MAXCYTE, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our audited consolidated financial statements and related notes for the year ended
December 31, 2021, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission(the "SEC") on March 22, 2022, as well as the information contained under Management's Discussion and Analysis of Financial Condition and Results of Operations and "Risk Factors" contained in the Annual Report on Form 10-K, and "Risk Factors Summary" and Part II, Item 1A "Risk Factors" of this Quarterly Report on Form 10-Q, and other information provided from time to time in our other filings with the SEC.
Special note regarding forward-looking statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements about us and our industry involve substantial risks, uncertainties, and assumptions, including those described in "Risk Factors Summary" and elsewhere in this report. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will" or "would" or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
? our expected future growth and the success of our business model;
? potential payments we may receive under our strategic platform
the size and growth potential of markets for our products, and our ability
? to serve these markets, increase our market share, and achieve and maintain
? the rate and degree of acceptance of our products by the market within the cell
? the expected future growth of our manufacturing capabilities and sales, the support
and marketing capabilities;
? our ability to expand our customer base and enter into additional SPLs;
? our ability to accurately forecast and manufacture the appropriate quantities of
our products to meet commercial demand;
our expectations regarding the development of the cell therapy market, in particular
? predicted growth in adoption of non-viral delivery approaches and gene editing
? our ability to maintain our FDA
our research and development for any future product, including our intention
? to introduce new instruments and treatment sets and upgrade to new
the development, regulatory approval and commercialization of competing products
? products and our ability to compete with companies that develop and sell
these products ;
? our ability to retain and hire senior executives and key personnel;
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? regulatory developments in
? our expectations regarding the period during which we qualify as an emerging company
growth company under the JOBS law;
? our ability to develop and maintain our business infrastructure, including our
? our financial performance and capital requirements;
our expectations regarding our ability to obtain and maintain
? protection of ownership of our products, as well as our ability to operate our
business without infringing the intellectual property rights of others; and
? our use of available capital resources.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled "Risk Factors Summary" in this report and under the caption "Risk Factors" and elsewhere in the Final Prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments. You should read this Quarterly Report and the documents that we file with the
SECwith the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.
In this Quarterly Report on Form 10-Q, unless the context otherwise requires, all references to “we”, “us”, “we”, “MaxCyte” and the “Company” are to
We are a leading commercial cell engineering company focused on providing enabling platform technologies to advance innovative cell-based research as well as next-generation cell therapeutic discovery, development and commercialization. Over the past twenty years, we have developed and commercialized our proprietary Flow Electroporation platform, which facilitates complex engineering through the delivery of molecules into a wide variety of cells. Electroporation is a method 19
transfection, or the process of deliberately introducing molecules into cells, which involves applying an electric field to temporarily increase the permeability of the cell membrane. This precisely controlled increase in permeability allows for the intracellular delivery of molecules, such as genetic material and proteins, that would normally not be able to cross the cell membrane as easily.
Our ExPERT platform, which is based on our Flow Electroporation technology, has been designed to address this rapidly expanding cell therapy market and can be utilized across the continuum of the high-growth cell therapy sector, from discovery and development through commercialization of next-generation, cell-based medicines. The ExPERT family of products includes three instruments, which we call the ATx, STx and GTx, respectively, as well as a portfolio of proprietary related disposables and consumables (as well as the VLx instrument for very large-scale cell engineering made available for sale in
December 2021). These include processing assemblies, or PAs, designed for use with our instruments, as well as accessories supporting PAs such as electroporation buffer solution and software protocols. We have garnered meaningful expertise in cell engineering via our internal research and development efforts as well as our customer-focused commercial approach, which includes a growing application scientist team. The platform is also supported by a robust intellectual property portfolio with more than 130 granted U.S.and foreign patents and more than 60 pending patent applications worldwide. From leading commercial cell therapy drug developers and top biopharmaceutical companies to top academic and government research institutions, including the U.S. National Institutes of Health, or NIH, our customers have extensively validated our technology. We believe the features and performance of our platform have led to sustained customer engagement. Our existing customer base ranges from large biopharmaceutical companies, including all of the top 10, and 20 of the top 25, pharmaceutical companies based on 2021 global revenue, to hundreds of biotechnology companies and academic centers focused on translational research. Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $11.6 millionand incurred a net loss of $4.1 millionfor the three months ended March 31, 2022. As of March 31, 2022, we had an accumulated deficit of $118.4 million. We expect to continue to incur net losses as we focus on growing commercial sales of our products in both the United Statesand international markets, including growing our sales and field application scientist teams, scaling our manufacturing operations, and research and development efforts to develop new products and further enhance our existing products. Further, we expect to incur additional costs associated with operating as a public company in the United States.
Impact of COVID-19 on our business
We continue to closely monitor the impact of the novel coronavirus ("COVID-19") pandemic on our business and the geographic regions where we operate. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. Impacts to our business as a result of COVID-19 have included disruptions to our manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts, decreased productivity and unavailability of materials or components, limitations on our employees' and customers' ability to travel, and delays in product installations, demonstrations, trainings or shipments to and from affected countries and within
the United States. Disruptions in our customers' operations have impacted and may continue to impact our business. In light of the uncertain and rapidly evolving situation relating to the spread of COVID-19, we have taken precautionary measures intended to minimize the risk of the virus to our employees, our customers and the communities in which we operate, including temporarily closing our offices to visitors and limiting the number of employees in our offices to those that are deemed essential for manufacturing and research purposes, as well as virtualizing, postponing or canceling customer, employee and industry events. We do not yet know the net impact that the COVID-19 pandemic may have on our business and cannot guarantee that it will not be materially negative. Although we continue to monitor the situation and may adjust our current policies as more information and public health guidance become available, the ongoing effects of the COVID-19 pandemic and/or the 20
The precautionary measures that we or our customers have implemented or may adopt may create operational and other challenges, any of which could adversely affect our business and results of operations.
We have continued to enter into SPL agreements with our cell therapy customers. These agreements are discussed in more detail in "Results of Operations" below and provide us with revenue from instrument sales and leases and disposables sales as well as downstream economics on our partners' programs (both pre- and post-commercial). In the first three months of 2022, we have signed an SPL agreement with Intima Bioscience. We continue to grow our SPL pipeline and, while the specific timing of any agreement is uncertain, we expect to sign additional SPL agreements in the future.
Comparison of the three months ended
The following table sets forth our results of operations for the periods presented: Three Months Ended March 31, 2022 2021 (in thousands) Total revenue
$ 11,587 $ 6,495Cost of goods sold 1,063 693 Gross profit 10,525 5,802 Operating expense Research and development 3,765 6,076 Sales and marketing 3,839 2,789 General and administrative 6,633 2,998 Depreciation and amortization 447 312 Total operating expense 14,684 12,175 Operating loss (4,159) (6,373) Other income (expense) Interest and other expense - (742) Interest and other income 92 10 Total other income (expense) 92 (733) Net loss $ (4,067) $ (7,106)Revenue
We generate revenue principally from the sale of instruments and single-use processing assemblies ("PAs") and buffer, and from the lease of instruments to our customers. In addition, our SPLs include clinical progress milestones and sales-based payments to us which may also provide material revenues. In order to evaluate how our sales are trending across key markets, as well as the contribution of program economics from our SPLs, we separately analyze revenue derived from our cell therapy customers and drug discovery customers, as well as the performance-based milestone revenues we recognize under our SPLs. Cell therapy revenues include primarily revenue from instruments sold, annual license fees for instruments under lease, and sales of our proprietary disposables. Drug discovery revenue includes primarily revenue from instruments sold, sales of our proprietary disposables and, occasionally, instruments leased. Program-related revenues include clinical progress milestone and sales-based revenues derived from SPL agreements. Milestone revenues are recognized when a customer achieves the associated milestone event. To date, all Program-related revenue has consisted entirely of pre-commercial milestone
revenue. 21 Table of Contents The following table provides details regarding the sources of our revenue for the periods presented: Three Months Ended March 31, Change 2022 2021 Amount % (in thousands, except percentages) Cell therapy
$ 7,416 $ 4,729 $ 2,68757% Drug discovery 2,167 1,762 405 23% Program-related 2,004 4 2,000 NM Total revenue $ 11,587 $ 6,495 $ 5,09278%
Total revenue for the three months ended
March 31, 2022was $11.6 million, an increase of $5.1 million, or 78%, compared to revenue of $6.5 millionduring the three months ended March 31, 2021. Our overall increase in revenue was primarily driven by growth in sales and licenses of instruments to cell therapy customers, and sales of disposables to cell therapy and drug discovery customers, as well as a significant increase in program-related revenue. In the cell therapy market, instrument sales and licenses of instruments increased by $1.7 millionwhich was primarily due to continued high levels of capital invested in companies operating in our target markets and progress of existing SPL partners, while disposable sales increased by $0.9 million, as a result of the continued progression of our cell therapy partners' therapeutic development programs. In the drug discovery market, the $0.4 millionincrease was primarily driven by increases in disposable sales. The $2.0 millionincrease in program-related revenues resulted from clinical progress of our SPL customers, consistent with the expected variability of milestone revenues given the small number of individual triggering events which currently generate this portion of revenue. We expect program-related revenue to experience variability for some time, although we anticipate that it may moderate as the volume of SPLs and associated milestones grows. We expect total revenue to increase over time as our markets grow and we are able to secure additional instrument sales and leases and disposable sales and as the percentage of our installed base that are under cell therapy license agreements increases. We expect revenue from instruments licensed to cell therapy customers to continue to grow as those customers advance their preclinical pipeline programs into clinical development and move their existing drug development programs into later-stage clinical trials. In addition, we expect new customers to emerge and contribute to these revenues, particularly given the underlying growth in the cell therapy pipeline among companies in this market, continued availability of capital to support such companies, and in particular the switch by some of these cell therapy companies away from viral to non-viral approaches. We expect, however, that our revenue will fluctuate from period to period due to the timing of securing product sales and licenses, the inherently uncertain nature of the timing of our partners' achievements of clinical progress milestones and our dependence on the program decisions of our partners.
Cost of goods sold and gross profit
Cost of goods sold primarily consists of costs for instrument and processing assembly components, contract manufacturer costs, salaries, overhead and other direct costs related to sales recognized as revenue in the period. Cost of goods sold associated with instrument lease revenue consists of leased equipment depreciation. Gross profit is calculated as revenue less cost of goods sold. Gross profit margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including sales mix among instruments, disposables and milestones, the specific mix among types of instruments or disposables, the proportion of revenues associated with instrument leases as opposed to sales, changes in the costs to produce our various products, the launch of new products or changes in existing products, our cost structure for manufacturing including changes in production volumes, and the pricing of our products which may be impacted by market conditions. During the three months ended
March 31, 2022, gross margin was 91%, compared to 89% in the same period of 2021. The increase in gross margin was principally due to increased milestone revenues, which have no associated cost of goods sold. Excluding program-related revenues, gross margin was materially unchanged. Our margins depend on the revenue mix from instruments, PAs and milestones under SPLs. We price our instruments at a premium given what we believe to be 22
the broad advantages of our platform and the limited availability of alternative clinically validated non-viral delivery approaches. However, the non-viral delivery market is highly competitive, and the introduction of a GMP-grade platform by a competitor that provides similar performance on a similar diversity of cell types could negatively impact our activities and lead to increased pressure on prices which has a negative impact on our gross margins.
In addition, part of our growth strategy is to expand into new regional markets, which could require the use of distributors and/or our participation in more competitive environments, which could impact our ability to price our instruments at a premium and could negatively impact our ability to enter into SPLs on terms similar to those currently in effect. Three Months Ended
2022 2021 Amount % (in thousands, except percentages) Cost of goods sold $ 1,063 $ 693
$ 37053% Gross profit $ 10,525 $ 5,802 $ 4,72381% Gross margin 91% 89%
Cost of goods sold increased by
$0.4 million, or 53%, for the three months ended March 31, 2022compared to the three months ended March 31, 2021. The increase was primarily driven by higher sales of instruments and disposables. Gross profit increased by $4.7 million, or 81%, for the three months ended March 31, 2022compared to the three months ended March 31, 2021. The increase was primarily driven by increased revenue from instrument and disposable sales,
licensed instruments and the significant increase in program-related revenue.
We expect that our cost of goods sold will generally increase or decrease as our instrument and disposables revenue increases or decreases. We expect our gross margin to benefit from realization of the economics from our SPL agreements, to the extent that such milestones grow to be a significant proportion of overall revenues, as there is no cost of goods sold associated with such revenue. However, realization and timing of these potential milestone revenues is uncertain. Operating Expenses Research and Development Three Months Ended March 31, Change 2022 2021 Amount % (in thousands, except percentages) Research and development $ 3,765 $
Research and development expenses consist primarily of costs incurred for our research activities related to advancing our technology and development of applications for our technology, including research into specific applications and associated data development, process development, product development (e.g., development of instruments and disposables, including hardware and software engineering) and design and other costs not directly charged to inventory or cost of goods sold. These expenses principally include employee-related costs, such as salaries, benefits, incentive compensation, stock-based compensation, and travel, as well as consultant services, facilities, and laboratory supplies and materials. These expenses are exclusive of depreciation and amortization. We expense research and development costs as incurred in the period in which the underlying activity is undertaken. For the three months ended
March 31, 2021, our research and development expenses included costs associated with developing the CARMA platform, principally for a clinical trial that has concluded. There were no material CARMA-related expenses after March 31, 2021and none are expected in the future. Research and development expenses decreased by $2.3 million, or 38%, for the three months ended March 31, 2022compared to the three months ended March 31, 2021. The decrease was primarily driven by a $3.6 milliondecrease in CARMA expenses as a result of the wind-down of CARMA operations, partially offset
$0.5 millionincrease in 23 Table of Contents
compensation costs due to the increase in the workforce and a
increase in stock-based compensation expense.
We believe that our continued investment in research and development is essential to our long-term competitive position. We expect to continue to incur substantial research and development expenses as we invest in research and development to support our customers, develop new uses for our existing technology and develop improved and/or new offerings for our customers and partners. As a result, we expect that our research and development expenses, excluding CARMA-related expenses, will continue to increase in absolute dollars in future periods and vary from period to period as a percentage of revenue. Sales and Marketing Three Months Ended March 31, Change 2022 2021 Amount % (in thousands, except percentages) Sales and marketing $ 3,839 $
Our sales and marketing expenses consist primarily of salaries, commissions and other variable compensation, benefits, stock-based compensation and travel costs for employees within our commercial sales and marketing functions, as well as third-party costs associated with our marketing activities. These expenses are exclusive of depreciation and amortization. Sales and marketing expenses increased by
$1.1 million, or 38%, for the three months ended March 31, 2022compared to the three months ended March 31, 2021. The increase was primarily driven by a $0.6 millionincrease in compensation expenses as a result of increases in headcount and a $0.2 millionincrease in stock-based compensation. We expect our sales and marketing expenses to increase in future periods as we expand our commercial sales, marketing and business development teams, product offerings, expand our collaboration efforts, increase our presence globally, and increase marketing activities to drive awareness and adoption of our products. General and Administrative Three Months Ended March 31, Change 2022 2021 Amount % (in thousands, except percentages) General and administrative $ 6,633 $
General and administrative expenses primarily consist of salaries, benefits, stock-based compensation and travel costs for employees in our executive, accounting and finance, legal, corporate development, human resources, and office administration functions as well as professional services fees, such as consulting, audit, tax and legal fees, general corporate costs, facilities and allocated overhead expenses and costs associated with being a Nasdaq and AIM listed public company such as director fees,
U.K.NOMAD and broker fees, investor relations consultants and insurance costs. These expenses are exclusive of depreciation and amortization. General and administrative expense increased by $3.6 million, or 121%, for the three months ended March 31, 2022compared to the three months ended March 31, 2021. The increase was primarily driven by a $1.3 millionincrease in expenses associated with our common stock being listed on the Nasdaq stock exchangein July 2021, as well as related legal and professional services, as well as a $1.0 millionincrease in compensation expense associated with headcount and salary increases, a $0.6 millionincrease in stock-based compensation, and a $0.3 millionincrease in occupancy expense. We expect that our general and administrative expenses will continue to increase in absolute dollars in future periods, primarily due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a public company listed on a U.S.exchange, including insurance (particularly directors and officers insurance), costs to comply with the rules and regulations applicable to companies listed on a U.S.securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SECand stock exchange 24
listing standards, investor relations and professional services. We expect these charges to vary from period to period as a percentage of revenue.
Depreciation and amortization
Depreciation expense consists of the depreciation of property and equipment used actively in the business, primarily by research and development activities. Amortization expense includes the amortization of intangible assets over their respective useful lives. Three Months Ended March 31, Change 2022 2021 Amount % (in thousands, except percentages) Depreciation and amortization $ 447 $
Depreciation and amortization expense increased by
$0.1 million, or 44%, for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The increase was primarily driven by a significant investment in capital assets made in 2021 for laboratory equipment.
Interest and other income (expenses)
Three Months Ended March 31, Change 2022 2021 Amount % (in thousands, except percentages) Interest and other expense $ - $ 742 (
$742) (100%) Interest and other income 92 10 82 837%
We did not incur interest or other expense for the three months ended
March 31, 2022as we currently have no indebtedness. Interest and other expense for the three months ended March 31, 2021comprise interest expense on our previously outstanding bank loan and a fair value adjustment for a warrant that has subsequently been exercised in full. Interest and other income represents interest on our cash balances and was immaterial for each of the three months ended March 31, 2022and 2021.
Cash and capital resources
Since our inception, we have experienced losses and negative cash flows from operations. For the three months ended
March 31, 2022, we incurred net losses of $4.1 million. As of March 31, 2022, we had an accumulated deficit of $118.4 million. To date, we have funded our operations primarily with proceeds from sales of common stock, including our IPO, as well as borrowings under loan agreements and from revenues associated with sales and licenses of our products to customers. As of March 31, 2022, we had cash and cash equivalents and short-term investments of $246.3 million. We expect to incur increased near-term operating losses as we continue to invest in expanding our business through growing our sales and marketing efforts, continued research and development, product development and expanding our product offerings. Based on our current business plan, we believe our existing cash and cash equivalents and short-term investments, will enable us to fund our operating expenses and capital expenditure requirements for the foreseeable future. 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. Our future funding requirements will depend on many factors, including:
? transaction and capital expenditure required for strategic activities;
? market acceptance of our products;
? the cost and timing of implementing additional sales, marketing and
distribution capabilities; 25 Table of Contents
the cost of our research and development activities and the success of our developments
? of data supporting the use of our products for new applications and rapid launch
new features and products;
? our ability to enter into additional SPLs and licenses for the clinical use of our
platform in the future;
? changes in the amount of capital available to existing and emerging customers
in our target markets;
? the effect of competing technological and business developments; and
? the level of our selling, general and administrative expenses.
If we are unable to execute on our business plan and adequately fund operations, or if the business plan requires a level of spending in excess of cash resources, we will have to seek additional equity or debt financing. If additional financings are required from outside sources, we may not be able to raise such capital on terms acceptable to us or at all. To the extent that we raise additional capital through the sale of equity or debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making product acquisitions, making capital expenditures or declaring dividends. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise additional capital when desired, we may have to delay development or commercialization of future products. We also may have to reduce marketing, customer support or other resources devoted to our existing products. Cash Flows The following table summarizes our uses and sources of cash for the periods presented: Three Months Ended March 31, (in thousands) 2022 2021 Net cash provided by (used in): Operating activities
$ (3,694) $ (4,642)Investing activities 194,797 15,692 Financing activities 893 48,899
Net increase in cash and cash equivalents
Net cash used in operating activities for the three months ended
March 31, 2022was $3.7 million, and consisted primarily of our net loss of $4.1. million, offset in part by net non-cash expenses of $3.0 million, including stock-based compensation of $2.5 millionand depreciation and amortization expenses of $0.5 million. We also had net cash inflows of $2.7 milliondue to net changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of an increase in the net effect of our right-of-use assets and lease liabilities of $2.4 millionand a $1.1 milliondecrease in other current assets, partially offset by a $2.1 millionincrease in TIA receivable, a $1.8 millionincrease in accounts receivable, a $1.4 millionincrease in inventory, a $0.7 millionincrease in other non-current assets and a $0.2 millionincrease in accounts payable and accrued expenses. Net cash used in operating activities for the three months ended March 31, 2021was $4.6 million, and consisted primarily of our net loss of $7.1 million, offset in part by net non-cash expenses of $2.0 million, including stock-based compensation of $1.3 million, warranty liability fair value adjustments of $0.3 million, and depreciation and amortization expenses of $0.3 million. We also had net cash inflows of $0.5 milliondue to net changes in our operating assets and liabilities. Net changes in our operating assets and liabilities consisted primarily of an increase in deferred revenue of $1.2 million, a 26
decrease in accounts receivable by
increase in inventory.
Investing Activities Net cash provided by investing activities during the three months ended
March 31, 2022was $194.8 million, which was primarily attributable to maturities of short-term marketable securities of $200.8 million, partially offset by purchases of property and equipment of $0.6 millionand capitalized lease-related construction expenses of $5.5 million. Purchases and sales of short-term marketable securities are made as part of ordinary course investing activities in compliance with our investment policy which has as its primary objective preservation of principal. Net cash provided by investing activities during the three months ended March 31, 2021was $15.7 million, which was primarily attributable to maturities of marketable securities of $16.0 million, partially offset by purchases of property and equipment of $0.3 million.
Net cash flows generated by financing activities during the three months ended
Net cash provided by financing activities during the three months ended
March 31, 2021was $48.9 million, which was primarily attributable to net proceeds from our issuance of common stock of $51.8 millionand proceeds of $2.0 millionfrom the exercise of stock options, partially offset by the repayment of indebtedness of $4.9 million.
Contractual obligations and commitments
Our contractual obligations and commitments as of
March 31, 2022consisted exclusively of operating lease obligations. In May, 2021, we entered into an operating lease for new office, lab and warehouse/manufacturing space. The lease for the new facility consists of three phases, with Phase 1 having commenced in December 2021and Phase 2 having commenced in the first quarter of 2022, and the lease of all phases is estimated to expire on August 31, 2035. We will design and construct the leasehold improvements with the approval of the landlord. The landlord will reimburse us for costs of property improvements up to amounts specified in the lease. The total incremental non-cancellable lease payments under the new lease agreements are approximately $29.6 millionthrough the lease term, which continues until 2035. In June, 2021, we exercised our option to early terminate the terms of one of our existing office space lease arrangements, which will terminate on June 7, 2022.
Purchase orders or contracts for the purchase of supplies and other goods and services are based on our current supply or development needs and are generally fulfilled by our suppliers on short notice.
Critical Accounting Policies and Significant Judgments and Estimates
We have prepared our condensed consolidated financial statements in accordance with
U.S.GAAP. Our preparation of these condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on 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. 27
Actual results could therefore differ materially from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies and estimates from those disclosed in our consolidated financial statements and the related notes and other financial information included in the Annual Report on Form 10-K filed with
SECon March 22, 2022.
Accounting election of the JOBS law
We are an "emerging growth company," or EGC, under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the delayed adoption of new and revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities. We also intend to rely on other exemptions provided by the JOBS Act, including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. We will remain an EGC until the earliest of (i)
December 31, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billionor more, (iii) the date on which we have issued more than $1 billionin non-convertible debt during the previous rolling three-year period, or (iv) the date on which we are deemed to be a "large accelerated filer" under SECrules.
Recent accounting pronouncements
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 included in this Quarterly Report on Form 10-Q.
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