PRAXIS PRECISION MEDICINES, INC. Management report and analysis of the financial situation and operating results. (Form 10-Q)

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 the audited financial information and the notes thereto included
in our Annual Report on Form 10-K, which was filed with the Securities and
Exchange Commission (the "SEC") on February 28, 2022. 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 our Annual
Report on Form 10-K for the year ended December 31, 2021 and 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.

Insight

We are a clinical-stage biopharmaceutical company translating genetic insights
into the development of therapies for central nervous system, or CNS, disorders
characterized by neuronal excitation-inhibition imbalance. Normal brain function
requires a delicate balance of excitation and inhibition in neuronal circuits,
which, when dysregulated, can lead to abnormal function and disease. We are
applying insights from genetic epilepsies to both rare and more prevalent
neurological and psychiatric disorders, using our understanding of shared
biological targets and circuits in the brain. We apply a deliberate and
pragmatic precision approach, leveraging a suite of translational tools
including novel transgenic and predictive translational animal models and
electrophysiology markers, to enable an efficient path to proof-of-concept in
patients. Through this approach, we have established a broad CNS portfolio with
multiple programs, including product candidates across psychiatric disorders,
movement disorders and epilepsy, with three clinical-stage product candidates.
Each of our clinical-stage product candidates is advancing in more than one
indication and we anticipate expansion into additional indications. We expect
multiple topline readouts from our clinical-stage programs and anticipate the
launch of two additional clinical development programs this year. In addition,
we have established a robust pipeline of preclinical stage programs through
internal research and in-licensing.

Our broad portfolio of CNS programs is currently structured by therapeutic focus
in three franchises - Psychiatry, Movement Disorders and Epilepsy. Within our
Psychiatry franchise, our most advanced clinical candidate, PRAX-114, is being
developed for the treatment of a broad range of patients suffering from major
depressive disorder, or MDD, and post-traumatic stress disorder, or PTSD. We
have completed the Aria Study, a Phase 2/3, placebo-controlled study evaluating
PRAX-114 for monotherapy treatment of MDD, and expect to report topline results
in June 2022. Following topline results from the Aria Study, we intend to engage
with the U.S. Food and Drug Administration, or FDA, for an end-of-Phase 2
meeting and subsequently initiate a Phase 3, placebo-controlled study in the
fourth quarter of 2022. We also expect to report topline results from the
Acapella Study, a Phase 2, placebo-controlled, dose-ranging study evaluating
PRAX-114 for treatment of MDD, in the third quarter of 2022. In addition, we
expect to report topline results from a Phase 2, placebo-controlled study
evaluating PRAX-114 for the treatment of PTSD in the second half of 2022.

Within our Movement Disorders franchise, our second clinical candidate,
PRAX-944, is being developed for the treatment of Essential Tremor, or ET, and
Parkinson's Disease, or PD. In May 2022, we reported positive topline results
from the second cohort of our Phase 2a trial evaluating PRAX-944 for the
treatment of ET. We expect to report topline results from the Phase 2b
placebo-controlled Essential1 Study for daytime treatment of ET in the second
half of 2022. Following the topline results from the second cohort, Part B, of
the Phase 2a study of PRAX-944 for the treatment of ET, we intend to change the
primary endpoint of the Essential1 Study from safety to efficacy. We also
initiated a Phase 2, placebo-controlled, crossover study to evaluate the safety,
pharmacokinetics, or PK, and efficacy of daytime dosing of PRAX-114 for the
treatment of ET in the first quarter of 2022 and expect to report topline
results in the second half of 2022. In addition, the FDA cleared the
Investigational New Drug, or IND, submission for a Phase 2 study of PRAX-944 for
the treatment of PD. We intend to initiate a Phase 2, placebo-controlled trial
to evaluate the safety, PK and efficacy of PRAX-944 as a non-dopaminergic
treatment for the motor symptoms of PD in the second half of 2022.

Within our Epilepsy franchise, we expect to initiate a Phase 2,
placebo-controlled study with our third clinical-stage candidate, PRAX-562, in
the second half of 2022 for the treatment of rare pediatric Developmental and
Epileptic Encephalopathies. Our most advanced preclinical stage product
candidate within our Epilepsy franchise,
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PRAX-222, is an antisense oligonucleotide, or ASO, designed to decrease the
expression levels of the protein encoded by the gene SCN2A in patients with
gain-of-function SCN2A mutations. In April 2022, we announced that we received
an email communication from the FDA that our IND application for the
first-in-patient study of PRAX-222 was place on clinical hold. The letter
detailing the reasons for the hold is expected to be received from the FDA
within 30 days of April 28, 2022. We expect to initiate a Phase 1 study with our
preclinical candidate, PRAX-628, in the fourth quarter of 2022 and subsequently
initiate a Phase 2 study in focal epilepsy in 2023. Our preclinical pipeline
also consists of discovery programs in development for KCNT1 related epilepsy,
three ASOs targeting SCN2A in patients with loss-of-function mutations, PCDH19
and SYNGAP1, respectively, and three additional discovery programs for
undisclosed targets in psychiatry, movement disorders and epilepsy. We plan to
declare ASO candidates for PRAX-080 for PCDH19 and PRAX-090 for SYNGAP1 in 2023.

We were incorporated in 2015 and commenced operations in 2016. Since inception,
we have devoted substantially all of our resources to developing our preclinical
and clinical product candidates, building our intellectual property, or IP,
portfolio, business planning, raising capital and providing general and
administrative support for these operations. We employ a "virtual" research and
development model, relying heavily upon external consultants, collaborators and
contract research organizations, or CROs, to conduct our preclinical and
clinical activities. Since inception, we have financed our operations primarily
with proceeds from the sale and issuance of equity securities.

We are a development stage company and we have not generated any revenue from
product sales, and do not expect to do so for several years, if at all. All of
our product candidates are still in preclinical and clinical development. Our
ability to generate product revenue sufficient to achieve profitability will
depend heavily on the successful development and eventual commercialization of
one or more of our product candidates, if approved. We have incurred recurring
operating losses since inception, including a net loss of $68.7 million for the
three months ended March 31, 2022. As of March 31, 2022, we had an accumulated
deficit of $385.3 million. We expect to incur significant expenses and operating
losses for the foreseeable future as we expand our research and development
activities. In addition, our losses from operations 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. We anticipate that our expenses will be maintained or increased in
connection with our ongoing activities, as we:

• advancing our lead product candidates, PRAX-114 and PRAX-944, in late-stage clinical trials;

• advancing our PRAX-562 candidate products for the Phase 2 clinical trial;

• advancing our PRAX-222 candidate products for clinical trials;

•take our preclinical candidates to clinical trials;

•invest more in our pipeline;

•invest more in our manufacturing capabilities;

• seek regulatory approval for our product candidates;

•maintain, develop, protect and defend our intellectual property portfolio;

•acquire or license technology;

•take temporary precautionary measures to help minimize the risk of COVID-19 to our employees; and

•increase our workforce to support our development efforts and expand our clinical development team.

In addition, as we progress toward potential marketing approval for any of our
product candidates, we expect to incur significant commercialization expenses
related to product manufacturing, marketing, sales and distribution.

As a result, we will need substantial additional funding to support our
continuing operations and pursue our growth strategy. Until such time as we can
generate significant revenue from product sales, if ever, we expect to finance
our operations through the sale of equity, debt financings or other capital
sources, including potential collaborations with other companies or other
strategic transactions. We may be unable to raise additional funds or enter into
such other agreements or arrangements when needed on favorable terms, or at all.
If we fail to raise capital or enter into such agreements as, and when, needed,
we may have to significantly delay, scale back or discontinue the development
and commercialization of one or more of our product candidates or delay our
pursuit of potential in-licenses or acquisitions.
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Because of the numerous risks and uncertainties associated with product
development, we are unable to predict the timing or amount of increased expenses
or when or if we will be able to achieve or maintain profitability. Even if we
are able to generate product sales, we may not become profitable. If we fail to
become profitable or are unable to sustain profitability on a continuing basis,
then we may be unable to continue our operations at planned levels and be forced
to reduce or terminate our operations.

As of March 31, 2022, we had cash, cash equivalents and marketable securities of
$222.5 million. We believe that our existing cash, cash equivalents and
marketable securities will enable us to fund our operating expenses and capital
expenditures into the third quarter of 2023. 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. See "-Liquidity and Capital Resources."

COVID-19 Business Update

In light of the ongoing COVID-19 pandemic, we continue to experience some
disruptions and increased risk in our operations and those third parties upon
whom we rely. These include disruptions and risks related to the conduct of our
clinical trials and preclinical studies as policies at various clinical sites
and federal, state, local and foreign laws, rules and regulations continue to
evolve, including quarantines, travel restrictions and redirection of healthcare
resources toward pandemic response efforts. The COVID-19 pandemic has impacted
the enrollment of some of our ongoing clinical trials, including slower patient
enrollment and treatment in some of our clinical studies, the impact of which
has varied by clinical study and program, but none of which have significantly
impacted our overall clinical trial timelines. While we have experienced limited
financial impacts to date, given the global economic slowdown, the overall
disruption of global healthcare systems and the other risks and uncertainties
associated with the pandemic such as increased inflation, our business,
financial condition and results of operations could be materially adversely
affected. We continue to closely monitor the COVID-19 pandemic as we evolve our
business continuity plans, clinical development plans and response strategy.

Financial Operations Overview

Revenue

We have not generated any revenue since inception and do not expect to generate
any revenue from the sale of products for several years, if at all. If our
development efforts for our current or future product candidates are successful
and result in marketing approval or collaboration or license agreements with
third parties, we may generate revenue in the future from a combination of
product sales or payments from such collaboration or license agreements.

Functionnary costs

Research and development costs

The nature of our activities and the main orientation of our activities generate a significant amount of research and development costs. Research and development expenses represent the costs we incur to:

•costs of developing our portfolio;

•discovery efforts leading to the development of candidates;

•the costs of clinical development of our product candidates; and

•the costs of developing our manufacturing technology and infrastructure.

The above costs include the following categories:

•personnel expenses, including salaries, benefits and stock-based compensation expenses;

•expenses incurred under agreements with third parties, such as consultants,
investigative sites and CROs, that conduct our preclinical and clinical studies
and in-licensing arrangements;

•costs incurred to maintain compliance with regulatory requirements;

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•costs incurred with third party development and contract manufacturing organizations to acquire, develop and manufacture materials for preclinical and clinical studies; and

•depreciation, amortization and other direct and allocated expenses, including
rent, insurance and other operating costs, incurred as a result of our research
and development activities.

We expense research and development costs as incurred. We recognize external
development costs based on an evaluation of the progress to completion of
specific tasks using information provided to us by our vendors and our clinical
investigative sites. Payments for these activities are based on the terms of the
individual agreements, which may differ from the pattern of costs incurred, and
are reflected in our consolidated balance sheets as prepaid expenses or accrued
expenses. Non-refundable advance payments for goods or services to be received
in the future for use in research and development activities are deferred and
capitalized, even when there is no alternative future use for the research and
development. The capitalized amounts are expensed as the related goods are
delivered or the services are performed.

As a company operating in a virtual environment, a significant portion of our
research and development costs have been external costs. We track direct
external research and development expenses to specific franchises and product
candidates upon commencement. Due to the number of ongoing studies and our
ability to use resources across several projects, indirect or shared operating
costs incurred for our research and development franchises, such as personnel,
facility costs and certain consulting costs, are not recorded or maintained on a
franchise-specific basis.

The following table reflects our research and development expenses, including
direct expenses summarized by major franchise and other exploratory CNS
indications and indirect or shared operating costs recognized as research and
development expenses during each period presented (in thousands):

                                                                          Three Months Ended March 31,
                                                                            2022                  2021
Psychiatry                                                           $        14,438          $    3,201
Epilepsy                                                                      14,264               4,926
Movement disorders                                                             9,104               1,577
Other exploratory CNS indications                                              2,191                 663
Personnel-related (including stock-based compensation)                        11,141               6,505
Other indirect research and development expenses                               1,514               1,057
Total research and development expenses                              $      

52,652 $17,929

Research and development activities are central to our business model. Product
candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials.
We expect that our research and development expenses will continue to increase
in the foreseeable future as we advance our product candidates through the
development phase, and as we continue to discover and develop additional product
candidates, build manufacturing capabilities and expand into additional
therapeutic areas.

At this time, we cannot reasonably estimate or know the nature, timing and
estimated costs of the efforts that will be necessary to complete the
development of, and obtain regulatory approval for, any of our product
candidates. We are also unable to predict when, if ever, material net cash
inflows will commence from sales or licensing of our product candidates. This is
due to the numerous risks and uncertainties associated with drug development,
including the uncertainty of:

•our ability to recruit and retain key research and development personnel;

•the timing and progress of preclinical and clinical development activities;

•the number and scope of preclinical and clinical programs that we decide to pursue;

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• our ability to successfully complete clinical trials with satisfactory safety, tolerability and efficacy profiles for the US Food and Drug Administrationor the FDA, or any comparable foreign regulatory authority;

• our ability to successfully develop, obtain regulatory approval and then successfully commercialize our product candidates;

• our successful enrollment and completion of clinical trials;

•costs associated with the development of any additional product candidates that we identify internally or acquire through collaborations;

• our ability to discover, develop and use biomarkers to demonstrate target engagement, pathway engagement and impact on disease progression of our product candidates;

•our ability to establish and maintain agreements with third-party manufacturers
for clinical supply for our clinical trials and commercial manufacturing, if our
product candidates are approved;

• the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder;

• our ability to obtain and maintain patent, trade secret and other intellectual property protection and regulatory exclusivity for our product candidates, if approved;

• our receipt of marketing approvals from applicable regulatory authorities;

• our ability to commercialize products, if approved, alone or in conjunction with others; and

•the maintenance of acceptable safety profiles of candidate products after approval.

A change in any of these variables with respect to the development of any of our
product candidates would significantly change the costs, timing and viability
associated with the development of that product candidate. For example, if the
FDA or another regulatory authority were to delay our planned start of clinical
trials or require us to conduct clinical trials or other testing beyond those
that we currently expect, or if we experience significant delays in enrollment
in any of our planned clinical trials, we could be required to expend
significant additional financial resources and time to complete our clinical
development activities. We may never obtain regulatory approval for any of our
product candidates. Drug commercialization will take several years and require
significant development costs.

General and administrative costs

General and administrative expenses consist primarily of personnel-related
costs, including salaries, benefits and stock-based compensation, for personnel
in our executive, finance, legal, commercial and administrative functions.
General and administrative expenses also include legal fees relating to
corporate matters; professional fees for accounting, auditing, tax and
administrative consulting services; commercial-related costs to support market
assessments and scenario planning; insurance costs; administrative travel
expenses; and facility-related expenses, which include direct depreciation costs
and allocated expenses for office rent and other operating costs. These costs
relate to the operation of the business, unrelated to the research and
development function, or any individual franchises or product candidate. Costs
to secure and defend our IP are expensed as incurred and are classified as
general and administrative expenses.

We anticipate that our general and administrative expenses will increase in the
future as we increase our headcount to support the expected growth in our
research and development activities and the potential commercialization of our
product candidates. We also expect to incur additional IP-related expenses as we
file patent applications to protect innovations arising from our research and
development activities.

Other income

Other income, net

Other income, net, includes interest income from our cash, cash equivalents and marketable securities and amortization of premiums and investment discounts.

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Income taxes

Since our inception, we have not recorded any U.S. federal or state income tax
benefits for the net losses we have incurred in each year or for our earned
research and development tax credits due to our uncertainty of realizing a
benefit from those items. Income taxes are determined at the applicable tax
rates adjusted for non-deductible expenses, research and development tax credits
and other permanent differences. Our income tax provision may be significantly
affected by changes to our estimates. The income tax benefit (provision) for the
three months ended March 31, 2022 and 2021 was not material.

Operating results

Comparison of the three months ended March 31, 2022 and 2021

The following table summarizes our consolidated statements of income for each period presented (in thousands):

                                    Three Months Ended March 31,             Change
                                        2022                   2021
Operating expenses:
Research and development     $        52,652                $  17,929      $  34,723
General and administrative            16,197                    9,490          6,707
Total operating expenses              68,849                   27,419         41,430
Loss from operations                 (68,849)                 (27,419)       (41,430)
Total other income:
Other income, net                        132                       46             86
Total other income                       132                       46             86
Net loss                     $       (68,717)               $ (27,373)     $ (41,344)

Research and development costs

The following table summarizes our research and development expenses for each period presented, as well as the evolution of these elements (in thousands):

                                                            Three Months Ended March 31,               Change
                                                               2022                  2021
Psychiatry                                              $        14,438          $   3,201          $   11,237
Epilepsy                                                         14,264              4,926               9,338
Movement disorders                                                9,104              1,577               7,527
Other exploratory CNS indications                                 2,191                663               1,528
Personnel-related (including stock-based compensation)           11,141              6,505               4,636
Other indirect research and development expenses                  1,514              1,057                 457
Total research and development expenses                 $        52,652     

$17,929 $34,723

the $34.7 million the increase in research and development expenses is mainly attributable to the following items:

•$11.2 million increase in expense related to our psychiatry franchise, driven
primarily by an increase in clinical-related spend for our PRAX-114 Phase 2/3
Aria and Acapella clinical trials which were initiated in the first quarter and
second quarter of 2021, respectively;

•$9.3 million increase in expense related to our epilepsy franchise, driven
primarily by an increase in clinical-related spend to support the initiation of
our PRAX-562 Phase 2 developmental epileptic encephalopathies clinical trial and
our anticipated PRAX-222 seamless clinical trial, an increase in
clinical-related spend for our PRAX-562 Phase 1 clinical trial, an increase in
preclinical activities for our earlier stage assets, and the payment of a $2.0
million license fee to Ionis Pharmaceuticals, Inc. in January of 2022 upon
exercise of our exclusive option to obtain the rights and license to further
develop and commercialize PRAX-222;

•$7.5 million increase in expense related to our movement disorders franchise,
driven primarily by an increase in clinical-related spend for our PRAX-944 Phase
2 Essential1 clinical trial;
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• $4.6 million increase in personnel costs due to the increase in the workforce;

•$1.5 million increase in other exploratory CNS indications, driven primarily by
clinical-related expenses for a planned Phase 2 trial in rare adult cephalgias
which we have determined not to pursue, as well as increased preclinical
activities for our earlier stage assets; and

•$0.5 million increase in other indirect research and development expenses,
driven primarily by an increase in technology spend and related consulting costs
to support our expanding operations.

General and administrative costs

the $6.7 million The increase in general and administrative expenses is mainly attributable to the following items:

•$5.0 million increase in personnel-related costs, driven primarily by increased
headcount, including an increase of $2.4 million in stock-based compensation
expense; and

• $1.7 million increase in other general and administrative expenses, none of which is individually significant.

Other income

Other income for the three months ended March 31, 2022 and 2021 included interest income on our cash, cash equivalents and marketable securities and amortization of premiums and investment discounts.

Cash and capital resources

Sources of liquidity

Since our inception, we have incurred significant losses in each period. We have
not yet commercialized any of our product candidates, which are in various
phases of preclinical and clinical development, and we do not expect to generate
revenue from sales of any products for several years, if at all.

To date, we have financed our operations primarily with proceeds from the sale
and issuance of equity securities. From inception through March 31, 2022, we
have raised $517.8 million in aggregate cash proceeds from such transactions,
net of issuance costs. As of March 31, 2022, we had cash, cash equivalents and
marketable securities of $222.5 million.

On November 3, 2021, we entered into an Open Market Sale Agreement, or the sales
agreement, with Jefferies LLC, or Jefferies, to provide for the offering,
issuance and sale of up to an aggregate amount of $125.0 million of common stock
from time to time in at-the-market offerings for which Jefferies acts as sales
agent. During the three months ended March 31, 2022, we issued and sold 70,410
shares under the sales agreement for aggregate net proceeds of $1.4 million. We
have issued and sold a total of 462,407 shares under the sales agreement for
aggregate net proceeds of $8.4 million after deducting commissions and offering
expenses payable by us.

Historical Cash Flows

The following table provides information about our cash flows for each period presented (in thousands):

                                                                     Three 

Months ended March, 31st,

                                                                       2022                  2021
Net cash (used in) provided by:
Operating activities                                             $      (54,109)         $  (25,722)
Investing activities                                                     (8,550)           (140,010)
Financing activities                                                      1,209                 276

Net decrease in cash, cash equivalents and restricted cash ($61,450) ($165,456)

Operational activities

Our cash flows from operating activities are greatly influenced by our use of
cash for operating expenses and working capital requirements to support our
business. We have historically experienced negative cash flows from operating
activities as we have invested in developing our portfolio, drug discovery
efforts and related infrastructure.
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The cash used in operating activities resulted primarily from our net losses
adjusted for non-cash charges and changes in operating assets and liabilities,
which are primarily the result of increased expenses and timing of vendor
payments.

During the three months ended March 31, 2022, net cash used in operating
activities of $54.1 million was primarily due to our $68.7 million net loss,
partially offset by $8.5 million of non-cash charges primarily related to
stock-based compensation, and $6.1 million in changes in operating assets and
liabilities primarily related to increases in accounts payable and accrued
expenses.

During the three months ended March 31, 2021, net cash used in operating
activities of $25.7 million was primarily due to our $27.4 million net loss and
$3.5 million in changes in operating assets and liabilities primarily related to
a decrease in accrued expenses and prepaid expenses and other current assets,
partially offset by $5.1 million of non-cash charges primarily related to
stock-based compensation.

Investing activities

In the three months ended March 31, 2022net cash allocated to investing activities of $8.6 million was primarily related to the purchase of marketable securities, partially offset by the maturity of marketable securities.

In the three months ended March 31, 2021net cash allocated to investing activities of $140.0 million was primarily related to the purchase of marketable securities.

Financing Activities

During the three months ended March 31, 2022, net cash provided by financing
activities of $1.2 million consisted of net proceeds from at-the-market
offerings of $1.4 million and net proceeds from the exercise of stock options of
$0.3 million partially offset by the payment of issuance costs for our
at-the-market offerings and the payment of taxes related to the vesting of
restricted stock units.

In the three months ended March 31, 2021net cash from financing activities is not significant.

Operation plan and future financing needs

We expect our expenses to increase substantially in connection with our ongoing
research and development activities, particularly as we advance the preclinical
activities and clinical trials of our product candidates. As a result, we expect
to incur substantial operating losses and negative operating cash flows for the
foreseeable future. We anticipate that our expenses will increase substantially
if and as we:

•advance the clinical development of our clinical-stage product candidates within our psychiatry, movement disorders and epilepsy franchises, respectively;

•advance the development of any additional product candidates;

•conduct research and pursue the preclinical development of potential product candidates;

•make strategic investments in manufacturing capabilities;

•maintain our intellectual property portfolio and opportunistically acquire additional intellectual property;

•seeking regulatory approvals for our product candidates;

•potentially establish a sales, marketing and distribution infrastructure and
scale-up manufacturing capabilities to commercialize any products for which we
may obtain regulatory approval;

•add clinical, scientific, operational, financial and management information
systems and personnel, including personnel to support our product development
and potential future commercialization efforts and to support our operations as
a public company; and

• experiencing delays or experiencing issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges.

We are unable to estimate the exact amount of our working capital requirements,
but based on our current operating plan, we believe that our existing cash, cash
equivalents and marketable securities will enable us to fund
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our operating expenses and capital expenditure requirements through the third quarter of 2023. However, we have based this estimate on assumptions that may prove to be inaccurate and we may deplete our capital resources sooner than expected.

Because of the numerous risks and uncertainties associated with product
development and potential collaborations with third parties for the development
of our product candidates, we may incorrectly estimate the timing and amounts of
increased capital outlays and operating expenses associated with completing the
research and development of our product candidates. Our funding requirements and
timing and amount of our operating expenditures will depend on many factors,
including, but not limited to:

•the extent, progress, results and costs of preclinical studies and clinical trials of our franchises and product candidates;

•the number and characteristics of product candidates and technologies that we develop or may license;

•the costs and timing of future commercialization activities, including manufacturing, marketing, sales and distribution, for each of our product candidates for which we receive marketing authorization;

•the costs necessary to obtain regulatory approvals, if any, for products in the
United States and other jurisdictions, and the costs of post-marketing studies
that could be required by regulatory authorities in jurisdictions where approval
is obtained;

• the costs and delays of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any claims related to intellectual property;

•the continuation of our existing license agreements and the entry into new collaborations and license agreements;

•the costs we incur to maintain our business operations;

•the costs associated with being a public company;

•revenues, if any, from commercial sales of any product candidates for which we receive marketing authorization;

•the effect of competing technological and commercial developments;

•the impact of any business interruptions to our operations or to those of our
manufacturers, suppliers or other vendors resulting from the COVID-19 pandemic
or similar public health crisis; and

•the extent to which we acquire or invest in businesses, products and
technologies, including entering into licensing or collaboration arrangements
for product candidates, although we currently have no commitments or agreements
to complete any such acquisitions or investments in businesses.

Identifying potential product candidates and conducting preclinical testing and
clinical trials is a time consuming, expensive and uncertain process that takes
years to complete, and we may never generate the necessary data or results
required to obtain marketing approval and achieve product sales. In addition,
our product candidates, if approved, may not achieve commercial success. Our
commercial revenues, if any, will be derived from sales of products that we do
not expect to be commercially available for many years, if ever. Accordingly, we
will need to obtain substantial additional funds to achieve our business
objectives.

Adequate additional funds may not be available to us on acceptable terms, or at
all. We do not currently have any committed external source of funds. Market
volatility resulting from the COVID-19 pandemic or other factors could also
adversely impact our ability to access capital as and when needed. To the extent
that we raise additional capital through the sale of equity or convertible debt
securities, the ownership interest of our existing stockholders will be diluted,
and the terms of these securities may include liquidation or other preferences
that adversely affect the rights of holders of our common stock. Additional debt
financing and preferred equity financing, if available, may involve agreements
that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or
declaring dividends and may require the issuance of warrants, which could
potentially result in dilution to the holders of our common stock.

If we raise additional funds through collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights to our technologies, future revenue streams, research programs or product
candidates or grant licenses on terms that may not be favorable to us. If we are
unable to raise additional
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funds through equity or debt financings if necessary, we may be required to delay, limit or terminate our product development programs or any future commercialization efforts or grant rights to develop and commercialize product candidates to third parties that we would otherwise prefer to develop and commercialize ourselves.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results
of operations is based on our condensed consolidated financial statements, which
have been prepared in accordance with generally accepted accounting principles
in the United States. The preparation of these condensed consolidated financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the condensed consolidated financial
statements, as well as the reported expenses incurred during the reporting
periods. Our estimates are based on our historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.

There have been no changes to our critical accounting policies from those
described under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Critical Accounting Policies and
Significant Judgments and Estimates" included in our Annual Report on Form 10-K
filed with the SEC on February 28, 2022.

Recently issued accounting pronouncements

We have reviewed all recently issued standards and have determined that, other
than as disclosed in Note 2 to our condensed consolidated financial statements
appearing elsewhere in this Quarterly Report on Form 10-Q, such standards will
not have a material impact on our condensed consolidated financial statements or
do not otherwise apply to our current operations.

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