aTyr Pharma, Inc.(ATYR) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents aTyr Pharma's unaudited consolidated financial statements, including balance sheets, operations, equity, cash flows, and detailed accounting notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands USD) | Metric | Sep 30, 2020 (unaudited) (in thousands USD) | Dec 31, 2019 (in thousands USD) | | :-------------------------------- | :------------------------------------- | :-------------------------- | | Assets | | | | Total current assets | $38,218 | $31,925 | | Total assets | $41,636 | $36,188 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $8,033 | $12,923 | | Total stockholders' equity | $31,998 | $21,026 | * Total current assets increased by $6.293 million (19.7%) from December 31, 2019, to September 30, 2020, primarily driven by an increase in cash and cash equivalents[10] * Total current liabilities decreased by $4.890 million (37.8%) over the same period, mainly due to a significant reduction in term loans[10] * Total stockholders' equity increased by $10.972 million (52.2%) from December 31, 2019, to September 30, 2020[10] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands USD) | Metric (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues | $148 | $184 | $8,402 | $278 | | Research and development | $4,616 | $3,799 | $12,593 | $10,458 | | General and administrative | $2,044 | $1,883 | $6,780 | $6,836 | | Total operating expenses | $6,660 | $5,682 | $19,373 | $17,294 | | Consolidated net loss | $(6,600) | $(5,645) | $(11,295) | $(17,630) | | Net loss per share, basic and diluted | $(0.68) | $(1.47) | $(1.31) | $(5.55) | * Total revenues for the nine months ended September 30, 2020, significantly increased to $8.4 million from $0.3 million in the prior year, primarily due to a license agreement[13] * Research and development expenses increased for both the three-month and nine-month periods, reflecting progression in clinical trials for ATYR1923[13] * Consolidated net loss decreased for the nine months ended September 30, 2020, to $(11.3) million from $(17.6) million in the prior year, driven by higher revenues[13] Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss (in thousands USD) | Metric (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Consolidated net loss | $(6,600) | $(5,645) | $(11,295) | $(17,630) | | Other comprehensive gain (loss) | $2 | $(1) | $(2) | $27 | | Comprehensive loss | $(6,598) | $(5,646) | $(11,297) | $(17,603) | * The comprehensive loss for the nine months ended September 30, 2020, was $(11.3) million, a decrease from $(17.6) million in the prior year, consistent with the net loss trend[16] Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (in thousands USD, except shares) | Metric (in thousands USD, except shares) | Balance as of Dec 31, 2019 | Balance as of Sep 30, 2020 | | :----------------------------------- | :------------------------- | :------------------------- | | Common Stock Shares | 3,891,787 | 9,990,962 | | Common Stock Amount | $4 | $10 | | Additional Paid-In Capital | $343,524 | $365,789 | | Accumulated Deficit | $(322,304) | $(333,596) | | Total Stockholders' Equity | $21,026 | $31,998 | * Common stock shares outstanding increased significantly from 3,891,787 at December 31, 2019, to 9,990,962 at September 30, 2020, primarily due to an underwritten follow-on offering and at-the-market offerings[19] * Additional paid-in capital increased by $22.265 million, reflecting proceeds from equity issuances[19] * Total stockholders' equity increased by $10.972 million, reaching $31.998 million as of September 30, 2020[19] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands USD) | Metric (in thousands USD) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(9,900) | $(15,097) | | Net cash provided by investing activities | $3,697 | $6,145 | | Net cash provided by financing activities | $15,144 | $3,331 | | Net change in cash and cash equivalents | $8,941 | $(5,621) | | Cash and cash equivalents at end of period | $18,151 | $17,341 | * Net cash used in operating activities decreased by $5.197 million, from $(15.1) million in 2019 to $(9.9) million in 2020, primarily due to a reduced net loss[24] * Net cash provided by financing activities significantly increased to $15.1 million in 2020 from $3.3 million in 2019, driven by proceeds from equity offerings[24] * Cash and cash equivalents at the end of the period increased to $18.151 million in 2020 from $17.341 million in 2019[24] Notes to Condensed Consolidated Financial Statements Note 1. Organization, Business, Basis of Presentation and Summary of Significant Accounting Policies * aTyr Pharma, Inc. is a Delaware-incorporated biotherapeutics company focused on discovering and developing innovative medicines based on novel biological pathways, including extracellular functionality and signaling pathways of tRNA synthetases[27][85] * The company's condensed consolidated financial statements include its 98% majority-owned subsidiary, Pangu BioPharma Limited, in Hong Kong[28] * The COVID-19 pandemic has caused significant disruptions, including delays in clinical trial enrollment (Phase 1b/2a pulmonary sarcoidosis), temporary facility closures, travel restrictions, and delays in R&D activities[30][31] * The company has incurred accumulated deficits of $333.6 million as of September 30, 2020, and expects to continue incurring net losses, but believes existing cash and investments ($36.1 million) are sufficient for at least one year[32][116] * Revenue recognition follows ASC Topic 606, recognizing revenue when promised goods or services are transferred to customers, either over time (e.g., R&D services) or at a point in time (e.g., license transfer)[39][42] Note 2. Fair Value Measurements * Financial assets measured at fair value on a recurring basis include cash equivalents and available-for-sale investment securities, categorized into a three-tier hierarchy (Level 1, 2, 3)[50] Fair Value Measurements (in thousands USD) | Asset Category (in thousands USD) | Sep 30, 2020 Total Fair Value | Dec 31, 2019 Total Fair Value | | :------------------------------ | :------------------------------ | :------------------------------ | | Cash equivalents | $15,965 | $8,248 | | Available-for-sale investments | $17,995 | $21,934 | | Asset-backed securities | $2,234 | $6,304 | | Commercial paper | $5,587 | $7,568 | | Corporate debt securities | $8,174 | $8,062 | | United States Treasury | $2,000 | $0 | | Total assets measured at fair value | $33,960 | $30,182 | * As of September 30, 2020, all available-for-sale investments have maturity dates of less than one year and are in gross unrealized gain positions[52] Note 3. License and Other Agreements * In March 2019, aTyr Pharma entered a research collaboration and option agreement with CSL Behring (CSL) for tRNA synthetase-derived product candidates, with CSL funding R&D activities[54] * Under the CSL Agreement, $0.1 million and $0.4 million in license revenue were recognized for the three and nine months ended September 30, 2020, respectively[59] * In January 2020, aTyr Pharma licensed ATYR1923 to Kyorin Pharmaceutical Co., Ltd. for interstitial lung diseases (ILDs) in Japan, receiving an $8.0 million upfront payment and eligibility for up to $167.0 million in milestones plus tiered royalties[60] * For the nine months ended September 30, 2020, $8.0 million in license revenue was recognized from the Kyorin Agreement[62] * Pangu BioPharma, aTyr's subsidiary, received a $750,000 grant with HKUST in March 2020 to develop a high-throughput platform for bi-specific antibodies, with aTyr contributing 50% of the project cost[64][91][93] Note 4. Debt, Commitments and Contingencies * The company had term loans totaling $20.0 million from Silicon Valley Bank and Solar Capital Ltd., with interest-only payments until June 2018, followed by principal and interest payments through November 2020[67][68] * As of September 30, 2020, the carrying value of Term Loans was $1.3 million principal outstanding, net of debt issuance costs and accretion of the final maturity payment[70] * Warrants to purchase common stock were issued to lenders in connection with the term loans, with an aggregate fair value of $0.5 million[71] Operating Lease Payments (in thousands USD) | Operating Lease Payments (in thousands USD) | Amount | | :-------------------------------------- | :----- | | 2020 | $254 | | 2021 | $1,031 | | 2022 | $1,062 | | 2023 | $404 | | Less: Amount representing interest | $(312) | | Present value of lease payments | $2,439 | | Less: Current portion of operating lease liability | $(834) | | Long-term operating lease liability | $1,605 | * The weighted-average remaining lease term for facility leases was 2.7 years with a weighted-average discount rate of 9.6% as of September 30, 2020[72] Note 5. Stockholders' Equity * Under the At-the-Market (ATM) Offering Program, the company sold 630,685 shares of common stock for gross proceeds of $2.5 million during the nine months ended September 30, 2020[74] * In February 2020, an underwritten follow-on public offering generated approximately $20.7 million in total gross proceeds from the issuance of 4,870,588 shares of common stock[75] * In September 2020, a common stock purchase agreement with Aspire Capital Fund, LLC committed Aspire Capital to purchase up to $20.0 million of common stock over 30 months, though no shares were sold as of September 30, 2020[76] Common Stock Reserved for Future Issuance (Sep 30, 2020) | Common Stock Reserved for Future Issuance (Sep 30, 2020) | Shares | | :------------------------------------------------------- | :----- | | Common stock warrants | 13,904 | | Common stock options and restricted stock units | 582,582 | | Shares available under 2015 equity incentive plan | 383,292 | | Shares available under employee stock purchase plan | 76,917 | | Total | 1,056,695 | Stock-based Compensation Expense (in thousands USD) | Stock-based Compensation Expense (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :---------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Research and development | $64 | $82 | $194 | $285 | | General and administrative | $260 | $196 | $931 | $1,073 | | Total stock-based compensation expense | $324 | $278 | $1,125 | $1,358 | Note 6. Subsequent Events * Through November 12, 2020, the company sold an additional 194,496 shares of common stock for $0.7 million gross proceeds via the ATM Offering Program[80] * On November 3, 2020, the Term Loans were fully repaid, including the final maturity payment[81] * On November 13, 2020, the ATM Offering Program amount was increased from $10.0 million to $20.0 million[81] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews the company's business, financial operations, and Q3 2020 results, discussing liquidity, capital, and COVID-19 impacts Overview * aTyr Pharma is a biotherapeutics company focused on novel biological pathways, specifically the extracellular functionality and signaling pathways of tRNA synthetases, with a global intellectual property estate[85] * The primary focus is on ATYR1923, a clinical-stage product candidate that downregulates immune responses by binding to the NRP2 receptor, in development for severe inflammatory lung diseases (ILDs) and being investigated for COVID-19[86][88] * A Phase 1b/2a clinical trial for ATYR1923 in pulmonary sarcoidosis patients showed the study drug was generally well tolerated with no drug-related serious adverse events[87] * Enrollment for a Phase 2 clinical trial of ATYR1923 in hospitalized COVID-19 patients with severe respiratory complications was completed in October 2020, with topline data expected at the turn of the calendar year[88] * Kyorin Pharmaceutical Co., Ltd. initiated a Phase 1 trial of ATYR1923 in Japan in September 2020, following an $8.0 million upfront payment and potential milestones up to $167.0 million[89] * The company declared ATYR2810, an NRP2 antibody program, as an IND candidate in oncology in November 2020, targeting aggressive tumors where NRP2 is implicated[90] * The COVID-19 pandemic has caused delays in clinical trial enrollment, temporary facility closures, and disruptions to R&D activities, impacting the pulmonary sarcoidosis trial[95] Financial Operations Overview * The company's consolidated financial statements include aTyr Pharma, Inc. and its 98% majority-owned subsidiary, Pangu BioPharma Limited[96] * Revenue recognition for the nine months ended September 30, 2020, included $8.0 million from the Kyorin Agreement and $0.4 million from the CSL Agreement[99][100] * Research and development expenses are primarily driven by clinical trials for product candidates, including ATYR1923 in pulmonary sarcoidosis and COVID-19, and are expected to increase[101][102] * General and administrative expenses consist mainly of salaries, stock-based compensation, legal, accounting, and patent-related costs[105] * Other expense, net, primarily includes interest income on cash and investments and interest expense on term loans[106] * Critical accounting policies involve significant estimates, particularly for clinical trials and R&D expenses, with additional uncertainty due to the COVID-19 pandemic[107] Results of Operations Results of Operations (in thousands USD) | Metric (in thousands USD) | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Change (in thousands USD) | | :-------------------------------- | :------------------------------ | :------------------------------ | :----- | | Revenues | $148 | $184 | $(36) | | Research and development expenses | $4,616 | $3,799 | $817 | | General and administrative expenses | $2,044 | $1,883 | $161 | | Other expense, net | $(88) | $(147) | $(59) | * For the three months ended September 30, 2020, R&D expenses increased by $0.8 million due to the progression of ATYR1923 clinical trials, while G&A expenses increased by $0.2 million due to insurance costs[111][112] Results of Operations (in thousands USD) | Metric (in thousands USD) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | Change (in thousands USD) | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Revenues | $8,402 | $278 | $8,124 | | Research and development expenses | $12,593 | $10,458 | $2,135 | | General and administrative expenses | $6,780 | $6,836 | $(56) | | Other expense, net | $(324) | $(614) | $(290) | * For the nine months ended September 30, 2020, revenues increased by $8.1 million, primarily from the Kyorin Agreement. R&D expenses increased by $2.1 million due to clinical trial progression[113][114] Liquidity and Capital Resources * As of September 30, 2020, the company had $36.1 million in cash, cash equivalents, and available-for-sale investments, deemed sufficient for at least one year of operations[116] * Operations have been financed primarily through equity securities sales, convertible debt, and term loans since inception[117] * In 2020, significant capital was raised through an underwritten follow-on public offering ($20.7 million gross proceeds) and at-the-market offerings ($2.5 million gross proceeds)[118][119] * A common stock purchase agreement with Aspire Capital Fund, LLC allows for the sale of up to $20.0 million in common stock over 30 months[120] * Term Loans were fully repaid on November 3, 2020[121] Cash Flow Activity (in thousands USD) | Cash Flow Activity (in thousands USD) | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(9,900) | $(15,097) | | Investing activities | $3,697 | $6,145 | | Financing activities | $15,144 | $3,331 | | Net change in cash and cash equivalents | $8,941 | $(5,621) | * Future funding requirements are uncertain and depend on clinical trial progress, R&D efforts, manufacturing, regulatory approvals, and potential collaborations, with additional challenges posed by the COVID-19 pandemic[127][128] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks, specifically interest rate and foreign currency exchange risks, and their potential financial impact * The company is exposed to interest rate risk on its cash, cash equivalents, and available-for-sale investments, totaling $36.1 million as of September 30, 2020[135] * A hypothetical 100 basis point increase in interest rates would not have a material effect on the company's results of operations[135] * The company incurs expenses in foreign currencies (Pounds Sterling, Euro, Hong Kong dollar, Australian dollar) and is thus exposed to foreign currency exchange risk, but does not use hedging transactions[137] * A 10% movement in the U.S. dollar to Pounds Sterling or U.S. dollar to Euro exchange rates would not have a material effect on the company's results of operations or financial condition[137] * Inflation has not had a material effect on the company's results of operations or financial condition during the periods presented[139] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and the absence of significant internal control changes * As of September 30, 2020, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[141] * No significant changes in internal control over financial reporting occurred during the three months ended September 30, 2020, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[142] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, though routine claims may arise without material adverse effect * aTyr Pharma is not a party to any material legal proceedings as of the reporting date[143] * The company may be subject to various legal proceedings and claims in the ordinary course of business, but does not believe any would have a material adverse effect on results or financial condition[143] Item 1A. Risk Factors This section outlines significant risks to the company's business, including financial, product development, regulatory, IP, operations, and commercialization Summary of Risks Associated with Our Business * Key risks include the need for additional capital, significant and ongoing losses, potential delays or failures in clinical trials, inability to commercialize product candidates, novel therapeutic approaches, undesirable side effects, reliance on collaborations, intellectual property protection challenges, and adverse effects from the COVID-19 pandemic[146][148] Risks related to our financial condition and need for additional capital * The company will need to raise substantial additional capital through equity, debt, grants, or partnerships to fund operations, as current funds are sufficient for only one year[147] * Future funding requirements depend on clinical trial progress, R&D costs, manufacturing, regulatory review, intellectual property, commercialization, and potential acquisitions[149] * Failure to obtain timely funding could lead to curtailment or discontinuation of R&D programs, impacting business, financial condition, and results of operations[151] * Equity financing would dilute stockholders, while debt financing would increase fixed obligations and impose restrictive covenants. The COVID-19 pandemic exacerbates financing difficulties[152] We have incurred significant losses since our inception and will continue to incur significant losses for the foreseeable future. * The company has incurred net losses since its inception in 2005, with an accumulated deficit of $333.6 million as of September 30, 2020[154] * Significant expenses are expected to continue for R&D, clinical development, manufacturing, regulatory approvals, commercialization, and intellectual property maintenance[156] * Operating results may fluctuate significantly, and period-to-period comparisons may not indicate future performance[158] We have never generated any revenue from product sales and may never be profitable. * The company has not generated product sales revenue and does not anticipate doing so for the foreseeable future, if ever[159] * Profitability depends on successfully completing development, obtaining regulatory approvals, establishing manufacturing, launching and commercializing products, protecting IP, and achieving market acceptance[159][160] Risks related to the discovery, development and regulation of our product candidates * Clinical trials are expensive, time-consuming, and uncertain, with potential for delays or failure to demonstrate safety and efficacy, which could harm the business[161] * Interim and preliminary clinical data are subject to change and may not be predictive of final results, potentially causing stock price volatility or impacting regulatory approval[169][171][172] * Difficulties in patient enrollment, especially for rare diseases or due to the COVID-19 pandemic, could delay or halt clinical trials, increasing costs and adversely affecting development[174][175][176] * The company's novel therapeutic approaches based on tRNA synthetase and NRP2 biology may face significant delays or fail to yield commercially viable drugs due to lack of precedent and unknown safety profiles[180][181] * Undesirable side effects or safety issues from product candidates could delay or prevent regulatory approval, limit commercial labels, or lead to significant negative consequences post-approval[188][191] * Manufacturing stoppages or challenges, including compliance with cGMP, contamination risks, and supply chain disruptions (exacerbated by COVID-19), could delay clinical trials or commercialization[194][197][199] * Regulatory approval is uncertain and may be delayed, limited in scope, or subject to post-marketing requirements, impacting commercial success[200][207] Risks related to our reliance on third parties * The company depends on existing and future collaborations for R&D and commercialization, and their failure to perform satisfactorily could limit revenue and product validation[213][214] * Reliance on third parties for manufacturing, protocol development, research, and clinical testing reduces control and poses risks if they fail to meet contractual duties, deadlines, or regulatory requirements[217][218] * Using third-party CDMOs for manufacturing entails risks such as inability to negotiate favorable terms, termination of agreements, and disruptions to operations, potentially delaying development or commercialization[219][221] * Sharing trade secrets with third parties increases the risk of misappropriation or disclosure, which could impair the company's competitive position[227] Risks related to our intellectual property * Inability to obtain, maintain, or protect intellectual property rights (patents, trade secrets) could hinder competition and commercialization of product candidates[230] * Patent applications may not issue, or issued patents may be challenged, narrowed, or invalidated, reducing protection and potentially impacting collaborations[232][233] * Trade secret protection is difficult to maintain, and unauthorized disclosure or independent development by competitors could impair the company's competitive position[234][235] * Claims of infringement by third parties could lead to costly litigation, substantial damages, or require licenses that may not be available on reasonable terms[239][242] * Patent terms may be inadequate due to long development timelines, leading to competition from generics or biosimilars upon expiration[244] * Failure to comply with obligations in license agreements could result in loss of critical intellectual property rights[248] * Changes in patent law, such as the Leahy-Smith America Invents Act and recent Supreme Court rulings, increase uncertainty and costs for patent prosecution and enforcement[260][262] Risks related to our business operations * Limited resources may lead to foregoing more profitable strategies or product candidates, and misallocation of resources could adversely impact the business[265] * The COVID-19 pandemic continues to adversely affect business operations, causing delays in clinical trials, disruptions to supply chains, and potential limitations on employee resources[266][268][269] * Future success depends on retaining key employees, consultants, and advisors, and attracting qualified personnel, which is challenging due to intense competition and potential immigration restrictions[276][277] * Internal restructuring activities, such as workforce reductions, may cause disruptions, loss of continuity, and may not achieve expected cost savings or efficiencies[279] * International operations expose the company to risks like differing regulatory requirements, reduced intellectual property protection, economic instability, and foreign currency fluctuations[282] * Misconduct by employees, investigators, or partners, including non-compliance with regulatory standards or fraud and abuse laws, could lead to significant penalties and reputational harm[284] * Product liability claims, even if unfounded, could result in substantial costs, litigation, reputational damage, and hinder commercialization efforts[285][288][289] * Non-compliance with healthcare fraud and abuse laws, data privacy laws (GDPR, CCPA), or other regulations could lead to significant penalties, fines, and operational restrictions[290][291][293] * Unfavorable global economic conditions, including those exacerbated by Brexit and COVID-19, could adversely affect the business by impacting capital raising and supply chains[295] * Natural disasters (e.g., earthquakes, floods) could severely disrupt operations, damage infrastructure, and lead to substantial expenses due to limited disaster recovery plans[296] Risks related to the commercialization of our product candidates * Inability to establish sales, marketing, and distribution capabilities or secure third-party agreements could prevent revenue generation from approved product candidates[297][298] * Lack of commercial manufacturing agreements and potential technical issues or regulatory inspection failures by CDMOs could harm commercialization efforts[300][301] * Intense competition from larger pharmaceutical and biotechnology companies, with greater resources and more advanced therapies, could adversely affect commercial success[303][304] * Market acceptance by physicians, patients, and third-party payors is crucial for commercial success, and failure to achieve adequate acceptance could prevent profitability[305][306] * Uncertainty regarding insurance coverage and adequate reimbursement by third-party payors, coupled with increasing cost-containment initiatives and governmental scrutiny of drug pricing, could limit market access and revenue[307][308][309][310] Risks related to the ownership of our common stock * The market price of common stock is highly volatile due to various factors, including clinical trial results, regulatory decisions, competition, and macroeconomic conditions, potentially leading to investment losses[312][313][314] * Executive officers, directors, and significant stockholders own approximately 36.0% of voting stock, allowing them to exert significant control over corporate matters[315] * Future sales and issuances of equity securities, including through offerings and employee benefit plans, could dilute existing stockholders and depress the stock price[316][319][320][321][322] * Failure to comply with Nasdaq listing requirements, such as the minimum bid price, could result in delisting, making it harder to trade stock and raise capital[323][325][326] * The ability to use net operating losses (NOLs) to offset future taxable income may be limited by ownership changes (Section 382 of the Code) and regulatory changes (e.g., CARES Act, California state limits)[327][328][329] * The company does not intend to pay dividends on common stock, limiting stockholder returns to stock appreciation[330] * Provisions in corporate documents and Delaware law could make it difficult for third parties to acquire the company or remove current management, even if beneficial to stockholders[332][335][336] General Risk Factors * Failure to comply with environmental, health, and safety laws and regulations could lead to fines, penalties, or significant costs[339][340] * The company is subject to anti-corruption laws (e.g., FCPA), and non-compliance could result in criminal/civil penalties and reputational harm[341] * System failures, including cyber-attacks, could disrupt operations, lead to data loss, intellectual property theft, and delays in product development[343][344] * Operating as a public company incurs significant costs and requires substantial management time for compliance initiatives (e.g., Sarbanes-Oxley, Dodd-Frank Act)[345] * As an 'emerging growth company,' reduced reporting requirements may make common stock less attractive to investors, potentially increasing stock price volatility[346] * Lack of research coverage or negative analyst reports could cause the stock price to decline[349] * The company has broad discretion in using its cash and investments, which may not yield significant returns, and is exposed to risks related to marketable securities[351] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period * No unregistered sales of equity securities or use of proceeds to report[352] Item 3. Defaults Upon Senior Securities This section indicates that there were no defaults upon senior securities during the reporting period * No defaults upon senior securities to report[353] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company * Mine safety disclosures are not applicable[354] Item 5. Other Information This section indicates that there is no other information to report for the period * No other information to report[355] Item 6. Exhibits This section provides a comprehensive list of exhibits filed with the Form 10-Q, including organizational documents, agreements, and certifications * The exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, specimen common stock certificate, various warrants, a Registration Rights Agreement, legal opinions, and certifications from the Principal Executive and Financial Officers[357][358] SIGNATURES This section contains the required signatures of the registrant's authorized officers, certifying the filing of the Form 10-Q * The report is signed by Sanjay S. Shukla, M.D., M.S., President and Chief Executive Officer, and Jill M. Broadfoot, Chief Financial Officer, on November 13, 2020[362]