Liquidity and Uncertainties

9 Months Ended

Sep. 30, 2022

Liquidity and Uncertainties

Liquidity and Uncertainties

3. Liquidity and Uncertainties

The Company is subject to risks common to development stage companies in the biopharmaceutical industry including, but not limited to, uncertainty of product development and commercialization, dependence on key personnel, uncertainty of market acceptance of products and product reimbursement, product liability, uncertain protection of proprietary technology, potential inability to raise additional financing necessary for development and commercialization, and compliance with the U.S. Food and Drug Administration (FDA) and other government regulations.

The Company has incurred losses since inception, including approximately $209.4 million for the nine months ended September 30, 2022, resulting in an accumulated deficit of approximately $876.8 million as of September 30, 2022. Management expects to incur losses for the foreseeable future. To date, the Company has funded its operations primarily through proceeds from sales of the Company’s capital stock. In addition, the Company entered into a Loan and Security Agreement (the “Loan Facility”) with Hercules Capital, Inc. and the several banks and other financial institutions or entities party thereto in May 2022 which provides for an aggregate of up to $250.0 million in term loans, which will be available in four tranches, subject to the Company’s achievement of certain milestones and conditions. The first $50.0 million tranche was drawn at closing of the Loan Facility (see Note 6 – Long Term Debt). The inability of the Company to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on the Company’s business, results of operations and financial condition. The Company believes it has the ability to delay certain clinical and pre-commercialization activities and related expenses if necessary due to liquidity concerns until a date when those concerns are relieved. If the Company is unable to obtain funding, the Company: could be forced to delay, reduce or eliminate some or all of its clinical studies or pre-commercialization efforts, which could adversely affect its business prospects; could adversely affect liquidity; and could affect the Company’s ability to maintain compliance with covenants under the Loan Facility.

In accordance with ASC 205-40, Going Concern (“ASC 205-40”), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Based upon current operating plans and the Company’s cash, cash equivalents and marketable securities totaling $153.2 million as of September 30, 2022, the Company expects, that such resources will not be sufficient to fund our operating expenses and capital requirements through the one year anniversary of the filing of this Quarterly Report on Form 10-Q. These conditions raise substantial doubt about the Company’s ability to continue as a going concern under ASC 205-40. Under ASC 205-40, management may not consider the potential for future capital raises through debt or equity financings, collaborations, partnerships or other strategic transactions, or management plans to reduce costs that are not considered probable within the meaning of such accounting standards. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all.