The following discussion and analysis of our financial condition and results of operations should be read in conjunction with: (i)our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period endedJune 30, 2021 , and (ii) our audited financial statements and notes thereto for the year endedDecember 31, 2020 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in in our 2020 Annual Report on Form 10-K/A for the year endedDecember 31, 2020 . Except as otherwise indicated herein or as the context otherwise requires, references in this Quarterly Report to "Oncternal" "the Company," "we," "us" and "our" refer toOncternal Therapeutics, Inc. , aDelaware corporation.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations and financial position, business strategies and plans, prospective products, product approvals, research and development costs, the expected impact of COVID-19, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These forward-looking statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of risks, uncertainties and assumptions, including those described in our Annual Report on Form 10-K/A, filed with theSEC onMarch 12, 2021 , and in Part II, Item 1A, "Risk Factors" of this Quarterly Report. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
Overview
We are a clinical-stage biopharmaceutical company focused on the development of novel oncology therapies for cancers with critical unmet medical need. Our development efforts are focused on promising, yet untapped, biological pathways implicated in cancer generation or progression. Our pipeline includes cirmtuzumab, an investigational humanized monoclonal antibody that is designed to inhibit Receptor tyrosine kinase-like Orphan Receptor 1, or ROR1, a growth factor receptor that is widely expressed on many tumors and that activates pathways leading to increased tumor proliferation, invasiveness and drug resistance. Cirmtuzumab is being evaluated in a Phase 1/2 clinical trial in combination with ibrutinib (Imbruvica®) (Cirmtuzumab and Ibrutinib targeting ROR1 for Leukemia and Lymphoma, or CIRLL), for the treatment of patients with B-cell lymphoid malignancies, including mantle cell lymphoma, or MCL, and chronic lymphocytic leukemia, or CLL, and in an investigator-sponsored, Phase 1b clinical trial in combination with paclitaxel for the treatment of women with HER2-negative metastatic or locally advanced, unresectable breast cancer. We are also supporting an investigator-sponsored Phase 2 clinical trial of cirmtuzumab in combination with venetoclax, a Bcl-2 inhibitor, in patients with relapsed/refractory CLL, which is currently enrolling patients. We are developing a chimeric antigen receptor T cell, or CAR-T, therapy candidate that targets ROR1, which is currently in preclinical development as a potential treatment for hematologic cancers and solid tumors. In addition, we are developing TK216, an investigational small molecule that is designed to inhibit the ETS, or E26 Transformation Specific, family of oncoproteins, which have been shown in preclinical studies to alter gene transcription and RNA processing and lead to increased cell proliferation and invasion. TK216 is being evaluated in a Phase 1/2 clinical trial as a single agent and in combination with vincristine in patients with relapsed or refractory Ewing sarcoma, a rare pediatric cancer. We recently added a new Phase 2 expansion cohort targeting up to 21 Ewing sarcoma patients to evaluate clinical responses to single agent TK216 using an optimized dosing regimen, treating for 28 days per cycle, to intensify the amount of TK216 administered over time. TheU.S. Food and Drug Administration , or FDA, has granted orphan drug designations for cirmtuzumab for the treatment of MCL and for the treatment of CLL/small lymphocytic lymphoma, and has granted rare pediatric disease designation, as well as orphan drug and fast track designations for TK216 for the treatment of Ewing sarcoma. Our clinical strategy for cirmtuzumab prioritizes development in MCL, based on continuing encouraging interim clinical results from the CIRLL Phase 1/2 clinical trial that were presented at the American Society Clinical of Oncology 2021 Annual Meeting in June. The CIRLL study target enrollment for patients with relapsed/refractory MCL in the ongoing Phase 2 expansion cohort is at 19 -------------------------------------------------------------------------------- least 20 patients to allow for the enrollment of patients with a broader range of prior Bruton's Tyrosine kinase, or BTK, inhibitor treatments. The total enrollment of CLL patients in the randomized Phase 2 CLL cohort of the CIRLL study is 28 patients, which was reached in 2020. InJuly 2021 , we opened a new treatment cohort of the ongoing Phase 1/2 study to evaluate cirmtuzumab plus ibrutinib in up to 34 patients with MCL who are refractory to prior BTK inhibitor treatment (ibrutinib, acalabrutinib or zanubrutinib), or who are at high risk for progression, having had an inadequate response to ibrutinib (stable disease or partial response).
In
Since the inception of privately-heldOncternal Therapeutics, Inc. in 2013, we have devoted most of our resources to organizing and staffing, business planning, raising capital, acquiring product candidates and securing related intellectual property rights and advancing our cirmtuzumab and TK216 clinical development programs. Under research subaward agreements between us and UC San Diego, we are eligible to receive approximately$14.0 million in development milestones during the award project period, estimated to be fromOctober 1, 2017 toMarch 31, 2022 . ThroughJune 30, 2021 , we have funded our operations primarily through: (i) gross proceeds of$125.0 million from the issuance of common stock, (ii) gross proceeds of$49.0 million from the issuance of convertible preferred stock, (iii) receipt of$13.9 million in subaward grant payments received from UC San Diego, and (iv) cash proceeds of$18.3 million received in connection with the closing of the merger withGTx, Inc. inJune 2019 , or the GTx Merger. As ofJune 30, 2021 , we had cash and cash equivalents of$103.7 million . We have incurred net losses in each year since inception. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our current or future product candidates. Our net loss was$13.6 million for the six months endedJune 30, 2021 . As ofJune 30, 2021 , we had an accumulated deficit of$96.4 million . Substantially all of our net losses have resulted from costs incurred in connection with: (i) advancing our research and development programs, (ii) general and administrative costs associated with our operations, including the costs associated with operating as a public company, and (iii) in-process research and development costs associated with the GTX Merger. We expect to continue to incur significant and increasing operating losses for at least the next several years. We expect that our expenses and capital funding requirements will increase substantially in connection with our ongoing activities, particularly if and as we:
• advance cirmtuzumab through clinical development in multiple indications,
initially focused on MCL;
• generate clinical proof-of-concept data with TK216 in Ewing sarcoma, an
orphan pediatric cancer indication;
• advance our ROR1-targeting CAR-T therapy candidate to clinical development,
initially in hematological cancers and then in solid tumors;
• respond to the impacts of the COVID-19 pandemic, which has slowed enrollment
into our clinical trials; • evaluate cirmtuzumab in additional ROR1-positive solid tumors; • evaluate TK216 in additional tumors with ETS fusion proteins or overexpression; • continue to develop additional product candidates; • acquire or inlicense other product candidates and technologies; • maintain, expand and protect our intellectual property portfolio;
• establish a commercial manufacturing source and secure supply chain capacity
sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval;
• seek regulatory approvals for any product candidates that successfully
complete clinical trials; • establish a sales, marketing and distribution infrastructure to
commercialize any products for which we may obtain regulatory approval; and
• add operational, financial and management information systems and personnel,
including personnel to support our planned product development and future
commercialization efforts.
We will not generate product sales revenue unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. In addition, we expect to incur additional costs associated with operating as a public company. 20 -------------------------------------------------------------------------------- As a result, we believe we will need substantial additional funding to support our continuing operations and pursue our business strategy. Until such time as we can generate significant product sales revenue, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, government funding, or other sources, including potentially collaborations, licenses and other similar arrangements. We may not be able to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, reduce or eliminate the development and commercialization of one or more of our product candidates or delay our pursuit of potential in licenses or acquisitions. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations. We expect that our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next twelve months. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. Beyond that point, we will need to raise additional capital to finance our operations, which cannot be assured.
Business Update Regarding COVID-19
The current COVID-19 pandemic has presented substantial public health and economic challenges and is affecting economies, financial markets and business operations around the world. International andU.S. governmental authorities in impacted regions have taken actions in an effort to slow the spread of COVID-19, including issuing and modifying varying forms of "stay-at-home" orders, and restricting business functions outside of one's home. In response, many Company employees continue to work remotely. To date, we have been able to continue to supply cirmtuzumab and TK216 clinical trial sites for patients enrolled in our ongoing clinical trials and do not currently anticipate any interruptions in the supply of cirmtuzumab or TK216. While we are continuing the clinical trials we have underway in sites across theU.S. , COVID-19 precautions have directly or indirectly impacted the timeline for some of our clinical trials. For our existing patients, we are actively working with all of our clinical trial sites to minimize disruptions and address concerns on an individual site or patient basis in order to allow participating patients to continue to receive treatment at home or in alternative healthcare settings while minimizing their potential exposure to the virus that causes COVID-19. If restrictions related to the COVID-19 outbreak continue or if additional clinical trial sites pause patient enrollment or treatments, our clinical trial milestones would be negatively impacted. Additionally, our expectations for the timing of first-in-human dosing of our ROR1 CAR-T therapy has been delayed to the first half of 2022. Any delays in the completion of our clinical trials and any disruption in our supply chain could have a material adverse effect on our business, results of operations and financial condition. The full extent to which the COVID-19 pandemic will continue to directly or indirectly impact our business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat it, the success or failure of vaccination programs, the emergence and spread of variants of COVID-19, as well as the economic impact on local, regional, national and international markets.
Components of Results of Operations
Grant Revenue
We have not and do not expect to generate any product sales revenue in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, we may generate product sales revenue in the future. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates. Our total revenue to date has been derived from aCalifornia Institute for Regenerative Medicine , or CIRM, grant subaward with UC San Diego. InAugust 2017 , CIRM awarded an$18.3 million grant to researchers at UC San Diego to advance our Phase 1/2 clinical trial evaluating cirmtuzumab in combination with ibrutinib for the treatment of patients with B-cell lymphoid malignancies, including MCL and CLL. We are conducting this study in collaboration with UC San Diego and estimate we will receive approximately$14.0 million in development milestones under research subaward agreements during the award project period, estimated to be fromOctober 1, 2017 toMarch 31, 2022 . In addition, we are committed to certain co-funding requirements and are required to provide UC San Diego progress and financial update reports throughout the award project period. We received subaward payments of$2.2 million and$1.4 million in the six months endedJune 30, 2021 andJune 30, 2020 , respectively. As ofJune 30, 2021 : (i) the remaining estimated subaward funds available total$0.6 million , and (ii) we believe we have met our obligations under the CIRM award and UC San Diego subawards. 21 --------------------------------------------------------------------------------
Operating Expenses Research and Development Research and development expenses consist primarily of costs incurred for the preclinical and clinical development of our lead product candidate, cirmtuzumab, as well as TK216 and our CAR-T program, which include:
• expenses under agreements with consultants, third-party contract
organizations, and investigative clinical trial sites that conduct research
and development activities on our behalf;
• costs related to the development and manufacture of preclinical study and
clinical trial material;
• salaries and employee-related costs, including stock-based compensation;
• costs incurred under our collaboration and third-party licensing agreements;
and
• laboratory and vendor expenses related to the execution of preclinical and
clinical trials.
We accrue all research and development costs in the period for which they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors, collaborators and third-party service providers. Advance payments for goods or services to be received in future periods for use in research and development activities are deferred and then expensed as the related goods are delivered and as services are performed. Any unearned advances would be refunded when known. We expect our research and development expenses to increase substantially for the foreseeable future as we: (i) invest in additional operational personnel to support our planned product development efforts, and (ii) continue to invest in developing our product candidates preclinically, advance them into later stages of clinical development, and as we begin to conduct larger clinical trials. 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. Our direct research and development expenses are tracked by product candidate and consist primarily of external costs, such as fees paid under third-party license agreements and to outside consultants, contract research organizations, or CROs, contract manufacturing organizations and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. We do not allocate employee costs and costs associated with our discovery efforts, laboratory supplies and facilities, including other indirect costs, to specific product candidates because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to conduct our research as well as for managing our preclinical development, process development, manufacturing and clinical development activities. These employees work across multiple programs and, therefore, we do not track our costs by product candidate unless we can include them as subaward costs. We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development, including any potential expanded dosing beyond the original protocols based in part on ongoing clinical success and the potential effects of the COVID-19 pandemic. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, regulatory developments and our ongoing assessments of each product candidate's commercial potential. We will need to raise substantial additional capital in the future. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs, insurance costs, facility costs and professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. Personnel-related costs consist of salaries, benefits and stock-based compensation. We expect our general and administrative expenses will increase as we: (i) incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing andSEC requirements, director and officer insurance premiums, and investor relations costs, (ii) hire additional personnel, and (iii) protect our intellectual property.
Interest Income
Interest income consists of interest earned on our cash equivalents, which consist of money market funds. Our interest income has not been significant due to low interest earned on invested balances.
22 --------------------------------------------------------------------------------
Results of Operations
Comparison of Three and Six Months Ended
The following table summarizes our results of operations for the three and six
months ended
Three Months Ended Six Months Ended June 30, June 30, (in thousands) 2021 2020 Change 2021 2020 Change Grant revenue$ 883 $ 623 $ 260 $ 1,631 $ 1,201 $ 430 Operating expenses: Research and development 5,192 3,815 1,377 9,105 6,510 2,595 General and administrative 3,381 2,343 1,038 6,174 4,977 1,197 Total operating expenses 8,573 6,158 2,415 15,279 11,487 3,792 Loss from operations (7,690 ) (5,535 ) (2,155 ) (13,648 ) (10,286 ) (3,362 ) Interest income 8 - 8 18 13 5 Net loss$ (7,682 ) $ (5,535 ) $ (2,147 ) $ (13,630 ) $ (10,273 ) $ (3,357 )
Comparison of Three Months Ended
Grant Revenue
Grant revenue was$0.9 million and$0.6 million for the three months endedJune 30, 2021 and 2020, respectively. The increase of$0.3 million was driven primarily by higher research and development subaward costs in 2021 as compared to 2020.
Research and Development Expenses
The following table summarizes our research and development expenses for the periods indicated: Three Months Ended June 30, Increase/ (in thousands) 2021 2020 (Decrease) Cirmtuzumab$ 1,944 $ 2,191 $ (247 ) TK216 1,139 692 447 CAR-T 470 - 470
Unallocated research and development expenses 1,639 932
707
Total research and development expenses
Research and development expenses for the three months endedJune 30, 2021 and 2020 were$5.2 million and$3.8 million , respectively, an increase of$1.4 million . The increase was primarily due to a$0.7 million increase in direct product candidate costs and a$0.7 million increase in unallocated expenses.
Direct expenses for cirmtuzumab decreased
Direct expenses for TK216 increased$0.4 million for the three months endedJune 30, 2021 , compared to the three months endedJune 30, 2020 , primarily due to an increase in manufacturing development costs. Direct expenses for CAR-T increased$0.5 million for the three months endedJune 30, 2021 , compared to the three months endedJune 30, 2020 , primarily due to an increase in preclinical costs.
Unallocated expenses increased
General and Administrative Expenses
General and administrative expenses for the three months endedJune 30, 2021 and 2020 were$3.4 million and$2.3 million , respectively, an increase of$1.1 million . The increase is primarily due to a$1.2 million increase in personnel and professional costs, primarily related to non-cash stock-based compensation costs, that were partially offset by a$0.2 million decrease in legal costs. 23 --------------------------------------------------------------------------------
Comparison of Six Months Ended
Grant Revenue
Grant revenue for the six months endedJune 30, 2021 was$1.6 million , compared to$1.2 million for the six months endedJune 30, 2020 . The increase of$0.4 million was primarily due to higher research and development subaward related costs incurred in 2021 as compared to 2020.
Research and Development Expenses
The following table summarizes our research and development expenses for the periods indicated: Six Months Ended June 30, Increase/ (in thousands) 2021 2020 (Decrease) Cirmtuzumab$ 3,799 $ 3,551 $ 248 TK216 1,740 1,041 699 CAR-T 606 - 606
Unallocated research and development expenses 2,960 1,918
1,042
Total research and development expenses
2,595 Research and development expenses for the six months endedJune 30, 2021 and 2020 were$9.1 million and$6.5 million , respectively, an increase of$2.6 million . The increase was primarily due to a$1.6 million increase in direct product candidate costs and a$1.0 million increase in unallocated expenses. Direct expenses for cirmtuzumab increased$0.3 million for the six months endedJune 30, 2021 , compared to the six months endedJune 30, 2020 , primarily due to an increase in clinical trial costs related to our ongoing Phase 1/2 trial of cirmtuzumab in MCL patients. Direct expenses for TK216 increased$0.7 million for the six months endedJune 30, 2021 , compared to the six months endedJune 30, 2020 , primarily due to an increase in manufacturing development costs. Direct expenses for CAR-T increased$0.6 million for the six months endedJune 30, 2021 , compared to the six months endedJune 30, 2020 , primarily due to an increase in preclinical costs. Unallocated expenses increased$1.0 million for six months endedJune 30, 2021 , compared to the six months endedJune 30, 2020 , primarily due to higher non-cash stock-based compensation costs.
General and Administrative Expenses
General and administrative expenses for the six months endedJune 30, 2021 and 2020 were$6.2 million and$5.0 million , respectively, an increase of$1.2 million . The increase is primarily due to higher personnel and professional costs of$1.1 million , primarily related to non-cash stock-based compensation costs, and an increase in director's and officer's insurance costs of$0.1 million .
Liquidity
We have incurred losses and negative cash flows from operations since inception. As ofJune 30, 2021 , we had an accumulated deficit of$96.4 million and anticipate that we will continue to incur net losses for the foreseeable future. As ofJune 30, 2021 , we had$103.7 million in cash and cash equivalents. We believe we have sufficient cash to fund our projected operating requirements for at least twelve months from the filing date of this Quarterly Report. We expect our operating expenses to continue to be substantial for the foreseeable future and, as a result, we will need additional capital to fund our operations, which we may obtain through one or more public or private equity or debt financings, or other sources such as potential collaboration arrangements. 24 --------------------------------------------------------------------------------
Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented: Six Months Ended June 30, (in thousands) 2021 2020 Net cash provided by (used in): Operating activities$ (13,593 ) $ (8,257 ) Financing activities 519 4,823
Net decrease in cash and cash equivalents
Operating activities During the six months endedJune 30, 2021 , net cash used in operating activities was$13.6 million , resulting from our net loss of$13.6 million , which included non-cash charges of$2.7 million primarily related to stock-based compensation expense, offset by a$2.7 million change in our operating assets and liabilities. The$2.7 million change in operating assets and liabilities primarily consisted of a$2.6 million increase in prepaid and other assets, a$0.6 million increase in deferred revenue, and a$0.7 million decrease in accounts payable and accrued expenses.
Financing activities
Net cash provided by financing activities was$0.5 million for the six months endedJune 30, 2021 , which resulted from net proceeds of$0.4 million received from the exercise of common stock options and$0.1 million received from the exercise of common stock warrants. Net cash provided by financing activities was$4.8 million for the six months endedJune 30, 2020 , which resulted primarily from$4.5 million in net proceeds received from a registered direct offering inMay 2020 . Funding Requirements We expect that our existing cash and cash equivalents will be sufficient to fund our operations into 2023. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on plans that may change as circumstances evolve and assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of testing product candidates in clinical trials is costly, and the timing of progress, potential amendments, or changes in protocols for our existing studies beyond our planned study protocols based in part on our clinical progress, and expenses in these trials is uncertain.
Our future capital requirements will depend on many factors, including:
• the type, number, scope, progress, expansions, results, costs and timing of,
our preclinical studies and clinical trials of our product candidates which
we are pursuing or may choose to pursue in the future;
• the costs incurred as a result of the COVID-19 pandemic, including clinical
trial delays;
• the costs and timing of manufacturing for our product candidates, including
commercial manufacturing if any product candidate is approved;
• the future potential costs of obtaining ibrutinib, for which we currently
obtain supply at no cost under our clinical supply agreement withPharmacyclics LLC , and vincristine to conduct our clinical trials of cirmtuzumab and TK216, respectively;
• the costs, timing and outcome of regulatory review of our product candidates;
• the costs of obtaining, maintaining and enforcing our patents and other
intellectual property rights;
• the costs associated with hiring additional personnel and consultants as our
preclinical and clinical activities increase;
• the costs and timing of establishing or securing sales and marketing
capabilities if any product candidate is approved;
• our ability to achieve sufficient market acceptance, adequate coverage and
reimbursement from third-party payors and adequate market share and revenue
for any approved products;
• the terms and timing of establishing and maintaining collaborations,
licenses and other similar arrangements; and
• costs associated with any products or technologies that we may in-license or
acquire.
Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our losses from operations and capital funding needs through a combination of equity offerings, debt financings, government funding and 25 -------------------------------------------------------------------------------- other sources, including potentially collaborations, licenses and other similar arrangements. To the extent we raise additional capital through the sale of debt or equity securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through debt or equity financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates by ourselves. There can be no assurance that we will be able to obtain any sources of financing on acceptable terms, or at all.
Obligations and Commitments
We are party to a number of license agreements, pursuant to which we have payment obligations that are contingent upon future events such as our achievement of specified development, regulatory and commercial milestones and are required to make royalty payments in connection with the sale of products developed under those agreements. As ofJune 30, 2021 , we were unable to estimate the timing or likelihood of achieving the milestones or making future product sales. See Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for a description of these agreements.
We enter into contracts in the normal course of business with clinical trial sites and clinical supply manufacturers and with vendors for preclinical studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination after a notice period.
Critical Accounting Policies
Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles inthe United States . The preparation of the financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience, trends and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We consider our critical accounting policies and estimates to be related to research and development expenses and accruals, and revenue recognition. There have been no material changes to our critical accounting policies and estimates during the six months endedJune 30, 2021 , from those disclosed in "Oncternal's Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies," included in the Annual Report on Form 10-K/A.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under
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