3. Liquidity and Going Concern
The Company has had no revenues from product sales and has incurred operating losses since inception. As of December 31, 2020, the Company had $28.0 million in cash and cash equivalents and during the three months ended December 31, 2020, incurred a loss from operations of $4.7 million and used $3.8 million of cash in operating activities.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.
The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:
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its ability to raise additional funds to finance its operations;
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its ability to maintain compliance with the listing requirements of The Nasdaq Capital Market (“Nasdaq”);
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the outcome, costs and timing of preclinical and clinical trial results for the Company’s current or future product candidates;
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the extent and amount of any indemnification claims;
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litigation expenses and the extent and amount of any indemnification claims;
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the emergence and effect of competing or complementary products;
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its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
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its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel;
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the trading price of its common stock; and
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its ability to increase the number of authorized shares outstanding to facilitate future financing events.
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The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or complete a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders.
The Company expects to incur substantial operating losses and negative cash flows from operations for the foreseeable future. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern.