THESEUS PHARMACEUTICALS, INC. You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. See "Special Note Regarding Forward-Looking Statements" and "Risk Factors" for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements.
Overview
We are a clinical-stage biopharmaceutical company focused on improving the lives of cancer patients through the discovery, development, and commercialization of transformative targeted therapies. Our development programs are designed to address drug resistance mutations in key driver oncogenes, which are mutated genes that cause cancer. Resistance mutations limit the efficacy of existing targeted therapies by rendering tumor cells unresponsive to drugs, and therefore present a critical challenge in cancer treatment today. Our initial focus is on developing the next generation of TKIs and is rooted in the critical role that tyrosine kinases play in the development of cancer. Despite the commercial success of approved TKIs, the development of drug resistance is a persistent limitation, narrowing the number of effective treatment options available to patients as they progress through subsequent lines of therapy.
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Our goal is to develop "pan-variant" kinase inhibitors-inhibitors that target all major cancer causing and drug resistance mutations in clinically significant protein kinases. We believe that truly pan-variant inhibitors are required to effectively inhibit the heterogeneous mix of resistance mutations found in patients, and may also suppress the emergence of new mutations when used in earlier lines of therapy. To develop such inhibitors, we deploy our novel PRA, a highly differentiated cell-based method for testing TKIs that we believe is predictive for "pan-ness". We also employ structure-guided drug design, and, coupled with our PRA, we believe our approach has the potential to optimize molecules for pan-variant activity while maintaining selectivity and tolerability.
Our most advanced product candidate, THE-630, is a pan-variant inhibitor of all
major classes of activating and resistance mutations of the KIT kinase for the
treatment of GIST, a type of cancer most often characterized by oncogenic
activation of KIT. GIST is the most common sarcoma of the gastrointestinal tract
and often initiates in the stomach or small intestines. We are currently
enrolling patients in a Phase 1/2 dose escalation and dose expansion clinical
trial for the evaluation of THE-630 in patients with advanced GIST whose disease
has developed resistance to prior KIT-targeting therapies. As of
Our second product candidate is THE-349, a fourth-generation EGFR inhibitor for
the treatment of NSCLC. THE-349 is designed to address on-target treatment
resistance to existing EGFR inhibitors by targeting the common activating
mutations in exons 19 and 21 alone or in combination with the most frequently
observed resistance mutations, T790M and C797X. Preclinical characterization of
THE-349 as central nervous system, or CNS active, and mutant-selective inhibitor
with potent activity against single-, double-, and triple-mutant EGFR variants,
including T790M and C797X, was shared in a poster presentation at the 34th ENA
Symposium in
Our third program is a next-generation BCR-ABL TKI that we are designing to be potent, selective, and pan-variant-features that we believe would balance safety and efficacy-for patients with relapsed/refractory CML and Ph+ ALL. We expect to nominate a development candidate for this program by early 2024, with the goal of pursuing clinical development in patients with CML who have been previously treated with a second-generation TKI or have the T315I mutation, and in combination therapy for newly diagnosed patients with Ph+ ALL.
Since our inception in
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the sale and issuance of our common stock pursuant to our ATM Program in the first quarter of 2023. Upon the closing of the IPO, each outstanding share of our preferred stock automatically converted into one share of common stock.
We have incurred significant operating losses since inception. Our ability to
generate product revenue sufficient to achieve profitability will depend heavily
on the successful development and eventual commercialization of one or more
product candidates. Our net losses for the years ended
? advance the clinical development of THE-630;
? advance THE-349, our BCR-ABL program and other compounds we may develop in the
future from discovery through preclinical development and clinical trials;
? seek marketing approvals for any product candidates that successfully complete
clinical trials;
? obtain, expand, maintain, defend and enforce our intellectual property
portfolio;
? hire additional clinical, regulatory and scientific personnel;
? ultimately establish a sales, marketing and distribution infrastructure to
commercialize any products for which we may obtain marketing approval;
? establish agreements with CROs, and CMOs; and
add operational, legal, compliance, financial and management information
? systems and personnel to support our research, product development and future
commercialization efforts, as well as to support our operations as a public
company.
Our net losses may fluctuate significantly from period to period, depending on the timing of expenditures related to our research and development activities.
We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate. In addition, if we obtain regulatory approval for a product candidate and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.
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 a combination of equity offerings, debt financings or other capital sources, which could include collaborations, strategic alliances or licensing arrangements. We may be unable to raise additional funds or enter into such arrangements when needed, on favorable terms, or at all. Our failure to raise capital or enter into such agreements as, and when, needed, could have a material adverse effect on our business, results of operations, and financial condition, including requiring us to have to delay, reduce or eliminate product development or future commercialization efforts.
Because of the numerous risks and uncertainties associated with development of targeted oncology therapies, 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
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profitable. We will need to generate significant revenue to achieve profitability, and we may never do so. 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
Impact of COVID-19 on Our Business
The COVID-19 pandemic continues to evolve, and we will continue to monitor the COVID-19 situation, including the resurgence of cases relating to the spread of new variants. The extent of the impact of the COVID-19 pandemic on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its impact on our CMOs, CROs, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. The ultimate impact of the COVID-19 pandemic or a similar health epidemic is uncertain and subject to change. To the extent possible, we are conducting business as usual. We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business. At this point, the extent to which the COVID-19 pandemic may affect our business, operations and development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain and is subject to change.
Initial Public Offering
On
Components of Our Results of Operations
Revenue
We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products or from other sources in the near future, if at all. If our development efforts for our product candidates, THE-630, THE-349, and our BCR-ABL program or any other product candidates that we may develop in the future are successful and result in marketing approval or if we enter into 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.
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Operating Expenses
Research and Development Expenses
Research and development expenses account for a significant portion of our operating expenses and consist primarily of costs incurred in connection with the discovery and preclinical development of our potential development candidates, and include:
? salaries, benefits, stock-based compensation and other related costs for
individuals involved in research and development activities;
external research and development expenses incurred under agreements with CROs
? and consultants that conduct our preclinical studies and other scientific
development services;
? costs incurred under agreements with CMOs for manufacturing material for our
preclinical studies and planned clinical trials; and
? costs related to compliance with regulatory requirements.
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 or our estimate of the level of service that has been performed at each reporting date. Payments for these external development 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 financial statements as prepaid expenses or accrued expenses. Nonrefundable 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.
A significant portion of our research and development costs have been external costs, which we track after a clinical product candidate has been identified. We utilize third-party contractors for our research and development activities and CMOs for our manufacturing activities and we do not have our own laboratory or manufacturing facilities. Therefore, we have no material facilities expenses attributed to research and development. Our internal research and development costs are primarily personnel-related costs and other indirect costs.
Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we advance clinical development of our product candidates, THE-630, THE-349, our BCR-ABL program, and continue to discover and develop additional product candidates, expand our headcount and maintain, expand and enforce our intellectual property portfolio. If any product candidates enter into later stages of clinical development, they will 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. There are numerous factors associated with the successful development and commercialization of any product candidates we may develop in the future, 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. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.
The successful development of our current product candidates, THE-630 and THE-349, and our BCR-ABL program or any product candidates we may develop in the future is highly uncertain. Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of THE-630, THE-349, our BCR-ABL program and any other product candidates we may develop. We are also unable to predict when, if ever, material net cash
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inflows will commence from the sale of any current or future product candidate, if approved. This is due to the numerous risks and uncertainties associated with product development, including the uncertainty of:
? the timing and progress of preclinical and clinical development activities;
? the number and scope of preclinical and clinical programs we decide to pursue;
? our ability to maintain our current research and development programs and to
establish new programs;
? successful patient enrollment in, and the initiation and completion of,
clinical trials;
the successful completion of clinical trials with safety, tolerability and
? efficacy profiles that are satisfactory to the FDA or any comparable foreign
regulatory authority;
? the timing, receipt and terms of any marketing approvals from applicable
regulatory authorities;
? our ability to establish new licensing or collaboration arrangements;
? the performance of our future collaborators, if any;
our ability to establish arrangements with third-party manufacturers for the
? clinical supply of our product candidates and commercial supply of products
that receive marketing approval, if any;
? development and timely delivery of commercial-grade drug formulations that can
be used in our planned clinical trials and for commercialization;
? obtaining, maintaining, defending and enforcing patent claims and other
intellectual property rights;
? commercializing product candidates, if approved, whether alone or in
collaboration with others; and
? maintaining a continued acceptable safety profile of the product candidates
following approval.
Any changes in the outcome of any of these variables with respect to the
development of THE-630, THE-349, our BCR-ABL program, or any other future
product candidates in clinical and preclinical development could mean a
significant change in the costs and timing associated with the development of
these product candidates. 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 clinical trials
following the
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits, and stock-based compensation expenses for personnel in executive, finance, accounting, human resources and other administrative functions. Other significant general and administrative expenses include legal fees relating to patent, intellectual property and corporate matters, and fees paid for accounting, consulting and other professional services, and expenses for rent, insurance and other operating costs.
We anticipate that our general and administrative expenses will increase in the future as our business expands to support our continued research and development activities, including any future clinical trials.
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These increases will likely include increased costs related to the hiring of
additional personnel and fees to outside consultants, among other expenses. We
also anticipate increased expenses associated with being a public company,
including costs for audit, legal, regulatory and tax-related services related to
compliance with the rules and regulations of the
We do not believe that inflation has had a material effect on our business. However, if our costs, in particular costs related to clinical trial expenses, preclinical expenses and/or employee-related expenses, were to become subject to significant inflationary pressures, it may adversely impact our business, operating results and financial condition.
Other Income, Net
Other income, net primarily consists of interest income, which is earned on cash equivalents that generate interest on a monthly basis, and short-term and long-term marketable securities.
Results of Operations
The following table summarizes our results of operations for the years ended
YEAR ENDED DECEMBER 31,
2022 2021 CHANGE
Operating expenses:
Research and development $ 35,698 $ 18,328 $ 17,370
General and administrative 18,388 9,008 9,380
Total operating expenses 54,086 27,336 26,750
Loss from operations (54,086) (27,336) (26,750)
Other income, net 3,478 28 3,450
Total other income, net 3,478 28 3,450
Net loss $ (50,608) $ (27,308) $ (23,300)
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Research and Development Expenses
The following table summarizes our research and development expenses for the
years ended
YEAR ENDED DECEMBER 31,
2022 2021 CHANGE
Direct research and development expenses by
program:
Pan-variant KIT inhibitor (THE-630) $ 7,965 $ 9,006 $ (1,041)
Fourth-generation EGFR inhibitor (THE-349) 6,569 1,740 4,829
Discovery programs 3,959 1,132 2,827
Unallocated research and development expenses:
Personnel-related (including stock-based
compensation) 15,517 5,922 9,595
Other 1,688 528 1,160
Total research and development expenses $ 35,698 $ 18,328 $ 17,370 Research and development expenses were
a
decrease in IND-enabling costs of
?
million, manufacturing costs of
1/2 clinical trial;
a
? increase in contract research expenses of
optimization, and manufacturing costs of
a
? including an increase in contract research expenses of
offset by a decrease in the use of outside independent consultants of
million;
a
? stock-based compensation expense, and an increase in salary and benefit related
expense of
a
? primarily from an increase of
costs and
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General and Administrative Expenses
The following table summarizes our general and administrative expenses for
the years ended
YEAR ENDED DECEMBER 31,
2022 2021 CHANGE
Personnel-related expenses (including
stock-based compensation) $ 10,364 $ 4,744 $ 5,620
Facilities and supplies 585 113 472
Legal and professional fees 3,911 2,481 1,430
Other expenses 3,528 1,670 1,858
$ 18,388 $ 9,008 $ 9,380 General and administrative expenses were
a
? in headcount, including an increase in stock-based compensation expense of
million, and an increase in salary and benefit related expense of
partially offset by a decrease in recruiting expense of
a
? increased legal and audit expenses and other costs associated with operating as
a growing public company; and
? a
expense.
Total Other Income, Net
Total other income, net, was
Liquidity and Capital Resources
Sources of Liquidity
Since our inception, we have incurred significant losses in each period and on
an aggregate basis. We have not yet commercialized any product candidates, and
we do not expect to generate revenue from sales of any product candidates or
from other sources for several years, if at all. As of
We have funded our operations primarily from sales of our preferred stock and common stock, including the net proceeds received from the underwriters' partial exercise of their over-allotment option in our IPO.
On
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shares of our common stock, under a Sales Agreement with
Cash Flows
The following table provides information regarding our cash flows for each of the periods presented (in thousands):
YEAR ENDED DECEMBER 31,
2022 2021
Net cash used in operating activities
(117,294) -
Net cash provided by financing activities 182 263,777
Net (decrease) increase in cash $ (150,057) $ 236,584
During the year ended
During the year ended
Net Cash Provided by Investing Activities
During the year ended
Net Cash Provided by Financing Activities
During the year ended
During the year ended
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we continue research and development and advance our THE-630 clinical trial and
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advance the preclinical development of our other programs, including THE-349 and
our BCR-ABL program. Furthermore, we expect to continue to incur additional
costs associated with operating as a public company including increased costs of
accounting, audit, legal, regulatory and tax-related services associated with
maintaining compliance with exchange listing and
Based on our current operating plan, we believe that our cash, cash equivalents,
and marketable securities of
Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:
the scope, rate of progress, success and costs of our drug discovery,
? preclinical development activities, laboratory testing and clinical trials for
product candidates;
? the number and scope of clinical programs we decide to pursue;
? the scope and costs of manufacturing development and commercial manufacturing
activities for product candidates, if approved;
? the extent to which we acquire or in-license other product candidates and
technologies;
? the timing and amount of any payments required to be made under the agreements
governing acquired or in-licensed product candidates or technologies;
? the cost, timing and outcome of regulatory review of product candidates;
? the cost and timing of establishing sales and marketing capabilities, if any
product candidate receives marketing approval;
the costs of preparing, filing and prosecuting patent applications, maintaining
? and enforcing our intellectual property rights and defending intellectual
property-related claims;
? our ability to establish and maintain collaborations on favorable terms, if at
all;
? the impact of the COVID-19 pandemic or other external disruptions on our
business, results of operations and financial position;
our efforts to enhance operational systems and our ability to attract, hire and
? retain qualified personnel, including personnel to support the development of
product candidates;
? the costs associated with being a public company; and
? the cost associated with commercializing product candidates, if they receive
marketing approval.
A change in the outcome of any of these or other variables with respect to the development of THE-630 or THE-349 or any product or development candidate we may develop in the future could significantly change
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the costs and timing associated with our development plans. Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings or other capital sources, which could include collaborations, strategic alliances or licensing arrangements. We currently have no credit facility or committed sources of capital. Adequate additional funds may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such stockholders. Debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.
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 program or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations
We did not have during the periods presented, and we do not currently have, any material contractual obligations, other than as described below. Refer to Note 9 in our consolidated financial statements included elsewhere in this Annual Report for further details.
License Agreement
We may incur contingent royalty payments that we are required to make under the ARIAD License Agreement, pursuant to which we have in-licensed certain intellectual property used to develop THE-630. Due to the uncertainty of the achievement and timing of the events requiring payment under the ARIAD License Agreement, the amounts to be paid by us are not fixed or determinable at this time. We are required to pay ARIAD royalties on all sales of licensed products, with such royalty percentages in the low- to mid-single digits of sales. We have not paid any royalties to date as we have no products commercially approved for sale.
Lease
On
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under applicable
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Critical Accounting Policies and Significant Judgments and Estimates
This management's discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with US generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported periods. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.
While our accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates.
As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued third-party research and development expenses as of each balance sheet date. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if necessary. The significant estimates in our accrued research and development expenses include the costs incurred for services performed by our vendors in connection with research and development activities for which we have not yet been invoiced.
We base our expenses related to research and development activities on our estimates of the services received and efforts expended pursuant to quotes and contracts with vendors that conduct research and development activities on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the research and development expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid balance accordingly. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Although we do not expect our estimates to be materially different from amounts incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, it could result in us reporting amounts that are too high or too low in any particular period. To date, there have been no material differences between our estimates of such expenses and the amounts incurred.
Tranche Rights and Anti-dilution Rights
The initial fair value of the Tranche Rights recognized in connection with our
issuance of our Series A Preferred Stock in
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remeasured prior to the issuance of subsequent tranches and anti-dilution shares and at each subsequent reporting period.
Each Tranche Right and Anti-dilution Right was valued as a forward contract. The values were determined using a probability-weighted present value calculation. In determining the fair values, estimates and assumptions impacting fair value included the future value of our Series A Preferred Stock, risk free interest rates, estimated years to liquidity and probability of each milestone being achieved. We determined the per share future value of the shares of Series A Preferred Stock by back-solving to the initial proceeds of the Series A Preferred Stock financing. We remeasured each Tranche Right and Anti-dilution Right at each reporting period and prior to settlement. The purchase price of the Series A Preferred Stock at initial issuance, and all subsequent issuances, was higher than the fair value of our common stock.
Stock-Based Compensation
We measure stock-based compensation expense in accordance with ASC 718, Compensation - Stock Compensation (ASC 718), which requires that all stock-based awards granted to employees and non-employees, including stock options, restricted stock awards, and restricted stock units, be recognized in the consolidated statement of operations and comprehensive loss based on their grant date fair values. We estimate the fair value of stock options using the Black-Scholes option-pricing model. The fair values of restricted stock awards and restricted stock units are based on the fair value of our common stock on the date of grant. The grant date fair value of stock-based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award. We recognize forfeitures as they occur.
We estimate the fair value of stock options using the Black-Scholes option-pricing model which uses the following inputs: the fair value of our common stock, the expected term of our stock options, the expected volatility of our common stock, the risk-free interest rate for a period that approximates the expected term of our stock options, and our expected dividend yield. Certain assumptions used in our Black-Scholes option-pricing model represent management's best estimates and involve a number of variables, uncertainties and assumptions and the application of management's judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future.
These subjective assumptions are estimated as follows:
? Fair value of common stock - The closing price of our common stock on the
Nasdaq Global Select Market as reported on the date of grant.
Expected term - The expected term represents the period that stock-based awards
are expected to be outstanding. We use the "simplified" method to calculate the
? expected term for awards that qualify as "plain-vanilla", which deems the
expected term to be the midpoint between the vesting date and the contractual
life of the stock-based awards.
Expected volatility - Due to the lack of a public market for our common stock
and a lack of company-specific historical and implied volatility data, we have
based our computation of expected volatility on the historical volatility of a
representative group of public companies with similar characteristics to us,
including stage of product development, life science industry focus, length of
trading history and similar vesting provisions. The historical volatility data
? is calculated based on a period of time commensurate with the expected term
assumption. We will continue to apply this process until a sufficient amount of
historical information regarding the volatility of our own stock price becomes
available or until circumstances change, such that the identified entities are
no longer representative companies. In the latter case, more suitable, similar
entities whose share prices are publicly available would be utilized in the
calculation.
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Risk-free interest rate - The risk-free interest rate is based on the US
?
with maturities approximately equal to the expected term of the awards.
Expected dividend yield - The expected dividend yield is assumed to be zero as
? we have never paid cash dividends on our common stock and have no plans to pay
cash dividends on our common stock in the visible future.
Emerging Growth Company Status
In
We will remain an emerging growth company until the earliest to occur of: (1)
the last day of the fiscal year in which we have more than
We are also a "smaller reporting company" as defined in the Exchange Act. We may
continue to be a smaller reporting company even after we are no longer an
emerging growth company. We may take advantage of certain of the scaled
disclosures available to smaller reporting companies until the fiscal year
following the determination that our common stock held by non-affiliates is more
than
Recently Issued Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report.
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