patent reimbursements as a reduction to general and administrative expense.
We expect that our general and administrative expenses will increase substantially in the future as a result of expanding our operations, including hiring personnel, preparing for potential commercialization of our product candidates, and additional facility occupancy costs, as well as increased costs associated with operating as a public company (including legal, audit, and accounting fees; regulatory costs related to maintaining compliance with the rules and regulations of the SEC and the Nasdaq Global Select Market; director and officer insurance premiums; costs for investor and public relations activities; and other accompanying compliance and governance costs). We also expect to increase the size of our administrative function to support the growth of our business.
Other Income (Expense)
Other income (expense) consists primarily of interest income earned on cash and money market funds, interest expense for our capital lease, and the promissory note related to our PPP Loan; change in the fair value of Intellia common stock in 2020; change in fair value of the MSKCC success payments liability under the Exclusive License Agreement (the “MSKCC Agreement”), dated November 13, 2020, by and between us and MSKCC; and other income from the sale of certain intellectual property rights. During the three and nine months ended September 30, 2021 and 2020, other income (expense) consisted primarily of interest income earned on cash and money market funds, interest expense on our capital lease, extinguishment of the promissory note related to our PPP Loan, and changes in the fair value of the MSKCC success payments liability.
29
Results of Operations
Comparison of the Three Months Ended September 30, 2021 and 2020
The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Change
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$
|
|
|
%
|
|
|
|
|
(in thousands, except percentages)
|
|
|
Licensing and collaboration revenue
|
|
$
|
3,977
|
|
|
$
|
1,198
|
|
|
$
|
2,779
|
|
|
|
232
|
%
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
15,833
|
|
|
|
6,180
|
|
|
|
9,653
|
|
|
|
156
|
%
|
|
General and administrative
|
|
|
6,760
|
|
|
|
3,247
|
|
|
|
3,513
|
|
|
|
108
|
%
|
|
Total operating expenses
|
|
|
22,593
|
|
|
|
9,427
|
|
|
|
13,166
|
|
|
|
140
|
%
|
|
Loss from operations
|
|
|
(18,616
|
)
|
|
|
(8,229
|
)
|
|
|
(10,387
|
)
|
|
|
126
|
%
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
22
|
|
|
|
4
|
|
|
|
18
|
|
|
|
450
|
%
|
|
Interest expense
|
|
|
-
|
|
|
|
(6
|
)
|
|
|
6
|
|
|
|
-100
|
%
|
|
Change in fair value of the MSKCC success payments liability
|
|
|
(2,403
|
)
|
|
|
-
|
|
|
|
(2,403
|
)
|
|
|
100
|
%
|
|
Other income
|
|
|
23
|
|
|
|
85
|
|
|
|
(62
|
)
|
|
|
-73
|
%
|
|
Total other income (expense)
|
|
|
(2,358
|
)
|
|
|
83
|
|
|
|
(2,441
|
)
|
|
|
-2941
|
%
|
|
Net loss before provision for income taxes
|
|
|
(20,974
|
)
|
|
|
(8,146
|
)
|
|
|
(12,828
|
)
|
|
|
157
|
%
|
|
Benefit from income taxes
|
|
|
-
|
|
|
|
213
|
|
|
|
(213
|
)
|
|
|
-100
|
%
|
|
Net loss and comprehensive loss
|
|
$
|
(20,974
|
)
|
|
$
|
(7,933
|
)
|
|
$
|
(13,041
|
)
|
|
|
164
|
%
|
Licensing and Collaboration Revenue
Licensing and collaboration revenue increased $2.8 million, or 232%, to $4.0 million for the three months ended September 30, 2021 from $1.2 million for the three months ended September 30, 2020. This increase was primarily related to increases of $2.3 million related to recognition of revenue under the AbbVie Agreement and $0.5 million related to other license agreements with various licensees.
The following table summarizes our revenue by licensee for the three months ended September 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
(in thousands)
|
|
|
AbbVie
|
|
$
|
2,274
|
|
|
$
|
-
|
|
|
Other licensees
|
|
|
1,703
|
|
|
|
1,198
|
|
|
Total licensing revenue
|
|
$
|
3,977
|
|
|
$
|
1,198
|
|
Research and Development Expenses
Research and development expenses increased $9.7 million, or 156%, to $15.8 million for the three months ended September 30, 2021 from $6.2 million for the three months ended September 30, 2020. This increase was primarily related to increases of $5.6 million in external clinical trial-related activities and contract manufacturing activities for our product candidates, $2.3 million in payroll-related expenses, $1.5 million related to our preclinical programs, and $0.4 million in facilities and other allocated expenses, partially offset by a $0.1 million decrease in costs associated with our intellectual property license agreements.
General and Administrative Expenses
General and administrative expenses increased $3.5 million, or 108%, to $6.8 million for the three months ended September 30, 2021 from $3.2 million for the three months ended September 30, 2020. This increase was primarily related to increases of $2.1 million in payroll-related costs, $0.6 million in fees related to legal and accounting services, $0.5 million in insurance expenses, and
30
$0.4 million in facilities and maintenance expenses, partially offset by a $0.1 million decrease in costs of prosecuting and maintaining third-party patents.
Other Income (Expense)
We recognized expense related to the change in fair value of the MSKCC success payments liability in the amount of $2.4 million for the three months ended September 30, 2021. The increase in the liability was primarily related to the increase in our common stock fair value after our IPO in July 2021. The MSKCC Agreement was entered into on November 13, 2020, and no similar expense was recorded during the three months ended September 30, 2020.
Income Tax
No income tax benefit or expense was recognized for the three months ended September 30, 2021. An income tax benefit of $0.2 million was recognized for the three months ended September 30, 2020, which was due primarily to the recognition of net operating loss carrybacks under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which generated a refund of taxes paid for the year ended December 31, 2018.
Comparison of the Nine Months Ended September 30, 2021 and 2020
The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
Change
|
|
|
|
|
2021
|
|
|
2020
|
|
|
$
|
|
|
%
|
|
|
|
|
(in thousands, except percentages)
|
|
|
Licensing and collaboration revenue
|
|
$
|
7,039
|
|
|
$
|
11,377
|
|
|
$
|
(4,338
|
)
|
|
|
-38
|
%
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
37,144
|
|
|
|
22,401
|
|
|
|
14,743
|
|
|
|
66
|
%
|
|
General and administrative
|
|
|
16,469
|
|
|
|
9,887
|
|
|
|
6,582
|
|
|
|
67
|
%
|
|
Total operating expenses
|
|
|
53,613
|
|
|
|
32,288
|
|
|
|
21,325
|
|
|
|
66
|
%
|
|
Loss from operations
|
|
|
(46,574
|
)
|
|
|
(20,911
|
)
|
|
|
(25,663
|
)
|
|
|
123
|
%
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
72
|
|
|
|
157
|
|
|
|
(85
|
)
|
|
|
-54
|
%
|
|
Interest expense
|
|
|
(8
|
)
|
|
|
(14
|
)
|
|
|
6
|
|
|
|
-43
|
%
|
|
Change in fair value of equity securities
|
|
|
-
|
|
|
|
(733
|
)
|
|
|
733
|
|
|
|
-100
|
%
|
|
Change in fair value of the MSKCC success payments liability
|
|
|
(3,584
|
)
|
|
|
-
|
|
|
|
(3,584
|
)
|
|
|
100
|
%
|
|
Gain on extinguishment of PPP Loan
|
|
|
1,584
|
|
|
|
-
|
|
|
|
1,584
|
|
|
|
100
|
%
|
|
Other income
|
|
|
66
|
|
|
|
431
|
|
|
|
(365
|
)
|
|
|
-85
|
%
|
|
Total other income (expense)
|
|
|
(1,870
|
)
|
|
|
(159
|
)
|
|
|
(1,711
|
)
|
|
|
1076
|
%
|
|
Net loss before provision for income taxes
|
|
|
(48,444
|
)
|
|
|
(21,070
|
)
|
|
|
(27,374
|
)
|
|
|
130
|
%
|
|
Benefit from income taxes
|
|
|
-
|
|
|
|
1,465
|
|
|
|
(1,465
|
)
|
|
|
-100
|
%
|
|
Net loss and comprehensive loss
|
|
$
|
(48,444
|
)
|
|
$
|
(19,605
|
)
|
|
$
|
(28,839
|
)
|
|
|
147
|
%
|
Licensing and Collaboration Revenue
Licensing and collaboration revenue decreased $4.3 million, or 38%, to $7.0 million for the nine months ended September 30, 2021 from $11.4 million for the nine months ended September 30, 2020. This decrease was primarily due to decreases of $7.5 million related to an Exclusive License Agreement, as amended, entered into with a related party private company on May 15, 2020 during the corresponding 2020 period, and $0.8 million related to completion of work under a Research Collaboration and License Agreement, as amended, with Genus plc on May 12, 2016, partially offset by increases of $2.8 million due to recognition of revenue under the AbbVie Agreement and $1.2 million related to other license agreements with various licensees.
31
The following table summarizes our revenue by licensee for the nine months ended September 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
(in thousands)
|
|
|
AbbVie
|
|
$
|
2,781
|
|
|
$
|
-
|
|
|
Genus
|
|
|
-
|
|
|
|
844
|
|
|
Related party private company
|
|
|
-
|
|
|
|
7,500
|
|
|
Other licensees
|
|
|
4,258
|
|
|
|
3,033
|
|
|
Total licensing revenue
|
|
$
|
7,039
|
|
|
$
|
11,377
|
|
Research and Development Expenses
Research and development expenses increased $14.7 million, or 66%, to $37.1 million for the nine months ended September 30, 2021 from $22.4 million for the nine months ended September 30, 2020. This increase was primarily related to increases of $5.2 million in external clinical trial-related activities and contract manufacturing activities for our product candidates, $3.3 million in payroll-related expenses, $3.1 million in expenses for our preclinical programs, $2.4 million in costs associated with our intellectual property license and assignment agreements, and $0.8 million in facilities and other allocated expenses.
General and Administrative Expenses
General and administrative expenses increased $6.6 million, or 67%, to $16.5 million for the nine months ended September 30, 2021 from $9.9 million for the nine months ended September 30, 2020. This increase was primarily related to increases of $3.5 million in recruiting and payroll-related costs, $1.5 million in fees related to accounting, audit, and investor and public relations, $0.7 million in facilities and other allocated expenses, $0.6 million in insurance expenses, and $0.5 million in costs of prosecuting and maintaining third-party patents, partially offset by a decrease of $0.2 million in professional fees related to legal services.
Other Income (Expense)
We recognized a $0.7 million change in fair value of our equity investment in Intellia common stock during the nine months ended September 30, 2020. We sold Intellia common shares during the three months ended March 31, 2020, and there were no changes in fair value of other equity securities during the nine months ended September 30, 2021. We have not held any Intellia shares since March 31, 2020.
We recognized expense related to the change in the fair value of the success payments liability under the MSKCC Agreement in the amount of $3.6 million for the nine months ended September 30, 2021. The MSKCC Agreement was entered into on November 13, 2020 and no similar expense was recorded during the nine months ended September 30, 2020.
Other income of $0.4 million for the nine months ended September 30, 2020 was related to earned sale and assignment of patents and patent applications, which was not an ordinary business activity.
Our PPP Loan was forgiven in May 2021, and we recognized a gain on the loan extinguishment of $1.6 million for the nine months ended September 30, 2021. No such gain was recognized for the nine months ended September 30, 2020.
Income Taxes
No income tax benefit or expense was recognized for the nine months ended September 30, 2021. We recognized an income tax benefit of $1.5 million for the nine months ended September 30, 2020, which was due primarily to the recognition of net operating loss carrybacks under the CARES Act, which generated a tax refund of taxes paid for the year ended December 31, 2018.
Liquidity, Capital Resources, and Capital Requirements
Sources of Liquidity
Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. We have funded our operations through sales of Series A, A-1, B, and C convertible preferred stock that generated approximately $150.1 million in aggregate net proceeds and from our IPO that generated approximately $321.0 million in net proceeds. We have also received approximately $88.4 million in net proceeds from the sale of Intellia common
32
stock received under the Intellia License Agreement. Additionally, through September 30, 2021, we received approximately $77.7 million from licensing agreements, licensing and collaboration agreements, a service agreement, patent assignments, and government grants, including $30.0 million that was received from AbbVie under the AbbVie Agreement.
As of September 30, 2021, we had cash and cash equivalents of $435.3 million. In March 2021, we received net proceeds of $108.8 million from our Series C convertible preferred stock financing and $30.0 million from AbbVie under the AbbVie Agreement. In July and August 2021, we received aggregate net proceeds of approximately $321.0 million from our IPO. We will continue to be dependent upon equity financing, debt financing, and/or other forms of capital raises at least until we are able to generate significant positive cash flows from our operations. We have no ongoing material financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years, except for our lease commitments as described in Note 9 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
Based on our current operating plan, we expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this Quarterly Report. We have based these estimates on our current assumptions, which may require future adjustments based on our ongoing business decisions.
Funding Requirements
Our primary use of cash is to fund operating expenses and research and development expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses.
Our future funding requirements will depend on many factors, including the following:
the initiation, progress, timing, costs, and results of preclinical studies and clinical trials for our product candidates;
the clinical development plans we establish for these product candidates;
the number and characteristics of the product candidates that we develop;
the increase in the number of our employees and expansion of our physical facilities to support growth initiatives;
the outcome, timing, and cost of meeting regulatory requirements established by the U.S. Food and Drug Administration (“FDA”) and other comparable foreign regulatory authorities;
whether we enter into any additional collaboration agreements and the terms of any such agreements;
the cost of filing and prosecuting our patent applications, and maintaining and enforcing our patents and other intellectual property rights;
the extent to which we acquire or in-license other product candidates and technologies;
the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against our products when we file for regulatory approval or thereafter;
the effect of competing technological and market developments;
the cost and timing of completion of commercial-scale outsourced manufacturing activities or the cost and timing of completion of clinical-scale and commercial-scale internal manufacturing activities;
the cost of establishing sales, marketing, and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products without a partner;
the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;
the achievement of milestones or occurrence of other developments that trigger payments by or to third parties under any collaboration or licensing agreements;
33
our implementation of various computerized informational systems and efforts to enhance operational systems;
the impact of the COVID-19 pandemic on our clinical development or operations; and
the costs associated with being a public company.
Furthermore, our operating plans may change, and we may need additional funds to meet operational needs and capital requirements for clinical trials and other research and development expenditures.
If we need to raise additional capital to fund our operations, funding may not be available to us on acceptable terms, or at all. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our preclinical studies, clinical trials, research and development programs, and/or commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, debt financings, collaborations, and licensing arrangements. If we raise additional capital through debt financing, we may be subject to 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 capital through the sale of equity or convertible debt securities, the issuance of these securities could result in dilution to our stockholders. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to us.
Cash Flows
Comparison of the Nine Months Ended September 30, 2021 and 2020
The following summarizes our cash flows for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
(in thousands)
|
|
|
Cash used in operating activities
|
|
$
|
(11,130
|
)
|
|
$
|
(25,139
|
)
|
|
Cash provided by (used in) investing activities
|
|
|
(2,436
|
)
|
|
|
6,963
|
|
|
Cash provided by financing activities
|
|
|
432,969
|
|
|
|
1,653
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
419,403
|
|
|
$
|
(16,523
|
)
|
Cash Used in Operating Activities
Net cash used in operating activities was $11.1 million and $25.1 million for the nine months ended September 30, 2021 and 2020, respectively.
Cash used in operating activities in the nine months ended September 30, 2021 was primarily due to our net loss of $48.4 million, adjusted by non-cash charges of $5.6 million and net changes in our net operating assets and liabilities of $31.7 million. Our non-cash charges consisted of a change in the fair value of the MSKCC success payments liability of $3.6 million, $1.9 million of stock-based compensation, $1.0 million of acquired in-process research development, which represents an investing activity, and $0.7 million of depreciation and amortization expense, which were offset by our PPP Loan extinguishment gain upon the loan forgiveness of $1.6 million. The changes in our net operating assets and liabilities were due to increases of $30.7 million in deferred revenue, $4.9 million in accrued expenses and other current liabilities, $0.9 million in deferred rent and lease incentive liability, and $0.8 million in accounts payable, offset by increases of $2.8 million in prepaid expenses and other current assets, $1.7 million in other receivables, $0.5 million in contract assets, $0.4 million in accounts receivable, and $0.2 million in other assets.
Cash used in operating activities in the nine months ended September 30, 2020 was primarily due to our net loss for the nine months of $19.6 million, adjusted by non-cash charges of $4.9 million and net changes in our net operating assets and liabilities of $0.6 million. Our non-cash charges consisted of $0.8 million of stock-based compensation, a change in the fair value of equity securities of $0.7 million, $0.7 million of depreciation and amortization expense, and $0.4 million of acquired in-process research and development, which represents an investing activity. These were offset by receipt of non-cash consideration for licensing and collaboration revenue in the amount of $7.6 million. The changes in our net operating assets and liabilities were primarily due to decreases of $1.5 million in prepaid expenses and other current assets, $0.2 million in contract assets, $0.1 million in other receivables, and an increase of $1.1 million in accrued expenses and other current liabilities, partially offset by a decrease of $1.9
34
million in accounts payable, $0.7 million in deferred revenue, $0.6 million in deferred tax liabilities, and $0.4 million in other liabilities.
Cash Provided by (Used in) Investing Activities
During the nine months ended September 30, 2021 cash used in investing activities was $2.4 million. During the nine months ended September 30, 2020, cash provided by investing activities was $7.0 million.
Cash used in investing activities for the nine months ended September 30, 2021 was primarily due to purchases of property and equipment of $1.4 million and payments for the acquisition of in-process research and development of $1.0 million.
Cash provided by investing activities for the nine months ended September 30, 2020 was primarily due to the receipt of $7.7 million in proceeds from the sale of Intellia common stock. This was partially offset by cash paid for the acquisition of in-process research and development of $0.4 million and purchases of property and equipment of $0.3 million.
Cash Provided by Financing Activities
During the nine months ended September 30, 2021 and 2020, cash provided by financing activities was $433.0 million and $1.7 million, respectively.
Cash provided by financing activities for the nine months ended September 30, 2021 was primarily due to the receipt of net proceeds from our IPO in the amount of $321.0 million, net proceeds from the issuance of Series C convertible preferred stock in the amount of $108.8 million, proceeds from the exercise of stock options of $2.1 million, and repayment of the promissory note issued to our president and chief executive officer in the amount of $1.2 million, partially offset by principal payments for a capital lease of $0.1 million.
Cash provided by financing activities for the nine months ended September 30, 2020 was primarily due to our receipt of proceeds from our PPP Loan in the amount of $1.6 million and receipt of proceeds from exercise of stock options of $0.2 million, offset by principal payments for a capital lease of $0.1 million.
Contractual Obligations and Commitments
The following summarizes our contractual obligations as of September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less Than
|
|
|
|
|
|
Due by Period
|
|
|
More Than
|
|
|
|
|
|
|
|
1 Year
|
|
|
1-3 Years
|
|
|
3-5 Years
|
|
|
5 Years
|
|
|
Total
|
|
|
|
|
(in thousands)
|
|
|
Operating leases (1)
|
|
$
|
3,459
|
|
|
$
|
7,248
|
|
|
$
|
8,183
|
|
|
$
|
23,750
|
|
|
$
|
42,640
|
|
|
Total obligations (2)
|
|
$
|
3,459
|
|
|
$
|
7,248
|
|
|
$
|
8,183
|
|
|
$
|
23,750
|
|
|
$
|
42,640
|
|
(1)
The operating lease obligations are primarily related to the facility lease for our corporate headquarters and research and development facility in Berkeley, California, which was amended on March 31, 2021 to include additional office and laboratory space and to extend the lease term to March 31, 2031.
(2)
Excludes payment obligations under our in-license and assignment agreements as of September 30, 2021, which are contingent upon our achievement of predefined clinical, regulatory, and commercial milestones; in the case of the MSKCC Agreement, changes in the price of our common stock and any change in control; and our royalty payment obligations on net product sales by our licensees. See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
We enter into contracts in the normal course of business with suppliers, CMOs, CROs, clinical trial sites, and the like. These agreements provide for termination at the request of either party generally with less than one-year notice and, therefore, we believe that our non-cancelable obligations under these agreements are not material and they are not included in the table above.
We have not included milestones, royalty, or other payments due under our existing license agreements in the table above due to the uncertainty of the occurrence of the events requiring payment under those agreements.
35
Under the MSKCC Agreement, we are obligated to make success payments to MSKCC of up to $35.0 million if our stock price increases by certain multiples of increasing value based on a comparison of the fair market value of our common stock with $5.1914 per share, which is the split adjusted initial price at which our Series B convertible preferred stock was sold, as adjusted for future stock splits, during a specified time interval. The relevant time interval commences when the first patient is dosed with a licensed CD371 product candidate in the first phase 1 clinical trial and ends upon the earlier of the third anniversary of approval by the FDA of our, our affiliate’s, or licensee’s biologics license application for a licensed CD371 product or 10 years from the date the first patient was dosed with a licensed CD371 product in the first phase 1 clinical trial. Additionally, if we undergo a change of control during the specified time interval, we may owe a change of control payment, depending upon the increase in our stock price due to the change of control and also to what extent the MSKCC success payments have already been paid. In no event will the combination of the MSKCC success payments and the change of control payment exceed $35.0 million. The relevant time period during which MSKCC is eligible for success payments and a change of control payment has not yet commenced. As of September 30, 2021 and December 31, 2020, the timing and likelihood of triggering the MSKCC success payments are uncertain and therefore any related payments are not included in the tables above. See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information about the MSKCC success payments liability.
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 applicable SEC rules.
Critical Accounting Policies and Significant Judgments and Estimates
Our critical accounting policies are disclosed in our audited consolidated financial statements for the year ended December 31, 2020, and the related notes included in the Final Prospectus. Since the date of such financial statements, there have been no material changes to our significant accounting policies other than those described in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
Recently Issued Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for more information regarding recently issued accounting pronouncements.
Indemnification Agreements
As permitted under Delaware General Corporation Law and in accordance with our Amended and Restated Bylaws, we indemnify our executive officers and directors for certain events or occurrences while such officer or director is or was serving in such capacity. We are also party to indemnification agreements with our executive officers, directors, and controller. We believe the fair value of the indemnification rights and agreements is minimal. Accordingly, we have not recorded any liabilities for these indemnification rights and agreements as of September 30, 2021.
Emerging Growth Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (a) are no longer an emerging growth company or (b) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed consolidated financial statements may not be comparable to those of companies that comply with the new or revised accounting pronouncements as of public company effective dates.
We expect to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company. As described in “Recent Accounting Pronouncements” in Note 2 to our condensed consolidated financial statements included elsewhere in this Quarterly Report, we have early adopted multiple accounting standards, because the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies, to the extent early adoption is allowed by the accounting standard.
36