RAPT THERAPEUTICS: Dialogue and evaluation by administration of the monetary place and outcomes of operations. (kind 10-Okay)

The next dialogue and evaluation of our monetary situation and outcomes of
operations ought to be learn at the side of our consolidated monetary
statements and associated notes showing elsewhere on this Annual Report. This
dialogue incorporates forward-looking statements that mirror our plans, estimates
and beliefs, and contain dangers and uncertainties. Our precise outcomes and the
timing of sure occasions may differ materially from these anticipated in these
forward-looking statements because of a number of elements, together with these
mentioned within the part titled "Danger Components" included beneath Half I, Merchandise 1A
and elsewhere on this Annual Report. See "Particular Be aware Concerning Ahead-Trying
Statements" on this Annual Report.

Overview

We're a clinical-stage immunology-based biopharmaceutical firm centered on
discovering, growing and commercializing oral small molecule therapies for
sufferers with vital unmet wants in oncology and inflammatory illnesses.
Using our proprietary drug discovery and improvement engine, we're
growing extremely selective small molecules designed to modulate the essential
immune responses underlying these illnesses. We now have found and superior into
medical improvement two distinctive drug candidates every focusing on C-C motif
chemokine receptor 4 ("CCR4"): FLX475 for the remedy of a spread of tumors and
RPT193 for the remedy of inflammatory illnesses. We're additionally pursuing a spread
of targets which might be within the discovery stage of improvement.

Monetary overview

We commenced operations in 2015, and have since devoted considerably all of our
efforts and monetary assets to constructing our analysis and improvement
capabilities, figuring out product candidates, endeavor preclinical research,
conducting medical trials and establishing our company infrastructure. As a
outcome, we now have incurred web losses since inception. As of December 31, 2020, we
had an gathered deficit of $214.8 million. We now have incurred web losses of
$52.9 million and $43.0 million for the years ended December 31, 2020 and 2019,
respectively. We don't count on to generate product income until and till we
acquire approval for the commercialization of a drug candidate, and we can not
guarantee you that we are going to ever generate vital income or income.

Since inception, we now have financed our operations primarily by means of the sale of
fairness securities. In February 2020, we accomplished an underwritten follow-on
public providing of two,500,000 shares of our frequent inventory for web proceeds of
$69.8 million. In December 2020, we bought 188,700 shares of frequent inventory for web
proceeds of $3.8 million in "at-the-market" choices pursuant to a Managed
Fairness OfferingSM Gross sales Settlement ("ATM Gross sales Settlement") with Cantor Fitzgerald
& Co. and Stifel, Nicolaus & Firm, Integrated. As of December 31, 2020, we
had money and money equivalents and marketable securities of $111.5 million and
working capital of $103.9 million. We consider our present money and money
equivalents and marketable securities can be ample to fund our deliberate
operations for a interval of at the least 12 months following the submitting date of this
report.

We count on to incur substantial expenditures within the foreseeable future as we
develop our pipeline and advance our drug candidates by means of medical
improvement, bear the regulatory approval course of and, if permitted, launch
industrial actions. Particularly, within the close to time period we count on to incur
substantial bills referring to our ongoing and deliberate medical trials, the
improvement and validation of our manufacturing processes and different improvement
actions.

We are going to want substantial further funding to help our persevering with operations
and pursue our improvement technique. Till such time as we will generate
vital income from gross sales of our drug candidates, if ever, we count on to
finance our operations by means of the sale of fairness, debt financings or different
capital sources, together with potential collaborations with different firms or
different strategic transactions. Enough funding will not be obtainable to us on
acceptable phrases, or in any respect. If we fail to boost capital or enter into such
agreements as, and when, wanted, we might should considerably delay, reduce
or discontinue the event and commercialization of our drug candidates or
delay our efforts to develop our product pipeline. We may additionally be required to
promote or license to different events rights to develop or commercialize our drug
candidates that we would favor to retain.

                                      106

--------------------------------------------------------------------------------

Impression of the COVID-19 pandemic

We now have been impacted and should proceed to be impacted by the worldwide pandemic of
the illness known as COVID-19 and the responses by authorities entities to
fight the pandemic. We now have been intently monitoring and proceed to watch the
affect of COVID­19 on all features of our enterprise and operations. Each the
outbreak of the illness and the actions to sluggish its unfold have had an opposed
affect on our operations by, amongst different issues, delaying our medical trials,
limiting our workers from coming to work at our facility and delaying companies
from third-party service suppliers. Our operations are restricted by protocols
carried out to guard the well being of our workers. Relying on how lengthy the
pandemic continues or if it intensifies, it's potential that these or different
challenges might have a bigger affect on our operations. Moreover, issues
over the financial affect of COVID-19 have precipitated excessive volatility in monetary
and different capital markets, which has adversely impacted, and should proceed to
adversely affect, our inventory value and our means to entry capital markets. The
state of affairs surrounding COVID-19 stays fluid, and we're actively managing our
response and assessing potential impacts to our monetary situation and different
operations, workers, outcomes of operations and our means to entry capital.
The magnitude of any such opposed affect can not presently be decided as a result of
quite a few uncertainties surrounding COVID-19 (check with Merchandise 1A. Danger Components for
associated dangers).

Parts of working outcomes

Returned

The revenues acknowledged through the intervals offered relate to the collaboration and license settlement (the “Hanmi settlement”) that we now have entered into with Hanmi Pharmaceutical Ltd. (“Hanmi”) in December 2019.

Analysis and improvement prices

We expense each inside and exterior analysis and improvement prices as such
bills are incurred. We monitor the exterior analysis and improvement prices
incurred for every of our drug candidates. Nevertheless, we don't monitor our inside
analysis and improvement prices by drug candidate, because the associated efforts and
their prices are sometimes unfold throughout a number of drug candidates.

We account for non-refundable advance funds for items or companies that may
be utilized in future analysis and improvement actions as bills when the products
have been acquired or when the service have been carried out relatively than when the
fee is made.

Scientific trial prices are a element of analysis and improvement bills. We
expense prices for our medical trial actions carried out by third events,
together with medical analysis organizations ("CROs") and different service suppliers,
as they're incurred, primarily based upon estimates of the work accomplished over the life
of the person examine in accordance with the related agreements. We use
info acquired from inside personnel and out of doors service suppliers to
estimate the medical trial prices incurred.

Exterior analysis and improvement prices primarily embrace prices incurred for the event of our drug candidates and embrace:

     •    prices incurred beneath agreements with CROs, investigative websites and
          consultants to conduct our medical trials and preclinical and
          non-clinical research;


     •    prices to amass, develop and manufacture provides for medical trials
          and different research, together with charges paid to contract manufacturing
          organizations ("CMOs"); and

• prices associated to compliance with regulatory necessities for drug improvement.

Inside analysis and improvement prices embrace:

     •    salaries and associated prices, together with stock-based compensation and
          journey bills, for personnel in our analysis and improvement
          capabilities; and

• depreciation and different prices associated to allotted installations and overheads.


                                      107

--------------------------------------------------------------------------------





We count on our analysis and improvement bills to extend considerably throughout
the subsequent few years as we search to finish present and provoke further
medical trials, pursue regulatory approval of FLX475 and RPT193 and advance
different applications into medical improvement. Over the subsequent few years, we count on our
preclinical, medical and contract manufacturing bills to extend
considerably relative to what we now have incurred to this point. Predicting the timing
or the ultimate value to finish our medical program or validation of our
manufacturing and provide processes is tough and delays might happen due to
many elements.

Normal and administrative bills

Normal and administrative bills consist principally of personnel-related
prices together with payroll and inventory­primarily based compensation for personnel in government,
finance, human assets, enterprise and company improvement and different
administrative capabilities; skilled charges for authorized, consulting and accounting
companies; lease and different amenities prices, depreciation and different normal
working bills not in any other case labeled as analysis and improvement
bills.

We count on our normal and administrative bills to extend considerably over the subsequent a number of years as a result of elevated workers and extra occupancy prices, in addition to the prices related to being a public firm, together with skilled charges. larger for authorized, advisory and accounting companies, investor relations prices, larger insurance coverage premiums and different compliance prices.

Different revenue, web

Our money and money equivalents and marketable securities are invested in cash
market funds, company debt securities, industrial paper and U.S. authorities
company securities. Different revenue, web, consists primarily of curiosity earned on
our money and money equivalents and marketable securities and remeasurement features
and losses on international foreign money transactions.

Important accounting insurance policies, vital judgments and using estimates

Our consolidated monetary statements have been ready in accordance with U.S.
typically accepted accounting ideas ("GAAP"). The preparation of those
consolidated monetary statements requires us to make estimates and assumptions
that have an effect on the reported quantities of belongings and liabilities and the disclosure of
contingent belongings and liabilities on the date of the consolidated monetary
statements, in addition to the reported bills incurred through the reporting
intervals. Our estimates are primarily based on our historic expertise and on varied
different elements that we consider are affordable beneath the circumstances, the
outcomes of which kind the premise for making judgments in regards to the carrying worth of
belongings and liabilities that aren't readily obvious from different sources. Precise
outcomes might differ from these estimates beneath completely different assumptions or
situations. We consider that the accounting insurance policies mentioned under are essential
to understanding our historic and future efficiency, as these insurance policies relate
to the extra vital areas involving administration's judgments and estimates.

Though our vital accounting insurance policies are described within the notes to our consolidated monetary statements, we consider the next vital accounting insurance policies are an important in understanding and evaluating our reported monetary outcomes.

Returned

Our license and collaborative agreements include license, milestone and
royalty funds generated by means of agreements with strategic companions for the
improvement and commercialization of sure product candidates. The phrases of an
settlement might embrace a non-refundable upfront charge, funds primarily based upon
achievement of milestones and royalties on web product gross sales. If a portion of
the nonrefundable upfront charge or different funds acquired is allotted to
persevering with efficiency obligations beneath the phrases of an settlement, such portion
is recorded as deferred income and acknowledged as income when (or as) the
underlying efficiency obligation is happy.

                                      108

--------------------------------------------------------------------------------


We acknowledge income after we switch promised items or companies to clients or
counterparties in an quantity that displays the consideration to which we count on
to be entitled in alternate for these items or companies. In figuring out the
acceptable quantity of income to be acknowledged, we carry out the next steps:
(i) identification of the promised items or companies within the settlement; (ii)
dedication of whether or not the promised items or companies are efficiency
obligations, together with whether or not they're distinct within the context of the
settlement; (iii) measurement of the transaction value, together with any constraint
on variable consideration; (iv) allocation of the transaction value to
efficiency obligations primarily based on estimated promoting costs; and (v) recognition
of income when (or as) we fulfill every efficiency obligation.

Licenses: If a license to our mental property is decided to be distinct
from the opposite efficiency obligations recognized in an settlement, we are going to
acknowledge income from the nonrefundable, upfront charge allotted to the license
when the license is transferred to the licensee and the licensee is ready to use
and profit from the license. If a license is bundled with different efficiency
obligations, we make the most of judgment to evaluate the character of the mixed
efficiency obligations to find out whether or not the mixed efficiency
obligations are happy over time or at a time limit and, if over time, the
acceptable methodology of measuring progress for functions of recognizing income. We
consider the measure of progress every reporting interval and, if vital, regulate
the measure of efficiency and associated income recognition.

Milestone funds: If an settlement consists of event-based or milestone funds,
we consider whether or not the occasions or milestones are thought-about more likely to be
achieved and estimate the quantity to be included within the transaction value utilizing
the almost definitely quantity methodology. Whether it is unlikely {that a} vital income
reversal would happen, the worth of the related event-based or milestone
funds is included within the transaction value. Occasion-based or milestone funds
that aren't inside our management are usually not included within the transaction value till
they grow to be more likely to be achieved.

Royalties: If an settlement consists of sales-based royalties and the license is
deemed to be the predominant merchandise to which the royalties relate, we are going to
acknowledge income on the later of (i) when the associated gross sales happen, or (ii) when
the efficiency obligation to which some or the entire royalty has been
allotted has been happy (or partially happy).

As of December 31, 2020 and 2019, we recorded deferred income of $5.0 million
and $4.0 million, respectively, on the consolidated stability sheet associated to our
license and collaboration settlement with Hanmi. As of December 31, 2020 we
acknowledged income of $5.0 million.

Analysis and improvement prices

Analysis and improvement prices are expensed as incurred. Analysis and
improvement prices consist primarily of salaries and advantages of analysis and
improvement personnel, prices associated to analysis actions, preclinical
research, medical trials, drug manufacturing and allotted overhead and
facility-related prices. We account for non-refundable advance funds for items
or companies that can be utilized in future analysis and improvement actions as
bills when the associated items have been acquired or when the service has been
carried out relatively than when the fee is made.

Scientific trial prices are a element of analysis and improvement bills. We
expense prices for our medical trial actions carried out by third events,
together with CROs and different service suppliers, as they're incurred, primarily based upon
estimates of the work accomplished over the lifetime of the person examine in
accordance with related agreements. We use info we obtain from
inside personnel and out of doors service suppliers to estimate the progress of
companies carried out and the related medical trial prices incurred.

                                      109

--------------------------------------------------------------------------------

Inventory-based compensation prices

We account for stock-based compensation preparations with workers and
non-employees in accordance with ASC 718, Inventory Compensation. Inventory-based awards
issued by us have been primarily inventory choices with time-based vesting or
performance-based vesting. ASC 718 requires the popularity of compensation
expense, utilizing a good value-based methodology, for prices associated to all stock-based
awards. To find out the grant-date honest worth of stock-based awards with
time-based vesting, we make the most of the Black-Scholes choice pricing mannequin, which is
impacted by the honest worth of our frequent inventory in addition to different variables
together with, however not restricted to, anticipated time period that stock-based awards will stay
excellent, anticipated frequent inventory value volatility over the time period of the
stock-based awards, risk-free rates of interest and anticipated dividends. Previous to
our preliminary public providing ("IPO"), there had been no public marketplace for our
frequent inventory. As such, the estimated honest values of our frequent inventory underlying
our stock-based awards had been decided at every grant date by our board of
administrators, with enter from administration, primarily based on the data identified to us on
the grant date, together with a evaluation of any latest occasions and their potential
affect on the estimated per share honest worth of our frequent inventory. Valuations of
our frequent inventory had been ready by a third-party valuation agency in accordance
with the steerage outlined within the American Institute of Licensed Public
Accountants Technical Apply Support, Valuation of Privately Held Firm Fairness
Securities Issued as Compensation (the "Apply Support"). Following our IPO, the
honest worth of every share of frequent inventory underlying inventory choice grants is predicated
on the closing value of our frequent inventory on the Nasdaq World Market as reported
on the date of grant.

For stock-based awards with time-based vesting, stock-based compensation is
acknowledged over the interval throughout which an awardee is required to offer
companies in alternate for the stock-based award, often called the requisite service
interval (often the vesting interval), on a straight-line foundation. For stock-based
awards with performance-based vesting, the honest worth of the award is acknowledged
as expense when the achievement of the related efficiency standards turns into
possible, utilizing an accelerated attribution methodology. For each time-based and
performance-based stock-based awards, stock-based compensation expense is
acknowledged primarily based on the honest worth decided on the date of grant.

Estimates of the honest worth of stock-based awards as of the grant date utilizing the
Black-Scholes choice pricing mannequin are affected by assumptions relating to a
variety of advanced variables. Adjustments within the assumptions can materially have an effect on
the honest worth and finally how a lot stock-based compensation expense is
acknowledged. These inputs are subjective and customarily require vital
evaluation and judgment to develop. These inputs are:

Anticipated time period - The anticipated time period represents the interval that our stock-based
awards granted is anticipated to be excellent and is decided utilizing the
simplified methodology (primarily based on the mid-point between the vesting date and the top
of the contractual time period). We now have very restricted historic info to develop
affordable expectations about future train patterns and post-vesting
employment termination conduct for our stock-based awards.

Anticipated volatility - Since we now have solely lately grow to be a public firm and
have solely a restricted buying and selling historical past for our frequent inventory, the anticipated
volatility was estimated primarily based on the common volatility for comparable publicly
traded biopharmaceutical firms over a interval, the place obtainable, equal to the
anticipated time period of the stock-based awards. The comparable firms had been chosen
primarily based on their comparable measurement, life cycle stage or space of specialty.

Danger-free rate of interest – The danger-free rate of interest is predicated on the weTreasury zero coupon points in impact on the time of the grant for intervals equivalent to the anticipated length of the share-based awards.

Anticipated Dividend – We now have by no means paid dividends on our frequent shares and don’t intend to pay dividends on our frequent shares. Subsequently, we use an anticipated dividend yield of zero.

The honest worth of every buy beneath the worker inventory buy plan ("ESPP")
is estimated at first of the providing interval utilizing the Black-Scholes
choice pricing mannequin.

                                      110
--------------------------------------------------------------------------------

The assumptions we now have utilized in making use of the Black-Scholes choice pricing mannequin to find out the estimated honest worth of our granted inventory choices contain inherent uncertainties and the applying of great judgment. Subsequently, if elements or anticipated outcomes change and we use materially completely different assumptions or estimates, our fairness compensation might be materially completely different.

Frequent inventory valuations

Previous to our IPO, the grant date honest worth of our frequent inventory was decided
by our board of administrators with the help of administration and an impartial
third-party valuation specialist. The grant date honest worth of our frequent inventory
was decided utilizing valuation methodologies that make the most of sure assumptions,
together with chance weighting of occasions, volatility, time to liquidation, a
risk-free rate of interest and a reduction for lack of marketability (Stage 3
inputs). In figuring out the honest worth of our frequent inventory, the methodologies
used to estimate our enterprise worth had been carried out utilizing methodologies,
approaches and assumptions in keeping with the Apply Support. The methodology to
decide the honest worth of our frequent inventory included estimating the honest worth
of the enterprise utilizing a market strategy, which estimates our honest worth by
together with an estimation of the worth of the enterprise primarily based on guideline public
firms beneath a variety of completely different situations. The assumptions used to
decide the estimated honest worth of our frequent inventory are primarily based on quite a few
goal and subjective elements, mixed with administration judgment, together with
exterior market situations affecting the pharmaceutical and biotechnology
business and traits inside the business; our stage of improvement; the rights,
preferences and privileges of our convertible most popular inventory relative to these
of our frequent inventory; the costs at which we bought shares of our convertible
most popular inventory; our monetary situation and working outcomes, together with our
ranges of obtainable capital assets; the progress of our analysis and
improvement efforts, our stage of improvement and enterprise technique; fairness
market situations affecting comparable public firms; normal U.S. market
situations; and the shortage of marketability of our frequent inventory.

Following our IPO, our board of administrators determines the honest worth of our frequent shares primarily based on the closing value of our frequent shares on the grant date.

Earnings taxes

We offer for revenue taxes beneath the asset and legal responsibility methodology. Present revenue
tax expense or profit represents the quantity of revenue taxes anticipated to be
payable or refundable for the present 12 months. Deferred revenue tax belongings and
liabilities are decided primarily based on variations between the monetary assertion
reporting and tax bases of belongings and liabilities and web working loss and
credit score carryforwards, and are measured utilizing the enacted tax charges and legal guidelines that
can be in impact when such objects are anticipated to reverse. Deferred revenue tax
belongings are decreased, as vital, by a valuation allowance when administration
determines it's extra doubtless than not that some or the entire tax advantages will
not be realized.

In accordance with the accounting requirements for unsure tax positions, we
consider the popularity threshold and measurement attribute standards for the
monetary assertion recognition and measurement of tax positions taken or
anticipated to be taken in a tax return. We assess all materials positions taken in
any revenue tax return, together with all vital unsure positions, in all tax
years which might be nonetheless topic to evaluation or problem by related taxing
authorities. Assessing an unsure tax place begins with the preliminary
dedication of the place's sustainability and is measured on the largest
quantity of profit that's better than fifty % doubtless of being realized
upon final settlement. As of every stability sheet date, unresolved unsure
tax positions have to be reassessed, and we are going to decide whether or not (i) the elements
underlying the sustainability assertion have modified and (ii) the quantity of the
acknowledged tax profit remains to be acceptable. The popularity and measurement of
tax advantages requires vital judgment. Judgments in regards to the recognition
and measurement of a tax profit may change as new info turns into
obtainable.

                                      111

--------------------------------------------------------------------------------


As of December 31, 2020, our whole deferred tax belongings had been $47.1 million. Due
to our lack of earnings historical past and uncertainties surrounding our means to
generate future taxable revenue, the online deferred tax belongings have been absolutely
offset by a valuation allowance. The deferred tax belongings had been primarily
comprised of federal and state tax web working loss carryforwards ("NOLs").
Utilization of NOLs could also be restricted by the "possession change" guidelines, as outlined
in Part 382 of the Inside Income Code. Comparable guidelines might apply beneath state
tax legal guidelines. Our means to make use of our remaining NOLs could also be additional restricted if we
expertise an possession change because of future adjustments in our inventory
possession.

Outcomes of operations

Comparability of accomplished years December 31, 2020 and 2019

The next desk summarizes our outcomes of operations for the intervals
indicated (in hundreds):



                                        Yr Ended
                                       December 31,
                                    2020          2019        $ Change       % Change
       Income                    $   5,042     $       -     $   5,042              *
       Working bills:
       Analysis and improvement      45,485        34,910        10,575             30 %
       Normal and administrative    12,771         8,719         4,052             46 %
       Complete working bills      58,256        43,629        14,627             34 %
       Loss from operations         (53,214 )     (43,629 )      (9,585 )           22 %
       Different revenue, web              1,312         1,292            20              2 %
       Web loss earlier than taxes        (51,902 )     (42,337 )      (9,565 )           23 %
       Provision for revenue taxes       990           660           330              *
       Web loss                   $ (52,892 )$ (42,997 )$  (9,895 )           23 %


*: Proportion not significant

Analysis and improvement prices

Analysis and improvement bills elevated $10.6 million, or 30%, to $45.5
million for the 12 months ended December 31, 2020 from $34.9 million for the 12 months
ended December 31, 2019. The rise in analysis and improvement bills was
primarily as a result of a rise of $1.3 million in medical trial prices referring to
RPT193, a rise of $3.7 million in medical trial prices referring to FLX475,
a rise of $1.2 million in prices referring to preclinical applications, an
improve of $3.6 million in stock-based compensation expense, $1.6 million in
larger personnel and different prices, offset by a lower of $0.3 million in
laboratory provide bills, a lower of $0.2 million in consulting prices and a
lower of $0.3 million in journey prices as a result of journey restrictions ensuing
from the COVID-19 pandemic. We count on our analysis and improvement bills to
improve considerably through the subsequent few years as we search to finish present
and provoke further medical trials, pursue regulatory approval of FLX475
and RPT193 and advance different applications into the clinic.

Here’s a comparability of analysis and improvement bills for the years ended. December 31, 2020 and 2019 (in hundreds):


                                                          Yr Ended
                                                         December 31,
                                                       2020         2019
          Exterior improvement bills:
          FLX475                                     $ 10,232$  6,542
          RPT193                                        6,592        5,265
          Different Applications                                1,908          685
          Inside analysis and improvement bills   26,753       22,418
          Complete analysis and improvement bills    $ 45,485$ 34,910


                                      112
--------------------------------------------------------------------------------




As beforehand famous, we don't monitor our personal inside analysis and improvement
prices by drug candidate, because the associated efforts and their prices are sometimes
unfold throughout a number of drug candidates.

Normal and administrative bills

Normal and administrative bills elevated $4.1 million, or 47%, to $12.8
million for the 12 months ended December 31, 2020 from $8.7 million for the 12 months
ended December 31, 2019. The rise was primarily as a result of a rise of $1.2
million in insurance coverage and company charges because of being a public firm,
a rise of $3.0 million in stock-based compensation expense, a rise of
$0.4 million in larger personnel and different prices and a rise of $0.3 million
in amenities value, offset by a lower of 0.4 million in skilled companies
and $0.4 million in journey prices as a result of journey restrictions ensuing from the
COVID-19 pandemic. We count on our normal and administrative bills to extend
considerably through the subsequent few years because of workers growth, prices
related to being a public firm, together with larger insurance coverage premiums,
authorized and accounting charges and different compliance prices related to working a
public firm.

Different Earnings, Web

Different revenue, web was $1.3 million for each years ended December 31, 2020 and
2019. Though our money stability elevated throughout 2020, rates of interest declined
throughout 2020, leading to comparable different revenue, web for each years.

Liquidity and capital assets

We had money and money equivalents and marketable securities of $111.5 million and
working capital of $103.9 million as of December 31, 2020. Our money and money
equivalents and marketable securities are invested in cash market funds,
company debt securities, industrial paper and U.S. authorities company
securities. Since inception, we now have incurred web losses and adverse money flows
from operations. At December 31, 2020, we had an gathered deficit of
$214.8 million. As well as, we count on to incur substantial prices with a view to
conduct analysis and improvement actions essential to develop and
commercialize a product. Further capital can be wanted to undertake these
actions and we intend to boost such capital by means of the issuance of
further fairness, borrowings and strategic alliances with different firms.
Nevertheless, if such capital just isn't obtainable at ample ranges or on acceptable
phrases, we might be required to considerably scale back working bills and delay
or scale back the scope of or eradicate a few of our improvement applications. We consider
our present money and money equivalents and marketable securities can be
ample to fund our anticipated degree of operations by means of at the least the subsequent
12 months following the submitting date of this report.

We are going to proceed to require further capital to develop our drug candidates
and fund operations for the foreseeable future. We might search to boost capital
by means of non-public or public fairness or debt financings, collaborative or different
preparations with different firms, or by means of different sources of financing.
Enough further funding will not be obtainable to us on acceptable phrases or at
all. Our failure to boost capital as and when wanted may have a adverse
affect on our monetary situation and our means to pursue our enterprise
methods. We anticipate that we might want to elevate substantial further
capital, the necessities of which can rely on many elements, together with:

• the scope, fee of development and prices of our drug discovery, preclinical

          improvement actions, laboratory testing and medical trials for our
          drug candidates;


  • the quantity and scope of medical applications we resolve to pursue;


     •    the scope and prices of producing improvement and industrial
          manufacturing actions;

• the extent to which we purchase or license different drug candidates and

applied sciences;

• the price, timing and outcomes of the regulatory evaluation of our drug candidates;

• the price and timing of constructing gross sales and advertising and marketing capabilities, if

          any of our drug candidates obtain advertising and marketing approval;


                                      113
--------------------------------------------------------------------------------

• the prices of making ready, submitting and pursuing patent functions,

          acquiring, sustaining and imposing our mental property rights
          and defending mental property-related claims;

• our means to ascertain and preserve collaborations on favorable phrases,

the place relevant;

• our efforts to enhance operational methods and our means to draw,

rent and retain certified personnel, together with personnel to help the

          improvement of our drug candidates;


  • the prices related to being a public firm; and

• the price related to the advertising and marketing of our drug candidates, in the event that they

obtain a advertising and marketing authorization.

See “Danger Components” for extra dangers related to our vital capital necessities.

If we elevate further funds by issuing fairness securities, our stockholders might
expertise dilution. Any future debt financing might impose upon us covenants that
prohibit our operations, together with limitations on our means to incur liens or
further debt, pay dividends, repurchase our frequent inventory, make sure
investments and interact in sure merger, consolidation or asset sale
transactions. Any fairness or debt financing might comprise phrases that aren't
favorable to us or our stockholders. If we're unable to boost further funds
when wanted, we could also be required to delay, scale back or terminate some or all of our
improvement applications and medical trials. We may additionally be required to promote or
license to different events' rights to develop or commercialize our drug candidates
that we would favor to retain.

Condensed Consolidated Statements of Money Flows

The next desk presents the principle sources and makes use of of money and money equivalents for every of the intervals offered under (in hundreds):


                                                          Yr Ended December 31,
                                                            2020             2019

Web money (utilized in) supplied by:

 Working actions                                   $    (40,491 )$ (35,474 )
 Investing actions                                        (87,435 )          (843 )
 Financing actions                                         75,461          49,902

Web improve (lower) in money and money equivalents (52,465) $$ 13,585


Working Actions

Web money utilized in working actions was $40.5 million for the 12 months ended
December 31, 2020, reflecting a web lack of $52.9 million, partially offset by
non-cash prices for depreciation, amortization and stock-based compensation
expense totaling $10.1 million and web money supplied by adjustments in working
belongings and liabilities of $2.3 million. Web money utilized in working actions
was $35.5 million for the 12 months ended December 31, 2019, reflecting a web lack of
$43.0 million, partially offset by non-cash prices for depreciation,
amortization and stock-based compensation expense totaling $3.4 million, and web
money supplied by adjustments in working belongings and liabilities of $4.1 million.

Funding actions

Money utilized in investing actions was $87.4 million and $0.8 million for years
ended December 31, 2020 and 2019, respectively, and primarily resulted from the
buy of marketable funding securities.

                                      114

--------------------------------------------------------------------------------

Fundraising actions

Web money supplied by financing actions was $75.5 million for the 12 months ended
December 31, 2020, primarily from the receipt of $69.8 million in web proceeds
from our February 2020 follow-on providing and $3.8 million in web proceeds from
gross sales of frequent inventory beneath our ATM Gross sales Settlement. Web money supplied by
financing actions was $49.9 million for the 12 months ended December 31, 2019,
primarily from our IPO and the issuance of our convertible most popular inventory.

Obligations and contractual commitments

The next desk summarizes our contractual obligations as of December 31,
2020 (in hundreds):



                                       Lower than                                       Greater than
                                        1 12 months         1-3 years       4-5 years        5 years        Complete
Contractual obligations:
Working lease obligations           $     1,969$     4,146     $     

4,442 $ 2,137$ 12,694
Complete contractual obligations: $ 1,969$ 4,146$ 4,442$ 2,137$ 12,694


As of December 31, 2020, our commitments consisted of working leases for our
amenities of roughly 36,754 sq. toes. Beneath the phrases of the
agreements, we may have lease obligations of $12.7 million from 2021 by means of
2026.

We enter into contracts within the regular course of enterprise with third-party
contract organizations for medical trials, non-clinical research and testing,
and different companies and merchandise for working functions. These contracts
typically present for termination following a sure interval after discover and,
due to this fact, we consider that our non-cancelable obligations beneath these agreements
are usually not materials and are usually not included within the desk above.

Off-balance sheet preparations

We presently haven't entered into and don't have any relationships with
unconsolidated entities or monetary collaborations, corresponding to entities typically
known as structured finance or particular objective entities, which might have
been established for the aim of facilitating off-balance sheet preparations
or different contractually slender or restricted objective.

Indemnity

As permitted beneath Delaware legislation and in accordance with our bylaws, we indemnify
our officers and administrators for sure occasions or occurrences whereas the officer
or director is or was serving in such capability pursuant to indemnification
agreements. We consider the honest worth of the indemnification rights and
agreements is minimal. Accordingly, we now have not recorded any liabilities for
these indemnification rights and agreements as of December 31, 2020 and 2019.

Accounting election of the Employment Act

The Jumpstart Our Enterprise Startups Act of 2012 (the "JOBS Act"), permits
an "rising development firm" corresponding to us to reap the benefits of an prolonged
transition interval to adjust to new or revised accounting requirements relevant
to public firms. We're selecting to elect the prolonged transition interval for
complying with new or revised accounting requirements pursuant to Part 107(b) of
the JOBS Act till the sooner of the date we (i) are now not an rising
development firm or (ii) affirmatively and irrevocably choose out of the prolonged
transition interval supplied within the JOBS Act. Consequently, our monetary
statements will not be corresponding to firms that adjust to new or revised
accounting pronouncements as of public firm efficient dates.

                                      115

————————————————– ——————————


We are going to stay an rising development firm till the earliest of (1) the final day
of our first fiscal 12 months (a) following the fifth anniversary of the completion
of the IPO, (b) through which we now have whole annual gross income of at the least $1.07
billion, or (c) through which we're deemed to be a big accelerated filer, which
means the market worth of our frequent inventory that's held by non-affiliates
exceeds $700.0 million of the prior June thirtieth and (2) the date on which we now have
issued greater than $1.0 billion in non-convertible debt securities through the
prior three-year interval.

© Edgar On-line, supply Previews


Supply hyperlink

About Aldrich Stanley

Check Also

Timeshare sellers can have holidays from minimum tax – Part 1

Large developers of US timeshare companies and other forms of vacation ownership interval projects typically …