cnst-10q_20200630.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38584

CONSTELLATION PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-1741721
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

215 First Street, Suite 200 Cambridge, Massachusetts	02142
(Address of principal executive offices)	(Zip code)

(617) 714-0555

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, $0.0001 par value per share

CNST

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2020, the registrant had 47,500,032 shares of common stock, $0.0001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plan, objectives of management and expected market growth are forward-looking statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under “Risk Factors” and include, among other things:

•

our ongoing clinical trials, including our Phase 2 clinical trial of CPI-0610, our Phase 1b/2 clinical trial of CPI-1205 and our Phase 1/2 clinical trial of CPI-0209;

•

our plans to advance our clinical-stage product candidates into later stage trials, including our plans to conduct a Phase 3 trial of CPI-0610

•

the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and development programs;

•

our plans to develop and, if approved, subsequently commercialize CPI-0610, CPI-0209 and any other product candidates, including in combination with other drugs and therapies;

•

the timing of and our ability to submit applications for, obtain and maintain regulatory approvals for CPI-0610, CPI-0209 and other product candidates;

•

our expectations regarding our ability to fund our operating expenses and capital expenditure requirements with our cash, cash equivalents and marketable securities;

•

the potential advantages of our product candidates;

•

our estimates regarding the potential market opportunity for our product candidates;

•

our manufacturing, commercialization and marketing capabilities and strategy;

•

our intellectual property position;

•

our ability to identify products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives;

•

our estimates regarding expenses, future revenue, timing of any future revenue, capital requirements and needs for additional financing;

•

the impact of government laws and regulations;

•

our competitive position;

•

developments relating to our competitors and our industry;

•

our ability to maintain and establish collaborations or obtain additional funding; and

•

the impact of the COVID-19 pandemic on our ability to enroll and monitor patients in our clinical trials, collect data, secure needed supplies, initiate new clinical trials, meet our current milestones and timeline, and continue to successfully execute on our plans and operations.

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. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Constellation Pharmaceuticals, Inc.

Table of Contents

		Page
	PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2020 and December 31, 2019	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) For the Three and Six Months Ended June 30, 2020 and 2019	5
	Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) For the Three and Six Months Ended June 30, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended June 30, 2020 and 2019	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	71
Item 6.	Exhibits	72

Signatures		73

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	179,112		$	334,332
Marketable securities		341,401			49,602
Prepaid expenses and other current assets		2,586			3,055
Total current assets		523,099			386,989
Property and equipment, net		1,443			971
Restricted cash		425			425
Operating lease, right-of-use assets		9,378			10,745
Other assets		453			—
Total assets	$	534,798		$	399,130

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	5,659		$	7,278
Accrued expenses and other current liabilities		16,538			12,915
Current portion of long-term debt, net of discount		2,150			—
Current portion of lease liabilities - operating lease		2,937			2,562
Total current liabilities		27,284			22,755
Long-term debt, net of current portion and discount		27,569			29,642
Operating lease liabilities, net of current portion		7,248			8,759
Other long-term liabilities		716			390
Total liabilities		62,817			61,546
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding at June 30, 2020 and December 31, 2019, respectively		—			—
Common stock, $0.0001 par value; 200,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively; 47,500,032 and 41,719,039 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively		5			4
Additional paid-in capital		846,305			656,973
Accumulated other comprehensive gain (loss)		255			(6	)
Accumulated deficit		(374,584	)		(319,387	)
Total stockholders' equity		471,981			337,584
Total liabilities and stockholders' equity	$	534,798		$	399,130

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Operating expenses:
Research and development	$	22,627		$	15,955		$	42,702		$	31,632
General and administrative		6,960			4,886			12,868			9,315
Total operating expenses		29,587			20,841			55,570			40,947
Loss from operations		(29,587	)		(20,841	)		(55,570	)		(40,947	)
Other income (expense):
Interest income		686			652			2,090			1,407
Gain on disposal of equipment		29			—			29			—
Interest expense		(857	)		(578	)		(1,707	)		(653	)
Total other income (expense), net		(142	)		74			412			754
Loss before income taxes		(29,729	)		(20,767	)		(55,158	)		(40,193	)
Income tax expense		24			—			39			—
Net loss	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.70	)	$	(0.80	)	$	(1.31	)	$	(1.56	)
Weighted average number of common shares used in net loss per share attributable to common stockholders, basic and diluted		42,589,415			25,809,556			42,177,523			25,807,132

Comprehensive loss:
Net loss	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)
Other comprehensive gain:
Unrealized gain on marketable securities		345			2			261			11
Total other comprehensive gain	$	345		$	2		$	261		$	11
Comprehensive loss	$	(29,408	)	$	(20,765	)	$	(54,936	)	$	(40,182	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share and per share amounts)

(Unaudited)

							Accumulated
					Additional		Other						Total
	Common Stock				Paid-in		Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital		Gain (Loss)			Deficit			Equity
Balances at December 31, 2019		41,719,039	$	4	$	656,973	$	(6	)	$	(319,387	)	$	337,584
Stock-based compensation expense		—		—		2,559		—			—			2,559
Stock option exercises		103,025		—		911		—			—			911
Unrealized loss on marketable securities		—		—		—		(84	)		—			(84	)
Net loss		—		—		—		—			(25,444	)		(25,444	)
Balances at March 31, 2020		41,822,064	$	4	$	660,443	$	(90	)	$	(344,831	)	$	315,526
Stock-based compensation expense		—		—		3,635		—			—			3,635
Issuance of common stock from public offering, net of underwriting discounts and commissions		5,500,000		1		180,726		—			—			180,727
Stock option exercises		177,968		—		1,501		—			—			1,501
Unrealized gain on marketable securities		—		—		—		345			—			345
Net loss		—		—		—		—			(29,753	)		(29,753	)
Balances at June 30, 2020		47,500,032	$	5	$	846,305	$	255		$	(374,584	)	$	471,981

							Accumulated
					Additional		Other					Total
	Common Stock				Paid-in		Comprehensive		Accumulated			Stockholders'
	Shares		Amount		Capital		Gain		Deficit			Equity
Balances at December 31, 2018		25,803,135	$	3	$	337,992	$	—	$	(233,837	)	$	104,158
Stock-based compensation expense		—		—		1,313		—		—			1,313
Vesting of common stock issued upon early exercise of unvested options		85		—		—		—		—			—
Stock option exercises		3,754		—		21		—		—			21
Unrealized gain on marketable securities		—		—		—		9		—			9
Net loss		—		—		—		—		(19,426	)		(19,426	)
Balances at March 31, 2019		25,806,974	$	3	$	339,326	$	9	$	(253,263	)	$	86,075
Stock-based compensation expense		—		—		1,797		—		—			1,797
Vesting of common stock issued upon early exercise of unvested options		85		—		—		—		—			—
Stock option exercises		12,364		—		77		—		—			77
Unrealized gain on marketable securities		—		—		—		2		—			2
Net loss		—		—		—		—		(20,767	)		(20,767	)
Balances at June 30, 2019		25,819,423	$	3	$	341,200	$	11	$	(274,030	)	$	67,184

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONSTELLATION PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(55,197	)	$	(40,193	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		267			364
Stock-based compensation expense		6,194			3,110
Non-cash interest expense		403			158
Amortization and accretion on marketable securities		(374	)		(523	)
Gain on disposal of equipment		(29	)		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		469			257
Operating lease, right-of-use assets		1,367			1,461
Accounts payable		(2,197	)		801
Accrued expenses and other current liabilities		3,623			(131	)
Operating lease liabilities		(1,136	)		(1,484	)
Other assets		(453	)		—
Net cash used in operating activities		(47,063	)		(36,180	)
Cash flows from investing activities:
Purchase of marketable securities		(373,417	)		(63,123	)
Purchases of property and equipment		(161	)		(469	)
Proceeds from sale of property and equipment		29			—
Proceeds from maturities and sales of marketable securities		82,253			20,600
Net cash used in investing activities		(291,296	)		(42,992	)
Cash flows from financing activities:
Proceeds from common stock offerings, net of underwriting discounts and commissions		180,727			—
Proceeds from issuance of long-term debt		—			19,650
Payment of debt issuance costs		—			(125	)
Proceeds from issuance of common stock upon stock option exercises		2,412			98
Net cash provided by financing activities		183,139			19,623
Net decrease in cash, cash equivalents and restricted cash		(155,220	)		(59,549	)
Cash, cash equivalents and restricted cash at beginning of period		334,757			115,017
Cash, cash equivalents and restricted cash at end of period	$	179,537		$	55,468

Supplemental disclosure of cash flow information:
Interest paid	$	1,304		$	347
Income taxes paid	$	24
Supplemental disclosure of noncash investing and financing information:
Purchases of property and equipment included in accounts payable and accrued expenses	$	578		$	41

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CONSTELLATION PHARMACEUTICALS, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. Nature of the Business and Basis of Presentation

Constellation Pharmaceuticals, Inc. (“Constellation” or the “Company”) is a clinical-stage biopharmaceutical company using its expertise in epigenetics to discover and develop novel therapeutics that address serious unmet medical needs in patients with cancers associated with abnormal gene expression or drug resistance. The Company was incorporated in January 2008 as EpiGenetiX, Inc. under the laws of the State of Delaware. On March 31, 2008, the Company changed its name to Constellation Pharmaceuticals, Inc.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

The accompanying financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Since inception, the Company has funded its operations with the proceeds of sales of convertible preferred stock, payments received in connection with collaboration agreements, borrowings under loan agreements, and proceeds from sales of its common stock public and private offerings.

On June 19, 2020, the Company completed a public offering of an aggregate of 5,500,000 of its common stock and received net proceeds of approximately $180.7 million.

The Company has incurred losses since inception, including net losses of $29.8 million and $55.2 for the three and six months ended June 30, 2020, respectively, and $85.6 million for the year ended December 31, 2019. As of June 30, 2020, the Company had an accumulated deficit of $374.6 million. The Company expects to continue to generate operating losses in the foreseeable future. Based on the Company’s current operating plan, the Company expects that its cash, cash equivalents and marketable securities at June 30, 2020, will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the interim financial statements. Management’s belief with respect to its ability to fund operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management’s estimates, the Company may need to seek additional funding sooner than would otherwise be expected. There can be no assurance that the Company will be able to obtain additional funding on acceptable terms, if at all.

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

2. Summary of Significant Accounting Policies

Unaudited Interim Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements as of June 30, 2020 and for the three and six months ended June 30, 2020 and 2019 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim consolidated financial statements. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “Annual Report”).

The unaudited condensed consolidated financial statements include the accounts of Constellation Pharmaceuticals, Inc. and its wholly owned subsidiary, Constellation Securities Corporation. All intercompany transactions and balances of the subsidiary have been eliminated in consolidation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2020, and results of operations for the three and six months ended June 30, 2020 and 2019, stockholders’ equity for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 2020 and 2019 have been made. The Company’s results of operations for the three and six months ended June 30, 2020 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2020.

Concentrations of Credit Risk and of Significant Suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains most of its cash, cash equivalents and marketable securities at two accredited financial institutions in amounts that could exceed federally insured limits. Cash equivalents are invested in an institutional money market fund. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company is dependent on third-party manufacturers to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to these programs. These programs could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included in the Annual Report. There have been no material changes to the significant accounting policies previously disclosed in the Annual Report other than as noted below.

Cash, Cash Equivalents and Restricted Cash

Cash equivalents consists of highly liquid investments that are readily convertible into cash with original maturities of three months or less from the date of purchase. The Company has a policy of making investments only in government securities or with commercial institutions that have at least an investment grade credit rating. The Company invests its cash primarily in reverse repurchase agreements (RRAs), government securities and obligations, corporate debt securities and money market funds. RRAs are collateralized by deposits in the form of government securities and obligations for an amount not less than 102% of their value. The Company does not record an asset or liability as the Company is not permitted to sell or repledge the associated collateral. The Company has a policy that the collateral has at least the prevailing credit rating of US Government Treasuries and Agencies. The Company utilizes a third-party custodian to manage the exchange of funds and ensure that collateral received is maintained at 102% of the value of the RRAs on a daily basis. RRAs have stated maturities of less than 30 days.

As of June 30, 2020, the Company classified $0.4 million as restricted cash related to a letter of credit issued as a security deposit in connection with Company's lease of its corporate office facilities (Note 10). Cash, cash equivalents and restricted cash consists of the following (in thousands):

	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	179,112	$	334,332
Restricted cash		425		425
Cash, cash equivalents and restricted cash	$	179,537	$	334,757

Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

•

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company’s cash equivalents and marketable securities are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of the Company’s accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities. The carrying value of the Company’s outstanding debt as of June 30, 2020 (see Note 7) approximated fair value (a Level 3 measurement) based on interest rates currently available to the Company.

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements (“ASU 2016-13”). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The targeted transition relief standard allows filers an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments. The Company adopted ASU 2016-13 on January 1, 2020, using the modified retrospective method for all financial assets measured at amortized cost. The adoption of ASU 2016-13 did not have a material impact on the Company’s financial position or results of operations upon adoption.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down-round features. Part II replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within ASC Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. The new guidance is effective for the Company for annual periods beginning after December 15, 2019. The adoption of ASU 2017-11 on January 1, 2020 did not have a material impact on the Company’s financial position, results of operations or cash flows.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies certain disclosure requirements on fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years. The adoption of ASU 2018-13 on January 1, 2020 did not have a material impact on the Company’s financial position, results of operations or cash flows.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software. This ASU addresses the accounting for implementation, setup and other upfront costs paid by a customer in a cloud computing or hosting arrangement. The guidance aligns the accounting treatment of these costs incurred in a hosting arrangement treated as a service contract with the requirements for capitalization and amortization costs to develop or obtain internal-use software. The guidance is effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. The guidance can be adopted either retrospectively or prospectively. The adoption of ASU 2018-15 on January 1, 2020 prospectively did not have a material impact on the Company’s financial position, results of operations or cash flows.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808), Clarifying the Interaction between Topic 808 and Topic 606. The ASU clarifies when transactions between collaborative participants are in the scope of ASC 606. The ASU also provides some guidance on presentation of transactions not in the scope of ASC 606 ASU 2018-18 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years. The adoption of ASU 2018-18 on January 1, 2020 did not have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2019, the FASB issued ASU No. 2019-01, Leases (Topic 842) Codification Improvements, which provides clarification on implementation issues associated with adopting ASU 2016-02. The implementation issues noted in ASU 2019-01 include determining the fair value of the underlying asset by lessors that are not manufacturers or dealers, presentation on the statement of cash flows for sales-type and direct financing leases, and transition disclosures related to Topic 250, Accounting Changes and Error Corrections. The adoption of ASU 2019-01 on January 1, 2020 did not have a material impact on the Company’s financial position, results of operations or cash flows.

Recently issued accounting pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, or ASU 2019-12, which includes amendments to simplify the accounting for income taxes by removing certain exceptions to the general principles in ASC 740, Income Taxes, or ASC 740. The amendments also improve consistent application of and simplify U.S. GAAP for other areas of ASC 740 by clarifying and amending existing guidance. The new guidance is effective for the Company for annual periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption of the amendments is permitted. The Company is currently evaluating ASU 2019-12.

3. Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	179,112	$	—	$	—	$	179,112
	$	179,112	$	—	$	—	$	179,112
Marketable securities:
Corporate debt securities	$	—	$	45,133	$	—	$	45,133
Commercial paper		—		71,278		—		71,278
Government securities		—		224,990		—		224,990
Total	$	—	$	341,401	$	—	$	341,401

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	303,345	$	—	$	—	$	303,345
Commercial paper		—		8,986		—		8,986
Corporate debt securities		—		2,001		—		2,001
Reverse Repurchase Agreements (RRAs)		—		20,000		—		20,000
	$	303,345	$	30,987	$	—	$	334,332
Marketable securities:
Corporate debt securities	$	—	$	12,748	$	—	$	12,748
Commercial paper		—		26,808		—		26,808
Government securities		—		10,046		—		10,046
Total	$	—	$	49,602	$	—	$	49,602

Money market funds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 1 measurement within the fair value hierarchy.

During the six months ended June 30, 2020 and the year ended December 31, 2019, there were no transfers between Level 1 and Level 2. The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities were determined through third-party pricing services.

4. Marketable Securities

The following table summarizes the Company’s marketable securities and cash equivalents as of June 30, 2020, and December 31, 2019, respectively (in thousands):

	June 30, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	179,112	$	—	$	—		$	179,112
Total cash equivalents	$	179,112	$	—	$	—		$	179,112

Marketable securities:
Corporate debt securities	$	44,960	$	176	$	(3	)	$	45,133
Commercial paper		71,278		—		—			71,278
Government securities		224,908		86		(4	)		224,990
Total marketable securities	$	341,146	$	262	$	(7	)	$	341,401
Total cash equivalents and marketable securities	$	520,258	$	262	$	(7	)	$	520,513

	December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	303,345	$	—	$	—		$	303,345
Commercial paper		8,986		—		—			8,986
Corporate debt securities		2,001		—		—			2,001
Reverse Repurchase Agreements (RRAs)		20,000		—		—			20,000
Total cash equivalents	$	334,332	$	—	$	—		$	334,332

Marketable securities:
Corporate debt securities	$	12,753	$	—	$	(5	)	$	12,748
Commercial paper		26,808		—		—			26,808
Government securities		10,047		—		(1	)		10,046
Total marketable securities	$	49,608	$	—	$	(6	)	$	49,602
Total cash equivalents and marketable securities	$	383,940	$	—	$	(6	)	$	383,934

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Accrued employee compensation and benefits	$	2,868	$	4,527
Accrued external research and development expense		12,716		7,707
Accrued professional fees		425		184
Other		529		497
	$	16,538	$	12,915

6. Collaboration Agreement

The Company has a collaboration agreement (the “LLS Agreement”) with the Leukemia and Lymphoma Society, (“LLS”) pursuant to which LLS committed to provide funding to the Company for research and development services, conditional on (i) the achievement of milestones in accordance with the LLS Agreement and (ii) equal funding being provided by the Company. Through December 31, 2019, the Company received funding totaling $7.3 million from LLS upon the achievement of specified milestones, which were recorded as a reduction of research and development expense. There was no additional funding received in the six months ended June 30, 2020.

The LLS Agreement requires the Company to make payments to LLS upon the Company’s achievement of specified milestones that could total up to $25.0 million in aggregate (see Note 11).

7. Debt

On March 20, 2019, the Company entered into a loan agreement with Hercules (“the Loan Agreement”) as administrative and collateral agent, and various other lenders, pursuant to which the Company could borrow up to $40.0 million. The Company has borrowed $30.0 million, and its right to borrow the remaining $10.0 million has expired. The term loan bears interest at an annual rate equal to the greater of 8.55% and the prime rate of interest plus 2.55%. The Loan Agreement provides for interest-only payments until April 30, 2021, and repayment of the aggregate outstanding principal balance of the term loan in monthly installments starting on May 1, 2021 and continuing through April 1, 2023 (the “Maturity Date”). In addition, the Company paid a fee of $0.3 million upon closing and is required to pay a fee of 6.35% of the aggregate amount of advances under the Loan Agreement at maturity. At its option, the Company may elect to prepay all or a portion of the outstanding advances by paying the entire principal balance (or a portion thereof) and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: 2% if an advance is prepaid during the first 12 months following the applicable advance date, 1% if an advance is prepaid after 12 months but prior to 24 months following the applicable advance date, and 0.5% if an advance is prepaid any time after 24 months following the applicable advance date but prior to the Maturity Date. In connection with the Loan Agreement, the Company granted Hercules a security interest in all of its personal property now owned or hereafter acquired, excluding intellectual property (but including the rights to payment and proceeds from the sale, licensing or disposition of intellectual property), and a negative pledge on intellectual property. The Loan Agreement also contains certain events of default, representations, warranties and non-financial covenants of the Company. If the Company fails to make payments when due, or breaches any operational covenant or has any event of default, this could have a material adverse effect on its business and financial condition.

As of June 30, 2020 and December 31, 2019, debt payable consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Principal amount of term loans	$	30,000		$	30,000
Debt discount current portion		(153	)		—
Less: Current portion		(2,150	)		—
Long-term debt, net of current portion		27,697			30,000
Debt discount net of current portion		(128	)		(358	)
Long-term debt, net of discount and current portion	$	27,569		$	29,642

8. Equity

Preferred Stock

The Company has authorized preferred stock amounting to 5,000,000 shares as of June 30, 2020 and December 31, 2019, respectively. The authorized preferred stock was classified under stockholders’ equity at June 30, 2020 and December 31, 2019, respectively.

Common Stock

As of June 30, 2020, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 200,000,000 shares of common stock, $0.0001 par value per share.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the Company’s board of directors. No dividends have been declared or paid by the Company since its inception.

At-the-Market Offering

In August 2019, the Company entered into an Open Market Sale Agreement^SM (the “Sales Agreement”) with Jefferies LLC (“Jefferies”), under which Jefferies may offer and sell, from time to time, shares of common stock having aggregate gross proceeds of up to $50.0 million. At its option, the Company may sell shares of common stock through Jefferies as its sales agent, with any such sales being made by any method that is deemed an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended (the “Securities Act”), or in other transactions pursuant to an effective shelf registration statement on Form S-3. The Company agreed to pay Jefferies a commission of up to 3% of the gross proceeds of any sales of common stock pursuant to the Sales Agreement. During the six months ended June 30, 2020, the Company did not sell any shares under the Sales Agreement.

Follow-On Offering

On June 19, 2020, the Company completed a public offering of an aggregate of 5,500,000 of its common stock and received net proceeds of approximately $180.7 million.

Warrants to Purchase Common Stock

As of June 30, 2020, the Company had outstanding warrants to purchase common stock as follows:

Issuance Date	Term (in years)	Exercise Price		Number of Common Shares Issuable under Warrant
May 23, 2011	10	$	1.55		61,868
June 28, 2013	10	$	13.22		7,569
September 30, 2014	10	$	13.22		15,139
					84,576

9. Stock-Based Compensation

2018 Equity Incentive Plan

In June 2018, the Company’s stockholders approved the 2018 Plan, which became effective on July 18, 2018. The 2018 Plan provides for the grant of incentive stock options, non-qualified options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares initially reserved for issuance under the 2018 Plan was 3,025,101. The number of shares reserved shall be annually increased on January 1, 2019 and each January 1 thereafter through January 1, 2028 by the least of (i) 2,216,368 shares, (ii) 4% of the number of shares of the Company’s common stock outstanding on the first day of the year or (iii) an amount determined by the Company’s board of directors. The shares of common stock underlying any awards that are expired, forfeited, canceled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2018 Plan or any predecessor plan such as the 2008 Equity Incentive Plan will be added back to the shares of common stock available for issuance under the 2018 Plan. In January 2020, the shares available for issuance under the 2018 Plan were increased by 1,668,762 shares pursuant to the annual increase described above. As of June 30, 2020, 2,271,872 shares remained available for future issuance under the 2018 Plan.

2018 Employee Stock Purchase Plan

In June 2018, the Company’s stockholders approved the 2018 Employee Stock Purchase Plan which became effective on July 18, 2018. A total of 272,504 shares of common stock were reserved for issuance under this plan. The number of shares reserved shall be annually increased on each January 1 through January 1, 2028 by the least of (i) 545,008 shares, (ii) 1% of the number of shares of the Company’s common stock outstanding on the first day of the year or (iii) an amount determined by the Company’s board of directors. In January 2020, the shares available for issuance under the 2018 Plan were increased by 417,190 shares pursuant to the annual increase described above. As of June 30, 2020, no offering periods have commenced, and 689,694 shares remained available for future issuance under the 2018 Plan.

Stock Option Issuances

The following is a summary of stock option activity for the six months ended June 30, 2020:

				Weighted		Weighted
				Average		Average		Aggregate
	Number			Exercise		Contractual		Intrinsic
	of Shares			Price		Term		Value
						(in years)		(in thousands)
Outstanding as of December 31, 2019		4,211,068		$	8.95		8.39	$	160,689
Granted		1,167,482		$	36.22
Exercised		(280,993	)	$	8.58
Forfeited		(92,649	)	$	13.33
Outstanding as of June 30, 2020		5,004,908		$	15.25		8.33	$	82,120
Vested and expected to vest as of June 30, 2020		5,004,908		$	15.25		8.33	$	82,120
Options exercisable as of June 30, 2020		1,681,244		$	8.53		7.58	$	36,496

During the six months ended June 30, 2020, the Company granted options to employees and directors for the purchase of 1,167,482 shares of common stock with a weighted average exercise price of $36.22 per share and a weighted average grant-date fair value of $25.41 per share.

The Company estimated the fair value of each stock option award using the Black-Scholes option-pricing model based on the following assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Risk-free interest rate		0.47	%		2.06	%		1.21	%		2.44	%
Expected volatility		84.78	%		83.08	%		82.85	%		82.24	%
Expected dividend yield		—			—			—			—
Expected term (in years)		5.90			5.68			6.02			6.02

As of June 30, 2020, total unrecognized compensation cost related to the unvested stock-based awards was $41.1 million, which is expected to be recognized over a weighted average period of 3.02 years.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its statements of operations and comprehensive loss (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development expenses	$	1,402	$	732	$	2,408	$	1,256
General and administrative expenses		2,233		1,065		3,786		1,854
Total	$	3,635	$	1,797	$	6,194	$	3,110

10. Leases

The Company has leases for office and laboratory space. The Company occupies approximately 47,546 square feet of office and laboratory space in Cambridge, Massachusetts under a lease that expires on June 30, 2023. The Company determined that these leases are operating leases.

In June 2019, the Company entered into a sublease agreement for a portion of its office space consisting of approximately 4,422 square feet. The sub-lease was originally expired on June 20, 2020. On June 19, 2020, the Company executed an amendment to extend the term of the sub-lease until July 31, 2020.

We recognize our minimum rental expense on a straight-line basis over the term of the lease beginning with the date of initial control of the asset. We recognized all leases with terms greater than 12 months in duration on our Condensed Consolidated Balance Sheets as right-of-use assets and lease liabilities.

11. Commitments and Contingencies

Research Agreements

The LLS Agreement requires the Company to make certain milestone payments to LLS, that could total up to $25.0 million in the aggregate, upon the receipt of payments by the Company associated with the licensing or transfer of rights to the related compound (or a product) to a third party, upon first regulatory approval of a product in the U.S., or upon the first regulatory approval of a product in Europe or Japan. As of June 30, 2020, and December 31, 2019, no events have occurred that would require payment of the milestones.

The Company has several in-license agreements with academic organizations. The Company is obligated to pay annual license maintenance fees of less than $0.1 million per year as well as reimburse certain institutions for costs incurred related to the filing, prosecution and maintenance of patent rights licensed under the agreements. In addition, the Company may be obligated to pay contingent milestone payments of up to a maximum of $15.7 million upon the achievement of certain defined events as well as royalties of low single-digit percentages of sales of licensed products. In certain cases, the maximum payments to the academic organizations are capped. If the Company grants any sublicense rights under the license agreements, the Company has agreed to pay a percentage of sublicense fees received by the Company to the licensors. As of June 30, 2020, and December 31, 2019, no events have occurred that would require payment of the milestones, royalties, or sublicense fees.

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and its executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its financial statements as of June 30, 2020 or December 31, 2019.

Legal Proceedings

The Company is not a party to any material legal matters or claims and did not have contingency reserves established for any litigation liabilities as of June 30, 2020 or December 31, 2019.

12. Net Loss Per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Numerator:
Net loss	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)
Net loss attributable to common stockholders	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)

Denominator:
Weighted average common shares outstanding, basic and diluted		42,589,415			25,809,556			42,177,523			25,807,132

Net loss per share attributable to common stockholders, basic and diluted	$	(0.70	)	$	(0.80	)	$	(1.31	)	$	(1.56	)

The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	June 30,
	2020		2019
Warrants for the purchase of common stock		84,576		95,930
Options to purchase common stock		5,004,908		4,829,732
Total		5,089,484		4,925,662

13. Retirement Plan

The Company has a defined-contribution plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. As currently established, the Company is not required to make contributions to the 401(k) Plan. The Company made matching contributions of $0.1 million for each of the three months ended June 30, 2020 and 2019, respectively. The Company made matching contributions of $0.3 million and $0.2 million for each of the six months ended June 30, 2020 and 2019, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission, or SEC. 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, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the Risk Factors section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage biopharmaceutical company using our expertise in epigenetics to discover and develop novel therapeutics that address serious unmet medical needs in patients with cancers associated with abnormal gene expression or drug resistance. Our integrated epigenetics platform enables us to validate targets and generate small molecules impacting these targets to selectively modulate gene expression in tumor and immune cells to drive anti-tumor activity. This platform reflects our deep understanding of the biology of regulation of gene expression by epigenetic regulatory proteins, or epigenetic regulators, the development of small-molecule product candidates that selectively modulate their activity, and the design of clinical development programs supported by novel biomarker strategies. We are able to target a broad variety of epigenetic regulators using our platform and have generated development candidates acting against distinct classes of those regulators. Our vision is to become a fully integrated oncology company, with a broad pipeline of development and discovery programs.

BET Inhibition

CPI-0610, our lead product candidate, is a small molecule designed to promote anti-tumor activity by specifically inhibiting the function of bromodomain and extra terminal domain, or BET, proteins, which normally enhance target gene expression. We are currently conducting MANIFEST, a Phase 2 clinical trial of CPI-0610 as a monotherapy and in combination with ruxolitinib (marketed as Jakafi®/Jakavi®) in patients with myelofibrosis, or MF, a progressive hematological cancer. We are enrolling MF patients who are Janus-kinase-, or JAK-, inhibitor-naïve, a first-line, or 1L, setting, as well as patients who are refractory to or intolerant of, or have had a sub-optimal response to, ruxolitinib, a second-line, or 2L, setting. In the 1L setting, we are testing CPI-0610 in combination with ruxolitinib in JAK-inhibitor-naïve patients with the aim of measuring spleen volume reduction, or SVR, and symptom improvement, among other relevant parameters. In the 2L setting, we are stratifying patients for dependence on red-blood-cell, or RBC, transfusions. In transfusion-dependent, or TD, patients, we are measuring conversion to transfusion independence, or TI, in addition to spleen volume reduction and symptom improvement. In non-TD patients, we are measuring spleen volume reduction and symptom improvement, among other relevant parameters.

We believe that preliminary data disclosed to date from MANIFEST suggest that CPI-0610 has the potential to offer meaningful benefits beyond the current standard of care in MF. We presented updated preliminary 24-week data for CPI-0610 as a monotherapy and in combination with ruxolitinib at the European Hematology Association (EHA) meeting on June 12, 2020, based on an April 17, 2020, data cutoff, and we intend to provide a further update of preliminary clinical and translational data from MANIFEST in the second half of 2020.

As part of indication expansion strategy for CPI-0610, we are planning to initiate an additional arm of MANIFEST (Arm 4) for treatment of approximately 20 hydroxyurea-resistant or -intolerant patients with essential thrombocythemia (ET) with CPI-0610 as a monotherapy in the second half of 2020. ET is a myeloproliferative disorder that can progress to MF and that is characterized by excessive production of blood platelets, fatigue, lightheadedness, headaches, vision changes, and an increased risk of blood clots. The primary endpoint of Arm 4 will be Complete Hematological Response within 24 weeks as measured by normalization of platelet count and white blood cell count within the normal range, with a key secondary endpoint of 50% reduction in Total Symptom Score at 24 weeks measured by the MPN Symptom Assessment Form.

We had constructive scientific and regulatory meetings with the FDA on future development plans for CPI-0610. We have aligned with the FDA on the design of a randomized, double-blind pivotal Phase 3 clinical trial for CPI-0610, to be called MANIFEST-2. We are preparing to initiate the Phase 3 trial in the second half of 2020. MANIFEST-2 will enroll approximately 310 JAK-inhibitor-naïve patients with advanced primary MF, post-essential-thrombocythemia MF, or post-polycythemia-vera MF. Patients will be randomized 1:1 to CPI-0610 plus ruxolitinib or placebo plus ruxolitinib. The primary endpoint will be 35% reduction in spleen volume (SVR35) at 24 weeks, and the key secondary endpoint will be 50% improvement in Total Symptom Score (TSS50) measured by Myelofibrosis Symptom Assessment Form version 4.0 at 24 weeks. The study is powered at approximately 90% to detect a difference in the primary endpoint. The trial protocol includes a mechanism to re-estimate sample size to ensure sufficient power for both endpoints.

Feedback from the FDA suggests that the current MANIFEST trial alone does not provide a sufficient basis for approval of the combination of CPI-0610 and ruxolitinib in MF patients. We plan to continue to explore other regulatory pathways for bringing CPI-0610 to MF patients.

EZH2 Inhibition

CPI-0209

CPI-0209 is a small molecule designed to promote anti-tumor activity by specifically inhibiting enhancer of zeste homolog 2, or EZH2, an enzyme that suppresses target gene expression. We designed CPI-0209, which is a second-generation EZH2 inhibitor, to achieve comprehensive coverage of EZH2 to potentially enable deeper, more rapid, and more durable tumor regression, as well as to demonstrate improved metabolic properties. We believe that CPI-0209 has the potential to be a best-in-class EZH2 inhibitor for use in a broad range of cancer types and to expand the addressable patient populations beyond those that have been targeted by first-generation EZH2 inhibitors. We are currently conducting the Phase 1 dose escalation portion of a Phase 1/2 clinical trial of CPI-0209 in solid tumors. After determining the recommended Phase 2 dose for the monotherapy, which we expect to accomplish in 2020, we intend to pursue monotherapy expansion arms in selected solid tumor indications with a biomarker enrichment strategy. We will also determine the recommended Phase 2 dose in combination therapy and then pursue expansion arms for this combination therapy.

CPI-1205

CPI-1205 is our first-generation EZH2 inhibitor. Based on insights from our platform and the scientific literature supporting the role of EZH2 in certain tumor types, we initiated ProSTAR, a Phase 1b/2 clinical study evaluating CPI-1205 combined with enzalutamide or abiraterone in patients with metastatic castration-resistant prostate cancer (mCRPC). In June 2020, we announced that we plan to discontinue development of CPI-1205 after completion of ProSTAR and to prioritize further clinical development of CPI-0209. The decision was based on a recent review of ProSTAR data, which did not demonstrate the definitive signal of activity necessary to advance the program into pivotal studies in mCRPC. We intend to present a full data set from ProSTAR at a future medical meeting.

COVID-19 Pandemic

The ongoing COVID-19 pandemic has affected and will continue to affect our business and operations. The section below provides an update of the impact of the COVID-19 pandemic on our business and operations.

MANIFEST clinical trial execution. Patient safety remains paramount in the execution of our clinical trials. Patient enrollment began to slow toward the end of first quarter of 2020, and several sites informed us that they temporarily halted enrollment due to the pandemic. Similarly, we had incidences of incomplete data collection. We have utilized recent regulatory guidance and provisions of the protocol that provide potential flexibility in the time and place of data collection. We provided a data update from the MANIFEST trial at the European Hematological Association meeting on June 12, 2020, with an April 17, 2020, data cutoff, as planned. The pace of enrollment improved in the second quarter of 2020, although it remains slower than our plans prior to the COVID-19 pandemic.

CPI-0610 Phase 3 clinical trial. Conditions at clinical trial sites caused by COVID-19 may impact the timing of the start of our Phase 3 clinical trial for CPI-0610. We currently aim to begin this trial in the second half of 2020.

CPI-0209 Phase 1 clinical trial. The Phase 1 clinical trial for CPI-0209 has proceeded as planned.

Manufacturing. In the first quarter of 2020, we experienced some disruption in our supply chain from our suppliers due to COVID-19. For instance, we experienced a delay in the supply of raw materials necessary to manufacture CPI-0610 coming from one of our contract manufacturers in China. We also experienced a delay in the supply of drug substance necessary to manufacture CPI-0209 from one of our contract manufacturers in India. However, we believe that these issues have now been resolved, and we are not currently experiencing supply chain disruptions in manufacturing for any of our product candidates.

Offices. Beginning in March, our offices in Cambridge were closed to non-essential employees, with the exception of minimal laboratory personnel. In May, we began reopening our offices in accordance with the business reopening directives of the state of Massachusetts. Our laboratory facilities are now open to all laboratory personnel with mandated safety protocols in place. The majority of our non-laboratory personnel continue to work remotely.

Financial Overview

As of June 30, 2020, we have funded our operations with the sales of convertible preferred stock, payments received in connection with collaboration agreements, borrowings under loan agreements and proceeds from our public and private offerings of our common stock. On March 20, 2019, we entered into a Loan and Security Agreement, or the Loan Agreement, with Hercules Capital, Inc., or Hercules, pursuant to which we could borrow up to $40.0 million. We have borrowed $30.0 million, and our right to borrow the remaining $10.0 million has expired. On June 19, 2020, we completed a public offering of an aggregate of 5,500,000 of our common stock and received net proceeds of approximately $180.7 million. Since our inception, we have incurred significant operating losses. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend heavily on the successful development and eventual commercialization of one or more of our product candidates. For the three and six months ended June 30, 2020, we reported a net loss of $29.8 million and $55.2 million, respectively. As of June 30, 2020, we had an accumulated deficit of $374.6 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next few years. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

•

continue our MANIFEST trial, continue our ProSTAR trial, and continue our Phase 1/2 clinical trial of CPI-0209;

•

advance our clinical-stage product candidates from mid-stage into later-stage trials, including our plans to conduct a Phase 3 trial of CPI-0610;

•

continue the research and development of our other product candidates;

•

seek to discover and develop additional product candidates;

•

seek regulatory approvals for any product candidates that successfully complete clinical trials;

•

establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval;

•

scale up our manufacturing processes and capabilities, or arrange for a third party to do so on our behalf, to support our clinical trials of our product candidates and commercialization of any of our product candidates for which we obtain marketing approval;

•

acquire or in-license products, product candidates or technologies;

•

maintain, expand, enforce, defend and protect our intellectual property portfolio;

•

hire additional clinical, quality control and scientific personnel; and

•

add operational, financial and administrative personnel, including personnel to support our product development and planned future commercialization efforts and our operations as a public company.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing and distribution. Further, we expect to incur additional costs associated with operating as a public company.

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; collaborations; strategic alliances; and marketing, distribution or licensing arrangements. 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 needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately 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, we may be unable to continue our operations at planned levels and may be forced to reduce or terminate our operations.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $520.5 million. We expect that our existing cash, cash equivalents and marketable securities will enable us to fund our planned operating expenses and capital expenditure requirements into mid-2023. 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. See “– Liquidity and Capital Resources.”

Components of Our Results of Operations

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales. We have entered into, and we may in the future enter into, license or collaboration agreements for our product candidates or intellectual property, and we may generate revenue in the future from payments as a result of such license or collaboration agreements. To date, all of our revenue has been derived from one collaboration arrangement. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our product candidates. We may never succeed in obtaining regulatory approval for any of our product candidates.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

•

employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions;

•

expenses incurred in connection with the preclinical and clinical development of our product candidates and research programs, including under agreements with third parties, such as consultants and contractors and contract research organizations, or CROs;

•

the cost of developing and scaling our manufacturing process and manufacturing drug products for use in our preclinical studies and clinical trials, including under agreements with third parties, such as consultants and contractors and contract manufacturing organizations, or CMOs;

•

laboratory supplies and research materials;

•

facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and

•

payments made under third-party licensing agreements.

In July 2012, we entered into a Research, Development and Commercialization Agreement, or the LLS Agreement, with the Leukemia & Lymphoma Society, or LLS, pursuant to which LLS committed to provide funding to us for research and development services, conditional on (i) the achievement of milestones in accordance with the LLS Agreement and (ii) equal funding being provided by us. We recognize the nonrefundable payments received under the LLS Agreement as a reduction to the research and development expenses incurred, based on a proportional methodology comparing the total expenses incurred in the period under the project to the total expenses expected to be incurred under the project. No funding was received from LLS during the six months ended June 30, 2020 and 2019, respectively.

We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Our direct external research and development expenses are tracked on a program-by-program basis and consist of costs that include fees, reimbursed materials and other costs paid to consultants, contractors, CMOs and CROs in connection with our preclinical, clinical development and manufacturing activities. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform technology and, as such, are not separately classified.

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 increase substantially in connection with our planned clinical and preclinical development activities in the near term and in the future as our current development programs progress and new programs are added. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our product candidates. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:

•

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 raise additional funds necessary to complete clinical development of and commercialize our product candidates;

•

the progress of the development efforts of parties with whom we may enter into collaboration arrangements;

•

our ability to maintain our current research and development programs and to establish new ones;

•

our ability to establish new licensing or collaboration arrangements;

•

the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S. Food and Drug Administration, or FDA, or any comparable foreign regulatory authority;

•

the receipt and related terms of regulatory approvals from applicable regulatory authorities;

•

the availability of raw materials for use in production of our product candidates;

•

our ability to consistently manufacture our product candidates for use in clinical trials;

•

our ability to establish and operate a manufacturing facility, or secure manufacturing supply through relationships with third parties;

•

our ability to obtain and maintain intellectual property protection and regulatory exclusivity, both in the United States and internationally;

•

our ability to maintain, enforce, defend and protect our rights in our intellectual property portfolio;

•

the commercialization of our product candidates, if and when approved;

•

our ability to obtain and maintain third-party coverage and adequate reimbursement;

•

the acceptance of our product candidates, if approved, by patients, the medical community and third-party payors;

•

competition with other products; and

•

a continued acceptable safety profile of our therapies following approval.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

Other Income (Expense)

Interest Income

Interest income consists of interest earned on our invested cash balances and associated with our marketable securities. We expect our interest income to increase as we invest the cash received from the net proceeds from our private placement in October 2019, public offerings in December 2019 and June 2020, and net proceeds from the Hercules Loan Agreement.

Interest Expense

Expense consists of interest expense on borrowings under the Hercules Loan Agreement, as well as amortization of debt discount and debt issuance costs.

Income Taxes

Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each year or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized. As of December 31, 2019, we had U.S. federal and state net operating loss carryforwards of $317.4 million and $315.3 million, respectively, which may be available to offset future income tax liabilities and begin to expire in 2028. As of December 31, 2019, we also had U.S. federal and state research and development tax credit carryforwards of $12.1 million and $4.4 million, respectively, which begin to expire in 2028 and 2025, respectively. We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.

Results of Operations

Comparison of the Three Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019:

	Three Months Ended June 30,
	2020			2019			Change
	(in thousands)
Operating expenses:
Research and development	$	22,627		$	15,955		$	6,672
General and administrative		6,960			4,886			2,074
Total operating expenses		29,587			20,841			8,746
Loss from operations		(29,587	)		(20,841	)		(8,746	)
Other income (expense):
Interest income		686			652			34
Gain on disposal of equipment		29			—			29
Interest expense		(857	)		(578	)		(279	)
Total other income (expense), net		(142	)		74			(216	)
Loss before income taxes		(29,729	)		(20,767	)		(8,962	)
Income tax expense		24			—			24
Net loss	$	(29,753	)	$	(20,767	)	$	(8,986	)

Research and Development Expenses

	Three Months Ended June 30,
	2020		2019		Change
	(in thousands)
Direct research and development expenses by program:
CPI-1205	$	1,620	$	5,123	$	(3,503	)
CPI-0610		8,885		3,145		5,740
CPI-0209		1,908		580		1,328
Preclinical pipeline		1,344		827		517
Unallocated expenses:
Personnel related (including stock-based compensation)		6,925		4,249		2,676
Laboratory supplies and consumables		464		529		(65	)
Facility related and other		1,481		1,502		(21	)
Total research and development expenses	$	22,627	$	15,955	$	6,672

Research and development expenses were $22.6 million for the three months ended June 30, 2020 compared to $16.0 million for the three months ended June 30, 2019. The increase was primarily due to increased expenses in our CPI-0610 program. The decrease in costs related to our CPI-1205 program was primarily due to lower expenses in our ProSTAR due to the maturity of the trial, decreased costs related to process chemistry expenses and the end of our ORIOnE trial in 2019. The increase in costs related to our CPI-0610 program was primarily due to increased costs in process chemistry expenses and increased enrollment in our MANIFEST trial in the second quarter of 2020. The increase in costs related to our CPI-0209 program was primarily due to the increase in patient enrollment and increased process chemistry expenses.

The increase in personnel related costs was primarily due to overall increase in headcount in our research and development function. Personnel related costs for the three months ended June 30, 2020 and 2019 included stock-based compensation expense of $1.4 million and $0.7 million, respectively.

General and Administrative Expenses

	Three Months Ended June 30,
	2020		2019		Change
	(in thousands)
Personnel related (including stock-based compensation)	$	4,311	$	2,762	$	1,549
Professional and consultant fees		1,665		1,157		508
Facility related and other		984		967		17
Total general and administrative expenses	$	6,960	$	4,886	$	2,074

General and administrative expenses for the three months ended June 30, 2020 were $7.0 million, compared to $4.9 million for the three months ended June 30, 2019. The increase in personnel related costs was primarily due to increased headcount and increased stock-based compensation expense. Personnel related costs for the three months ended June 30, 2020 and 2019 included stock-based compensation expense of $2.2 million and $1.1 million, respectively. The increase in professional and consultant fees was primarily due to the increased marketing and accounting fees.

Other Income (Expense)

Interest Income

Interest income was $0.7 million for the three months ended June 30, 2020 and 2019, respectively.

Interest Expense

Interest expense was $0.9 million and $0.6 million for the three months ended June 30, 2020 and 2019, respectively, consisted primarily of cash and non-cash interest related to the Hercules Loan Agreement, which commenced on March 20, 2019.

Income Tax Expense

Income tax expense was less than $0.1 million for the three months ended June 30, 2020, consisted of income tax accrued for the interest income associated with our marketable securities.

Comparison of the Six Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
	2020			2019			Change
	(in thousands)
Operating expenses:
Research and development	$	42,702		$	31,632		$	11,070
General and administrative		12,868			9,315			3,553
Total operating expenses		55,570			40,947			14,623
Loss from operations		(55,570	)		(40,947	)		(14,623	)
Other income (expense):
Interest income		2,090			1,407			683
Gain on disposal of equipment		29			—			29
Interest expense		(1,707	)		(653	)		(1,054	)
Total other income (expense), net		412			754			(342	)
Loss before income taxes		(55,158	)		(40,193	)		(14,965	)
Income tax expense		39			—			39
Net loss	$	(55,197	)	$	(40,193	)	$	(15,004	)

Research and Development Expenses

	Six Months Ended June 30,
	2020		2019		Change
	(in thousands)
Direct research and development expenses by program:
CPI-1205	$	3,850	$	10,281	$	(6,431	)
CPI-0610		16,116		5,623		10,493
CPI-0209		3,243		1,696		1,547
Preclinical pipeline		2,255		1,648		607
Unallocated expenses:
Personnel related (including stock-based compensation)		13,083		8,462		4,621
Laboratory supplies and consumables		1,174		993		181
Facility related and other		2,981		2,929		52
Total research and development expenses	$	42,702	$	31,632	$	11,070

Research and development expenses were $42.7 million for the six months ended June 30, 2020 compared to $31.6 million for the six months ended June 30, 2019. The increase was primarily due to increased expenses in our CPI-0610 program. The decrease in costs related to our CPI-1205 program was primarily due to lower expenses in our ProSTAR due to the maturity of the trial, decreased costs related to process chemistry expenses and the end of our ORIOnE trial in 2019. The increase in costs related to our CPI-0610 program was primarily due to increased costs in process chemistry expenses and increased enrollment in our MANIFEST trial in the first half of 2020. The increase in costs related to our CPI-0209 program was primarily due to the increase in patient enrollment and increased process chemistry expenses.

The increase in personnel related costs was primarily due to overall increase in headcount in our research and development function. Personnel related costs for the six months ended June 30, 2020 and 2019 included stock-based compensation expense of $2.4 million and $1.3 million, respectively.

General and Administrative Expenses

	Six Months Ended June 30,
	2020		2019		Change
	(in thousands)
Personnel related (including stock-based compensation)	$	7,760	$	5,257	$	2,503
Professional and consultant fees		2,731		2,154		577
Facility related and other		2,377		1,904		473
Total general and administrative expenses	$	12,868	$	9,315	$	3,553

General and administrative expenses for the six months ended June 30, 2020 were $12.9 million, compared to $9.3 million for the six months ended June 30, 2019. The increase in personnel related costs was primarily due to increased headcount and increased stock-based compensation expense. Personnel related costs for the six months ended June 30, 2020 and 2019 included stock-based compensation expense of $3.8 million and $1.9 million, respectively. The increase in professional and consultant fees was primarily due to the increased marketing and accounting fees. The increase in facility related and other costs was related to insurance costs, IT software licenses, service contracts and laptops to support the increased headcount.

Other Income (Expense)

Interest Income

Interest income increased to $2.1 million for the six months ended June 30, 2020 from $1.4 million for the six months ended June 30, 2019, primarily due to interest income earned with higher cash balances invested in marketable securities.

Interest Expense

Interest expense was $1.7 million and $0.7 million for the six months ended June 30, 2020 and 2019, respectively, and consisted primarily of cash and non-cash interest related to the Hercules Loan Agreement, which commenced on March 20, 2019.

Income Tax Expense

Income tax expense was less than $0.1 million for the six months ended June 30, 2020, and consisted of income tax accrued for the interest income associated with our marketable securities.

Liquidity and Capital Resources

Since our inception, we have incurred significant operating losses. As of June 30, 2020, we have financed our operations primarily through sales of our preferred stock, payments received in connection with our collaboration and research agreements, borrowings under the Loan Agreement and sales of our common stock. As of June 30, 2020, we had received net proceeds of $29.5 million under the loan agreement. On June 19, 2020, we completed a public offering of an aggregate of 5,500,000 of our common stock and received net proceeds of approximately $180.7 million. As of June 30, 2020, we had cash, cash equivalents and marketable securities of $520.5 million.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods presented:

	Six Months Ended June 30,
	2020			2019
	(in thousands)
Cash used in operating activities	$	(47,063	)	$	(36,180	)
Cash used in investing activities		(291,296	)		(42,992	)
Cash provided by financing activities		183,139			19,623
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(155,220	)	$	(59,549	)

Operating Activities

During the six months ended June 30, 2020, net cash used in operating activities was $47.1 million, primarily resulting from our net loss of $55.2 million, partially offset by changes in our operating assets and liabilities of $1.7 million, and net non-cash expense of $6.4 million. Changes in our operating assets and liabilities for the six months ended June 30, 2020 consisted primarily of $3.6 million increase in accrued expenses and other current liabilities and $0.5 million increase in prepaid expense and other current assets, partially offset by $2.2 million decrease in accounts payable and $0.2 million decrease in other assets.

During the six months ended June 30, 2019, net cash used in operating activities was $36.2 million, primarily resulting from our net loss of $40.2 million, partially offset by changes in our operating assets and liabilities of $0.9 million and net non-cash expense of $3.1 million. Changes in our operating assets and liabilities for the six months ended June 30, 2019 consisted primarily of a $0.8 million increase in accounts payable, and a $0.2 million increase in prepaid expense and other current assets, partially offset by $0.1 million decrease in accrued expenses and other current liabilities.

Investing Activities

During the six months ended June 30, 2020 and 2019, net cash used in investing activities were $291.3 million and $43.0 million, respectively, due to cash investment in marketable securities.

Financing Activities

During the six months ended June 30, 2020, net cash provided by financing activities consisted primarily of net proceeds from issuance of common stock of $180.7 million and net proceeds from exercise of stock options of $2.4 million.

During the six months ended June 30, 2019, net cash provided by financing activities was $19.6 million, consisting primarily of net proceeds from the issuance of notes payable related to the Loan Agreement with Hercules.

Loan and Security Agreement

On March 20, 2019, we entered into the Loan Agreement with Hercules, under a term loan facility, pursuant to which we could borrow up to $40.0 million. We have borrowed $30.0 million as of June 30, 2020, and our right to borrow the remaining $10 million has expired. The term loan bears interest at an annual rate equal to the greater of 8.55% and the prime rate of interest plus 2.55%. The Loan Agreement provides for interest-only payments until April 30, 2021, and repayment of the aggregate outstanding principal balance of the term loan in monthly installments starting on May 1, 2021 and continuing through April 1, 2023 (the “Maturity Date”). In addition, we paid a fee of $0.3 million upon closing and are required to pay a fee of 6.35% of the aggregate advances under the Loan Agreement at maturity. At our option, we may elect to prepay all or a portion of the outstanding advances by paying the entire principal balance (or any portion thereof) and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: 2% if an advance is prepaid during the first 12 months following the applicable advance date, 1% if an advance is prepaid after 12 months but prior to 24 months following the applicable advance date, and 0.5% if an advance is prepaid any time after 24 months following the applicable advance date but prior to the Maturity Date. In connection with the Loan Agreement, we granted Hercules a security interest in all of our personal property now owned or hereafter acquired, excluding intellectual property (but including the rights to payment and proceeds from the sale, licensing or disposition of intellectual property), and a negative pledge on intellectual property. The Loan Agreement also contains certain events of default, representations, warranties and non-financial covenants of the Company. If we fail to make payments when due, breach any operational covenant, or have any event of default, this could have a material adverse effect on our business and financial condition.

At-the-Market Offering

In August 2019, we entered into an Open Market Sale Agreement, or the Sales Agreement, with Jefferies LLC, under which we may offer and sell, from time to time, shares of our common stock having aggregate gross proceeds of up to $50.0 million through Jefferies as sales agent. Any such sales being made by any method that is deemed an “at-the-market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. We will pay Jefferies LLC a commission of up to 3% of the gross proceeds of any sales of common stock pursuant to the Sales Agreement. During the six months ended June 30, 2020, we did not sell any shares under the Sales Agreement.

Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials for our product candidates in development. In addition, as a result of the IPO, we expect to incur additional costs associated with operating as a public company. The timing and amount of our operating expenditures will depend largely on:

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the timing and progress of preclinical and clinical development activities;

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the commencement, enrollment or results of the planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates;

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the timing and outcome of regulatory review of our product candidates;

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our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;

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our requirements and timing to expand headcount and facilities in order to support our growing operations:

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changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals;

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developments concerning our contract manufacturers;

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our ability to obtain materials to produce adequate product supply for any approved product or inability to do so at acceptable prices;

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our ability to establish additional collaborations if needed;

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the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we obtain marketing approval;

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the legal patent costs involved in preparing, filing and prosecuting patent applications and maintaining, defending and enforcing patent claims and other intellectual property claims;

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additions or departures of key scientific or management personnel;

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unanticipated serious safety concerns related to the use of our product candidates; and

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

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $520.5 million. We expect that our existing cash, cash equivalents and marketable securities, will enable us to fund our planned operating expenses and capital expenditure requirements into mid-2023. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Until such time as we can generate substantial product revenue, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights as a common stockholder. 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 acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug 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 or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

Contractual Obligations and Commitments

In our 2019 Form 10-K Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, under the heading “Contractual Obligations and Commitments”, we have described our commitments and contingencies. There were no material changes to our total contractual commitments and obligations during the six months ended June 30, 2020.

Critical Accounting Policies and Significant Judgments and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. We believe that of our critical accounting policies described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”), the following involve the most judgment and complexity:

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vendors in connection with preclinical development activities;

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CMOs in connection with the process development and scale up activities and the production of preclinical and clinical trial materials; and

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CROs and other providers in connection with clinical trials.

Accordingly, we believe the policies set forth above are critical to fully understanding and evaluating our financial condition and results of operations. If actual results or events differ materially from the estimates, judgments and assumptions used by us in applying these policies, our reported financial condition and results of operations could be materially affected. There have been no significant changes to our critical accounting policies from those described in the Annual Report.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

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 financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of $520.5 million. Interest income is sensitive to changes in the general level of interest rates; however, due to the nature of these investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio.

As of June 30, 2020, we had $30.0 million of borrowings outstanding under the Loan Agreement. This term loan bears interest at a variable annual rate equal to the greater of (i) 8.55% and (ii) the prime rate plus 2.55%, thereby exposing us to interest rate risk. Based upon the prime rate at June 30, 2020 of 3.25% and considering the $30.0 million of principal outstanding, an immediate 10% change in the Prime Rate would not have a material impact on our debt-related obligations, financial position or results of operation.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

Inflation would generally affect us by increasing our cost of labor and clinical trial costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the six months ended June 30, 2020 and the year ended December 31, 2019.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

Based on the market value of our common stock held by non-affiliates as of June 30, 2020, we will cease to be an emerging growth company on December 31, 2020.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2020 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As a result of the COVID-19 pandemic, certain of our employees began working remotely in March 2020. We have not identified any material changes in our internal control over financial reporting as a result of these changes to the working environment. We have been and will continue to monitor and assess COVID-19 pandemic to determine any potential impacts on our internal controls over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material legal matters or claims and did not have contingency reserves established for any litigation liabilities as of June 30, 2020 or December 31, 2019.

Item 1A. Risk Factors

Our business is subject to numerous risks. The following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in this Quarterly Report on Form 10-Q and other filings with the Securities and Exchange Commission, or the SEC, press releases, communications with investors, and oral statements. Actual future results may differ materially from those anticipated in our forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

Risks related to our financial position and need for additional capital

We have incurred significant losses since our inception. We expect to incur losses over the next several years and may never achieve or maintain profitability.

Since inception, we have incurred significant operating losses. Our net loss was $55.2 million for the six months ended June 30, 2020, $85.6 million for the year ended December 31, 2019. As of June 30, 2020, we had an accumulated deficit of $374.6 million. To date, we have financed our operations primarily though sales of convertible preferred stock, payments received in connection with collaboration agreements, borrowings under loan agreements and proceeds from our public and private offerings of our common stock. All of our revenue to date has been collaboration revenue. We have devoted substantially all of our financial resources and efforts to research and development, including clinical trials and preclinical studies. We are still in the early stages of development of our product candidates, and we have not completed development of any product candidates. We expect to continue to incur significant expenses and operating losses over the next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially as we continue to advance towards our goal to become a late-stage oncology development company, including:

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continue our Phase 2 clinical trial of CPI-0610, which we refer to as MANIFEST, and our Phase 1/2 clinical trial of CPI-0209, our second-generation EZH2 inhibitor;

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advance certain of our clinical-stage product candidates into later stage trials, including our plans to conduct a Phase 3 trial of CPI-0610;

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continue the research and development of our other product candidates;

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seek to discover and develop additional product candidates;

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seek regulatory approvals for any product candidates that successfully complete clinical trials;

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ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain regulatory approval;

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acquire or in-license products, product candidates or technologies;

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maintain, expand, enforce, defend and protect our intellectual property portfolio;

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hire additional personnel to support our product development and planned future commercialization efforts and our operations as a public company.

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add operational, financial and administrative personnel, including personnel to support our product development and planned future commercialization efforts and our operations as a public company.

To become and remain profitable, we must succeed in developing, and eventually commercializing, a product or products that generate significant revenue. The ability to achieve this success will require us to be effective in a range of challenging activities, including completing preclinical testing and clinical trials of our product candidates, discovering additional product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval. We are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability. Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Our expenses will increase if, among other things:

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we are required by the U.S. Food and Drug Administration, or the FDA, the European Medicines Agency, or the EMA, or other regulatory authorities to perform trials or studies in addition to those currently expected;

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there are any delays in completing our clinical trials or the development of any of our product candidates; or

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there are any third-party challenges to our intellectual property or we need to defend against any intellectual property-related claim.

Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product offerings or even continue our operations. A decline in the value of our company could also cause our stockholders to lose all or part of their investment.

We will need substantial additional funding. If we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts.

We expect to devote substantial financial resources to our ongoing and planned activities, particularly as we continue our Phase 1b/2 clinical trial of CPI-1205, our Phase 2 clinical trial of CPI-0610, and our Phase 1/2 clinical trial of CPI-0209 and plan and initiate a Phase 3 clinical trial of CPI-0610; and continue research and development and initiate additional clinical trials of, and seek regulatory approval for, these and other product candidates. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance our preclinical activities and clinical trials. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. Furthermore, we will incur additional costs associated with operating as a more mature public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts.

Our future capital requirements will depend on many factors, including:

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the progress, costs and results of our ongoing Phase 2 clinical trial of CPI-0610, Phase 1/2 clinical trial of CPI-0209 and the planned Phase 3 clinical trial of CPI-0610;

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the scope, progress, results and costs of discovery research, preclinical development, laboratory testing and clinical trials for any other product candidates we may develop in the future;

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the number and development requirements of other product candidates that we pursue;

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the costs, timing and outcome of regulatory review of our product candidates;

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our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of such arrangements;

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milestones and other collaboration-based revenues, if any;

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the amount and timing of revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

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the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property-related claims;

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the impact of the COVID-19 pandemic on our business and operations; and

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the extent to which we acquire or in-license other products, product candidates or technologies.

As of June 30, 2020, we had cash, cash equivalents and marketable securities of approximately $520.5 million. We expect that our existing cash, cash equivalents and marketable securities, will enable us to fund our planned operating expenses and capital expenditure requirements into mid-2023. However, we have based these estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. As a result, we could deplete our capital resources sooner than we currently expect.

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 regulatory approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Commercial revenues, if any, will not be derived unless and until we can achieve sales of commercially available products, which we do not anticipate for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient funds for our current or future operating plans. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for one or more of our product candidates or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our product candidates.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

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, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights as a common stockholder. 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, selling or licensing our assets, making capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution 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 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.

Our limited operating history may make it difficult for our stockholders to evaluate the success of our business to date and to assess our future viability.

We commenced active operations in early 2008, and our operations to date have been limited to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential product candidates, undertaking preclinical studies and conducting clinical trials. All but three of our product candidates are still in preclinical development. We have not yet demonstrated our ability to successfully develop any product candidate, obtain regulatory approvals, manufacture a commercial scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions our stockholders make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

In addition, as our business grows, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.

We expect our financial condition and operating results to fluctuate significantly from quarter-to-quarter and year-to-year due to a variety of factors, many of which are beyond our control. Accordingly, our stockholders should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

If we fail to comply with the covenants or payment obligations under our debt instrument, this could result in an event of default, which could materially and adversely affect our business and our financial condition.

On March 20, 2019, we entered into a Loan and Security Agreement, or the Loan Agreement, with various lenders and Hercules Capital, Inc. pursuant to which we could borrow up to $40.0 million. We have borrowed $30.0 million as of June 30, 2020, and our right to borrow the remaining $10 million has expired. The term loan bears interest at an annual rate equal to the greater of 8.55% and the prime rate of interest plus 2.55%. The Loan Agreement provides for interest-only payments until April 30, 2021, and repayment of the aggregate outstanding principal balance of the term loan in monthly installments starting on May 1, 2021 and continuing through April 1, 2023, or the Maturity Date. In addition, we are required to pay a fee of 6.35% of the aggregate amount of advances under the Loan Agreement at maturity. At our option, we may elect to prepay all or a portion of the outstanding advances by paying the entire principal balance (or such portion thereof) and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: 2% if an advance is prepaid during the first 12 months following the applicable advance date, 1% if an advance is prepaid after 12 months but prior to 24 months following the applicable advance date, and 0.5% if an advance is prepaid any time after 24 months following the applicable advance date but prior to the Maturity Date. In connection with the Loan Agreement, we granted Hercules Capital, Inc. a security interest in all of our personal property now owned or hereafter acquired, excluding intellectual property (but including the rights to payment and proceeds from the sale, licensing or disposition of intellectual property), and a negative pledge on intellectual property. The Loan Agreement also contains certain events of default, representations, warranties and non-financial covenants. If we fail to make payments when due, or breach any operational covenant or have any event of default, this could have a material adverse effect on our business and financial condition.

Our existing and future indebtedness may limit cash flow available to invest in the ongoing needs of our business.

As of June 30, 2020, we had $30.0 million of borrowings outstanding under the Loan Agreement with Hercules Capital, Inc. We could in the future incur additional indebtedness.

Our debt combined with our other financial obligations and contractual commitments could have significant adverse consequences, including:

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requiring us to dedicate a substantial portion of cash flow from operations or cash on hand to the payment of interest on, and principal of, our debt, which will reduce the amounts available to fund working capital, capital expenditures, product development efforts and other general corporate purposes;

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increasing our vulnerability to adverse changes in general economic, industry and market conditions;

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subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing;

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limiting our flexibility in planning for, or reacting to, changes in our business and our industry; and

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placing us at a competitive disadvantage compared to our competitors that have less debt or better debt servicing options.

We intend to satisfy our current and future debt service obligations with our existing cash and funds from external sources. Nonetheless, we may not have sufficient funds or may be unable to arrange for additional financing to pay the amounts due under our existing or any future debt. Funds from external sources may not be available on acceptable terms, if at all. In addition, a failure to comply with the covenants under the Hercules Loan Agreement or any future loan agreements we may enter into could result in an event of default and acceleration of amounts due. If an event of default occurs and the lenders accelerate the amounts due under such loan agreements, we may not be able to make accelerated payments, and such lenders could seek to enforce security interests in the collateral securing such indebtedness.

Changes in tax laws or in their implementation or interpretation may adversely affect our business and financial condition.

Recent changes in tax law may adversely affect our business or financial condition. On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act, or TCJA, which significantly reformed the Internal Revenue Code of 1986, as amended. The TCJA, among other things, contained significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for net interest expense to 30% of adjusted taxable income (except for certain small businesses), the limitation of the deduction for net operating losses arising in taxable years beginning after December 31, 2017 to 80% of annual taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years ending after December 31, 2017 (though any such net operating losses may be carried forward indefinitely), the imposition of a one-time taxation of offshore earnings at reduced rates regardless of whether they are repatriated, the elimination of U.S. tax on foreign earnings (subject to certain important exceptions), the allowance of immediate deductions for certain new investments instead of deductions for depreciation expense over time, and the modification or repeal of many business deductions and credits.

As part of Congress’ response to the COVID-19 pandemic, the Families First Coronavirus Response Act, or FFCR Act, was enacted on March 18, 2020, and the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was enacted on March 27, 2020. Both contain numerous tax provisions. In particular, the CARES Act retroactively and temporarily (for taxable years beginning before January 1, 2021) suspends application of the 80%-of-income limitation on the use of net operating losses, which was enacted as part of the TCJA. It also provides that net operating losses arising in any taxable year beginning after December 31, 2017, and before January 1, 2021, are generally eligible to be carried back up to five years. The CARES Act also temporarily (for taxable years beginning in 2019 or 2020) relaxes the limitation of the tax deductibility for net interest expense by increasing the limitation from 30 to 50% of adjusted taxable income.

Regulatory guidance under the TCJA, the FFCR Act and the CARES Act is and continues to be forthcoming, and such guidance could ultimately increase or lessen impact of these laws on our business and financial condition. It is also likely that Congress will enact additional legislation in connection with the COVID-19 pandemic, some of which could have an impact on our company. In addition, it is uncertain if and to what extent various states will conform to the TCJA, the FFCR Act or the CARES Act.

We might not be able to utilize a significant portion of our net operating loss carryforwards and research and development tax credit carryforwards.

As of December 31, 2019, we had federal net operating loss carryforwards of $317.4 million and federal research and development tax credit carryforwards of $12.1 million, all of which will, if not utilized, will begin to expire in 2028. To the extent that they expire unused, these net operating loss and tax credit carryforwards will not be available to offset our future income tax liabilities. Federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of such carryforwards is limited to 80% of our taxable income in the year in which such carryforwards are used.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-change net operating loss and credit carryforwards to reduce its tax liability for post-change periods may be limited. We have not conducted a study to assess whether a change of control has occurred since 2011. We also may experience ownership changes in the future as a result of shifts in our stock ownership, some of which may be outside of our control. In addition, we have not conducted a detailed study to document whether our historical activities qualify to support the research and development credits currently claimed as a carryforward. A detailed study could result in adjustment to our research and development credit carryforwards. If we determine that an ownership change has occurred and our ability to use our historical net operating loss and tax credit carryforwards is materially limited, or if our research and development carryforwards are adjusted, our use of those attributes to offset future income tax liabilities would be limited.

There is also a risk that due to regulatory changes, such as suspensions on the use of net operating losses, or other unforeseen reasons, our existing net operating losses could expire or otherwise become unavailable to offset future income tax liabilities. As described above in “Changes in tax laws or in their implementation or interpretation may adversely affect our business and financial condition,” the TCJA, as amended by the CARES Act, includes changes to U.S. federal tax rates and the rules governing net operating loss carryforwards that may significantly impact our ability to utilize our net operating losses to offset taxable income in the future. In addition, state net operating losses generated in one state cannot be used to offset income generated in another state. For these reasons, even if we attain profitability, we may be unable to use a material portion of our net operating losses and other tax attributes.

Risks Related to the Discovery and Development of our Product Candidates

The ongoing COVID-19 pandemic may affect our ability to conduct our ongoing clinical trials, delay the initiation of planned and future clinical trials, disrupt regulatory activities, or have other adverse effects on our business and operations. In addition, this pandemic has caused substantial disruption in the financial markets and may adversely impact economies worldwide, both of which could result in adverse effects on our business and operations.

The COVID-19 outbreak and government measures taken in response have had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. The future progression of the outbreak and its effects on our business and operations are uncertain.

We and our third-party contract manufacturers, contract research organizations and clinical sites may experience disruptions in supply of product candidates and/or procuring items that are essential for our research and development activities, including raw materials used in the manufacturing of our product candidates, medical and laboratory supplies used in our clinical trials or preclinical studies or animals that are used for preclinical testing, in each case, for which there may be shortages because of ongoing efforts to address the outbreak. For instance, we experienced a delay of supply of raw materials necessary to manufacture CPI-0610 from one of our contract manufacturers in China. We also experienced a delay of supply of drug substance necessary to manufacture CPI-0209 from one of our contract manufacturers in India. While these delays have not materially impacted our overall manufacturing supply chain operations to date, and we continue to explore back up or alternative sources of supply, any future disruption in the supply chain from the COVID-19 outbreak, or any potential future outbreak could have a material adverse impact on our clinical trial plans and business operations.

Additionally, we have enrolled, and will seek to enroll, cancer patients in our clinical trials at sites located both in the United States and internationally. Most of our clinical trial sites are in areas affected by COVID-19 and, as a result, our trials are being impacted. For example, MANIFEST clinical trial enrollment has been impacted by COVID-19. Patient enrollment in MANIFEST began to slow toward the end of the first quarter of 2020, and several sites have informed us that they have temporarily halted enrollment due to the pandemic. We cannot predict how long enrollment may be delayed. In addition, even if sites are actively recruiting, we may face difficulties recruiting or retaining patients in our ongoing and planned clinical trials if patients are affected by the virus or are fearful of visiting or traveling to our clinical trial sites because of the outbreak. Prolonged delays or closure to enrollment in our trials or patient discontinuations could have a material adverse impact on our clinical trial plans and timelines. In addition, our ability to collect all data requested of patients enrolled in our clinical trials during this pandemic is being impacted to varying degrees by COVID-19. Clinical trial data collection generally continues for each of our clinical trials, but at a slower pace, and in some instances, we encounter disruption of collection of complete study data. This could have a material adverse impact on our data analysis. In addition, while we are currently aiming to initiate our Phase 3 clinical trial of CPI-0610 for the treatment of MF in the second half of 2020, this timeline could be delayed if sites are unable or unwilling to initiate a new trial, or if other factors relevant to the pandemic render this impracticable.

The response to the COVID-19 pandemic may redirect resources with respect to regulatory and intellectual property matters in a way that would adversely impact our ability to progress regulatory approvals and protect our intellectual property. In addition, we may face impediments to regulatory meetings and approvals due to measures intended to limit in-person interactions.

Any negative impact that the COVID-19 outbreak has on the ability of our suppliers to provide materials for our product candidates or on recruiting or retaining patients in our clinical trials or our ability to collect patient data could cause costly delays to clinical trial activities, which could adversely affect our ability to obtain regulatory approval for and to commercialize our product candidates, increase our operating expenses, and have a material adverse effect on our financial results.

Additionally, the impact of the COVID-19 outbreak in Massachusetts resulted in a temporary shut-down of our Cambridge research facility. While we began reopening our facilities to laboratory personnel in May 2020, not all employees have returned to our facility and we cannot be certain that we will not close our facilities again in the future as a result of the COVID-19 outbreak. Additional closures may substantially impact our discovery and translational activities and may delay the experimentation needed to identify novel product candidate targets, prosecute such targets, identify development candidates for such targets and identify biomarkers that inform the potential clinical development paths for such targets. Moreover, discovery and implementation of clinical biomarker assays for ongoing clinical trials may be delayed. Furthermore, any negative impact that the outbreak has on the ability of our contract research organizations to deliver data sets and execute on experimentation could cause substantial delays for our discovery activities and materially impact our ability to fuel our pipeline with new product candidates.

Any negative impact that the COVID-19 pandemic has on recruiting or retaining patients in our clinical trials, obtaining complete clinical trial data or on the ability of our suppliers to provide materials for our product candidates could cause additional delays to clinical trial and developmental activities, which could materially and adversely affect our ability to obtain regulatory approval for and to commercialize our product candidates, increase our operating expenses, affect our ability to raise additional capital, and have a material adverse effect on our financial results.

The COVID-19 pandemic has already caused significant disruptions in the financial markets, and may continue to cause such disruptions, which could impact our ability to raise additional funds through public offerings and may also impact the volatility of our stock price and trading in our stock. Moreover, the pandemic has also significantly impacted economies worldwide, which could result in adverse effects on our business and operations. We cannot be certain what the overall impact of the COVID-19 pandemic will be on our business. It has the potential to adversely affect our business, financial condition, results of operations, and prospects.

Our approach to the discovery and development of product candidates based on the inhibition of epigenetic regulators by small molecules is an emerging field, and we do not know whether we will be able to successfully develop any products.

The discovery and development of small molecules that inhibit epigenetic regulators to restore normal gene expression is an emerging field, and the scientific discoveries that form the basis for our efforts to discover and develop product candidates are relatively new.

Although epigenetic regulation of gene expression plays an essential role in biological function, few drugs premised on the inhibition of epigenetic regulators have been developed.

Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must conduct extensive clinical trials to demonstrate the safety and efficacy of such product candidate in humans. We have not yet begun or completed a pivotal clinical trial of any product candidate. Clinical trials may fail to demonstrate that our product candidates are safe for humans and effective for indicated uses. Even if the clinical trials are successful, changes in marketing approval policies during the development period, changes in or the enactment or promulgation of additional statutes, regulations or guidance or changes in regulatory review for each submitted product application may cause delays in the approval or rejection of an application. Regulatory authorities have substantial discretion in the approval process and may cause delays in the approval or rejection of an application. As a result of these factors, it is more difficult for us to predict the time and cost of product candidate development, and we cannot predict whether the application of our epigenetic platform, or any similar or competitive epigenetic platforms, will result in the development and regulatory approval of any products. There can be no assurance that any development problems we experience in the future related to our epigenetics platform or any of our research programs will not cause significant delays or unanticipated costs, or that such development problems can be solved.

In addition, adverse developments in preclinical studies or clinical trials conducted by others of epigenetic product candidates or adverse events in patients treated with epigenetic products may cause the FDA or other regulatory agencies to require modifications to clinical trials of epigenetic product candidates, revise the requirements for approval of epigenetic product candidates or limit the use of epigenetic products, any of which could materially harm our business. Moreover, there have been significant adverse side effects in clinical trials of epigenetic product candidates of our competitors. For example, one such competitor reported that some patients in its Phase 1 clinical trial of an EZH2 inhibitor had developed secondary hematological malignancies following treatment. This same company previously reported that in the course of the preclinical safety studies of its EZH2 inhibitor, it had observed the development of lymphoma in juvenile rats at higher doses than the labeled dose for adult humans. We have no clinical data from our studies to date to suggest that patients are likely to experience similar side effects with our product candidates that inhibit EZH2. However, due to concerns regarding hematological malignancies, the FDA previously inquired about our plans for typical long-term toxicology studies of CPI-1205, and required that we include the development of a rare leukemia as a potential risk in the informed consent for our CPI-1205 and CPI-0209 trials. The FDA required us to update the investigator’s brochure and informed consent for our trials of CPI-1205 and the investigator’s brochure and the study protocol for CPI-0209 to include the risk of the development of T-cell lymphoma. As per FDA guidance, we have conducted a long-term toxicology study in rats, to explore whether the development of lymphoma is associated with exposure to these product candidates. The final reports from the 90-day repeat-dose toxicology study indicated once daily oral administration of CPI-1205 in the main study group rats resulted in malignant T-cell lymphoma in four out of ten female rats in the high dose (300 mg/kg/day) group. This finding was not observed in male rats. Although lymphoma can occur spontaneously in young rats, these findings were considered related to administration of CPI-1205 due to the high incidence in the females at 300 mg/kg/day relative to controls. As of May 1, 2020, a total of 194 patients have been treated with CPI-1205 in clinical trials. Based on a review of all treatment-emergent adverse events reported by 194 patients as of May 1, 2020, there have been no findings of secondary hematological malignancies. We have notified the FDA of these preclinical toxicology findings and have updated our investigator brochure and informed consent form for CPI-1205 to include information about the findings of the toxicology study.

Adverse events in our or our competitors’ preclinical studies and/or clinical trials of epigenetic product candidates, even if not ultimately attributable to the product candidate under exploration, and the resulting negative publicity, could result in increased governmental regulation, unfavorable public perception, inadequate acceptance in the medical community, potential regulatory delays in the testing or approval of our product candidates and any additional product candidates that we may identify and develop, stricter labeling requirements for those product candidates that are approved, and a decrease in demand for any such product candidates.

Any of these factors may prevent us from completing our preclinical studies, completing any clinical trials that we may initiate or commercializing any product candidates we may develop, on a timely or profitable basis, if at all.

We are early in our development efforts. If we are unable to commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.

We are early in our development efforts. We are currently developing CPI-0610 for the treatment of myelofibrosis, or MF, in a Phase 2 clinical trial and a Phase 1/2 clinical trial for our second generation EZH2 inhibitor CPI-0209. Additional product candidates are still in preclinical development. We recently announced that we will not be advancing CPI-1205 beyond the ongoing clinical trial. We have invested substantially efforts and financial resources in our integrated epigenetics platform to discover and develop new drugs that selectively modulate gene expression that may lead to the killing or reprogramming of cancer cells or result in anti-tumor immune activity. Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates. The success of our product candidates will depend on several factors, including the following:

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successfully completing preclinical studies and clinical trials;

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expanding and maintaining a workforce of experienced scientists and others with relevant experience to continue to develop our product candidates;

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successfully applying for and receiving marketing approvals from applicable regulatory authorities;

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obtaining and maintaining intellectual property protection and regulatory exclusivity for our product candidates;

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making arrangements with third-party manufacturers for, or establishing, commercial manufacturing capabilities;

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establishing sales, marketing and distribution capabilities and successfully launching commercial sales of the products, if and when approved, whether alone or in collaboration with others;

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acceptance of the products, if and when approved, by patients, the medical community and third-party payors;

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effectively competing with other therapies;

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obtaining and maintaining coverage, adequate pricing and adequate reimbursement from third-party payors, including government payors;

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maintaining, enforcing, defending and protecting our rights in our intellectual property portfolio;

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not infringing, misappropriating or otherwise violating others’ intellectual property or proprietary rights; and

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maintaining a continued acceptable safety profile of the products following approval.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully develop and commercialize our product candidates, which would materially harm our business.

We may not be successful in our efforts to use our product platform to build a pipeline of product candidates.

One element of our strategy to date has been to use our integrated epigenetics product platform to build a pipeline of small molecule product candidates that selectively modulate gene expression in tumor and immune cells to drive anti-tumor activity and progress these product candidates through clinical development for the treatment of a variety of different types of cancer.

We may not be able to identify additional compelling potential product candidates. Even if we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical development, including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely to receive marketing approval and achieve market acceptance. If we do not successfully develop and commercialize product candidates based upon our technological approach, we will not be able to obtain product revenues in future periods, which likely would result in significant harm to our financial position and adversely affect our stock price.

Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

We have product candidates in clinical development and preclinical development. The risk of failure for each of our product candidates is high. It is impossible to predict when or if any of our product candidates will prove effective or safe in humans or will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans.

Product candidates are subject to continued preclinical safety studies, which may be conducted concurrent with our clinical testing. The outcomes of these safety studies may delay the launch of or enrollment in future clinical trials.

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. Furthermore, the failure of any of our product candidates to demonstrate safety and efficacy in any clinical trial could negatively impact the perception of our other product candidates and/or cause the FDA or other regulatory authorities to require additional testing before approving any of our product candidates. In addition, results from compassionate use protocols or investigator-sponsored trials may not be confirmed in company-sponsored trials and/or may negatively impact the prospects for our programs.

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:

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regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

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we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

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clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

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we may be unable to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful;

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preclinical testing may produce results based on which we may decide, or regulators may require us, to conduct additional preclinical studies before we proceed with certain clinical trials, limit the scope of our clinical trials, halt ongoing clinical trials or abandon product development programs;

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the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate;

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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;

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we may amend our protocols or suspend or terminate clinical trials of our product candidates for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

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regulators or IRBs may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;

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clinical or regulatory developments with competitive product candidates could impact our clinical trial enrollment and/or requirements, costs and timelines for potential approval of our own product candidates;

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regulators or IRBs may require us to perform additional or unanticipated clinical trials to obtain approval or we may be subject to additional post-marketing testing requirements to maintain regulatory approval;

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regulators may revise the requirements for approving our product candidates, or such requirements may not be as we anticipate;

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the cost of clinical trials of our product candidates may be greater than we anticipate;

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the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be delayed, insufficient or inadequate;

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our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs to suspend or terminate the trials; and

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regulators may withdraw their approval of a product or impose restrictions on its distribution, such as in the form of a risk evaluation and mitigation strategy, or REMS.

We may use new or novel endpoints or methodologies and the FDA or other regulatory authorities may not consider the endpoints of our clinical trials to provide clinically meaningful results. Even if applicable regulatory authorities do not object to our proposed endpoints in an earlier stage clinical trial, such regulatory authorities may require evaluation of additional or different clinical endpoints in later-stage clinical trials. Even if the FDA does find our clinical trial success criteria to be sufficiently validated and clinically meaningful, we may not achieve the pre-specified endpoint to a degree of statistical significance in any pivotal or other clinical trials we may conduct for our product candidates. Further, even if we do achieve the pre-specified criteria, our trials may produce results that are unpredictable or inconsistent with the results of the more traditional efficacy endpoints in the trial. The FDA also could give overriding weight to other efficacy endpoints over a primary endpoint, even if we achieve statistically significant results on that primary endpoint, if we do not do so on our secondary efficacy endpoints. The FDA also weighs the benefits of a product against its risks and the FDA may view the efficacy results in the context of safety as not being supportive of approval. Other regulatory authorities in Europe and other countries may make similar findings with respect to these endpoints.

If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:

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be delayed in obtaining marketing approval for our product candidates;

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not obtain marketing approval at all;

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obtain approval for indications or patient populations that are not as broad as intended or desired;

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obtain approval with labeling or a REMS that includes significant use or distribution restrictions or safety warnings;

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be subject to additional post-marketing testing requirements; or

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have the product removed from the market after obtaining marketing approval.

Our product development costs will also increase if we experience delays in testing or in obtaining marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. We may also determine to change the design or protocol of one or more of our clinical trials, including to add additional arms or patient populations, which could result in increased costs and expenses and/or delays. Significant preclinical study or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or similar regulatory authorities outside of the United States. In particular, because certain of our products may be focused on specific patient populations, our ability to enroll eligible patients may be limited or may result in slower enrollment than we anticipate. In addition, some of our competitors have ongoing clinical trials for product candidates that may treat the broader patient populations within which our product candidates are being developed for the treatment of a subset of identifiable patients with cancer and other diseases, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates.

Patient enrollment is affected by a variety of other factors, including:

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the prevalence and severity of the disease under investigation;

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the eligibility criteria for the trial in question;

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the perceived risks and benefits of the product candidate under trial;

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the existence of existing treatments for the indications for which we are conducting clinical trials;

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the efforts to facilitate timely enrollment in clinical trials;

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the patient referral practices of physicians;

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the ability to monitor patients adequately during and after treatment;

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the proximity and availability of clinical trial sites for prospective patients;

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the conducting of clinical trials by competitors for product candidates that treat the same indications as our product candidates;

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the ability to identify specific patient population for biomarker-defined trial cohort(s); and

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the cost to, or lack of adequate compensation for, prospective patients.

Most of our clinical trial sites are in areas affected by COVID-19 and, as a result, our trials are being impacted. For example, MANIFEST clinical trial enrollment has been impacted by COVID-19. Patient enrollment in MANIFEST began to slow toward the end of the first quarter of 2020, and several sites have informed us that they have temporarily halted enrollment due to the pandemic. We cannot predict how long enrollment may be delayed.

Our inability to locate and enroll a sufficient number of patients for our clinical trials would result in significant delays, could require us to abandon one or more clinical trials altogether and could delay or prevent our receipt of necessary regulatory approvals. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing.

If serious adverse events or unacceptable side effects are identified during the development of our product candidates, we may need to abandon or limit our development of some of our product candidates.

If our product candidates, either alone or in combination with other therapeutics, are associated with serious adverse events or undesirable side effects or unacceptable drug-drug interactions in clinical trials or have characteristics that are unexpected in clinical trials or preclinical testing, we may need to abandon their development or limit development to more narrow uses or subpopulations in which the serious adverse events, undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. In pharmaceutical development, many compounds that initially show promise in early-stage or clinical testing for treating cancer are later found to cause side effects that prevent further development of the compound. In addition, if third parties manufacture or use our product candidates without our permission, and generate adverse events or unacceptable side effects, this could also have an adverse impact on our development efforts.

We are currently pursuing the development of our product candidates in combination with other approved therapeutics. If the FDA revokes approval of any such therapeutic, or if safety, efficacy, manufacturing or supply issues arise with any therapeutic that we use in combination with one of our product candidates in the future, we may be unable to further develop and/or market our product candidate or we may experience significant regulatory delays or supply shortages, and our business could be materially harmed.

We are pursuing the development of a Phase 2 clinical trial of CPI-0610 as a monotherapy or in combination with ruxolitinib, which is marketed by Incyte, Inc. and is currently approved to treat intermediate or high-risk MF. We may commence additional clinical trials of our product candidates in combination with other approved therapeutics, including, our planned pivotal clinical trial of CPI-0610 in combination with ruxolitinib for the treatment of MF. We may also seek to develop our product candidates in combination with other therapeutics in the future.

We did not develop or obtain regulatory approval for, and we do not manufacture or sell, any of these approved therapeutics. In addition, these combinations have not been tested before and may, among other things, fail to demonstrate synergistic activity, may fail to achieve superior outcomes relative to the use of single agents or other combination therapies, may exacerbate adverse events associated with one of our product candidates when used as monotherapy or may fail to demonstrate sufficient safety or efficacy traits in clinical trials to enable us to complete those clinical trials or obtain marketing approval for the combination therapy.

If the FDA revokes its approval of any of these therapeutics, we will not be able to continue clinical development of or market CPI-0610 or any other product candidate in combination with such revoked therapeutic. If safety or efficacy issues arise with these or any other therapeutics that we seek to combine with our product candidates in the future, we may experience significant regulatory delays, and the FDA may require us to redesign or terminate the applicable clinical trials. Moreover, if these therapeutics were to receive regulatory approval in combination with a different therapeutic in any indication for which we are pursuing approval, such approval could impact the feasibility and design of any subsequent clinical trials that we may seek to conduct evaluating CPI-0610 or any other product candidate in combination with such therapeutic. If manufacturing, cost or other issues result in a supply shortage of this therapeutic or any other combination therapeutics, we may not be able to complete clinical development of CPI-0610 on our current timeline or at all, or any other product candidate we may develop in the future.

In addition, we may need, for supply, data referencing or other purposes, to collaborate or otherwise engage with the companies who market these approved therapeutics. If we are unable to do so on a timely basis, on acceptable terms or at all, we may have to curtail the development of a product candidate or indication, reduce or delay its development program, delay its potential commercialization or reduce the scope of any sales or marketing activities.

Even if CPI-0610, or any other product candidate, were to receive regulatory approval and be commercialized for use in combination with ruxolitinib or another therapeutic, we would continue to be subject to the risk that the FDA could revoke its approval of such therapeutic, that safety, efficacy, manufacturing, cost or supply issues could arise with one of these therapeutic agents, or that the current standard of care may be replaced. This could result in CPI-0610 or any such other product candidate, if approved, being removed from the market or being less successful commercially.

We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we focus on research programs and product candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential. In June 2020, we announced that we plan to discontinue development of CPI-1205 after completion of ProSTAR and to prioritize further clinical development of CPI-0209. The decision was based on a recent review of ProSTAR data, which we determined did not demonstrate the definitive signal of activity necessary to advance the program into pivotal studies in mCRPC. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.

We currently conduct clinical trials for product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in such locations.

We currently conduct clinical trials outside the United States. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of these data is subject to conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted and be performed by qualified investigators in accordance with ethical principles. The trial population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. In addition, while these clinical trials are subject to the applicable local laws, FDA acceptance of the data will depend on its determination that the trials also complied with all applicable U.S. laws and regulations. If the FDA does not accept the data from any trial that we conduct outside the United States, it would likely result in the need for additional trials, which would be costly and time-consuming and could delay or permanently halt our development of the applicable product candidates.

Risks Related to the Commercialization of Our Product Candidates

Even if any of our product candidates receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success, and the market opportunity for any of our product candidates, if approved, may be smaller than we estimate.

If any of our product candidates receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. For example, current cancer treatments like chemotherapy and radiation therapy are well established in the medical community, and doctors may continue to rely on these treatments. If our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

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the efficacy and potential advantages of our product candidates compared to alternative treatments;

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our ability to offer our products for sale at competitive prices;

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the clinical indications for which the product is approved;

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the convenience and ease of administration compared to alternative treatments;

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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

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the strength of marketing and distribution support;

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the timing of market introduction of competitive products;

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the availability of third-party coverage and adequate reimbursement;

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the prevalence and severity of any side effects; and

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any restrictions on the use of our products together with other medications.

Our assessment of the potential market opportunity for our product candidates is based on industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, we have not independently verified such data. Our estimates of the potential market opportunities for our product candidates include several key assumptions based on our industry knowledge, industry publications, third-party research and other surveys, which may fail to accurately reflect market opportunities. While we believe that our internal assumptions are reasonable, no independent source has verified such assumptions. If any of our assumptions or estimates, or these publications, research, surveys or studies prove to be inaccurate, then the actual market for any of our product candidates may be smaller than we expect, and as a result our product revenue may be limited and it may be more difficult for us to achieve or maintain profitability.

If we are unable to establish sales, marketing and distribution capabilities or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates if and when they are approved.

We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any product for which we have obtained marketing approval, we will need to establish a sales, marketing and distribution organization, either ourselves or through collaborations or other arrangements with third parties.

In the future, we expect to build a focused, specialty sales and marketing infrastructure to market some of our product candidates in the United States, if and when they are approved. There are risks involved with establishing our own sales, marketing and distribution capabilities. For example, recruiting and training a sales force is expensive and time-consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. These efforts may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

Factors that may inhibit our efforts to commercialize our products on our own include:

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our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;

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the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future products;

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the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

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unforeseen costs and expenses associated with creating an independent sales and marketing organization.

If we are unable to establish our own sales, marketing and distribution capabilities and enter into arrangements with third parties to perform these services, our product revenues and our profitability, if any, are likely to be lower than if we were to market, sell and distribute any products that we develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell, market and distribute our product candidates or may be unable to do so on terms that are acceptable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

We face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

The development and commercialization of new drug products is highly competitive. We face competition with respect to our current product candidates, and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the

development of products for the treatment of many of the disease indications for which we are developing our product candidates. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

Specifically, there are a large number of companies developing or marketing treatments for cancer and hematologic diseases, including many large pharmaceutical and biotechnology companies. In addition, many companies are developing cancer therapies that work by targeting epigenetic mechanisms, including through EZH2 and BET inhibition, such as AbbVie Inc., AstraZeneca PLC, BMS, CellCentric Ltd, Daiichi Sankyo Company, Eli Lilly & Company, Epizyme, Inc., GlaxoSmithKline plc, Incyte, Inc., Novartis AG, Pfizer Inc. and Zenith Epigenetics Ltd.

Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products before we do, or that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in additional challenges to our regulatory approval strategy and/or our competitors establishing a stronger market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products. Generic products are currently on the market for many of the indications that we are pursuing, and additional products are expected to become available on a generic basis over the coming years. If our product candidates achieve marketing approval, we expect that they will be priced at a significant premium over competitive generic products.

Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

If our contracted manufacturing facilities experience production issues for any reason, and/or we experience import/export issues for any reason, we may be unable to manufacture or supply clinical supplies or commercial quantities of our product candidates for a substantial amount of time, which could have a material adverse effect on our business.

We rely, and expect to continue to rely, on third parties to manufacture clinical supplies of our product candidates and commercial supplies of our products, if and when approved for marketing by applicable regulatory authorities, as well as for packaging, sterilization, storage, distribution and other production logistics. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or manufacture and release our product candidates in accordance with regulatory requirements, if there are disagreements between us and such parties, or if such parties are unable to expand capacities to support commercialization of any of our product candidates for which we obtain marketing approval, we may not be able to fulfill, or may be delayed in producing sufficient product candidates to meet, our supply requirements.

Similarly, we previously reported that we were closely monitoring our CPI-0610 supply due to potential production shortages with our manufacturers. In addition, the various manufacturing facilities with which we do business may also be affected by natural disasters, such as floods or fire, or societal disruptions or outbreaks such as the recently identified coronavirus. Further, facilities could face manufacturing issues, such as contamination or regulatory concerns following a regulatory inspection of such facility. In such instances, we may need to locate an appropriate replacement third-party facility and establish a contractual relationship, which may not be readily available or on acceptable terms, which would cause additional delay and increased expense, including as a result of additional required FDA approvals, and may have a material adverse effect on our business.

Our third-party manufacturers are subject to inspection and approval by the FDA before we can commence the manufacture and sale of any of our product candidates, and thereafter subject to FDA inspection from time to time. Failure by our third-party manufacturers to pass such inspections and otherwise satisfactorily complete the FDA approval regimen with respect to our product candidates may result in regulatory actions such as the issuance of FDA Form 483 notices of observations, warning letters or injunctions or the loss of operating licenses.

We or our third-party manufacturers may also encounter shortages in the raw materials or active pharmaceutical ingredient necessary to produce our product candidates in the quantities needed for our clinical trials or, if our product candidates are approved, in sufficient quantities for commercialization or to meet an increase in demand, as a result of capacity constraints or delays or disruptions in the market for the raw materials or active pharmaceutical ingredient, including shortages caused by the purchase of such raw

materials or active pharmaceutical ingredient by our competitors or others. The failure of us or our third-party manufacturers to obtain the raw materials or active pharmaceutical ingredient necessary to manufacture sufficient quantities of our product candidates, may have a material adverse effect on our business.

In addition, these third parties may be adversely affected by the COVID-19 pandemic. For instance, we experienced a delay of supply of raw materials necessary to manufacture CPI-0610 from one of our contract manufacturers in China. We also experienced a delay of supply of drug substance necessary to manufacture CPI-0209 from one of our contract manufacturers in India. While these delays have not materially impacted our overall manufacturing supply chain operations to date, and we continue to explore back up or alternative sources of supply, any future disruption in the supply chain from the recent COVID-19 outbreak, or any potential future outbreak could have a material adverse impact on our clinical trial plans and business operations.

Some of our manufacturing activities take place outside of the United States. In addition, with respect to clinical trial or manufacturing activities that take place outside of the United States, changes in import/export regulations or practices could impact our ability to obtain critical materials, drug substance, or product candidates across international borders. Such challenges could have a material adverse effect on our business.

Even if we are able to commercialize any product candidates, the products may become subject to unfavorable pricing regulations, third-party coverage or reimbursement practices or healthcare reform initiatives, which could harm our business.

The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drug products vary widely from country to country. Current and future legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain marketing approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval.

Our ability to commercialize any product candidates successfully also will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices and are challenging the prices charged for medical products. Coverage and reimbursement may not be available for any product that we commercialize and, even if these are available, the level of reimbursement may not be satisfactory. Reimbursement may affect the demand for, or the price of, any product candidate for which we obtain marketing approval. Obtaining and maintaining adequate reimbursement for our products may be difficult. We may be required to conduct expensive pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement relative to other therapies. If coverage and adequate reimbursement are not available or reimbursement is available only to limited levels, we may not be able to successfully commercialize any product candidate for which we obtain marketing approval.

There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by the FDA or similar regulatory authorities outside of the United States. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution expenses. Interim reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and adequate reimbursement rates from both government-funded and private payors for any approved products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.

There can be no assurance that our product candidates, even if they are approved for sale in the United States or in other countries, will be considered medically reasonable and necessary for a specific indication or cost-effective by third-party payors, or that coverage and an adequate level of reimbursement will be available or that third-party payors’ reimbursement policies will not adversely affect our ability to sell our product candidates profitably.

Product liability lawsuits against us could divert our resources and could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and use of our product candidates through compassionate use, and we will face an even greater risk if we commercially sell any products that we may develop. For example, on January 17, 2017, a participant dosed in one of the Company’s clinical trials filed a complaint against us in the United States District Court for the District of Arizona, alleging negligence, lack of informed consent, strict products liability and loss of consortium. The parties reached agreement with regards to a resolution, and the court dismissed the case with prejudice.

If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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decreased demand for any product candidates or products that we may develop;

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injury to our reputation and significant negative media attention;

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withdrawal of clinical trial participants;

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significant costs to defend any related litigation;

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substantial monetary awards to trial participants or patients;

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loss of revenue;

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reduced resources of our management to pursue our business strategy; and

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the inability to commercialize any products that we may develop.

We currently hold $10 million in product liability insurance coverage in the aggregate, with a per incident limit of $10 million, which may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

Risks Related to Our Dependence on Third Parties

We rely, and expect to continue to rely, on third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.

We currently rely on third-party clinical research organizations to conduct our ongoing Phase 1b/2 clinical trial of CPI-1205, our Phase 2 clinical trial of CPI-0610 and our Phase 1/2 clinical trial of CPI-0209, and we anticipate we would rely on third-party clinical research organizations or third-party research collaboratives to conduct future clinical trials. We expect to continue to rely on third parties, such as clinical research organizations, clinical data management organizations, medical institutions and clinical investigators, to conduct our clinical trials. These agreements might terminate for a variety of reasons, including a failure to perform by the third parties. If we need to enter into alternative arrangements, our product development activities might be delayed.

Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred to as good clinical practices, or GCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within specified timeframes. Failure to do so can result in fines, adverse publicity and civil and criminal sanctions.

If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully develop and commercialize our product candidates. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors.

We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.

We contract with third parties for the manufacture of our product candidates for preclinical and clinical testing and expect to continue to do so for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.

We do not have any manufacturing facilities, and we rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for preclinical and clinical testing, as well as for commercial manufacture if any of our product candidates receive marketing approval. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.

We also expect to rely on third-party manufacturers or third-party collaborators for the manufacture of commercial supply of any other product candidates for which we or our collaborators obtain marketing approval. We may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

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reliance on the third party for regulatory compliance and quality assurance;

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the possible breach of the manufacturing agreement by the third party;

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the possible misappropriation of our proprietary information, including our trade secrets and know-how; and

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the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

Third-party manufacturers may not be able to comply with current good manufacturing practices, or cGMP, regulations or similar regulatory requirements outside of the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.

Our product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.

Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. For example, we recently experienced a delay in batch release for CPI-0610 due to an extended testing period to rule out specification impurities. The matter was resolved and the batch was subsequently released. However, if we had been unable to release this batch of CPI-0610, our ability to timely complete the MANIFEST clinical trial may have been materially affected. In addition to our primary supply chain, we currently do not have alternative suppliers established to provide secondary sources of bulk starting materials and drug substance. If our current contract manufacturers or sources of drug substance cannot perform as agreed, we may be required to replace such manufacturers. Although we believe that there are several potential alternative manufacturers who could manufacture our product candidates, we may incur added costs and delays in identifying and qualifying any such replacement.

Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.

We may enter into collaborations with third parties for the development or commercialization of our product candidates. If our collaborations are not successful, we may not be able to capitalize on the market potential of these product candidates and our business could be adversely affected.

We may utilize collaboration, distribution and other marketing arrangements with third parties to develop and commercialize CPI-0610, CPI-0209 and/or any other product candidates for which we obtain marketing approval in markets outside the United States. We also may enter into arrangements with third parties to perform these services in the United States if we do not establish our own sales, marketing and distribution capabilities in the United States for our product candidates or if we determine that such third-party arrangements are otherwise beneficial. We also may seek third-party collaborators for development and commercialization of other product candidates. Our likely collaborators for any sales, marketing, distribution, development, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. We will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from these arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements.

Collaborations that we enter into may pose a number of risks, including the following:

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collaborators have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations;

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collaborators may not perform their obligations as expected;

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collaborators may not pursue development of our product candidates or may elect not to continue or renew development programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;

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collaborators may not pursue commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew commercialization programs based on results of clinical trials or other studies, changes in the collaborators’ strategic focus or available funding, or external factors, such as an acquisition, that may divert resources or create competing priorities;

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collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates and products if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

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product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates;

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a collaborator may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product;

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a collaborator with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products;

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disagreements with collaborators, including disagreements over intellectual property or proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;

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collaborators may not properly obtain, maintain, enforce, defend or protect our intellectual property or proprietary rights or may use our proprietary information in such a way as to potentially lead to disputes or legal proceedings that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;

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collaborators may infringe, misappropriate or otherwise violate the intellectual property or proprietary rights of third parties, which may expose us to litigation and potential liability; and

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collaborations may be terminated for the convenience of the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.

Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. If any collaborations that we enter into do not result in the successful development and commercialization of products or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under these agreements, our development of our product candidates could be delayed and we may need additional resources to develop our product candidates. All of the risks relating to product development, regulatory approval and commercialization described herein also apply to the activities of our collaborators.

Additionally, subject to its contractual obligations to us, if a collaborator of ours is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by us. If one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our perception in the business and financial communities could be adversely affected.

If we are not able to establish collaborations, we may have to alter our development and commercialization plans and our business could be adversely affected.

For some of our product candidates, we may decide to collaborate with pharmaceutical or biotechnology companies for the development and potential commercialization of those product candidates. We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. We may also be restricted under future license agreements from entering into agreements on certain terms with potential collaborators. Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical and biotechnology companies that have resulted in a reduced number of potential future collaborators.

If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms or at all, we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to fund and undertake development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates or bring them to market or continue to develop our product platform.

If we are required by FDA to develop a companion diagnostic to identify patients who are likely to benefit from a therapeutic product, we will by reliant on third parties to develop a diagnostic and their failure to do so may delay or prevent approval of the therapeutic product.

In July 2014, the FDA issued final guidance that stated that if safe and effective use of a therapeutic depends on an in vitro diagnostic, then the FDA generally will not approve the therapeutic unless the FDA approves or clears this “in vitro companion diagnostic device” at the same time that the FDA approves the therapeutic. We may be required by FDA to develop companion diagnostics to identify patients who are likely to benefit from our therapeutic product candidates. We expect to rely on third parties for much of the development, testing and manufacturing of such diagnostics. We will likely rely on such third parties to also obtain any required regulatory approval for and then commercially supply such diagnostics. We have very limited experience in the development of diagnostics and, even with the help of third parties with greater experience, may fail to obtain the required diagnostic product marketing approval, which could prevent or delay approval of the therapeutic product. Because we expect to rely on third parties for various aspects of the development, testing and manufacture, as well as for regulatory approval for and commercial supply, of our diagnostics, the commercial success of any of our product candidates that require a diagnostic will be tied to and dependent on the continued ability of such third parties to make the diagnostic commercially available on reasonable terms in the relevant geographies.

Risks Related to Our Intellectual Property

If we are unable to obtain, maintain, enforce and protect patent protection for our technology and product candidates or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully develop and commercialize our technology and product candidates may be adversely affected.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to any proprietary technology and product candidates we develop, including CPI-0610 and CPI-0209. We seek to protect our proprietary position by filing patent applications in the United States and abroad related to our technologies and product candidates that are important to our business and by in-licensing intellectual property related to such technologies and product candidates. If we are unable to obtain or maintain patent protection with respect to any proprietary technology or product candidate, our business, financial condition, results of operations and prospects could be materially harmed. In particular, we do not own or in-license any patented intellectual property related to our epigenetics platform. Accordingly, we may not be able to prevent third parties from developing and commercializing a similar platform or technology to compete with us.

The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, defend or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to maintain, enforce and defend the patents, covering technology that we license from third parties. Therefore, these in-licensed patents and applications may not be prepared, filed, prosecuted, maintained, defended and enforced in a manner consistent with the best interests of our business.

Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.

The patent position of pharmaceutical and biotechnology companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the scope of patent protection outside of the United States is uncertain and laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. With respect to both owned and in-licensed patent rights, we cannot predict whether the patent applications we and our licensors are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors. In addition, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not published at all. Therefore, neither we nor our licensors can know with certainty whether either we or our licensors were the first to make the inventions claimed in the patents and patent applications we own or in-license now or in the future, or that either we or our licensors were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our owned and in-licensed patent rights are highly uncertain.

Moreover, our owned and in-licensed pending and future patent applications may not result in patents being issued which protect our technology and product candidates, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents and our ability to obtain, protect, maintain, defend and enforce our patent rights, narrow the scope of our patent protection and, more generally, could affect the value or narrow the scope of our patent rights.

Moreover, we or our licensors may be subject to a third-party reissuance submission of prior art to the United States Patent and Trademark Office, or USPTO, or become involved in opposition, derivation, revocation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or product candidates and compete directly with us, without payment to us. If the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. Furthermore, such proceedings also may result in substantial cost and require significant time from our management and employees, even if the eventual outcome is favorable to us.

Additionally, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if our owned and in-licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and in-licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates. Such proceedings also may result in substantial cost and require significant time from our management and employees, even if the eventual outcome is favorable to us. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. Furthermore, our competitors may be able to circumvent our owned or in-licensed patents by developing similar or alternative technologies or products in a non-infringing manner. As a result, our owned and in-licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing technology and products similar or identical to any of our technology and product candidates.

Moreover, some of our owned and in-licensed patents and patent applications are, and may in the future be, co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owners’ interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owner of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

Furthermore, our owned and in-licensed patents may be subject to a reservation of rights by one or more third parties. For example, the research resulting in certain of our in-licensed patent rights and technology was funded in part by the U.S. government. As a result, the government may have certain rights, such as march-in rights, to such patent rights and technology. When new technologies are developed with government funding, the government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the government to use the invention for non-commercial purposes. These rights may permit the government to disclose our confidential information to third parties and to exercise march-in rights to use or allow third parties to use our licensed technology. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions substantially in the United States. Any exercise by the government of such rights could harm our competitive position, business, financial condition, results of operations, and prospects. In addition, under the Research, Development and Commercialization Agreement, or the LLS Agreement, with The Leukemia & Lymphoma Society, or LLS, we are required to use commercially reasonable efforts to research, develop and commercialize CPI-0610. If we fail to meet the foregoing obligation, then, under certain circumstances, LLS may terminate the LLS Agreement and may exercise the exclusive, sublicensable and worldwide license we granted LLS in and to certain of our intellectual property to develop and commercialize CPI-0610.

If we do not obtain patent term extension for any product candidates we may develop, our business may be materially harmed.

In the United States, depending upon the timing, duration, and specifics of any FDA marketing approval of a product candidate, the patent term of a patent that covers an FDA-approved drug may be eligible for limited patent term extension, which permits patent term restoration as compensation for the patent term lost during the FDA regulatory review process. The Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. Patent extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, and only one patent applicable to an approved drug may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. Similar provisions are available in Europe and other non-United States jurisdictions to extend the term of a patent that covers an approved drug. While, in the future, if and when our product candidates receive FDA approval, we expect to apply for patent term extensions on patents covering those product candidates, there is no guarantee that the applicable authorities will agree with our assessment of whether such extensions should be granted, and even if granted, the length of such extensions. We may not be granted an extension because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of the relevant patents, or otherwise failing to satisfy applicable requirements. If we are unable to obtain any patent term extension or the term of any such extension is less than we request, our competitors may obtain approval of competing products following the expiration of our patent rights, and our business, financial condition, results of operations, and prospects could be materially harmed.

Changes to patent laws in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our products.

Changes in either the patent laws or interpretation of patent laws in the United States, including patent reform legislation such as the Leahy-Smith America Invents Act, or the Leahy-Smith Act, could increase the uncertainties and costs surrounding the prosecution of our owned and in-licensed patent applications and the maintenance, enforcement or defense of our owned and in-licensed issued patents. The Leahy-Smith Act includes a number of significant changes to United States patent law. These changes include provisions that affect the way patent applications are prosecuted, redefine prior art, provide more efficient and cost-effective avenues for competitors to challenge the validity of patents, and enable third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent at USPTO-administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith Act, the United States transitioned to a first-to-file system in which, assuming that the other statutory requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. As such, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

In addition, the patent positions of companies in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on our patent rights and our ability to protect, defend and enforce our patent rights in the future.

We or our licensors may become involved in lawsuits to protect or enforce our patent or other intellectual property rights, which could be expensive, time-consuming and unsuccessful.

Competitors and other third parties may infringe, misappropriate or otherwise violate our or our licensor’s issued patents or other intellectual property. As a result, we or our licensors may need to file infringement, misappropriation or other intellectual property related claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke such parties to assert counterclaims against us alleging that we infringe, misappropriate or otherwise violate their intellectual property. In addition, in a patent infringement proceeding, such parties could counterclaim that the patents we or our licensors have asserted are invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may institute such claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings).

An adverse result in any such proceeding could put one or more of our owned or in-licensed patents at risk of being invalidated or interpreted narrowly, and could put any of our owned or in-licensed patent applications at risk of not yielding an issued patent. A court may also refuse to stop the third party from using the technology at issue in a proceeding on the grounds that our owned or in-licensed patents do not cover such technology. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information or trade secrets could be compromised by disclosure during this type of litigation. Any of the foregoing could allow such third parties to develop and commercialize competing technologies and products and have a material adverse impact on our business, financial condition, results of operations, and prospects.

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing, misappropriating or otherwise violating the intellectual property and proprietary rights of third parties. There is considerable patent and other intellectual property litigation in the pharmaceutical and biotechnology industries. We may become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our technology and product candidates, including interference proceedings, post grant review, inter partes review, and derivation proceedings before the USPTO and similar proceedings in foreign jurisdictions such as oppositions before the European Patent Office.

The legal threshold for initiating litigation or contested proceedings is low, so that even lawsuits or proceedings with a low probability of success might be initiated and require significant resources to defend. Litigation and contested proceedings can also be expensive and time-consuming, and our adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we can. The risks of being involved in such litigation and proceedings may increase if and as our product candidates near commercialization and as we gain the greater visibility associated with being a public company. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of merit. We may not be aware of all such intellectual property rights potentially relating to our technology and product candidates and their uses. Thus, we do not know with certainty that our technology and product candidates, or our development and commercialization thereof, do not and will not infringe, misappropriate or otherwise violate any third party’s intellectual property.

Even if we believe that third party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of misappropriation, infringement, validity, enforceability, or priority. A court of competent jurisdiction could hold these third-party patents are valid, enforceable, and infringed, which could materially and adversely affect our ability to commercialize any technology or product candidate covered by the asserted third-party patents. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to infringe, misappropriate or otherwise

violate a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing, manufacturing and marketing our technology and product candidates. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us and could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or product. In addition, we could be found liable for significant monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right and could be forced to indemnify our customers or collaborators. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. In addition, we may be forced to redesign our product candidates, seek new regulatory approvals and indemnify third parties pursuant to contractual agreements. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar material adverse effect on our business, financial condition, results of operations, and prospects.

Intellectual property litigation or other legal proceedings relating to intellectual property could cause us to spend substantial resources and distract our personnel from their normal responsibilities.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and may also have an advantage in such proceedings due to their more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of intellectual property litigation or other proceedings could compromise our ability to compete in the marketplace.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance, renewal and annuity fees and various other government fees on any issued patent and pending patent application must be paid to the USPTO and foreign patent agencies in several stages or annually over the lifetime of our owned and in-licensed patents and patent applications. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In certain circumstances, we rely on our licensing partners to pay these fees to, or comply with the procedural and documentary rules of, the relevant patent agency. With respect to our patents, we rely on an annuity service to remind us of the due dates and to make payment after we instruct them to do so. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In such an event, potential competitors might be able to enter the market with similar or identical products or technology. If we or our licensors fail to maintain the patents and patent applications covering our product candidates, it would have a material adverse effect on our business, financial condition, results of operations, and prospects.

If we fail to comply with our obligations in our intellectual property licenses and funding arrangements with third parties, we could lose rights that are important to our business.

We are party to license and funding agreements that impose, and we may enter into additional licensing and funding arrangements with third parties that may impose, diligence, development and commercialization timelines, milestone payment, royalty, insurance and other obligations on us. Under our existing licensing and funding agreements, we are obligated to pay royalties on net product sales of product candidates or related technologies to the extent they are covered by the agreements. If we fail to comply with such obligations under current or future license and funding agreements, our counterparties may have the right to terminate these agreements or require us to grant them certain rights. Such an occurrence could materially adversely affect the value of any product candidate being developed under any such agreement. For example, under the LLS Agreement, we are required to use commercially reasonable efforts to research, develop and commercialize CPI-0610. If we fail to meet the foregoing obligation, then, under certain circumstances, LLS may terminate the LLS Agreement and may exercise the exclusive, sublicensable and worldwide license we granted LLS in and to certain of our intellectual property to develop and commercialize CPI-0610. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or reinstated agreements with less favorable terms, or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology, which would have a material adverse effect on our business, financial condition, results of operations, and prospects.

Additionally, these and other license agreements may not provide exclusive rights to use the licensed intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and products in the future. As a result, we may not be able to prevent competitors from developing and commercializing competitive products and technology in fields of use and territories not included in such agreements. In addition, we may not have the right to control the preparation, filing, prosecution, maintenance, enforcement, and defense of patents and patent applications covering the technology that we license from third parties. Therefore, we cannot be certain that these patents and patent applications will be prepared, filed, prosecuted, maintained, and defended in a manner consistent with the best interests of our business. If our licensors fail to prosecute, maintain, enforce, and defend such patents, or lose rights to those patents or patent applications, the rights we have licensed may be reduced or eliminated, and our right to develop and commercialize any of our products that are the subject of such licensed rights could be adversely affected.

We may need to obtain additional licenses from others to advance our research or allow commercialization of our product candidates. It is possible that we may be unable to obtain additional licenses at a reasonable cost or on reasonable terms, if at all, or such licenses may be non-exclusive. The licensing or acquisition of third-party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all.

If we are unable to obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may be required to expend significant time and resources to redesign our technology, product candidates, or the methods for manufacturing them or to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected technology and product candidates, which could harm our business, financial condition, results of operations, and prospects significantly.

Disputes may arise regarding intellectual property subject to a licensing agreement, including:

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the scope of rights granted under the license agreement and other interpretation related issues;

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the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

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the sublicensing of patent and other rights under our collaborative development relationships;

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our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

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the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and

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the priority of invention of patented technology.

In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected technology and product candidates, which could have a material adverse effect on our business, financial conditions, results of operations, and prospects.

Our licensors may have relied on third-party consultants or collaborators or on funds from third parties such that our licensors are not the sole and exclusive owners of the patents and patent applications we in-licensed. If other third parties have ownership rights to our in-licensed patents, they may be able to license such patents to our competitors, and our competitors could market competing products and technology. This could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

In spite of our best efforts, our licensors might conclude that we have materially breached our license agreements and might therefore terminate the license agreements, thereby removing our ability to develop and commercialize product candidates and technology covered by these license agreements. If these in-licenses are terminated, or if the underlying intellectual property fails to provide the intended exclusivity, competitors would have the freedom to seek regulatory approval of, and to market, products and technologies identical to ours. This could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

We may not be able to protect our intellectual property and proprietary rights throughout the world.

Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection or licenses but enforcement is not as strong as that in the United States. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, and prospects may be adversely affected.

We may be subject to claims by third parties asserting that our employees, consultants, contractors or we have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

Many of our employees, consultants and contractors were previously employed at universities or other pharmaceutical or biotechnology companies, including our competitors or potential competitors. Although we try to ensure that our employees and contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims.

In addition, while it is our policy to require our employees, consultants and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our intellectual property assignment agreements with them may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial conditions, results of operations, and prospects.

If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could have a material adverse effect on our competitive business position and prospects. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to commercialize our technology or products, which license may not be available on commercially reasonable terms, or at all, or such license may be non-exclusive. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to our management and employees.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for some of our technology and product candidates, we also rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect our trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. We cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary technology. Despite these efforts,

any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Detecting the disclosure or misappropriation of a trade secret and enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside of the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be materially and adversely harmed.

Intellectual property rights do not necessarily address all potential threats.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

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our epigenetics platform is not protected by any patented intellectual property, and we may not be able to develop, acquire or in-license any patentable technologies or other intellectual property related to such platform;

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we, or our license partners or current or future collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent applications that we license or may own in the future;

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we, or our license partners or current or future collaborators, might not have been the first to file patent applications covering certain of our or their inventions;

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others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or in-licensed intellectual property rights;

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it is possible that our owned and in-licensed pending patent applications or those we may own or in-license in the future will not lead to issued patents;

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issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors;

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our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

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we may not develop additional proprietary technologies that are patentable;

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the patents of others may harm our business; and

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we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.

Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters

Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, we will not be able to commercialize our product candidates, and our ability to generate revenue will be materially impaired.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, export and import are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by the EMA and similar regulatory authorities outside of the United States. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. We have not submitted an application for or received marketing approval for any of our product candidates in the United States or in any other jurisdiction.

We have only limited experience in filing and supporting the applications necessary to gain marketing approvals and expect to rely on third-party clinical research organizations or other third-party consultants or vendors to assist us in this process. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing approval also requires the

submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. New cancer drugs frequently are indicated only for patient populations that have not responded to an existing therapy or have relapsed. If any of our product candidates receives marketing approval, the accompanying label may limit the approved use of our drug in this way, which could limit sales of the product.

The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.

If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.

We may not be able to obtain orphan drug exclusivity for each of our product candidates and, even if we do, that exclusivity may not prevent the FDA or the EMA from approving other competing products.

Regulatory authorities in some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as a patient population of fewer than 200,000 individuals in the United States. For example, in November 2019, we received FDA orphan drug designation for CPI-0610 for the treatment of myelofibrosis, and in February 2020 we received EMA orphan drug designation for CPI-0610 for the treatment of myelofibrosis.

Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA or the EMA from approving another marketing application for the same drug for that time period. The applicable period is seven years in the United States and ten years in Europe. The exclusivity period in Europe can be reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

Even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. In addition, even after an orphan drug is approved, the FDA can subsequently approve the same drug for the same condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.

On August 3, 2017, the U.S. Congress passed the FDA Reauthorization Act of 2017, or FDARA. FDARA, among other things, codified the FDA’s pre-existing regulatory interpretation, to require that a drug sponsor demonstrate the clinical superiority of an orphan drug that is otherwise the same as a previously approved drug for the same rare disease in order to receive orphan drug exclusivity. The new legislation reverses prior precedent holding that the Orphan Drug Act unambiguously requires that the FDA recognize the orphan exclusivity period regardless of a showing of clinical superiority. The FDA may further reevaluate the Orphan Drug Act and its regulations and policies. We do not know if, when or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our business. Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.

A Fast Track designation by the FDA may not lead to a faster development or regulatory review or approval process.

We received Fast Track designation for CPI-0610 for the treatment of myelofibrosis in November 2018 and we may seek Fast Track designation for some of our additional product candidates. If an investigational drug is intended for the treatment of a serious or life-threatening condition and the drug demonstrates the potential to address unmet medical needs for this condition, the drug sponsor may apply for FDA Fast Track designation. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation, we cannot assure stockholders that the FDA would decide to grant it. Even if we do receive Fast Track designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may withdraw Fast Track designation if it believes that the designation is no longer supported by data from our clinical development program.

A Breakthrough Therapy designation by the FDA for our product candidates may not lead to a faster development or regulatory review or approval process, and it does not increase the likelihood that our product candidates will receive marketing approval.

We may seek a Breakthrough Therapy designation for some of our product candidates. A Breakthrough Therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For drugs and biologics that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens.

Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. Even if we receive Breakthrough Therapy designation, the receipt of such designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that the products no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Failure to obtain marketing approval in foreign jurisdictions would prevent our product candidates from being marketed abroad.

In order to market and sell our products in the European Union and many other foreign jurisdictions, we or our potential third-party collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside of the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside of the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country. We or our potential third-party collaborators may not obtain approvals from regulatory authorities outside of the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside of the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in other countries. We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market.

Additionally, on June 23, 2016, the electorate in the United Kingdom voted in favor of leaving the European Union, commonly referred to as Brexit. Following protracted negotiations, the United Kingdom left the European Union on January 31, 2020. Under the withdrawal agreement, there is a transitional period until December 31, 2020 (extendable up to two years). Discussions between the United Kingdom and the European Union have so far mainly focused on finalizing withdrawal issues and transition agreements but have been extremely difficult to date. To date, only an outline of a trade agreement has been reached. Much remains open but the Prime Minister has indicated that the United Kingdom will not seek to extend the transitional period beyond the end of 2020. If no trade agreement has been reached before the end of the transitional period, there may be significant market and economic disruption. The Prime Minister has also indicated that the UK will not accept high regulatory alignment with the EU.

Since the regulatory framework for pharmaceutical products in the United Kingdom covering quality, safety, and efficacy of pharmaceutical products, clinical trials, marketing authorization, commercial sales, and distribution of pharmaceutical products is derived from European Union directives and regulations, Brexit could materially impact the future regulatory regime that applies to products and the approval of product candidates in the United Kingdom. Any delay in obtaining, or an inability to obtain, any marketing approvals, as a result of Brexit or otherwise, may force us to restrict or delay efforts to seek regulatory approval in the United Kingdom and/or European Union for our product candidates, which could significantly and materially harm our business.

If we are required by the FDA to obtain approval of a companion diagnostic in connection with approval of a therapeutic product candidate, and we do not obtain or face delays in obtaining FDA approval of a diagnostic device, we will not be able to commercialize the product candidate and our ability to generate revenue will be materially impaired.

According to FDA guidance, if the FDA determines that a companion diagnostic device is essential to the safe and effective use of a novel therapeutic product or indication, the FDA generally will not approve the therapeutic product or new therapeutic product indication if the companion diagnostic is not also approved or cleared for that indication. Under the Federal Food, Drug, and Cosmetic Act, or FDCA, companion diagnostics are regulated as medical devices, and the FDA has generally required companion diagnostics intended to select the patients who will respond to cancer treatment to obtain Premarket Approval, or a PMA, for the diagnostic. The PMA process, including the gathering of clinical and preclinical data and the submission to and review by the FDA, involves a rigorous premarket review during which the applicant must prepare and provide the FDA with reasonable assurance of the device’s safety and effectiveness and information about the device and its components regarding, among other things, device design, manufacturing and labeling.

For example, a clinical trial is typically required for a PMA application and, in a small percentage of cases, the FDA may require a clinical study in support of a 510(k) submission. A manufacturer that wishes to conduct a clinical study involving the device is subject to the FDA’s IDE regulation. The IDE regulation distinguishes between significant and non-significant risk device studies and the procedures for obtaining approval to begin the study differ accordingly. Also, some types of studies are exempt from the IDE regulations. A significant risk device presents a potential for serious risk to the health, safety, or welfare of a subject. Significant risk devices are devices that are substantially important in diagnosing, curing, mitigating, or treating disease or in preventing impairment to human health. Studies of devices that pose a significant risk require both FDA and an IRB approval prior to initiation of a clinical study. Non-significant risk devices are devices that do not pose a significant risk to the human subjects. A non-significant risk device study requires only IRB approval prior to initiation of a clinical study.

Thus, a PMA is not guaranteed and may take considerable time, and the FDA may ultimately respond to a PMA submission with a “not approvable” determination based on deficiencies in the application and require additional clinical trial or other data that may be expensive and time-consuming to generate and that can substantially delay approval. As a result, if we are required by the FDA to obtain approval of a companion diagnostic for a therapeutic product candidate, and we do not obtain or there are delays in obtaining FDA approval of a diagnostic device, we may not be able to commercialize the product candidate on a timely basis or at all and our ability to generate revenue will be materially impaired.

Any product candidate for which we obtain marketing approval could be subject to post-marketing restrictions or withdrawal from the market and we may be subject to substantial penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.

Any product candidate for which we obtain marketing approval, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval, including the requirement to implement a REMS. New cancer drugs frequently are indicated only for patient populations that have not responded to an existing therapy or have relapsed. If any of our product candidates receives marketing approval, the accompanying label may limit the approved use of our drug in this way, which could limit sales of the product.

The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product, including the adoption and implementation of REMS. The FDA and other agencies, including the Department of Justice, or the DOJ, closely regulate and monitor the post-approval marketing and promotion of drugs to ensure they are marketed and distributed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA and DOJ impose stringent restrictions on manufacturers’ communications regarding off-label use, and if we do not market our products for their approved indications, we may be subject to enforcement action for off-label marketing. Violations of the FDCA and other statutes, including the False Claims Act, relating to the promotion and advertising of prescription drugs may lead to investigations and enforcement actions alleging violations of federal and state healthcare fraud and abuse laws, as well as state consumer protection laws.

In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may have various consequences, including:

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restrictions on such products, manufacturers or manufacturing processes;

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restrictions and warnings on the labeling or marketing of a product;

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restrictions on product distribution or use;

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requirements to conduct post-marketing studies or clinical trials;

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warning letters or untitled letters;

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withdrawal of the products from the market;

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refusal to approve pending applications or supplements to approved applications that we submit;

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recall of products;

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fines, restitution or disgorgement of profits or revenues;

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suspension or withdrawal of marketing approvals;

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damage to relationships with any potential collaborators;

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unfavorable press coverage and damage to our reputation;

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refusal to permit the import or export of our products;

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product seizure;

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injunctions or the imposition of civil or criminal penalties; or

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litigation involving patients using our products. Non-compliance with European Union requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with the European Union’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.

In addition, manufacturers of approved products and those manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to cGMPs applicable to drug manufacturers or quality assurance standards applicable to medical device manufacturers, which include requirements relating to quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting requirements. We, any contract manufacturers we may engage in the future, our future collaborators and their contract manufacturers will also be subject to other regulatory requirements, including submissions of safety and other post-marketing information and reports, registration and listing requirements, requirements regarding the distribution of samples to clinicians, recordkeeping, and costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product such as the requirement to implement a REMS.

The efforts of the Trump administration to pursue regulatory reform may limit the FDA’s ability to engage in oversight and implementation activities in the normal course, and that could negatively impact our business.

The Trump administration has taken several executive actions, including the issuance of a number of executive orders, that could impose significant burdens on, or otherwise materially delay, the FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. On January 30, 2017, President Trump issued an executive order, applicable to all executive agencies, including the FDA, requiring that for each notice of proposed rulemaking or final regulation to be issued in fiscal year 2017, the agency shall identify at least two existing regulations to be repealed, unless prohibited by law. These requirements are referred to as the “two-for-one” provisions. This executive order includes a budget neutrality provision that requires the total incremental cost of all new regulations in the 2017 fiscal year, including repealed regulations, to be no greater than zero, except in limited circumstances. For fiscal years 2018 and beyond, the executive order requires agencies to identify regulations to offset any incremental cost of a new regulation. In interim guidance issued by the Office of Information and Regulatory Affairs within the Office of Management and on February 2, 2017, the Trump administration indicates that the “two-for-one” provisions may apply not only to agency regulations, but also to significant agency guidance documents. It is difficult to predict how these requirements will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

Our relationships with healthcare providers, physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse, false claims, transparency, health information privacy and security, and other healthcare laws and regulations, which, in the event of a violation, could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

Healthcare providers, physicians and third-party payors will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with healthcare providers, physicians and third-party payors may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any products for which we obtain marketing approval. In addition, we may be subject to transparency laws and patient privacy regulation by U.S. federal and state governments and by governments in foreign jurisdictions in which we conduct our business. Restrictions under applicable federal and state healthcare laws and regulations include the following:

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the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;

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the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, currently set at a minimum of $11,181 and a maximum of $22,363 per false claim;

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the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

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the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs to report payments and other transfers of value to physicians and teaching hospitals; and

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analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and transparency statutes, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. Additionally, some state and local laws require the registration of pharmaceutical sales representatives in the jurisdiction. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from participation in government funded healthcare programs.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain for any products that are approved in the United States or foreign jurisdictions.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval. The pharmaceutical industry has been a particular focus of these efforts and have been significantly affected by legislative initiatives. Current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any FDA approved product.

In the United States, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for physician-administered drugs. In addition, this legislation provided authority for limiting the number of drugs that will be covered in any therapeutic class. Cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that we receive for any approved products. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from the MMA may result in a similar reduction in payments from private payors.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the ACA. Among the provisions of the ACA of potential importance to our business, including, without limitation, our ability to commercialize and the prices we may obtain for any of our product candidates that are approved for sale, are the following:

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an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents;

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an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;

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expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;

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a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (and 70% starting January 1, 2019) point-of-sale discounts off negotiated prices;

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extension of manufacturers’ Medicaid rebate liability;

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expansion of eligibility criteria for Medicaid programs;

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expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

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new requirements to report certain financial arrangements with physicians and teaching hospitals;

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a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and

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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include the Budget Control Act of 2011, which, among other things, led to aggregate reductions to Medicare payments to providers of up to 2% per fiscal year that started in 2013 and, due to subsequent legislative amendments to the statute, will stay in effect through 2027 unless additional congressional action is taken, and the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used. Further, there have been several recent U.S. congressional inquiries and proposed state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products.

We expect that these healthcare reforms, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product and/or the level of reimbursement physicians receive for administering any approved product we might bring to market. Reductions in reimbursement levels may negatively impact the prices we receive or the frequency with which our products are prescribed or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

With enactment of the TCJA, which was signed by the President on December 22, 2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance, will become effective in 2019. According to the Congressional Budget Office, the repeal of the individual mandate will cause an estimated 13 million fewer Americans to be insured in 2027 and premiums in insurance markets may rise. Further, on December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual mandate portion of the ACA is an essential and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Cuts and Jobs Act, the remaining provisions of the ACA are invalid as well. The Trump administration and CMS have both stated that the ruling will have no immediate effect, and on December 30, 2018 the same judge issued an order staying the judgment pending appeal. The Trump administration has represented to the U.S. Court of Appeals for the Fifth Circuit considering this judgment that it does not oppose the lower court’s ruling. On July 10, 2019, the Court of Appeals for the Fifth Circuit heard oral argument in this case. On December 18, 2019, that court affirmed the lower court’s ruling that the individual mandate portion of the ACA is unconstitutional and it remanded the case to the district court for reconsideration of the severability question and additional analysis of the provisions of the ACA. On January 21, 2020, the U.S. Supreme Court declined to review this decision on an expedited basis. In March 2020, the U.S. Supreme Court agreed to hear this case, with arguments likely to take place later this year. Pending review, the ACA remains in effect, but it is unclear at this time what effect the latest ruling will have on the status of the ACA. According to the Congressional Budget Office, the repeal of the individual mandate will cause 13 million fewer Americans to be insured in 2027 and premiums in insurance markets may rise.

Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices. Further, the Bipartisan Budget Act of 2018, among other things, amends the ACA, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole”. Further, each chamber of the U.S. Congress has put forth multiple bills designed to repeal or repeal and replace portions of the ACA. Although none of these measures has been enacted by Congress to date, Congress may consider other legislation to repeal and replace elements of the ACA.

The Trump Administration has also taken executive actions to undermine or delay implementation of the ACA. Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. One Executive Order directs federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. The second Executive Order terminates the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October 25, 2017. In addition, CMS has recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces. Further, on June 14, 2018, U.S. Court of Appeals for the Federal Circuit ruled that the federal government was not required to pay more than $12 billion in ACA risk corridor payments to third-party payors who argued were owed to them. This decision was appealed to the U.S. Supreme Court, which on April 27, 2020, reversed the U.S. Court of Appeals for the Federal Circuit’s decision and remanded the case to the U.S. Court of Federal Claims, concluding the government has an obligation to pay these risk corridor payments under the relevant formula. It is not clear what effect this result will have on our business, but we will continue to monitor any developments.

The costs of prescription pharmaceuticals have also been the subject of considerable discussion in the United States, and members of Congress and the Trump administration have stated that they will address such costs through new legislative and administrative measures. To date, there have been several recent U.S. congressional inquiries and proposed and enacted state and federal legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products. At the federal level, the Trump administration’s budget proposal for fiscal year 2019 contains further drug price control measures that could be enacted during the 2019 budget process or in other future legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. While any proposed measures will require authorization through additional legislation to become effective, Congress and the Trump administration have each indicated

that it will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

Specifically, there have been several recent U.S. congressional inquiries and proposed federal and proposed and enacted state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the costs of drugs under Medicare and reform government program reimbursement methodologies for drug products. At the federal level, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. The Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers. On March 10, 2020, the Trump administration sent “principles” for drug pricing to Congress, calling for legislation that would, among other things, cap Medicare Part D beneficiary out-of-pocket pharmacy expenses, provide an option to cap Medicare Part D beneficiary monthly out-of-pocket expenses, and place limits on pharmaceutical price increases. While any proposed measures will require authorization through additional legislation to become effective, Congress and the Trump administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. The Department of Health and Human Services, or HHS, has solicited feedback on some of these measures and, at the same time, is implementing others under its existing authority. For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1, 2020. This final rule codified CMS’s policy change that was effective January 1, 2019.

In addition, on December 23, 2019, the Trump Administration published a proposed rulemaking that, if finalized, would allow states or certain other non-federal government entities to submit importation program proposals to FDA for review and approval. Applicants would be required to demonstrate their importation plans pose no additional risk to public health and safety and will result in significant cost savings for consumers. At the same time, FDA issued draft guidance that would allow manufacturers to import their own FDA-approved drugs that are authorized for sale in other countries (multi-market approved products).

In addition, it is possible that additional governmental action is taken to address the COVID-19 pandemic. For example, on April 18, 2020, CMS announced that qualified health plan issuers under the ACA may suspend activities related to the collection and reporting of quality data that would have otherwise been reported between May and June 2020 given the challenges healthcare providers are facing responding to the COVID-19 virus.

At the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional health care authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other health care programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. Increased scrutiny by the U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing testing and other requirements.

Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition or results of operations.

The regulatory framework for the collection, use, safeguarding, sharing, transfer and other processing of information worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Globally, virtually every jurisdiction in which we operate has established its own data security and privacy frameworks with which we must comply. For example, the collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, including personal health data, is subject to the EU General Data Protection Regulation, or the GDPR, which took effect across all member states of the European Economic Area, or EEA, in May 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR increases our obligations with respect to clinical trials conducted in the EEA by expanding the definition of personal data to include coded data and requiring changes to informed consent practices and more detailed notices for clinical trial subjects and investigators. In addition, the GDPR also imposes strict rules on the transfer of personal data to countries outside the European Union, including the United States and, as a result, increases the scrutiny that clinical trial sites located in the EEA should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protection, such as the United States. The GDPR also permits data protection authorities to require destruction of improperly gathered or used personal information and/or impose substantial fines for violations of the GDPR, which can be up to four percent of global revenues or €20 million, whichever is greater, and it also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. In addition, the GDPR provides that European Union member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data.

Similar actions are either in place or under way in the United States. There are a broad variety of data protection laws that are applicable to our activities, and a wide range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security concerns based on general consumer protection laws. The Federal Trade Commission and state Attorneys General all are aggressive in reviewing privacy and data security protections for consumers. New laws also are being considered at both the state and federal levels. For example, the California Consumer Privacy Act—which went into effect on January 1, 2020—is creating similar risks and obligations as those created by GDPR, though the Act does exempt certain information collected as part of a clinical trial subject to the Federal Policy for the Protection of Human Subjects (the Common Rule). Many other states are considering similar legislation. A broad range of legislative measures also have been introduced at the federal level. Accordingly, failure to comply with federal and state laws (both those currently in effect and future legislation) regarding privacy and security of personal information could expose us to fines and penalties under such laws. There also is the threat of consumer class actions related to these laws and the overall protection of personal data. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could harm our reputation and our business.

Given the breadth and depth of changes in data protection obligations, preparing for and complying with these requirements is rigorous and time intensive and requires significant resources and a review of our technologies, systems and practices, as well as those of any third-party collaborators, service providers, contractors or consultants that process or transfer personal data collected in the European Union. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of sensitive data, such as healthcare data or other personal information from our clinical trials, could require us to change our business practices and put in place additional compliance mechanisms, may interrupt or delay our development, regulatory and commercialization activities and increase our cost of doing business, and could lead to government enforcement actions, private litigation and significant fines and penalties against us and could have a material adverse effect on our business, financial condition or results of operations.

Governments outside of the United States tend to impose strict price controls, which may adversely affect our revenues, if any.

In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed, possibly materially.

If we or any third-party manufacturers we engage now or in the future fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs or liabilities that could harm our business.

We and third-party manufacturers we engage now are, and any third-party manufacturers we may engage in the future will be, subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. Liability under certain environmental laws governing the release and cleanup of hazardous materials is joint and several and could be imposed without regard to fault. We also could incur significant costs associated with civil or criminal fines and penalties or become subject to injunctions limiting or prohibiting our activities for failure to comply with such laws and regulations.

Although we maintain general liability insurance as well as workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

Further, with respect to the operations of our current and any future third-party contract manufacturers, it is possible that if they fail to operate in compliance with applicable environmental, health and safety laws and regulations or properly dispose of wastes associated with our products, we could be held liable for any resulting damages, suffer reputational harm or experience a disruption in the manufacture and supply of our product candidates or products. In addition, our supply chain may be adversely impacted if any of our third party contract manufacturers become subject to injunctions or other sanctions as a result of their non-compliance with environmental, health and safety laws and regulations.

We are subject to anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures and legal expenses, be precluded from developing manufacturing and selling certain products outside the United States or be required to develop and implement costly compliance programs, which could adversely affect our business, results of operations and financial condition.

Our operations are subject to anti-corruption laws, including the U.K. Bribery Act 2010, or Bribery Act, the U.S. Foreign Corrupt Practices Act, or FCPA, and other anti-corruption laws that apply in countries where we do business and may do business in the future. The Bribery Act, FCPA and these other laws generally prohibit us, our officers, and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. Compliance with the FCPA, in particular, is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

We may in the future operate in jurisdictions that pose a high risk of potential Bribery Act or FCPA violations, and we may participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under the Bribery Act, FCPA or local anti-corruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted. If we expand our operations outside of the United States, we will need to dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.

We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the United Kingdom and the United States, and authorities in the European Union, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws. In addition, various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the Bribery Act, the FCPA or other legal requirements, including Trade Control laws. If we are not in compliance with the Bribery Act, the FCPA and other anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity. The Securities and Exchange Commission also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions. Any investigation of any potential violations of the Bribery Act, the FCPA, other anti-corruption laws or Trade Control laws by United Kingdom, U.S. or other authorities could also have an adverse impact on our reputation, our business, results of operations and financial condition.

Our employees may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for us and harm our reputation.

We are exposed to the risk of employee fraud or other misconduct, including intentional failures to comply with FDA regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory authorities, comply with manufacturing standards, comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. This could include violations of HIPAA, other U.S. federal and state law, and requirements of non-U.S. jurisdictions, including the European Union Data Protection Directive. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws, standards, regulations, guidance or codes of conduct. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.

Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Our internal computer systems and those of any collaborators, contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. Such systems are also vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. Cyber-attacks also could include phishing attempts or e-mail fraud to cause payments or information to be transmitted to an unintended recipient.

While we have not experienced any such material system failure, accident, cyber-attack or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

Risks Related to Employee Matters and Managing Growth

Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.

We are highly dependent on the research and development, clinical and business expertise of our executive officers, as well as the other principal members of our management, scientific and clinical teams. Although we have entered into employment letter agreements with our executive officers, each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.

Recruiting and retaining qualified scientific, clinical, manufacturing, legal and sales and marketing personnel will also be critical to our success. Although we have a robust process for interviewing and hiring personnel, there is no guarantee that individuals will fulfill the obligations we employ them for, or that they will fit within our organizational culture. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.

We expect to expand our development and regulatory capabilities and potentially implement sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

We expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of drug development, clinical, regulatory affairs and, if any of our product candidates receives marketing approval, sales, marketing and distribution. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.

Risks Related to Our Common Stock

Our executive officers, directors and entities associated or affiliated with our executive officers and directors, if they choose to act together, have the ability to significantly influence all matters submitted to stockholders for approval.

As of July 31, 2020, our executive officers, directors and entities associated or affiliated with our executive officers and directors, in the aggregate, owned shares representing approximately 2.8% of our capital stock. As a result, if these stockholders were to choose to act together, they could substantially impact matters submitted to our stockholders for approval, as well as our management and affairs.

This concentration of ownership control may:

•

delay, defer or prevent a change in control;

•

entrench our management and board of directors; or

•

delay or prevent a merger, consolidation, takeover or other business combination involving us that other stockholders may desire.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

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establish a classified board of directors such that only one of three classes of directors is elected each year;

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allow the authorized number of our directors to be changed only by resolution of our board of directors;

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limit the manner in which stockholders can remove directors from our board of directors;

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establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;

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require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

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limit who may call stockholder meetings;

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authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and

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require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal specified provisions of our certificate of incorporation or bylaws.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

An active trading market for our common stock may not be sustained.

Our shares of common stock began trading on the Nasdaq Global Select Market on July 19, 2018. Given the limited trading history of our common stock, there is a risk that an active trading market for our shares may not continue to develop or be sustained. If an active market for our common stock does not continue to develop or is not sustained, it may be difficult for our stockholders to sell shares without depressing the market price for the shares, or at all.

If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock could decline.

The trading market for our common stock relies, in part, on the research and reports that industry or financial analysts publish about us or our business Although we have obtained analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our stock or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for our stock, which in turn could cause our stock price and trading volume to decline.

The price of our common stock is volatile and fluctuates substantially, which could result in substantial losses for our stockholders

The trading price of our common stock has been, and is likely to continue to be, highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. During the period from July 18, 2018 to July 31, 2020, the closing price of our common stock ranged from a high of $49.79 per share to a low of $4.01 per share. The stock market in general and the market for smaller biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our common stock may be influenced by many factors, including:

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results of or developments in clinical trials of our product candidates or those of our competitors;

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results of discussions with regulatory authorities and regulatory actions with respect to our product candidates or our competitors’ products and product candidates;

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our success in commercializing our product candidates, if and when approved;

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the success of competitive products or technologies;

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the effect of the COVID-19 outbreak on the healthcare system and the economy generally and on our clinical trials and other operations specifically;

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regulatory or legal developments in the United States and other countries;

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developments or disputes concerning patent applications, issued patents or other intellectual property or proprietary rights;

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the recruitment or departure of key personnel;

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the level of expenses related to any of our product candidates or clinical development programs;

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the results of our efforts to discover, develop, acquire or in-license products, product candidates or technologies, the costs of commercializing any such products and the costs of development of any such product candidates or technologies;

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actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

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variations in our financial results or the financial results of companies that are perceived to be similar to us;

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changes in the structure of healthcare payment systems;

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market conditions in the pharmaceutical and biotechnology sectors;

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general economic, industry and market conditions; and

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the other factors described in this “Risk Factors” section.

In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management’s attention and resources.

A significant portion of our total outstanding shares are eligible to be sold into the market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Persons who were our stockholders prior to our initial public offering continue to hold a substantial number of shares of our common stock. If such persons sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline.

Moreover, holders of a substantial number of shares of our common stock, including shares of our common stock issuable upon exercise of outstanding warrants, have rights, subject to specified conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We have filed a registration statement registering all shares of common stock that we may issue under our equity compensation plans. These shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates.

We currently have on file with the SEC a universal shelf registration statement which allows us to offer and sell registered common stock, preferred stock, debt securities, warrants and/or units from time to time pursuant to one or more offerings at prices and terms to be determined at the time of sale. Sales of a substantial number of shares of our common stock, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.

As a public company, we incur, and after we are no longer an emerging growth company beginning January 1, 2021, we will further incur, significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Global Select Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified members of our board of directors.

We are evaluating these rules and regulations, and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we are required to furnish a report by our management on our internal control over financial reporting. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses in our internal control over financial reporting, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be our stockholders’ sole source of gain.

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of the Hercules Loan Agreement preclude, and any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.

Our certificate of incorporation designates the state courts in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against the company and our directors, officers and employees.

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery of the State of Delaware does not have jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or stockholders to our company or our stockholders, (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, or (4) any action asserting a claim arising pursuant to any provision of our certificate of incorporation or bylaws (in each case, as they may be amended from time to time) or governed by the internal affairs doctrine. This exclusive forum provision will not apply to actions arising under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

This exclusive forum provision may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition and operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 6. Exhibits

Exhibit Number		Description of Exhibit


10.1*		Consulting Agreement, dated as of June 22, 2020, by and between the Registrant and Adrian Senderowicz

10.2*		Offer Letter, dated as of June 8, 2020, by and between the Registrant and Jeffrey S. Humphrey.

31.1*		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1+		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2+		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith

+	Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CONSTELLATION PHARMACEUTICALS, INC.

Date: August 5, 2020	By:	/s/ Jigar Raythatha
		Jigar Raythatha
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: August 5, 2020	By:	/s/ Emma Reeve
		Emma Reeve
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

cnst-ex101_158.htm

Exhibit 10.1

CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”), effective as June 22, 2020 (the “Effective Date”) is made between Constellation Pharmaceuticals, Inc., a Delaware corporation, with offices at 215 First St., Suite 200, Cambridge, MA 02142 (“Constellation”), and Oncology Drug Development, LLC., a Pennsylvania company (“Consultant”) (each a “Party” and collectively the “Parties”).

R E C I T A L S

WHEREAS, Constellation desires to retain the services of Consultant, and Consultant desires to perform certain services for Constellation;

NOW, THEREFORE, Constellation and Consultant hereby agree as follows:

1.Services.

1.1Description of Services. Constellation hereby retains Consultant to perform the services specified in one or more attachments to this Agreement executed by the Parties (each an “Attachment”), and to perform all other obligations set forth in this Agreement (collectively, the “Services”). Consultant agrees that the Services shall be performed solely by Adrian Senderowicz, MD (the “Senior Advisor”), at such times and locations as may be mutually agreed, from time to time as requested by Constellation, unless otherwise agreed in writing between the Parties. Consultant agrees to devote its best efforts to perform the Services promptly and diligently, in compliance with all applicable laws and regulations, including laws and regulations regarding the promotion and marketing of pharmaceutical products. Consultant shall also comply with all rules, procedures and standards promulgated from time to time by Constellation with regard to Consultant’s access to and use of Constellation’s property, information, equipment and facilities. Consultant shall not have any right to bind the Company or commit the Company to any legal obligation whatsoever, or to hire or retain other parties at the Company’s expense, without the Company’s prior written approval.

1.2Compliance with Policies. Consultant is responsible for ensuring that this Agreement is not in conflict with the intellectual property, consulting, conflict-of-interest, and other policies of any institution or other entity to which Consultant or the Senior Advisor is now, or may become during the term of this Agreement, affiliated or bound.

1.3Third Party Obligations. Consultant represents and warrants to Constellation that none of its or the Senior Advisor’s current obligations conflict with this Agreement or the Services to be provided hereunder. Consultant covenants not to, and to cause the Senior Advisor not to, enter into any such conflicting agreement or incur any such conflicting obligation without the prior written consent of Constellation. Consultant further covenants that the performance of the Services will not breach any agreement or obligation with any third party, including without limitation any obligation to refrain from engaging in activities that may compete with such party. The Consultant’s Services hereunder are agreed to be non-exclusive.

1.4Authorization to Perform Services. Consultant represents and warrants that the Senior Advisor: (i) is not and has not been excluded from participation in any federal or state health care program, debarred by the Food and Drug Administration, or otherwise debarred from contracting; (ii) has not been convicted of or pled nolo contendere to any felony, or to any federal or state legal violation relating to prescription drug products; (iii) is not an employee of the National Institutes of Health within the scope of 5 CFR Section 5501.109; and (iv) has and shall continue to have throughout the term of this Agreement, the right and authority to perform the Services hereunder in the United States and will not require the sponsorship by Constellation.

2.Compensation.

2.1Compensation. In exchange for the timely completion of Services during the term of this Agreement, Constellation shall pay to Consultant compensation as set forth in the applicable Attachment. Fees will be paid upon documented completion of Service in accordance with the requirements set forth in the Attachment. Consultant acknowledges and agrees that payments made hereunder are for Services performed by Consultant. No payments shall be passed through to third parties on behalf of Constellation without a valid invoice or other written documentation between the Parties evidencing such payment arrangement.

2.2Reimbursement of Expenses. Constellation shall reimburse Consultant for pre-approved reasonable travel and other out-of-pocket expenses, that are reasonably incurred by Consultant in the performance of the Services.

2.3Benefits. Consultant is an independent contractor of Constellation. Consultant acknowledges and agrees that Constellation will not provide Consultant or the Senior Advisor with any employee benefits. Without in any way limiting the generality of the foregoing, Consultant acknowledges and agrees that it has no right to participate in any equity plan(s) of Constellation, subject to the rights of the Senior Advisor expressly set forth in the Senior Advisor Addendum. Consultant is also responsible for the payment and the withholding of all applicable taxes, levies and/or duties applicable to any compensation or reimbursements paid to Consultant hereunder in accordance with all applicable laws, rules and regulations.

2.4No Additional Obligation / Fair Market Value. Consultant acknowledges and agrees that the compensation payable hereunder represents Constellation’s full and complete obligation for any and all Services to be rendered by Consultant under this Agreement. Consultant further represents to Constellation that the compensation paid hereunder represents fair market value for Consultant’s time and the Services hereunder and is consistent with fees paid to Consultant for similar time and services provided by Consultant to others. Both Parties acknowledge that the compensation is not determined in a manner that takes into account the volume or value of any future business that might be generated between the Parties. In addition, Consultant and Constellation acknowledge that nothing in this Agreement shall be construed to require Consultant to promote, purchase, prescribe, or otherwise recommend any Constellation products being marketed or under development.

3.Term and Termination.

3.1Term. This Agreement shall commence on the Effective Date and shall remain in effect for a period of one (1) year, unless extended by mutual written agreement of the Parties or terminated in accordance with the provisions of this Article 3.

3.2Termination. Either Constellation or Consultant may terminate this Agreement for breach of this Agreement by the other Party, effective upon fifteen (15) days prior written notice to the breaching Party (such notice to provide a detailed explanation of said purported breach), unless such breach is cured by the other Party within such fifteen (15) day notice period.

3.3Survival. Articles 4 through 6 and Sections 7.3, 7.5, 7.7, 7.9 and 7.10, together with this Section 3.3, shall survive the expiration or termination of this Agreement for any reason.

4.Confidential Information.

4.1Definition of Confidential Information. “Confidential Information” shall mean any technical or business information furnished by or on behalf of Constellation to Consultant in connection with this Agreement or developed by Consultant in the course of performing the Services, regardless of whether such Confidential Information is in oral, electronic or written form. Such Confidential Information may include, without limitation, trade secrets, know-how, inventions, technical data or specifications, testing methods, business or financial information, research and development activities, product and marketing plans, and customer and supplier information.

4.2Obligations. Consultant shall: (i) maintain all Confidential Information in strict confidence; (ii) use all Confidential Information solely for the purpose of providing the Services as requested by Constellation; (iii) reproduce the Confidential Information only to the extent necessary for providing the Services as requested by Constellation, with all such reproductions being considered Confidential Information; (iv) disclose the Confidential Information only as expressly permitted in order to perform the Services; and (v) not disclose or publish any Confidential Information to any third party without the express prior written consent of Constellation, in each case in Constellation’s sole discretion.

4.3Exceptions. The obligations of Consultant under Section 4.2 shall not apply to the extent that Consultant can demonstrate that certain information: (i) was in the public domain prior to its disclosure or development under this Agreement; (ii) entered the public domain after the time of its disclosure or development under this Agreement other than due to an act or omission by Consultant; (iii) was independently developed by Consultant prior to the time of its disclosure or development under this Agreement and without access to Confidential Information; or (iv) is or was disclosed to Consultant without restriction at any time prior to its disclosure or development under this Agreement by a third party having no obligation of confidentiality with respect to such Confidential Information.

4.4Required Disclosures. Consultant may disclose Confidential Information to the extent necessary to comply with applicable laws or regulations, or with a court or administrative order, provided that Consultant (i) gives Constellation prompt written notice of such legal obligation prior to disclosure, (ii) takes all reasonable and lawful actions to obtain confidential

treatment for such disclosure and, if possible, to minimize the extent of such disclosure and (iii) discloses only the Confidential Information strictly required to comply with such legal obligation.

4.5Return of Confidential Information; Survival of Obligations. Upon the termination of this Agreement, or earlier at the request of Constellation, Consultant shall return to Constellation all originals, copies, and summaries of documents, materials, and other tangible manifestations of Confidential Information in the possession or control of Consultant. The obligations set forth in this Article 4 shall remain in effect for a period of five (5) years after termination of this Agreement, except that the obligations of Consultant to return Confidential Information shall survive until fulfilled. Consultant acknowledges and agrees that the Confidential Information is of critical value to Constellation, and any use or disclosure thereof other than as expressly allowed under this Agreement would cause irreparable harm to Constellation, for which Constellation would be entitled to relief as contemplated in Section 7.7 of this Agreement, and that such unauthorized disclosure may represent Consultant’s violation of United States securities laws.

5.Developments; Third Party IP; Avoidance of Claims.

5.1Developments. Consultant agrees that all Confidential Information and all other discoveries, inventions, ideas, concepts, trademarks, service marks, logos, processes, products, formulas, computer programs or software, source codes, object codes, algorithms, machines, apparatuses, items of manufacture or composition of matter, or any new uses therefor or improvements thereon, or any new designs or modifications or configurations of any kind, or works of authorship of any kind, including, without limitation, compilations and derivative works, whether or not patentable or copyrightable, conceived, developed, reduced to practice, or otherwise made by Consultant, either alone or with others, whether or not on Constellation’s premises, and in any way related to or arising out of (i) the Services or (ii) Confidential Information of Constellation (collectively, “Developments”), and any and all services and products which embody, emulate or employ any such Developments or Confidential Information shall be the sole property of Constellation and all copyrights, patents, patent rights, trademarks and reproduction rights to, and other proprietary rights in, each such Development or Confidential Information, whether or not patentable or copyrightable, shall belong exclusively to Constellation without further compensation of any kind to Consultant. Consultant agrees that all such Developments shall constitute works made for hire under the copyright laws of the United States if applicable, and otherwise hereby assigns and, to the extent any such assignment cannot be made at the present time, agrees to assign to Constellation, without any additional consideration from Constellation, any and all copyrights, patents and other proprietary rights that Consultant may have in any such Development, together with the right to file and/or own wholly without restrictions applications for United States and foreign patents, trademark registration and copyright registration and any patent, trademark or copyright registration issuing thereon. Consultant shall make and maintain adequate and current written records of all Developments, and shall disclose all Developments promptly, fully and in writing to Constellation immediately upon development of the same and at any time upon request.

5.2Consultant’s Obligation to Cooperate. Consultant will, at any time during or after the term of this Agreement, upon request of Constellation, execute all documents and perform all lawful acts which Constellation considers necessary or advisable to secure its rights hereunder and to carry out the intent of this Agreement. Without limiting the generality of the foregoing, Consultant will assist Constellation in any reasonable manner to obtain for its own benefit patents

or copyrights in any and all countries with respect to all Developments assigned pursuant to Section 5.1, and Consultant will execute, when requested, patent and other applications and assignments thereof to Constellation, or persons designated by it, and any other lawful documents deemed necessary by Constellation to carry out the purposes of this Agreement, and Consultant will further assist Constellation in every way to enforce any patents and copyrights obtained, including testifying in any suit or proceeding involving any of said patents or copyrights or executing any documents deemed necessary by Constellation. Reasonable out of pocket expenses of Consultant’s assistance incurred at the request of Constellation under this Section will be reimbursed by Constellation.

6.Return of Property. Upon termination of Consultant’s engagement with Constellation, or at any other time upon request of Constellation, Consultant shall return promptly any and all Confidential Information, including customer or prospective customer lists, other customer or prospective customer information or related materials, computer programs, software, electronic data, specifications, drawings, blueprints, devices, samples, reproductions, sketches, notes, notebooks, memoranda, reports, records, proposals, business plans, or copies of them, other documents or materials, tools, equipment, or other property belonging to Constellation or its customers which Consultant may then possess or have under his or her control. Consultant further agrees that upon termination of the engagement Consultant shall not take with it any documents or data in any form or of any description containing or pertaining to Confidential Information or any Developments.

7.Miscellaneous.

7.1Counterparts. This Agreement may be executed in counterparts, which, when taken together, shall constitute one agreement. If any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

7.2Assignment. This Agreement may not be assigned by either Party without the prior written consent of the other Party, except that Constellation may assign this Agreement to an affiliate or in connection with the merger, consolidation, or sale of all or substantially all of its business or assets relating to this Agreement. This Agreement shall inure to the benefit of and be binding upon the Parties and their respective lawful successors, assigns, heirs, and personal representatives.

7.3Insider Trading. Consultant acknowledges that Consultant will receive material, non-public information about Constellation and its business in the course of providing the Services, that this information must be maintained in strict confidence and that the United States securities laws restrict trading on the basis of such information or providing such information to third parties who may trade on such information.

7.4Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be deemed given (a) when delivered personally, (b) upon confirmation of delivery by email if sent during normal business hours, and otherwise on the next business day, (c) on the next business day after timely delivery to an overnight courier (postage prepaid), or (d) on the third business day after deposit in the United States mail (certified or registered mail return

receipt requested, postage prepaid), to the address set forth in the first paragraph of this Agreement. Either Party may change its designated address by notice to the other Party in the manner provided in this Section 7.4.

7.5Governing Law. This Agreement has been drafted in the English Language and the English language shall govern its interpretation. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware irrespective of any conflict of laws principles.

7.6Severability. In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and this Agreement shall be construed as if such invalid or unenforceable provision had not been included herein. If any provision hereof shall, for any reason, be held by a court to be excessively broad as to duration, geographical scope, activity, or subject matter, it shall be construed by limiting and reducing it to make it enforceable to the extent compatible with applicable law as then in effect. To the extent this Agreement may be construed in accordance with the laws of any state that limits the assignability to Constellation of certain Developments, the provisions of this Agreement shall be modified to conform to such state limitation while most closely effectuating the original intention of the Parties (e.g., by providing for fully paid up license rights, or the like).

7.7Equitable Relief. Consultant agrees that any breach or threatened breach of his/her obligations under this Agreement (including without limitation, any use or disclosure of the Confidential Information other than as expressly allowed under this Agreement), will cause irreparable harm to Constellation. Therefore, in addition to any other remedies that may be available to Constellation, Constellation may apply for and obtain immediate injunctive relief in any court of competent jurisdiction to restrain the breach or threatened breach of, or otherwise to enforce, any obligations of Consultant hereunder.

7.8Entire Agreement. This Agreement, including (i) the Senior Advisor Addendum, and (ii) Attachment – General Consulting Services, both attached hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes any and all prior or contemporaneous oral and prior written agreements and understandings with respect to the subject matter hereof. This Agreement may be modified, amended, or supplemented only by means of a written instrument signed by both Parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

7.9Massachusetts Information Security Regulations Compliance. Massachusetts Information Security Regulations, 201 Code of Mass. Regs. 17.00 et seq. (the “IS Regulations”) mandate procedures to safeguard the “Personal Information,” as defined in the IS Regulations, of Massachusetts residents. Because Consultant may have access to the Personal Information of Constellation’s employees, contractors, business associates, or customers who are Massachusetts residents (“Protected Information”), the IS Regulations require Consultant to certify compliance with the IS Regulations. Accordingly, Consultant agrees that, as long as Consultant has access to or maintains copies of Protected Information Consultant will: (a) comply with the IS Regulations with respect to the Protected Information, (b) promptly notify Constellation of any suspected or

actual data breach involving Protected Information, and (c) cooperate with Constellation to investigate and remediate any suspected or actual data breach involving Protected Information.

7.10Whistleblower Notice. Pursuant to 18 USC § 1833(b), an individual may not be held criminally or civilly liable under any federal or state trade secret law for disclosure of a trade secret: (i) made in confidence to a government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law; and/or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Accordingly, the Parties to this Agreement have the right to disclose in confidence trade secrets to Federal, State, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The Parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

7.11Persons Performing Services for Consultant. It is currently anticipated by the parties that only the Senior Advisor will perform any services for Consultant under the terms of this Agreement. As a result, the Senior Advisor shall execute the attached Senior Advisor agreement affirming his agreement to comply with the restrictive covenants contained in this Agreement. Should Constellation agree in the future to permit Consultant to engage anyone else to perform services under this Agreement, such person must also agree in writing to be bound by the restrictive covenants contained in this Agreement. The Parties agree that the requirements contained in this paragraph are necessary to protect Confidential Information, Developments and Protected Information.

7.12 Indemnity. Constellation agrees to indemnify and hold the Consultant and Special Advisor (each, an “Indemnified Party”) free and harmless from and against any cost, loss or expense including both defense and liability from any third party claim, controversy or dispute arising from Constellation’s acts or omissions not directly related to, and/or outside the scope of, Consultant’s efforts undertaken in accordance with this Agreement, except to the extent caused by the negligence or intentional misconduct of either Indemnified Party.

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IN WITNESS WHEREOF, the Parties each have caused this Agreement to be executed by their duly respective authorized representative as of the Effective Date.

CONSTELLATION PHARMACEUTICALS, INC.CONSULTANT

/s/ Jigar Raythatha/s/ Adrian Senderowicz

Name: Jigar RaythathaName: Adrian Senderowicz

Title:Chief Executive Officer

Date: June 5, 2020Date: June 5, 2020

Senior Advisor Addendum:

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned hereby agrees and affirms, as a condition of being permitted to provide services hereunder, to be bound by the restrictions set forth in Sections 4, 5, 6, 7.7 and 7.9.

Provided the undersigned, a former employee of Constellation, continues to provide services to Constellation hereunder, any unvested stock options previously granted to the undersigned during his employment shall continue to vest in accordance with the terms of any applicable agreement or plan, as amended from time to time. The undersigned agrees and acknowledges that, to the extent any such stock options were intended to be “incentive stock options” (as defined under the Internal Revenue Code), such options, to the extent vested prior to the undersigned date of termination of employment, shall be treated as incentive stock options for three months following the date of termination of employment and shall thereafter be treated as nonstatutory stock options under the Internal Revenue Code. The undersigned further agrees and acknowledges that to the extent any such stock option is a nonstatutory stock option, income and employment tax withholding shall be required at the time of exercise of such option and it shall be a condition to exercise that the undersigned satisfy such withholding obligation. In addition, in the event that a Change of Control occurs, as defined in the Company’s Change in Control Plan (the “Plan”), while the undersigned is providing services hereunder, any unvested stock options previously granted shall become vested consistent with, and subject to, the terms and provisions of the Plan to the same extent as if the undersigned were a participant under the Plan.

/s/ Adrian Senderowicz, MD

Adrian Senderowicz, MD

Date: June 5, 2020

Acknowledged and agreed:

Constellation Pharmaceuticals, Inc.

Name: /s/ Jigar Raythatha

Jigar Raythatha

Title: Chief Executive Officer

Date: June 5, 2020

Attachment

General Consulting Services

THIS ATTACHMENT IS INCORPORATED BY REFERENCE INTO, AND SUBJECT TO THE PROVISIONS OF, THAT CERTAIN CONSULTING AGREEMENT BETWEEN THE UNDERSIGNED PARTIES DATED JUNE 22, 2020 (THE “AGREEMENT”).

Description of Services

Consultant shall provide such consulting services as Constellation reasonably requests in connection with the operation of Constellation’s business. Consultant shall provide at least one hundred sixty (160) hours per month of consulting services through August 31, 2020. Thereafter, it is anticipated that Consultant will provide at least eighty (80) hours per month of consulting services during the term of the Agreement. In determining the times and locations for the performance of such services, due consideration shall be given to Consultant’s other commitments and the needs and priorities of the Company.

Consulting services shall include, but will not be limited to, guidance regarding:

(i) early pipeline strategy, (ii) research and development strategy; (iii) competitive intelligence; and (iv) assessment of business development opportunities. In addition, Consultant shall assist the Company in preparing for and shall participate in, the meeting with the FDA anticipated to occur in the mid-year timeframe.

Compensation

In full consideration for the Services performed pursuant to this Attachment, Constellation shall pay Consultant a fee in cash for the Services performed after the Effective Date at a rate of $35,531 per month through August 31, 2020. Thereafter, so long as Consultant is providing at least eighty (80) hours per month of Services, the fee shall be $17,765 per month during the term of the Agreement. In the event that the Consultant is performing less then eighty (80) hours per month of Services, the fee shall be converted to an hourly rate of $200 per hour. All fees shall be payable in arrears without withholdings or deductions of any kind within thirty (30) days after the receipt of Consultant’s valid invoice and supporting documentation. All compensation and expense reimbursements to be paid under this Agreement shall be paid to Consultant in U.S. Dollars.

CONSTELLATION PHARMACEUTICALS, INC.CONSULTANT

By: /s/ Jigar Raythatha By: /s/ Adrian Senderowicz

Name: Jigar RaythathaName: Adrian Senderowicz

Title:Chief Executive Officer

Date:June 5, 2020Date: June 5, 2020

cnst-ex102_160.htm

Exhibit 10.2

May 29, 2020

Dear Jeff,

It is my pleasure to confirm our offer to you for the position of Chief Medical Officer at Constellation Pharmaceuticals, Inc. (“the Company” or “Constellation”). This letter and accompanying enclosures will summarize important details about your employment, should you accept our offer.

Employment: You will be employed to serve on a full-time basis in the position of Chief Medical Officer, reporting to the Chief Executive Officer (CEO). You agree to devote your full business time, best efforts, skill, knowledge, attention, and energies to the advancement of the Company's business and interests and to the performance of your duties and responsibilities as an employee of the Company, effective on such date as is mutually agreed upon by you and the Company provided, however, that, with the approval of the Board of Directors, you may serve as a director on board(s) of directors of enterprises that do not compete directly or indirectly with the Company or otherwise conflict with Executive's duties and service to the Company.

Base Salary: Your base salary will be at the rate of $17,307.69 per bi-weekly pay period (which if annualized equals $450,000), less all applicable taxes and withholdings and which will be paid in accordance with the Company’s regular payroll practices, as in effect from time to time. Such base rate of compensation may be adjusted from time to time in accordance with normal business practices and in the sole discretion of the Company.

Annual Discretionary Bonus: Following the end of each fiscal year, and provided that the Board of Directors of the Company (the “Board”) approves funding an annual bonus pool for such fiscal year, you will be eligible for a retention and performance bonus (the “Performance Bonus”). The target amount of such Performance Bonus will be 40% of your annualized base salary for the applicable fiscal year, based on the Company’s achievement of its performance goals and your achievement of your performance goals for the fiscal year. The Board or its designee, in its sole discretion, shall determine whether goals have been achieved, whether a Performance Bonus will be awarded, and the amount, if any, of any Performance Bonus. Any Performance Bonus will be paid to you following the close of the fiscal year to which it relates (but in no event later than March 15^th). For 2020 the target amount of the Performance Bonus will be 40% of base salary paid in the current fiscal year. In any event, you must be an active employee of the Company on the date any Performance Bonus is distributed in order to be eligible for and to earn a bonus award, as it also serves as an incentive to remain employed by the Company.

Sign on Bonus: You will receive a one-time sign-on bonus in the amount of $25,000.00, less all applicable taxes and withholdings, to be paid on the Company’s first regular pay date whose cutoff date follows your commencement of employment. Please note that if, prior to the one-year anniversary of your start date, you resign your employment without Good Reason (as defined below) or your employment is terminated for Cause (as defined below), you will be required to repay the Company (within thirty (30) days following your separation date) an amount equal to $2,083.33 per complete calendar month remaining between your separation date and the one-year anniversary of your start date You hereby agree that any amount to be repaid to the Company may be deducted from your final pay consistent with applicable law.

Withholdings: All compensation payable to you shall be subject to applicable taxes and withholdings.

Initial Stock Option Grant You will be granted an option to purchase up to 133,000 shares of the Company’s common stock (the “Initial Option”), at a price equal to the fair market value of the common stock on the date of the grant, as determined by the Board. This Initial Option will be granted within sixty (60) days of your start date of active employment in accordance with the Company’s standard practices for approval of new hire stock option grants, and shall be subject to the standard terms and conditions of the Constellation Pharmaceuticals Stock Option Plan and the stock option agreement provided in connection therewith, as amended from time to time. As set forth in the stock option agreement, the Initial Option will vest over four years at the rate of 25% after twelve months of the grant date and an additional 6.25% per quarter thereafter in accordance with the specific terms provided in the stock option agreement.

Performance Stock Option Grant: Following the end of each fiscal year, and provided that the Board approves employee stock option grants, you will be eligible for a performance-based option grant (the “Performance Grant”). The target amount of such grant is based on the Company’s achievement of its performance goals and your individual performance for the fiscal year. The Board or its designee, in its sole discretion, shall determine whether goals have been achieved and whether an option grant will be awarded. Any Performance Grant will be subject to the terms and conditions of the Constellation Pharmaceuticals Stock Option Plan and the stock option agreement provided in connection therewith, as amended from time to time.

Relocation: You will receive a relocation bonus in the amount of $75,000, which shall be grossed up for income taxes in accordance with the Company’s tax policies, to be paid on the first pay date following commencement of your employment. Should you resign your employment without Good Reason (as defined below) or be terminated for Cause (as defined below) by Constellation within the first 24 months of employment, you will be required to repay the Company 1/24^th of the amount paid to you above, including the gross-up, multiplied by each

complete calendar month which remains from your first day of employment to the second anniversary of your start date. You hereby agree that any amount to be repaid to the Company may be deducted from your final pay consistent with applicable law.

Benefits: You may participate in any and all benefit programs that the Company establishes and makes available to its employees from time to time, provided that you are eligible under (and subject to all provisions of) the plan documents governing those programs, including the Company’s 401(k) plan, which is currently being offered through Fidelity Investments. Enclosed is a summary of the benefits that are currently provided to the employees of Constellation Pharmaceuticals. Please note that the benefits made available by the Company, and the rules, terms, and conditions for participation in such benefit plans, may be changed by the Company at any time, and from time to time without advance notice.

Change In Control: The Company has adopted a Change in Control Severance Plan (the “Plan”), in which you are eligible to participate and that will be provided to you under separate cover. The Plan is the sole agreement between the Company and you governing any compensation and/or benefits, equity or otherwise, that you may be eligible to receive if your employment with the Company (or its successor in a “Change in Control” (as defined in the Plan)) is terminated other than for “Cause” (as defined in the Plan) or terminates for “Good Reason” (as defined in the Plan) during the Protected Period (as defined in the Plan), but not in the event of death or disability. In the event there is a conflict between the terms of this offer letter and the terms of the Plan, the terms of the Plan shall govern. For the avoidance of doubt, if you are eligible for benefits under the Plan, you will not be eligible to receive the Severance Benefits (as defined below). Any acceleration provisions under the Plan will apply to both the Initial Option and any Performance Grant.

Employment At-Will: This offer letter is not intended to create or constitute an employment agreement or contract between you and Constellation for any definite period of time. If you accept the Company’s offer of employment, your employment with the Company will be on an “at-will” basis, meaning that you will have the right to terminate your employment relationship with Constellation at any time for any reason, with or without notice. Similarly, Constellation will have the right to terminate its employment relationship with you at any time for any reason, with or without notice. The at-will nature of your employment may only be changed by a written agreement signed by you and the CEO that expressly states the intention to modify the at-will nature of your employment. Similarly, nothing in this letter shall be construed as an agreement, either express or implied, to pay you any compensation or grant you any benefit beyond the end of your employment with the Company, except as otherwise explicitly set forth herein.

Severance Benefits Not in Connection With a Change in Control:

Without limiting the at-will nature of your employment with the Company, in the event that, outside of the Protected Period (as defined in the Plan) Constellation terminates your employment without Cause (as defined below) or you resign your employment for Good Reason (as defined below), and subject to the Severance Conditions set forth below, Constellation shall: (i) pay you in one lump sum a severance payment equivalent to twelve (12) months of your then current base salary which amount shall, if your separation occurs prior to the one-year anniversary of your start date, be multiplied by a fraction, the numerator of which is the number of days from the start date through and including the date employment ends and the denominator of which is 365, less all applicable taxes and withholdings (the “Severance Pay”); and (ii) if you are eligible for and timely elect to continue receiving group medical and/or dental insurance under COBRA, until the earlier of (x) the date that is twelve (12) months following your separation date, and (y) the date on which you obtain alternative coverage (as applicable, the “COBRA Contribution Period”), continue to pay the share of the premiums for such coverage to the same extent it was paying such premiums on your behalf immediately prior to your separation date (though if, as a result of a change in legal requirements, the Company’s provision of payments for COBRA will violate the nondiscrimination requirements of applicable law, this COBRA benefit will not apply) (collectively, the “Severance Benefits”).

The Company’s obligation to provide you with the Severance Benefits is contingent upon your entering into a Severance and Release of Claims Agreement (the “Severance Agreement”) in a form to be provided by the Company (which will include, at a minimum, a release of all releasable claims you may have and your agreement to non-disparagement, confidentiality, and cooperation obligations). The Severance Agreement must be signed by you, and any applicable revocation period with respect thereto must have expired, by the 60^th day following the end of your employment (or such shorter period as the Company may specify) (the “Severance Conditions”). Payment of the Severance Pay will be made on the first regular payday after the Severance Agreement becomes effective; provided, however, that if the 60^th day following your separation date occurs in the calendar year following the year of your separation, then payment shall not be made before January 1 of such subsequent calendar year.

Cause: For purposes of this offer letter, “Cause” shall mean (as determined by the Board in its reasonable judgment) (i) a material breach of any material term of any applicable offer letter or agreement between you and the Company, including the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement referred to below, (ii) your plea of guilty or nolo contendere to, or your conviction of, a felony offense or a crime of dishonesty, (iii) your repeated unexplained or unjustified absences or refusals or failures to carry out the lawful directions of the Board or the CEO, or (iv) your willful misconduct that results or is reasonably likely to result in material harm to the Company.

Good Reason: For purposes of this offer letter, Good Reason is defined as (i) a material reduction of your base salary; (ii) a material diminution of your authority, duties, or responsibilities; (iii) a requirement that your principal place of providing services to the Company change by more than 50 miles, other than in a direction that reduces your daily commuting distance; or (iv) any material breach by the Company of a material provision of any agreement between you and the Company under which you provide services. Notwithstanding the occurrence of any of the foregoing events or circumstances, a resignation shall not be deemed to constitute resignation for Good Reason unless (x) you give the Company a written notice of the purported Good Reason (no more than 90 days after the initial existence of such event or circumstance), (y) such event or circumstance has not been fully corrected (and you have not been reasonably compensated for any losses or damages resulting therefrom) within 30 days following the Company’s receipt of such notice, and (z) if the Company does not correct, you end your employment not more than 30 days following the period to correct in (y).

Payments Subject to Section 409A: This offer letter, and any payments or other benefits under this offer letter, is intended to be exempt from or to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A") and shall, to the extent practicable, be construed in accordance with such intention and consistent with Exhibit A to this offer letter.

Employment Eligibility: This offer of employment is contingent upon satisfactory reference checks, your signing Constellation’s standard form of Employee Non-Solicitation, Confidentiality and Assignment Agreement (the “Non-Compete”), a copy of which is enclosed, and I-9 Employment Verification. You will be required to submit documentation that establishes your identity and employment eligibility in accordance with the US Immigration and Naturalization requirements within the first three days of your employment with the Company.

Company Policies and Procedures: As an employee of the Company, you will be required to comply with all Company policies and procedures. Violations of the Company's policies may lead to immediate termination of your employment. Further, the Company's premises, including all workspaces, furniture, documents, and other tangible materials, and all information technology resources of the Company (including computers, data and other electronic files, and all internet and email) are subject to oversight and inspection by the Company at any time. Company employees should have no expectation of privacy with regard to any Company premises, materials, resources, or information.

Miscellaneous: You represent that you are not bound by any employment contract, restrictive covenant or other restriction preventing you from entering into employment with or carrying out your responsibilities for the Company, or which is in any way inconsistent with the terms of this letter. If there are any agreements of any type that you are aware of which may impact or limit your ability to perform your job at the Company, please let us know as soon as possible.

Please note that this offer letter is your formal offer of employment and supersedes any and all prior or contemporaneous agreements, discussions and understandings, whether written or oral, relating to the subject matter of this letter or your employment with the Company. The resolution of any disputes under this letter will be governed by Massachusetts law.

Please indicate your acceptance of this offer by signing in the appropriate space below and returning a signed copy of this offer letter along with a signed copy of the Employee Agreement to the attention of Brenda Sousa at Constellation Pharmaceuticals.

We are all very excited about the opportunity to work with you, Jeff. Feel free to contact Brenda Sousa or me if you have any questions or need more information. On behalf of all our team members, let me extend a sincere welcome.

Sincerely,

_/s/ Jigar Raythatha___________

Jigar Raythatha

President & CEO

Constellation Pharmaceuticals, Inc.

The foregoing correctly sets forth the terms of my at-will employment with Constellation Pharmaceuticals, Inc. I am not relying on any representations other than those set forth above.

/s/ Jeffrey S. Humphrey, MDMay 27, 2020

Jeffrey S. Humphrey, MD Date

Enclosures:

~Summary of Constellation Benefits

~Constellation’s Employee Non-Solicitation, Confidentiality and Assignment Agreement

Exhibit A

Payments Subject to Section 409A

The following rules shall apply with respect to distribution of the payments and benefits, if any, to be provided under this offer letter in connection with your termination of employment, which must, to the extent required by Section 409A, constitute a “separation from service” (as defined under Section 409A):

(a)

It is intended that each installment of the severance payments and benefits provided under this offer letter shall be treated as a separate “payment” for purposes of Section 409A of the Internal Revenue Code and the guidance issued thereunder (“Section 409A”). Neither you nor Constellation shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.

(b)

If, as of the date of your “separation from service” from Constellation, you are not a “specified employee” (within the meaning of Section 409A), then each installment of the severance payments and benefits shall be made on the dates and terms set forth in this offer letter.

(c)

If, as of the date of your “separation from service” from Constellation, you are a “specified employee” (within the meaning of Section 409A), then:

(i)

Each installment of the severance payments and benefits due under this offer letter that is paid within the short-term deferral period (as defined under Section 409A) shall be treated as a short-term deferral within the meaning of Treasury Regulation Section 1.409A-1(b)(4) to the maximum extent permissible under Section 409A and shall be made on the dates and terms set forth in this offer letter; and

(ii)

Each installment of the severance and benefits due under this offer letter that is not described in paragraph (i) above and that would, absent this subsection, be paid within the six-month period following your “separation from service” from Constellation shall not be paid until the date that is six months and one day after such separation from service, (or, if earlier, upon your death), with any such installments that are required to be delayed being accumulated during the six-month period and paid in a lump sum on the date that is six months and one day following your separation from service and any subsequent installments, if any, being paid in accordance with the dates and terms set forth herein; provided, however, that the preceding provisions of this sentence shall not apply to any installment of severance payments and benefits if any to the maximum extent that such installment is deemed to be paid under a separation pay plan that does not provide for a deferral of compensation by reason of the application of Treasury Regulation Section 1.409A-1(b)(iii) (relating to separation pay upon an involuntary “separation from service”. Any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of your second taxable year following the taxable year in which separation from service occurs.

(d)

The determination of whether and when your separation from service from Constellation has occurred shall be made and in a manner consistent with, and based on the presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely for purposes of this paragraph (d), “Constellation” shall include all persons with whom Constellation would be considered a single employer under Sections 414(b) and 414(c) of the Code.

(e)

All reimbursements and in-kind benefits provided under this offer letter shall be made or provided in accordance with the requirements of Section 409A to the extent that such reimbursements or in-kind benefits are subject to Section 409A, including, where applicable the requirement that (i) any reimbursement is for expenses incurred during your lifetime (or during a shorter period of time specified in this offer letter), (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred and (iv) the right to reimbursement is not subject to set off or liquidation or exchange for any other benefit.

(f)

Notwithstanding anything to the contrary in this offer letter, the Company shall have no liability to you or to any other person to the extent that the payments and benefits hereunder that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant.

cnst-ex311_7.htm

Exhibit 31.1

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT

OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jigar Raythatha, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Constellation Pharmaceuticals, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2020	By:	/s/ Jigar Raythatha
		Jigar Raythatha
		President and Chief Executive Officer
		(Principal Executive Officer)

cnst-ex312_8.htm

Exhibit 31.2

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT

OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Emma Reeve, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Constellation Pharmaceuticals, Inc.;

b) (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313);

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2020	By:	/s/ Emma Reeve
		Emma Reeve
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

cnst-ex321_9.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Constellation Pharmaceuticals, Inc. (the “Company”) for the period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Jigar Raythatha, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 5, 2020	By:	/s/ Jigar Raythatha
		Jigar Raythatha
		President and Chief Executive Officer
		(Principal Executive Officer)

cnst-ex322_6.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Constellation Pharmaceuticals, Inc. (the “Company”) for the period ended June 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Emma Reeve, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 5, 2020	By:	/s/ Emma Reeve
		Emma Reeve
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2020	Jul. 31, 2020
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Trading Symbol	CNST
Entity Registrant Name	CONSTELLATION PHARMACEUTICALS INC
Entity Central Index Key	0001434418
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Small Business	true
Entity File Number	001-38584
Entity Tax Identification Number	26-1741721
Entity Address, Address Line One	215 First Street
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Cambridge
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02142
City Area Code	617
Local Phone Number	714-0555
Entity Common Stock, Shares Outstanding		47,500,032
Document Quarterly Report	true
Document Transition Report	false
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Security Exchange Name	NASDAQ
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 179,112	$ 334,332
Marketable securities	341,401	49,602
Prepaid expenses and other current assets	2,586	3,055
Total current assets	523,099	386,989
Property and equipment, net	1,443	971
Restricted cash	425	425
Operating lease, right-of-use assets	9,378	10,745
Other assets	453
Total assets	534,798	399,130
Current liabilities:
Accounts payable	5,659	7,278
Accrued expenses and other current liabilities	16,538	12,915
Current portion of long-term debt, net of discount	2,150
Current portion of lease liabilities - operating lease	2,937	2,562
Total current liabilities	27,284	22,755
Long-term debt, net of current portion and discount	27,569	29,642
Operating lease liabilities, net of current portion	7,248	8,759
Other long-term liabilities	716	390
Total liabilities	62,817	61,546
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding at June 30, 2020 and December 31, 2019, respectively
Common stock, $0.0001 par value; 200,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively; 47,500,032 and 41,719,039 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	5	4
Additional paid-in capital	846,305	656,973
Accumulated other comprehensive gain (loss)	255	(6)
Accumulated deficit	(374,584)	(319,387)
Total stockholders' equity	471,981	337,584
Total liabilities and stockholders' equity	$ 534,798	$ 399,130

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2020	Dec. 31, 2019
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	47,500,032	41,719,039
Common stock, shares outstanding	47,500,032	41,719,039

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Operating expenses:
Research and development	$ 22,627	$ 15,955	$ 42,702	$ 31,632
General and administrative	6,960	4,886	12,868	9,315
Total operating expenses	29,587	20,841	55,570	40,947
Loss from operations	(29,587)	(20,841)	(55,570)	(40,947)
Other income (expense):
Interest income	686	652	2,090	1,407
Gain on disposal of equipment	29		29
Interest expense	(857)	(578)	(1,707)	(653)
Total other income (expense), net	(142)	74	412	754
Loss before income taxes	(29,729)	(20,767)	(55,158)	(40,193)
Income tax expense	24		39
Net loss	$ (29,753)	$ (20,767)	$ (55,197)	$ (40,193)
Net loss per share attributable to common stockholders, basic and diluted	$ (0.70)	$ (0.80)	$ (1.31)	$ (1.56)
Weighted average number of common shares used in net loss per share attributable to common stockholders, basic and diluted	42,589,415	25,809,556	42,177,523	25,807,132
Comprehensive loss:
Net loss	$ (29,753)	$ (20,767)	$ (55,197)	$ (40,193)
Other comprehensive gain:
Unrealized gain on marketable securities	345	2	261	11
Total other comprehensive gain	345	2	261	11
Comprehensive loss	$ (29,408)	$ (20,765)	$ (54,936)	$ (40,182)

Condensed Consolidated Statements of Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	IPO [Member]	Common Stock [Member]	Common Stock [Member] IPO [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] IPO [Member]	Accumulated Other Comprehensive Gain (Loss) [Member]	Accumulated Deficit [Member]
Beginning balance at Dec. 31, 2018	$ 104,158		$ 3		$ 337,992			$ (233,837)
Beginning balance, shares at Dec. 31, 2018			25,803,135
Stock-based compensation expense	1,313				1,313
Vesting of common stock issued upon early exercise of unvested options, shares			85
Stock option exercises	21				21
Stock option exercises, shares			3,754
Unrealized gain (loss) on marketable securities	9						$ 9
Net loss	(19,426)							(19,426)
Ending balance at Mar. 31, 2019	86,075		$ 3		339,326		9	(253,263)
Ending balance, shares at Mar. 31, 2019			25,806,974
Beginning balance at Dec. 31, 2018	104,158		$ 3		337,992			(233,837)
Beginning balance, shares at Dec. 31, 2018			25,803,135
Net loss	(40,193)
Ending balance at Jun. 30, 2019	67,184		$ 3		341,200		11	(274,030)
Ending balance, shares at Jun. 30, 2019			25,819,423
Beginning balance at Dec. 31, 2018	104,158		$ 3		337,992			(233,837)
Beginning balance, shares at Dec. 31, 2018			25,803,135
Net loss	(85,600)
Ending balance at Dec. 31, 2019	337,584		$ 4		656,973		(6)	(319,387)
Ending balance, shares at Dec. 31, 2019			41,719,039
Beginning balance at Mar. 31, 2019	86,075		$ 3		339,326		9	(253,263)
Beginning balance, shares at Mar. 31, 2019			25,806,974
Stock-based compensation expense	1,797				1,797
Vesting of common stock issued upon early exercise of unvested options, shares			85
Stock option exercises	77				77
Stock option exercises, shares			12,364
Unrealized gain (loss) on marketable securities	2						2
Net loss	(20,767)							(20,767)
Ending balance at Jun. 30, 2019	67,184		$ 3		341,200		11	(274,030)
Ending balance, shares at Jun. 30, 2019			25,819,423
Beginning balance at Dec. 31, 2019	337,584		$ 4		656,973		(6)	(319,387)
Beginning balance, shares at Dec. 31, 2019			41,719,039
Stock-based compensation expense	2,559				2,559
Stock option exercises	911				911
Stock option exercises, shares			103,025
Unrealized gain (loss) on marketable securities	(84)						(84)
Net loss	(25,444)							(25,444)
Ending balance at Mar. 31, 2020	315,526		$ 4		660,443		(90)	(344,831)
Ending balance, shares at Mar. 31, 2020			41,822,064
Beginning balance at Dec. 31, 2019	337,584		$ 4		656,973		(6)	(319,387)
Beginning balance, shares at Dec. 31, 2019			41,719,039
Net loss	(55,197)
Ending balance at Jun. 30, 2020	471,981		$ 5		846,305		255	(374,584)
Ending balance, shares at Jun. 30, 2020			47,500,032
Beginning balance at Mar. 31, 2020	315,526		$ 4		660,443		(90)	(344,831)
Beginning balance, shares at Mar. 31, 2020			41,822,064
Stock-based compensation expense	3,635				3,635
Issuance of stock, net of issuance costs		$ 180,727		$ 1		$ 180,726
Issuance of stock, net of issuance costs, shares				5,500,000
Stock option exercises	1,501				1,501
Stock option exercises, shares			177,968
Unrealized gain (loss) on marketable securities	345						345
Net loss	(29,753)							(29,753)
Ending balance at Jun. 30, 2020	$ 471,981		$ 5		$ 846,305		$ 255	$ (374,584)
Ending balance, shares at Jun. 30, 2020			47,500,032

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net loss	$ (55,197)	$ (40,193)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	267	364
Stock-based compensation expense	6,194	3,110
Non-cash interest expense	403	158
Amortization and accretion on marketable securities	(374)	(523)
Gain on disposal of equipment	(29)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	469	257
Operating lease, right-of-use assets	1,367	1,461
Accounts payable	(2,197)	801
Accrued expenses and other current liabilities	3,623	(131)
Operating lease liabilities	(1,136)	(1,484)
Other assets	(453)
Net cash used in operating activities	(47,063)	(36,180)
Cash flows from investing activities:
Purchase of marketable securities	(373,417)	(63,123)
Purchases of property and equipment	(161)	(469)
Proceeds from sale of property and equipment	29
Proceeds from maturities and sales of marketable securities	82,253	20,600
Net cash used in investing activities	(291,296)	(42,992)
Cash flows from financing activities:
Proceeds from common stock offerings, net of underwriting discounts and commissions	180,727
Proceeds from issuance of long-term debt		19,650
Payment of debt issuance costs		(125)
Proceeds from issuance of common stock upon stock option exercises	2,412	98
Net cash provided by financing activities	183,139	19,623
Net decrease in cash, cash equivalents and restricted cash	(155,220)	(59,549)
Cash, cash equivalents and restricted cash at beginning of period	334,757	115,017
Cash, cash equivalents and restricted cash at end of period	179,537	55,468
Supplemental disclosure of cash flow information:
Interest paid	1,304	347
Income taxes paid	24
Supplemental disclosure of noncash investing and financing information:
Purchases of property and equipment included in accounts payable and accrued expenses	$ 578	$ 41

Nature of the Business and Basis of Presentation

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Nature of the Business and Basis of Presentation

1. Nature of the Business and Basis of Presentation

On June 19, 2020, the Company completed a public offering of an aggregate of 5,500,000 of its common stock and received net proceeds of approximately $180.7 million.

The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Unaudited Interim Consolidated Financial Information

Concentrations of Credit Risk and of Significant Suppliers

Summary of Significant Accounting Policies

Cash, Cash Equivalents and Restricted Cash

	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	179,112	$	334,332
Restricted cash		425		425
Cash, cash equivalents and restricted cash	$	179,537	$	334,757

Fair Value Measurements

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Recently adopted accounting pronouncements

Recently issued accounting pronouncements

Fair Value of Financial Assets and Liabilities

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Assets and Liabilities

3. Fair Value of Financial Assets and Liabilities

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	179,112	$	—	$	—	$	179,112
	$	179,112	$	—	$	—	$	179,112
Marketable securities:
Corporate debt securities	$	—	$	45,133	$	—	$	45,133
Commercial paper		—		71,278		—		71,278
Government securities		—		224,990		—		224,990
Total	$	—	$	341,401	$	—	$	341,401

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	303,345	$	—	$	—	$	303,345
Commercial paper		—		8,986		—		8,986
Corporate debt securities		—		2,001		—		2,001
Reverse Repurchase Agreements (RRAs)		—		20,000		—		20,000
	$	303,345	$	30,987	$	—	$	334,332
Marketable securities:
Corporate debt securities	$	—	$	12,748	$	—	$	12,748
Commercial paper		—		26,808		—		26,808
Government securities		—		10,046		—		10,046
Total	$	—	$	49,602	$	—	$	49,602

Money market funds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 1 measurement within the fair value hierarchy.

Marketable Securities

6 Months Ended

Jun. 30, 2020

Cash And Cash Equivalents [Abstract]

Marketable Securities

4. Marketable Securities

The following table summarizes the Company’s marketable securities and cash equivalents as of June 30, 2020, and December 31, 2019, respectively (in thousands):

	June 30, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	179,112	$	—	$	—		$	179,112
Total cash equivalents	$	179,112	$	—	$	—		$	179,112

Marketable securities:
Corporate debt securities	$	44,960	$	176	$	(3	)	$	45,133
Commercial paper		71,278		—		—			71,278
Government securities		224,908		86		(4	)		224,990
Total marketable securities	$	341,146	$	262	$	(7	)	$	341,401
Total cash equivalents and marketable securities	$	520,258	$	262	$	(7	)	$	520,513

	December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	303,345	$	—	$	—		$	303,345
Commercial paper		8,986		—		—			8,986
Corporate debt securities		2,001		—		—			2,001
Reverse Repurchase Agreements (RRAs)		20,000		—		—			20,000
Total cash equivalents	$	334,332	$	—	$	—		$	334,332

Marketable securities:
Corporate debt securities	$	12,753	$	—	$	(5	)	$	12,748
Commercial paper		26,808		—		—			26,808
Government securities		10,047		—		(1	)		10,046
Total marketable securities	$	49,608	$	—	$	(6	)	$	49,602
Total cash equivalents and marketable securities	$	383,940	$	—	$	(6	)	$	383,934

Accrued Expenses and Other Current Liabilities

6 Months Ended

Jun. 30, 2020

Payables And Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Accrued employee compensation and benefits	$	2,868	$	4,527
Accrued external research and development expense		12,716		7,707
Accrued professional fees		425		184
Other		529		497
	$	16,538	$	12,915

Collaboration Agreement

6 Months Ended

Jun. 30, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Collaboration Agreement

6. Collaboration Agreement

The LLS Agreement requires the Company to make payments to LLS upon the Company’s achievement of specified milestones that could total up to $25.0 million in aggregate (see Note 11).

Debt

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Debt

7. Debt

As of June 30, 2020 and December 31, 2019, debt payable consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Principal amount of term loans	$	30,000		$	30,000
Debt discount current portion		(153	)		—
Less: Current portion		(2,150	)		—
Long-term debt, net of current portion		27,697			30,000
Debt discount net of current portion		(128	)		(358	)
Long-term debt, net of discount and current portion	$	27,569		$	29,642

Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Equity

8. Equity

Preferred Stock

Common Stock

As of June 30, 2020, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 200,000,000 shares of common stock, $0.0001 par value per share.

At-the-Market Offering

Follow-On Offering

On June 19, 2020, the Company completed a public offering of an aggregate of 5,500,000 of its common stock and received net proceeds of approximately $180.7 million.

Warrants to Purchase Common Stock

As of June 30, 2020, the Company had outstanding warrants to purchase common stock as follows:

Issuance Date	Term (in years)	Exercise Price		Number of Common Shares Issuable under Warrant
May 23, 2011	10	$	1.55		61,868
June 28, 2013	10	$	13.22		7,569
September 30, 2014	10	$	13.22		15,139
					84,576

Stock-Based Compensation

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

9. Stock-Based Compensation

2018 Equity Incentive Plan

2018 Employee Stock Purchase Plan

Stock Option Issuances

The following is a summary of stock option activity for the six months ended June 30, 2020:

				Weighted		Weighted
				Average		Average		Aggregate
	Number			Exercise		Contractual		Intrinsic
	of Shares			Price		Term		Value
						(in years)		(in thousands)
Outstanding as of December 31, 2019		4,211,068		$	8.95		8.39	$	160,689
Granted		1,167,482		$	36.22
Exercised		(280,993	)	$	8.58
Forfeited		(92,649	)	$	13.33
Outstanding as of June 30, 2020		5,004,908		$	15.25		8.33	$	82,120
Vested and expected to vest as of June 30, 2020		5,004,908		$	15.25		8.33	$	82,120
Options exercisable as of June 30, 2020		1,681,244		$	8.53		7.58	$	36,496

The Company estimated the fair value of each stock option award using the Black-Scholes option-pricing model based on the following assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Risk-free interest rate		0.47	%		2.06	%		1.21	%		2.44	%
Expected volatility		84.78	%		83.08	%		82.85	%		82.24	%
Expected dividend yield		—			—			—			—
Expected term (in years)		5.90			5.68			6.02			6.02

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its statements of operations and comprehensive loss (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development expenses	$	1,402	$	732	$	2,408	$	1,256
General and administrative expenses		2,233		1,065		3,786		1,854
Total	$	3,635	$	1,797	$	6,194	$	3,110

Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

10. Leases

Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

Research Agreements

Indemnification Agreements

Legal Proceedings

The Company is not a party to any material legal matters or claims and did not have contingency reserves established for any litigation liabilities as of June 30, 2020 or December 31, 2019.

Net Loss Per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Net Loss Per Share

12. Net Loss Per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Numerator:
Net loss	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)
Net loss attributable to common stockholders	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)

Denominator:
Weighted average common shares outstanding, basic and diluted		42,589,415			25,809,556			42,177,523			25,807,132

Net loss per share attributable to common stockholders, basic and diluted	$	(0.70	)	$	(0.80	)	$	(1.31	)	$	(1.56	)

	June 30,
	2020		2019
Warrants for the purchase of common stock		84,576		95,930
Options to purchase common stock		5,004,908		4,829,732
Total		5,089,484		4,925,662

Retirement Plan

6 Months Ended

Jun. 30, 2020

Compensation And Retirement Disclosure [Abstract]

Retirement Plan

13. Retirement Plan

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Unaudited interim consolidated financial information

Unaudited Interim Consolidated Financial Information

Concentrations of credit risk and of significant suppliers

Concentrations of Credit Risk and of Significant Suppliers

Cash, cash equivalents and restricted cash

Cash, Cash Equivalents and Restricted Cash

	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	179,112	$	334,332
Restricted cash		425		425
Cash, cash equivalents and restricted cash	$	179,537	$	334,757

Fair value measurements

Fair Value Measurements

•

Level 1 – Quoted prices in active markets for identical assets or liabilities.

•

Recently adopted accounting pronouncements

Recently issued accounting pronouncements

Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Schedule of Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consists of the following (in thousands):

	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	179,112	$	334,332
Restricted cash		425		425
Cash, cash equivalents and restricted cash	$	179,537	$	334,757

Fair Value of Financial Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

	June 30, 2020
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	179,112	$	—	$	—	$	179,112
	$	179,112	$	—	$	—	$	179,112
Marketable securities:
Corporate debt securities	$	—	$	45,133	$	—	$	45,133
Commercial paper		—		71,278		—		71,278
Government securities		—		224,990		—		224,990
Total	$	—	$	341,401	$	—	$	341,401

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	303,345	$	—	$	—	$	303,345
Commercial paper		—		8,986		—		8,986
Corporate debt securities		—		2,001		—		2,001
Reverse Repurchase Agreements (RRAs)		—		20,000		—		20,000
	$	303,345	$	30,987	$	—	$	334,332
Marketable securities:
Corporate debt securities	$	—	$	12,748	$	—	$	12,748
Commercial paper		—		26,808		—		26,808
Government securities		—		10,046		—		10,046
Total	$	—	$	49,602	$	—	$	49,602

Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2020

Cash And Cash Equivalents [Abstract]

Schedule of Marketable Securities and Cash Equivalents

The following table summarizes the Company’s marketable securities and cash equivalents as of June 30, 2020, and December 31, 2019, respectively (in thousands):

	June 30, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	179,112	$	—	$	—		$	179,112
Total cash equivalents	$	179,112	$	—	$	—		$	179,112

Marketable securities:
Corporate debt securities	$	44,960	$	176	$	(3	)	$	45,133
Commercial paper		71,278		—		—			71,278
Government securities		224,908		86		(4	)		224,990
Total marketable securities	$	341,146	$	262	$	(7	)	$	341,401
Total cash equivalents and marketable securities	$	520,258	$	262	$	(7	)	$	520,513

	December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents:
Money market funds	$	303,345	$	—	$	—		$	303,345
Commercial paper		8,986		—		—			8,986
Corporate debt securities		2,001		—		—			2,001
Reverse Repurchase Agreements (RRAs)		20,000		—		—			20,000
Total cash equivalents	$	334,332	$	—	$	—		$	334,332

Marketable securities:
Corporate debt securities	$	12,753	$	—	$	(5	)	$	12,748
Commercial paper		26,808		—		—			26,808
Government securities		10,047		—		(1	)		10,046
Total marketable securities	$	49,608	$	—	$	(6	)	$	49,602
Total cash equivalents and marketable securities	$	383,940	$	—	$	(6	)	$	383,934

Accrued Expenses and Other Current Liabilities (Tables)

6 Months Ended

Jun. 30, 2020

Payables And Accruals [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	June 30, 2020		December 31, 2019
Accrued employee compensation and benefits	$	2,868	$	4,527
Accrued external research and development expense		12,716		7,707
Accrued professional fees		425		184
Other		529		497
	$	16,538	$	12,915

Debt (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Components of Debt Payable

As of June 30, 2020 and December 31, 2019, debt payable consisted of the following (in thousands):

	June 30, 2020			December 31, 2019
Principal amount of term loans	$	30,000		$	30,000
Debt discount current portion		(153	)		—
Less: Current portion		(2,150	)		—
Long-term debt, net of current portion		27,697			30,000
Debt discount net of current portion		(128	)		(358	)
Long-term debt, net of discount and current portion	$	27,569		$	29,642

Equity (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Warrant Activities

As of June 30, 2020, the Company had outstanding warrants to purchase common stock as follows:

Issuance Date	Term (in years)	Exercise Price		Number of Common Shares Issuable under Warrant
May 23, 2011	10	$	1.55		61,868
June 28, 2013	10	$	13.22		7,569
September 30, 2014	10	$	13.22		15,139
					84,576

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Company's Option Activity

The following is a summary of stock option activity for the six months ended June 30, 2020:

				Weighted		Weighted
				Average		Average		Aggregate
	Number			Exercise		Contractual		Intrinsic
	of Shares			Price		Term		Value
						(in years)		(in thousands)
Outstanding as of December 31, 2019		4,211,068		$	8.95		8.39	$	160,689
Granted		1,167,482		$	36.22
Exercised		(280,993	)	$	8.58
Forfeited		(92,649	)	$	13.33
Outstanding as of June 30, 2020		5,004,908		$	15.25		8.33	$	82,120
Vested and expected to vest as of June 30, 2020		5,004,908		$	15.25		8.33	$	82,120
Options exercisable as of June 30, 2020		1,681,244		$	8.53		7.58	$	36,496

Schedule of Weighted Average Basis Assumptions Used in Black-Scholes Option-Pricing Model

The Company estimated the fair value of each stock option award using the Black-Scholes option-pricing model based on the following assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Risk-free interest rate		0.47	%		2.06	%		1.21	%		2.44	%
Expected volatility		84.78	%		83.08	%		82.85	%		82.24	%
Expected dividend yield		—			—			—			—
Expected term (in years)		5.90			5.68			6.02			6.02

Schedule of Stock Based Compensation Expense Related to Statements of Operations and Comprehensive Loss

The Company recorded stock-based compensation expense in the following expense categories of its statements of operations and comprehensive loss (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development expenses	$	1,402	$	732	$	2,408	$	1,256
General and administrative expenses		2,233		1,065		3,786		1,854
Total	$	3,635	$	1,797	$	6,194	$	3,110

Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Calculations of Basic and Diluted Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Numerator:
Net loss	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)
Net loss attributable to common stockholders	$	(29,753	)	$	(20,767	)	$	(55,197	)	$	(40,193	)

Denominator:
Weighted average common shares outstanding, basic and diluted		42,589,415			25,809,556			42,177,523			25,807,132

Net loss per share attributable to common stockholders, basic and diluted	$	(0.70	)	$	(0.80	)	$	(1.31	)	$	(1.56	)

Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

	June 30,
	2020		2019
Warrants for the purchase of common stock		84,576		95,930
Options to purchase common stock		5,004,908		4,829,732
Total		5,089,484		4,925,662

Nature of the Business and Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 19, 2020	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Issuance of stock, net of issuance costs, shares	5,500,000
Proceeds from common stock offerings, net of underwriting discounts and commissions	$ 180,700					$ 180,727
Net losses		$ 29,753	$ 25,444	$ 20,767	$ 19,426	55,197	$ 40,193	$ 85,600
Accumulated deficit		$ 374,584				$ 374,584		$ 319,387
Common Stock [Member]
Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items]
Issuance of stock, net of issuance costs, shares	5,500,000
Proceeds from common stock offerings, net of underwriting discounts and commissions	$ 180,700

Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Significant Accounting Policies [Line Items]
Percentage Securities for Reverse Repurchase Agreements	102.00%
Restricted cash	$ 425	$ 425
Letter of Credit [Member]
Significant Accounting Policies [Line Items]
Restricted cash	$ 400
Maximum [Member]
Significant Accounting Policies [Line Items]
Percentage Securities for Reverse Repurchase Agreements	102.00%
Reverse repurchase agreements maturity period	30 days

Summary of Significant Accounting Policies - Schedule of Cash, Cash Equivalents and Restricted Cash (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Cash and cash equivalents	$ 179,112	$ 334,332
Restricted cash	425	425
Cash, cash equivalents and restricted cash	$ 179,537	$ 334,757	$ 55,468	$ 115,017

Fair Value of Financial Assets and Liabilities - Schedule of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Cash equivalents:
Cash and cash equivalents	$ 179,112	$ 334,332
Marketable securities:
Marketable securities	341,401	49,602
Commercial Paper [Member]
Cash equivalents:
Cash and cash equivalents		8,986
Marketable securities:
Marketable securities	71,278	26,808
Government Securities [Member]
Marketable securities:
Marketable securities	224,990	10,046
Reverse Repurchase Agreements (RRAs)
Cash equivalents:
Cash and cash equivalents		20,000
Fair Value, Inputs, Level 1 [Member]
Cash equivalents:
Cash and cash equivalents	179,112	303,345
Fair Value, Inputs, Level 2 [Member]
Cash equivalents:
Cash and cash equivalents		30,987
Marketable securities:
Marketable securities	341,401	49,602
Fair Value, Inputs, Level 2 [Member] \| Commercial Paper [Member]
Cash equivalents:
Cash and cash equivalents		8,986
Marketable securities:
Marketable securities	71,278	26,808
Fair Value, Inputs, Level 2 [Member] \| Government Securities [Member]
Marketable securities:
Marketable securities	224,990	10,046
Fair Value, Inputs, Level 2 [Member] \| Reverse Repurchase Agreements (RRAs)
Cash equivalents:
Cash and cash equivalents		20,000
Money Market Funds [Member]
Cash equivalents:
Cash and cash equivalents	179,112	303,345
Money Market Funds [Member] \| Fair Value, Inputs, Level 1 [Member]
Cash equivalents:
Cash and cash equivalents	179,112	303,345
Corporate Debt Securities [Member]
Cash equivalents:
Cash and cash equivalents		2,001
Marketable securities:
Marketable securities	45,133	12,748
Corporate Debt Securities [Member] \| Fair Value, Inputs, Level 2 [Member]
Cash equivalents:
Cash and cash equivalents		2,001
Marketable securities:
Marketable securities	$ 45,133	$ 12,748

Fair Value of Financial Assets and Liabilities - Additional Information (Detail) - USD ($)	Jun. 30, 2020	Dec. 31, 2019
Fair Value Disclosures [Abstract]
Fair value of assets transfers level 1 to level 2	$ 0	$ 0
Fair value of assets transfers level 2 to level 1	0	0
Fair value of liabilities transfers level 1 to level 2	0	0
Fair value of liabilities transfers level 2 to level 1	$ 0	$ 0

Marketable Securities - Schedule of Marketable Securities and Cash Equivalents (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Cash And Cash Equivalents [Line Items]
Amortized Cost	$ 520,258	$ 383,940
Unrealized Gains	262
Unrealized Losses	(7)	(6)
Fair Value	520,513	383,934
Total Cash Equivalents [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost	179,112	334,332
Fair Value	179,112	334,332
Total marketable securities [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost	341,146	49,608
Unrealized Gains	262
Unrealized Losses	(7)	(6)
Fair Value	341,401	49,602
Corporate Debt Securities [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost	44,960	12,753
Unrealized Gains	176
Unrealized Losses	(3)	(5)
Fair Value	45,133	12,748
Commercial Paper [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost	71,278	26,808
Fair Value	71,278	26,808
Government Securities [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost	224,908	10,047
Unrealized Gains	86
Unrealized Losses	(4)	(1)
Fair Value	224,990	10,046
Money Market Funds [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost	179,112	303,345
Fair Value	$ 179,112	303,345
Commercial Paper [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost		8,986
Fair Value		8,986
Corporate Debt Securities [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost		2,001
Fair Value		2,001
Reverse Repurchase Agreements (RRAs) [Member]
Cash And Cash Equivalents [Line Items]
Amortized Cost		20,000
Fair Value		$ 20,000

Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Payables And Accruals [Abstract]
Accrued employee compensation and benefits	$ 2,868	$ 4,527
Accrued external research and development expense	12,716	7,707
Accrued professional fees	425	184
Other	529	497
Accrued expenses and other current liabilities	$ 16,538	$ 12,915

Collaboration Agreement - Additional Information (Detail) - LLS Agreement [Member] - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Milestone method revenue recognized	$ 0	$ 7,300,000
Milestone payments maximum amount	$ 25,000,000.0

Debt - Additional Information (Detail) - Loan Agreement [Member] - USD ($)	Mar. 20, 2019	Jun. 30, 2020
Debt Instrument [Line Items]
Loan amount		$ 30,000,000.0
Unused amount expired		$ 10,000,000.0
Debt instrument, interest rate terms	The term loan bears interest at an annual rate equal to the greater of 8.55% and the prime rate of interest plus 2.55%.
Frequency of periodic payment	The Loan Agreement provides for interest-only payments until April 30, 2021, and repayment of the aggregate outstanding principal balance of the term loan in monthly installments starting on May 1, 2021 and continuing through April 1, 2023 (the “Maturity Date”).
Loan Agreement maturity date	Apr. 01, 2023
Debt instrument, fee description	The Company paid a fee of $0.3 million upon closing and is required to pay a fee of 6.35% of the aggregate amount of advances under the Loan Agreement at maturity.
Debt instrument closing fee	$ 300,000
Debt instrument, redemption, description	At its option, the Company may elect to prepay all or a portion of the outstanding advances by paying the entire principal balance (or a portion thereof) and all accrued and unpaid interest thereon plus a prepayment charge equal to the following percentage of the principal amount being prepaid: 2% if an advance is prepaid during the first 12 months following the applicable advance date, 1% if an advance is prepaid after 12 months but prior to 24 months following the applicable advance date, and 0.5% if an advance is prepaid any time after 24 months following the applicable advance date but prior to the Maturity Date.
Maximum [Member]
Debt Instrument [Line Items]
Loan amount	$ 40,000,000.0

Debt - Components of Debt Payable (Detail) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Disclosure [Abstract]
Principal amount of term loans	$ 30,000	$ 30,000
Debt discount current portion	(153)
Less: Current portion	(2,150)
Long-term debt, net of current portion	27,697	30,000
Debt discount net of current portion	(128)	(358)
Long-term debt, net of discount and current portion	$ 27,569	$ 29,642

Equity - Additional Information (Detail) - USD ($)		6 Months Ended
Equity - Additional Information (Detail) - USD ($)	Jun. 19, 2020	Jun. 30, 2020	Dec. 31, 2019
Class Of Stock [Line Items]
Preferred stock, shares authorized		5,000,000	5,000,000
Common stock, shares authorized		200,000,000	200,000,000
Common stock, par value		$ 0.0001	$ 0.0001
Sale of stock		47,500,032	41,719,039
Shares issued	5,500,000
Net proceeds from issuance of initial public offering	$ 180,700,000	$ 180,727,000
Maximum [Member] \| Sales Agreement [Member]
Class Of Stock [Line Items]
Gross proceeds from issuance of common shares		$ 50,000,000.0
Common Stock [Member]
Class Of Stock [Line Items]
Shares issued	5,500,000
Net proceeds from issuance of initial public offering	$ 180,700,000
Common Stock [Member] \| Sales Agreement [Member]
Class Of Stock [Line Items]
Commission, percentage of gross proceeds of common stock		3.00%
Sale of stock		0

Equity - Schedule of Warrant Activities (Detail) - Common Stock [Member]	6 Months Ended
	Jun. 30, 2020 $ / shares shares
Class of Warrant or Right [Line Items]
Number of Common Shares Issuable under Warrant	84,576
Warrant One [Member]
Class of Warrant or Right [Line Items]
Warrant Issue date	May 23, 2011
Warrant Term	10 years
Warrants exercise price \| $ / shares	$ 1.55
Number of Common Shares Issuable under Warrant	61,868
Warrant Two [Member]
Class of Warrant or Right [Line Items]
Warrant Issue date	Jun. 28, 2013
Warrant Term	10 years
Warrants exercise price \| $ / shares	$ 13.22
Number of Common Shares Issuable under Warrant	7,569
Warrant Three [Member]
Class of Warrant or Right [Line Items]
Warrant Issue date	Sep. 30, 2014
Warrant Term	10 years
Warrants exercise price \| $ / shares	$ 13.22
Number of Common Shares Issuable under Warrant	15,139

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended		6 Months Ended
	Jan. 31, 2020	Jun. 30, 2018	Jun. 30, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized compensation cost related to unvested stock-based awards			$ 41.1
Unvested stock based weighted average period			3 years 7 days
Employee Stock Option [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options granted			1,167,482
Weighted average exercise price			$ 36.22
Weighted average grant-date fair value per share			$ 25.41
2018 Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares reserved for issuance		3,025,101
Shares remained available for future issuance			2,271,872
Number of shares increased reserved for issuance under plan	1,668,762
2018 Plan [Member] \| Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock available for issuance		2,216,368
Percentage of shares of common stock available for issuance		4.00%
ESPP [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares reserved for issuance		272,504
Shares remained available for future issuance			689,694
Number of shares increased reserved for issuance under plan	417,190
ESPP [Member] \| Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares of common stock available for issuance		545,008
Percentage of shares of common stock available for issuance		1.00%

Stock-Based Compensation - Summary of Company's Option Activity (Detail) - Employee Stock Option [Member] $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of Shares Outstanding, Beginning Balance \| shares	4,211,068
Number of Shares, Granted \| shares	1,167,482
Number of Shares, Exercised \| shares	(280,993)
Number of Shares, Forfeited \| shares	(92,649)
Number of Shares Outstanding, Ending Balance \| shares	5,004,908	4,211,068
Number of Shares, Vested and expected to vest \| shares	5,004,908
Number of Shares, Options exercisable \| shares	1,681,244
Weighted Average Exercise Price Outstanding, Beginning Balance \| $ / shares	$ 8.95
Weighted Average Exercise Price, Granted \| $ / shares	36.22
Weighted Average Exercise Price, Exercised \| $ / shares	8.58
Weighted Average Exercise Price, Forfeited \| $ / shares	13.33
Weighted Average Exercise Price Outstanding, Ending Balance \| $ / shares	15.25	$ 8.95
Weighted Average Exercise Price, Vested and expected to vest \| $ / shares	15.25
Weighted Average Exercise Price, Options exercisable \| $ / shares	$ 8.53
Weighted Average Contractual Term (in years) Outstanding	8 years 3 months 29 days	8 years 4 months 20 days
Weighted Average Contractual Term (in years), Vested and expected to vest	8 years 3 months 29 days
Weighted Average Contractual Term (in years), Options exercisable	7 years 6 months 29 days
Aggregate Intrinsic Value Outstanding, Beginning Balance \| $	$ 82,120	$ 160,689
Aggregate Intrinsic Value, Vested and expected to vest \| $	82,120
Exercisable at June 30, 2020 \| $	$ 36,496

Stock-Based Compensation - Schedule of Weighted Average Basis Assumptions Used in Black-Scholes Option-Pricing Model (Detail) - Valuation Technique, Option Pricing Model	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Risk-free interest rate	0.47%	2.06%	1.21%	2.44%
Expected volatility	84.78%	83.08%	82.85%	82.24%
Expected term (in years)	5 years 10 months 24 days	5 years 8 months 4 days	6 years 7 days	6 years 7 days

Stock-Based Compensation - Stock-Based Compensation Expense Related to Statements of Operations and Comprehensive Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	$ 3,635	$ 1,797	$ 6,194	$ 3,110
Research and Development Expenses [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	1,402	732	2,408	1,256
General and Administrative Expenses [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	$ 2,233	$ 1,065	$ 3,786	$ 1,854

Leases - Additional Information (Detail) - ft²		1 Months Ended	6 Months Ended
Leases - Additional Information (Detail) - ft²	Jun. 19, 2020	Jun. 30, 2019	Jun. 30, 2020
Leases [Line Items]
Office and laboratory space			47,546
Lease expiration date			Jun. 30, 2023
2019 Sublease
Leases [Line Items]
Rentable office space under sublease		4,422
Sublease extended date	Jul. 31, 2020
Sublease expiration date		Jun. 20, 2020

Commitments and Contingencies - Additional Information (Detail) - USD ($)	6 Months Ended
	Jun. 30, 2020	Dec. 31, 2019
Commitments And Contingencies [Line Items]
License maintenance fees	$ 100,000
Contingent milestone payments	15,700,000
Contingency reserve for litigation liabilities	0	$ 0
LLS Agreement [Member]
Commitments And Contingencies [Line Items]
Milestone payments maximum amount	$ 25,000,000.0

Net Loss Per Share - Calculations of Basic and Diluted Net Loss per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Numerator:
Net loss	$ (29,753)	$ (25,444)	$ (20,767)	$ (19,426)	$ (55,197)	$ (40,193)	$ (85,600)
Net loss attributable to common stockholders	$ (29,753)		$ (20,767)		$ (55,197)	$ (40,193)
Denominator:
Weighted average common shares outstanding, basic and diluted	42,589,415		25,809,556		42,177,523	25,807,132
Net loss per share attributable to common stockholders, basic and diluted	$ (0.70)		$ (0.80)		$ (1.31)	$ (1.56)

Net Loss Per Share - Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Detail) - shares	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	5,089,484	4,925,662
Warrants for the purchase of common stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	84,576	95,930
Options to purchase common stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities	5,004,908	4,829,732

Retirement Plan - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Compensation And Retirement Disclosure [Abstract]
Matching contributions made	$ 0.1	$ 0.1	$ 0.3	$ 0.2
Defined Contribution Plan, Plan Name [Extensible List]			us-gaap:RetirementPlanNameOtherMember