IMMUNEERING CORPORATION You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2022 , including the audited consolidated financial statements and notes thereto. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are a clinical-stage oncology company developing medicines for broad populations of cancer patients. Our initial aim is to develop a universal-RAS therapy, an approach designed to include patients with solid tumors driven by any mutation in KRAS, NRAS or HRAS. Our inclusive approach differentiates us from narrowly targeted precision therapies, which are limited to patients with tumors harboring select mutations. We are currently evaluating our lead product candidate, IMM-1-104, in a Phase 1/2a clinical trial in patients with advanced solid tumors harboring RAS mutations. IMM-1-104 is being developed as a once-daily oral monotherapy that aims to achieve universal-RAS activity through deep cyclic inhibition of the MAPK pathway. Deep cyclic inhibition is a novel mechanism that aims to deprive tumor cells of the sustained proliferative signaling required for rapid growth, while sparing healthy cells through a cadenced, normalized level of signaling. This mechanism was engineered using our proprietary informatics-based discovery platform. The development of our pipeline is translationally guided by our proprietary, human-aligned 3D tumor modeling platform that we combine with bioinformatics-driven patient profiling, which we believe has the potential to increase the probability of success in clinical development versus traditional drug development approaches. Our second product candidate, IMM-6-415, aims to achieve universal-MAPK activity with an accelerated twice-daily oral dosing cadence, also through deep cyclic inhibition of the MAPK pathway. IMM-6-415 is currently in IND-enabling studies. Our pipeline also includes Trifecta MEK, RAS modulators and other small molecule drug discovery programs. InFebruary 2023 , we suspended our neuroscience programs, which were in the early stages of drug discovery, in order to focus on advancing our core oncology pipeline. OnApril 18, 2023 , we announced initial pharmacokinetic, or PK, pharmacodynamic, or PD, and safety data from the ongoing Phase 1 portion of our Phase 1/2a clinical trial of IMM-1-104 in patients with advanced solid tumors harboring RAS mutations. As ofApril 10, 2023 , we had PK, PD and safety data from four patients with pancreatic or colorectal cancer available for evaluation. Of these patients, we dosed one patient at 40 mg once daily oral dose, or the first dose level, one patient at 80 mg once daily oral dose, or the second dose level, and two patients at 160 mg once daily oral dose, or the third dose level. At the third dose level, we observed significant PK Cmax levels, which is the plasma concentration of therapy in a specific area of the body, with IMM-1-104 of over 2,000 ng/mL or approximately 1 uM drug free-fraction. In addition, we observed greater than 90% PD inhibition of phosphorylated extracellular signal-regulated kinase (pERK) with IMM-1-104 compared to pretreatment baseline for patients at the third dose level. A median plasma half-life of 1.94 hours was observed with IMM-1-104 across the first three dose levels evaluated in patients with pancreatic and colorectal cancer with different RAS mutations, including KRAS-G12D, the most common mutation present in pancreatic cancer. IMM-1-104 was well tolerated in these four patients, as well as one patient dosed at 320 mg once daily oral dose, or the fourth dose level, with no dose limiting toxicities or serious adverse events observed and no drug-related adverse events beyond Grade 1 observed. Based on this initial data, we plan to announce the recommended Phase 2 dose in early 2024 instead of our prior guidance of mid-2024. In addition, we plan to submit an IND for IMM-6-415 to theU.S. Food and Drug Administration , or FDA, in the fourth quarter of 2023. For the period from inception through 2017, we devoted substantially all of our efforts to business planning, service revenue generation, developing tools to aid in drug discovery, and recruiting management and technical staff. Since 2018, we have also focused significant effort on our own internal research and development programs. We have financed our operations through service revenues, the issuance of convertible debt and the sale of convertible preferred stock and common stock. OnDecember 22, 2021 , we completed the acquisition of all outstanding shares of capital stock ofBioArkive, Inc. , aCalifornia corporation ("BioArkive") for a market value of$8.75 million . 22 -------------------------------------------------------------------------------- Table of Contents BioArkive is aSan Diego based contract research organization that has previously provided preclinical research services and biosample storage to us and other biotechnology companies. BioArkive was fully integrated into our operations following the acquisition and exclusively supports our internal preclinical research activities for our oncology pipeline. In connection with the acquisition, we assumed the obligations under BioArkive's three lease agreements. OnApril 20, 2023 , we completed an underwritten offering, pursuant to which we issued and sold 2,727,273 shares of our Class A common stock at an offering price of$11.00 per share. The aggregate net proceeds received from the offering was$28.2 million , after deducting underwriting discounts and commissions, but before deducting offering costs payable by us, which are estimated to be$0.4 million . Since inception, we have had significant annual operating losses. Our net loss was approximately$13.6 million , for the three months endedMarch 31, 2023 and$50.5 million for the year endedDecember 31, 2022 . As ofMarch 31, 2023 , we had an accumulated deficit of approximately$123.4 million and approximately$91.5 million in cash and cash equivalents and marketable securities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued expenses. We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. In particular, we expect our expenses to increase as we continue our development of, and seek regulatory approvals for, our internally developed product candidates as well as add operational, financial and management informational systems and personnel to support our product development. In addition, if and when we seek and obtain regulatory approval to commercialize any product candidate, we will also incur increased expenses in connection with commercialization and marketing of any such product. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities. Based on our current business plans, we believe that our existing cash, cash equivalents and marketable securities, including the estimated net proceeds from ourApril 2023 underwritten offering, will enable us to fund our development activities and other operations into 2025. 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. To finance our operations beyond that point we will need to raise additional capital, which cannot be assured. We have not had any internally developed products approved for sale. We do not expect to generate any product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our internally developed product candidates. If we obtain regulatory approval for any of our internally developed product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. As a result, until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including collaborations, licenses or similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed or on favorable terms, if at all. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies, including our research and development activities. If we are unable to raise capital, we will need to delay, reduce or terminate planned activities to reduce costs.
Components of Our Results of Operations
Revenue
Our revenue has historically been generated by providing computational biology
professional services to pharmaceutical and biotechnology companies. We charged
an agreed upon rate per hour based on the aggregate level of personnel assigned
to work on the project or a fixed fee for a defined scope of work. Our contracts
specified the period of time over which these professional services would be
provided. We recognized revenue over time by measuring the progress toward
complete satisfaction of the performance obligation using a single method of
measuring progress, which depicts the performance in transferring control of the
associated services to the customer. We used input methods to measure the
progress toward the complete satisfaction of performance obligations and
evaluate the measure of progress each reporting period and, if necessary,
adjusted the measure of performance and related revenue recognition. Any such
adjustments were recorded on a cumulative catch-up basis, which would affect
revenue and net loss in the period of adjustment.
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We have ceased accepting new services contracts in order to focus on developing
our wholly-owned internal pipeline. In September 2022 , we completed our last
remaining services contract associated with the computational biology
professional services business.
We have also discontinued our biosample storage business, which was acquired
through the BioArkive transaction, to external parties. In December 2022 , we
completed our last remaining contract. The revenue earned associated with the
biosample storage business for the year ended December 31, 2022 is immaterial to
the financial statements.
At this time, we do not anticipate entering into any new service or storage contracts or agreements.
Cost of Revenue
Historically, our cost of revenue has primarily consisted of expenses related to providing professional services to our customers. These costs include salaries, bonuses, benefits, stock-based compensation expense, depreciation, facilities, and other outside services. As a result of the discontinued service contracts and bio-sample storage business, the cost of revenue incurred for the year endedDecember 31, 2022 is immaterial to the financial statements.
Operating Expenses
Our operating expenses consist of (i) research and development expenses and (ii) general and administrative expenses.
Research and Development
Research and development expenses account for a significant portion of our operating expenses. Our research and development expenses consist primarily of direct and unallocated costs incurred in connection with the development of our research platform, product candidates, discovery efforts and preclinical and clinical activities related to our program pipeline.
Our direct costs include:
•expenses incurred under agreements with third-party contract research organizations, or CROs, and other vendors that conduct our preclinical and clinical activities on our behalf; including clinical trial sites that conduct research and development activities on our behalf.
•laboratory expenses related to the execution of discovery programs, preclinical studies and clinical trials;
•costs related to production of clinical and preclinical materials, including fees paid to contract manufacturers.
Our unallocated costs include:
•personnel-related expenses, consisting of employee salaries, bonuses, benefits and stock-based compensation expense, and recruiting costs for personnel engaged in research and development activities; and
•contractor and consulting fees related to the preparation and ongoing support of clinical trials
•facility and equipment related expenses, consisting of indirect and allocated expenses for rent, depreciation, maintenance of facilities, insurance, and other supplies.
We expense research and development costs in the periods in which they are incurred.
Our direct research and development expenses are tracked on a program-by-program
basis once they are in Phase 1 and consist of external costs and fees paid to
contract manufacturing organizations, or CMOs, and CROs in connection with our
preclinical and clinical development and manufacturing activities. Such program
costs also include the external costs of laboratory and consumable materials and
costs of raw materials that are directly attributable to and incurred for any
single program. We do not allocate employee costs, contractor/consultant fees,
costs associated with our platform development and discovery efforts, payments
made under third-party licensing agreements, costs of laboratory supplies and
consumable materials that are not directly attributable to any single program,
and facilities expenses, including rent, depreciation and other indirect costs,
to specific product development programs because these costs are deployed across
multiple programs and our platform technology and, as such, are not separately
classified.
Due to the inherently unpredictable nature and numerous risks and uncertainties
associated with product development and the current stage of development of our
product candidates and programs, we cannot reasonably estimate or know the
nature, timing and estimated costs necessary to complete the remainder of the
development of our product candidates or
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programs. We are also unable to predict if, when, or to what extent we will
obtain approval and generate revenues from the commercialization and sale of any
of our product candidates.
The duration, costs and timing of preclinical studies and clinical trials and
development of our product candidates will depend on a variety of factors, such
as:
•successful completion of preclinical studies and initiation of clinical trials for future product candidates;
•successful enrollment and completion of clinical trials for our current product candidates;
•data from our clinical programs that support an acceptable risk-benefit profile of our product candidates in the intended patient populations;
•acceptance by the FDA or other applicable regulatory agencies of IND applications, clinical trial applications and/or other regulatory filings for our product candidates;
•expansion and maintenance of a workforce of experienced scientists and others to continue to develop our product candidates;
•successful application for and receipt of marketing approvals from applicable regulatory authorities;
•obtainment and maintenance of intellectual property protection and regulatory exclusivity for our product candidates;
•making of arrangements with contract manufacturing organizations for, or establishment of, commercial manufacturing capabilities;
•establishment of sales, marketing and distribution capabilities and successful launch of commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others;
•acceptance of our product candidates, if and when approved, by patients, the medical community and third-party payors;
•effective competition with other therapies;
•obtainment and maintenance of coverage, adequate pricing and adequate reimbursement from third-party payors, including government payors;
•maintenance, enforcement, defense and protection of our rights in our intellectual property portfolio;
•avoidance of infringement, misappropriation or other violations with respect to others' intellectual property or proprietary rights; and
•maintenance of a continued acceptable safety profile of our products following receipt of any marketing approvals.
A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.
The process of conducting the necessary preclinical and clinical research to
obtain regulatory approval is costly and time-consuming. The actual probability
of success for our product candidates may be affected by a variety of factors.
We may never succeed in achieving regulatory approval for any of our product
candidates. Further, a number of factors, including those outside of our
control, could adversely impact the timing and duration of our product
candidates' development, which could increase our research and development
expense. We may obtain unexpected results from our preclinical studies and
clinical trials. We may elect to discontinue, delay or modify clinical trials of
some product candidates or focus on others. A change in the outcome of any of
these factors could mean a significant change in the costs and timing associated
with the development of our current and future preclinical and clinical product
candidates. For example, if the FDA or another regulatory authority were to
require us to conduct clinical trials beyond those that we currently anticipate
will be required for the completion of clinical development, or if we experience
significant delays in execution of or enrollment in any of our preclinical
studies or clinical trials, we could be required to expend significant
additional financial resources and time on the completion of preclinical and
clinical development.
We expect that our research and development expenses will substantially increase
for the foreseeable future as we continue to implement our business strategy,
which includes advancing our product candidates through clinical development,
expanding our research and development efforts, including hiring additional
personnel to support our research and development efforts, and seeking
regulatory approvals for our product candidates that successfully complete
clinical trials.
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In addition, product candidates in later stages of clinical development
generally incur higher development costs than those in earlier stages of
clinical development, primarily due to the increased size and duration of
later-stage clinical trials. As a result, we expect our research and development
expenses to increase as our product candidates advance into later stages of
clinical development. As of the date of this Quarterly Report on Form 10-Q, we
cannot reasonably determine or accurately project total program-specific
expenses through commercialization. There are numerous factors associated with
the successful commercialization of any of our product candidates, including
future trial design and various regulatory requirements, many of which cannot be
determined with accuracy at this time based on our stage of development.
General and Administrative
Our general and administrative expenses consist primarily of personnel-related expenses, including employee salaries, bonuses, benefits, stock-based compensation, and recruiting costs for personnel in executive, finance, and other administrative functions. Other significant general and administrative expenses include legal fees relating to intellectual property and corporate matters, professional fees for accounting, tax and consulting services, insurance costs, travel expenses and facility related expenses not otherwise included in research and development expenses. We expect our general and administrative expenses will substantially increase for the foreseeable future as we continue to increase our general and administrative headcount to support our continued research and development activities and, if any product candidates receive marketing approval, commercialization activities, as well as to support our operations generally. As we expand our operations, we also expect to incur increased expenses associated with operating as a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and rules and regulations of theSecurities and Exchange Commission ("SEC"), Sarbanes-Oxley Act, director and officer insurance costs, and investor and public relations costs.
Amortization of intangible asset
Amortization of intangible asset relates to the technology acquired in the BioArkive acquisition.
Other Income (Expense) Interest income Interest income consists of interest earned on our cash and cash equivalents balances and our marketable securities. The primary objective of our investment policy is capital preservation.
Other income (expense)
Other income (expense) consists of the amortization of premiums or accretion of discounts related to our marketable securities.
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Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the periods
indicated:
Three Months Ended March 31, Change
2023 2022 $ %
(inthousands, except percentages)
Revenue $ -$ 184 $ (184) (100.0) % Cost of revenue - 91 (91) (100.0) % Gross profit - 93 (93) (100.0) % Operating expenses Research and development 10,211 9,059 1,152 12.7 % General and administrative 4,461 3,952 509 12.9 % Amortization of intangible asset 7 8 (1) (12.5) % Total operating expenses 14,679 13,019 1,660 12.8 % Loss from operations (14,679) (12,926) (1,753) 13.6 % Other income (expense) Interest income 831 133 698 524.8 % Other income (expense) 244 (103) 347 (336.9) % Net loss$ (13,604) (12,896) (708) 5.5 % Revenue The following table summarizes the revenue recognized for the periods indicated: Three Months Ended March 31, Change 2023 2022 $ % (in thousands, except percentages) Revenue $ -$ 184 $ (184) (100.0) % Revenue decreased by approximately$0.2 million , or 100.0%, to$0 for the three months endedMarch 31, 2023 compared to approximately$0.2 million for the three months endedMarch 31, 2022 . The decrease in revenue was due to the completion of the remaining services contracts associated with the computational biology professional services business inSeptember 2022 , in addition to fulfilling the final bio-sample storage contract inDecember 2022 .
Cost of Revenue
Cost of revenue decreased by approximately$91 thousand , or 100.0%, to$0 for the three months endedMarch 31, 2023 compared to approximately$91 thousand for the three monthsMarch 31, 2022 . The decrease was primarily due to decreased employee-related costs of approximately$0.2 million related to services contracts that were discontinued as ofSeptember 2022 . 27
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Research and Development
The following table summarizes the components of our research and development expenses for the periods indicated:
Three Months Ended March 31, Change
2023 2022 $ %
(inthousands, except percentages)
Direct research and development expenses by program: IMM-1-104$ 2,082 $ 890 $ 1,192 133.9 % Other Programs 3,252 4,125 (873) (21.2) % Unallocated research and development expenses: Employee-related costs 3,913 3,484 429 12.3 % Stock-based compensation expense 591 433 158 36.5 % Facilities and other expenses 320 105 215 204.8 % Depreciation 53 22 31 140.9 % Total research and development$ 10,211 $ 9,059 $ 1,152 12.7 % N/M - Not meaningful Research and development expenses increased by approximately$1.2 million , or 12.7%, to approximately$10.2 million for the three months endedMarch 31, 2023 as compared to approximately$9.1 million for the three months endedMarch 31, 2022 . The increase of approximately$1.2 million was primarily due to an increase of approximately$0.3 million related to direct research and development expenses, of which$1.2 million related to IMM-1-104 and a decrease of$0.9 million for earlier stage programs. The remaining increase was driven by unallocated research and development costs of approximately$0.8 million , which was primarily driven by the increase of$0.4 million in additional employee-related costs,$0.2 million related to stock-based compensation expense, and$0.2 million in depreciation, facilities, and other expenses in the aggregate. General and Administrative
The following table summarizes the components of our general and administrative expenses for the periods indicated:
Three Months Ended March 31, Change
2023 2022 $ %
(inthousands, except percentages)
Employee-related costs$ 2,347 $ 2,169 $ 178 8.2 % Stock-based compensation expense 683 460 223 48.5 % Professional fees 918 693 225 32.5 % Public relations - 1 (1) (100.0) % Outside consultants - 68 (68) (100.0) % Facilities and other allocated expenses 138 357 (219) (61.3) % Other 375 204 171 83.8 % Total general and administrative$ 4,461 $ 3,952 $ 509 12.9 % General and administrative expenses increased by approximately$0.5 million , or 12.9%, to approximately$4.5 million for the three months endedMarch 31, 2023 compared to approximately$4.0 million for the three months endedMarch 31, 2022 . The increase of approximately$0.5 million was primarily due to an increase in employee-related costs of approximately$0.2 million , increased stock-based compensation expense of$0.2 million , decreased facilities and allocated 28
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expenses of approximately
Amortization of Intangible Asset
Amortization of intangible asset was$7,317 in the three months endedMarch 31, 2023 , compared to$8,103 in the three months endedMarch 31, 2022 . This amortization is related to the technology acquired for the BioArkive acquisition completed inDecember 2021 .
Other Income (expense)
Interest income increased by approximately
Other expense increased by approximately
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have financed our operations through service revenues, the issuance of convertible notes payable, convertible preferred stock, common stock, and the exercise of stock options. As ofMarch 31, 2023 , we had an accumulated deficit of$123.4 million and$91.5 million in cash and cash equivalents and marketable securities. Cash and cash equivalents are comprised of deposits at major financial banking institutions and highly liquid investments with an original maturity of three months or less at the date of purchase. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures, and to a lesser extent, general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, reflected in the change in our outstanding accounts payable and accrued expenses.
Since our inception, we have incurred significant operating losses. We have not yet commercialized any of our product candidates, and we do not expect to generate revenue from sales of any product candidates for the next several years, if at all. To date, our operations have been financed primarily by service revenues and proceeds from sales of our debt and equity securities.
OnAugust 10, 2022 , we entered into an Equity Distribution Agreement, or the Sales Agreement, withPiper Sandler & Co , or the Sales Agent, to sell shares of our common stock with aggregate gross proceeds of up to$50 million , from time to time, through an "at the market" equity offering program. For the quarter endedMarch 31, 2023 , we did not sell any shares of common stock under the Sales Agreement. OnApril 20, 2023 , we completed an underwritten offering, pursuant to which we issued and sold 2,727,273 shares of our Class A common stock at an offering price of$11.00 per share. The aggregate net proceeds received from the offering was$28.2 million , after deducting underwriting discounts and commissions, but before deducting offering costs payable by us, which are estimated to be$0.4 million . As ofMarch 31, 2023 , we have contractual obligations related to various leases of$0.6 million for 2023,$0.7 million for 2024,$0.7 million for 2025,$0.8 million for 2026,$0.8 million for 2027 and$3.7 million for the periods thereafter. We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. 29
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Cash Flows
The following table summarizes our sources and uses of cash for the periods
indicated:
Three Months Ended March 31,
2023 2022
(in thousands)
Net cash (used in) provided by:
Operating activities $ (14,418) $ (12,281)
Investing activities 18,972 12,405
Financing activities 239 193
Net increase in cash and cash equivalents $ 4,793
During the three months ended
During the three months endedMarch 31, 2022 , operating activities used approximately$12.3 million of cash, primarily resulting from our net loss of approximately$12.9 million and cash provided by changes in our operating assets and liabilities of approximately$0.4 million , partially offset by stock-based compensation expense of approximately$0.6 million .
Net Cash Provided by Investing Activities
During the three months ended
During the three months endedMarch 31, 2022 , investing activities provided approximately$12.4 million , primarily resulting from the maturities of marketable securities of approximately$20.5 million , offset by purchases of marketable securities for$8.0 million and purchases of property and equipment of$0.1 million .
Net Cash Provided by Financing Activities
During the three months ended
During the three months ended
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Future Funding Requirements
We expect that our expenses will increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials for our product candidates in development. The timing and amount of our operating and capital expenditures will depend largely on:
•the costs and results of our ongoing clinical trial for IMM-1-104 and potential future clinical trials for our other product candidates;
•the scope, progress, results and costs of discovery research, preclinical development, laboratory testing and clinical trials for our other product candidates;
•the costs, timing and outcome of regulatory review of our product candidates;
•our ability to enter into contract manufacturing arrangements for supply of active pharmaceutical ingredient, or API, and manufacture of our product candidates and the terms of such arrangements;
•the payment or receipt of milestones and receipt of other collaboration-based revenues, if any;
•the costs and timing of any future commercialization activities, including product manufacturing, sales, marketing and distribution, for any of our product candidates for which we may receive marketing approval;
•the amount and timing of revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;
•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property related claims;
•the extent to which we acquire or in-license other products, product candidates, technologies or data referencing rights;
•our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;
•our ability to access the private and public capital markets or to obtain financing at commercially reasonable rate;
•the ability to receive additional non-dilutive funding, including grants from organizations and foundations;
•the costs of operating as a public company; and
•the impacts of the pandemic related to COVID-19 and its variants and potential future pandemics.
Based on our current business plans, we believe that our existing cash, cash equivalents and marketable securities, including the estimated net proceeds from ourApril 2023 underwritten offering, will enable us to fund our development activities and other operations into 2025. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
Critical Accounting Estimates
Our financial statements are prepared in accordance with generally accepted accounting principles inthe United States . The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Use of Estimates" in our Annual Report on 10-K for the fiscal year endingDecember 31, 2022 . If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no significant changes to our critical accounting policies from those described in our Annual Report on 10-K for the fiscal year endingDecember 31, 2022 . 31
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A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
As an emerging growth company, or EGC, under the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies. Other exemptions and reduced reporting requirements under the JOBS Act for EGCs include presentation of only two years of audited consolidated financial statements in a registration statement for an IPO, an exemption from the requirement to provide an auditor's report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, an exemption from any requirement that may be adopted by thePublic Company Accounting Oversight Board , and less extensive disclosure about our executive compensation arrangements. In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an EGC to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. We may remain classified as an EGC until the end of the fiscal year following the fifth anniversary of our IPO, although if the market value of our common stock that is held by non-affiliates exceeds$700 million as of the last business day of the second fiscal quarter of any year before that time, or if we have annual gross revenues of$1.235 billion or more in any fiscal year, we would cease to be an EGC as ofDecember 31 of the applicable year. We also would cease to be an EGC if we issue more than$1.0 billion of non-convertible debt over a three-year period.
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