You should read the following discussion and analysis of our financial condition
and results of operations together with (1) our condensed consolidated financial
statements and the related notes and other financial information included
elsewhere in this Quarterly Report on Form 10-Q and (2) the audited consolidated
financial statements and the related notes and management's discussion and
analysis of financial condition and results of operations for the fiscal year
ended
Overview
We are a clinical-stage microbiome therapeutics company leveraging our Human-First Discovery platform to develop a novel class of orally administered biological drugs. The microbiome consists of trillions of microbes that live symbiotically in and on every human and are essential to our health. When key microbes are lost, the resulting dysbiosis can increase susceptibility to immune disorders, infections, neurological conditions, cancer and other serious diseases. We are developing novel therapeutics designed to deliver missing microbes and their clinically relevant biochemical functions to correct dysbiosis and the diseases that emerge from it. Our Human-First Discovery platform uses reverse translation to identify diseases of dysbiosis and to design microbiome therapeutics that address them. We believe that our differentiated platform, rich pipeline and the broad therapeutic potential of this new field of medicine position us to transform care for a wide range of unmet medical needs.
Our lead product candidate, CP101, is an orally administered complete microbiome
therapeutic in development for the prevention of recurrent Clostridioides
difficile infection, or CDI. In
We have decided to modify the design of our Phase 1b clinical trial of FIN-211 in autism spectrum disorder, or ASD, which we refer to as AUSPIRE, as a single cohort, placebo-controlled study. The anticipated changes to AUSPIRE are expected to provide more meaningful insights into the potential impact of FIN-211 on behavioral and gastrointestinal symptoms, in addition to establishing safety and tolerability. The changes are supported by insights that have recently emerged from third-party studies of microbiota transplantation in children with autism and significant gastrointestinal symptoms. We anticipate submitting the IND for FIN-211 in the fourth quarter of this year. The IND submission is expected to reflect changes in the AUSPIRE trial design and manufacturing updates related to the recently resolved clinical hold on our IND for CP101. We plan to provide guidance in the future on the expected timing of a topline AUSPIRE data readout.
We continue to partner with Takeda Pharmaceutical Company Limited, or Takeda, on the development of targeted microbiome therapeutics for inflammatory bowel disease, or IBD. These include TAK-524, a product candidate designed for the treatment of ulcerative colitis, and FIN-525, a program to develop a live biotherapeutic product optimized for the treatment of Crohn's disease.
Since our inception, we have focused primarily on developing and progressing our product candidates through clinical development, organizing and staffing our company, research and development activities, establishing and protecting our intellectual property portfolio, including for our Human-First Discovery platform, and raising capital. We do not have any product candidates approved for sale and have not generated any revenue from product sales. Since our inception, we have funded our operations primarily with proceeds from our initial public offering, or the IPO, the sale of convertible preferred stock and from collaboration revenue.
We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more of our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution.
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As a result, we will need substantial additional funding to support our operating activities as we advance our product candidates through clinical development, seek regulatory approval and prepare for and, if any of our product candidates are approved, proceed to commercialization. Until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including collaborations, licenses or similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed or on favorable terms, if at all.
If we are unable to obtain funding, we will be forced to delay, reduce or eliminate some or all of our research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect our business prospects, or we may be unable to continue operations. Although we continue to pursue these plans, there is no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.
We believe that our existing cash and cash equivalents of
Recent Developments
On
COVID-19 Business Update
We continue to closely monitor the COVID-19 pandemic as we evolve our business continuity plans, clinical development plans and response strategy. The extent of the impact of the COVID-19 pandemic, including variants of COVID-19, on our business, operations and clinical development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its impact on our clinical trial enrollment, trial sites, contract research organizations, or CROs, contract manufacturing organizations, and other third parties with whom we do business, as well as regulatory authorities and our key scientific and management personnel.
Components of Our Results of Operations
Revenue
We have no products approved for commercial sale. We have not generated any
revenue from product sales and do not expect to generate any revenue from the
sale of licensed products for the foreseeable future. Our revenue to date has
been generated primarily through collaboration and license agreements. We
recognize revenue over our expected performance period under each agreement. We
expect that our revenue for the next several years will be derived primarily
from our current collaboration agreement and any additional collaborations that
we may enter into in the future, and any collaboration revenue we generate will
fluctuate from period to period as a result of the timing and amount of
milestones and other payments. To date, we have not received any royalties under
our collaboration agreement with Takeda. Additionally, we will continue to earn
royalties under our Asset Purchase Agreement, dated as of
Collaboration and License Agreement with Takeda
In
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for further development and manufacturing activities with respect to TAK-524
from us to Takeda in accordance with a transition plan, and Takeda will assume
sole responsibility for regulatory matters with respect to TAK-524. In
In connection with entry into the Takeda Agreement, we received a one-time,
upfront payment from Takeda in the amount of
Agreements with OpenBiome
We have historically collaborated with OpenBiome under several agreements related to, among other things, the license of various technology and intellectual property rights, and the supply of certain materials, as further described below.
On
Also on
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our product candidates. We expense research and development costs as incurred, which include:
•
salaries, benefits and other related costs, including stock-based compensation expense, for personnel engaged in research and development functions;
•
upfront, milestone and maintenance fees incurred under license, acquisition and other third-party agreements;
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costs of laboratory supplies and acquiring, developing and manufacturing study materials;
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•
facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs; and
•
costs of outside consultants, including their fees and related travel expenses engaged in research and development functions.
Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid or accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed. We do not allocate certain employee-related costs, external costs directly related to our Human First Discovery platform, and other indirect costs to specific research and development programs because these costs are deployed across multiple product programs under development and, as such, are classified as costs of our platform research.
Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we initiate and continue our planned clinical trials for our product candidates and continue to discover and develop additional product candidates. If any of our product candidates enter into later stages of clinical development, they will 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. There are numerous factors associated with the successful commercialization of any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include professional fees for legal, patent, accounting, auditing, tax and consulting services, travel expenses and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our continued research and development and potential commercialization of our product candidates and expand our corporate headquarters. We also expect to continue to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services, director and officer insurance costs, and investor and public relations costs.
Total Other Income (Expense), Net
Interest Income (Expense)
Interest income primarily consists of interest earned on our cash and cash equivalents. Our interest income has not been significant due to low interest earned on cash balances related to our money market account.
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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 REVENUE: Collaboration revenue$ 354 $ 3,553 Total revenue 354 3,553 OPERATING EXPENSES: Research and development (15,530 ) (12,975 ) General and administrative (9,404 ) (4,552 ) Total operating expenses (24,934 ) (17,527 ) Net operating loss (24,580 ) (13,974 ) OTHER INCOME (EXPENSE): Interest income (expense) 13 (1 ) Other expense - (6 ) Total other income (expense) 13 (7 ) Net loss$ (24,567 ) $ (13,981 ) Revenue
Revenue of
Research and Development Expenses
The following table summarizes our research and development expenses for the
three months ended
THREE MONTHS ENDED MARCH 31, Increase 2022 2021 (Decrease) CDI (CP101)$ 3,530 $ 4,319 $ (789 ) Inflammatory Bowel Diseases (IBD) (TAK-524 and FIN-525) 492 2,785 (2,293 ) Autism Spectrum Disorder (ASD) (FIN-211) 1,866 1,459 407 Hepatitis B (HBV) (CP101) 298 576 (278 ) Platform 8,144 3,510 4,634 Unallocated 1,200 326 874$ 15,530 $ 12,975 $ 2,555
Research and development expenses for the three months ended
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This increase was offset by a
General and Administrative Expenses
The following table summarizes our general and administrative expenses for the
three months ended
THREE MONTHS ENDED MARCH 31, Increase 2022 2021 (Decrease) Personnel expenses (including stock-based compensation)$ 3,658 $ 2,368 $ 1,290 Facilities and supplies 218 100 118 Professional fees 3,254 1,818 1,436 Other expenses 2,274 266 2,008$ 9,404 $ 4,552 $ 4,852
General and administrative expenses were
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Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have not recognized any product revenue and have
incurred operating losses and negative cash flows from our operations. We have
not yet commercialized any product and we do not expect to generate revenue from
sales of any products for several years, if at all. We have funded our
operations primarily through equity financings and from collaboration revenue.
We have raised an aggregate of approximately
Cash Flows
The following table summarizes our cash flows for the three months ended
THREE MONTHS ENDED MARCH 31, 2022 2021 Net cash used in operating activities$ (25,646 ) $ (15,214 ) Net cash used in investing activities (909 ) (8,824 ) Net cash provided by financing activities 5 117,367 Net (decrease) increase in cash and cash equivalents, and restricted cash$ (26,550 ) $ 93,329
Operating Activities
During the three months ended
During the three months ended
Investing Activities
During the three months ended
Financing Activities
During the three months ended
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During the three months ended
Funding Requirements
As of
Since our inception, we have incurred significant operating losses. Our net
losses were
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continue the research and development of our product candidates;
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initiate and conduct clinical trials for, or additional preclinical development of, our product candidates;
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further develop and refine the manufacturing process for our product candidates;
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change or add manufacturers or suppliers of product candidate materials;
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seek regulatory and marketing authorizations for any of our product candidates that successfully complete development;
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seek to identify and validate additional product candidates;
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acquire or license other product candidates, technologies or biological materials;
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make milestone, royalty or other payments under any current or future license agreements;
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obtain, maintain, protect and enforce our intellectual property portfolio;
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seek to attract and retain new and existing skilled personnel;
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incur lease expenses in connection with the expansion of our corporate headquarters;
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create additional infrastructure to support our operations and incur increased legal, accounting, investor relations and other expenses; and
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experience delays or encounter issues with any of the above.
Material Cash Requirements
During the three months ended
Critical Accounting Policies and Significant Judgments and Estimates
Our unaudited interim condensed consolidated financial statements are prepared
in accordance with generally accepted accounting principles in
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pandemic on our results of operations, cash flows, and financial position are unclear. Our actual results may differ from these estimates under different assumptions or conditions.
There have been no significant changes to our critical accounting policies from those described in "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in the 2021 10-K.
Recently Issued Accounting Pronouncements
See Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.
Emerging Growth Company Status and Smaller Reporting Company Status
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or 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 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 (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. 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 and, as a result, we will not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.
We will remain an emerging growth company until
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