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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 March 31, 2022
OR
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: 001-37449
ALPINE IMMUNE SCIENCES, INC.
(Exact name of registrant as specified in its charter)
Delaware20-8969493
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
188 East Blaine Street, Suite 200
Seattle, WA  98102
(206) 788-4545
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
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, par value $0.001 per shareALPNThe Nasdaq Stock Market LLC
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 May 5, 2022, the registrant had 30,328,462 shares of common stock, $0.001 par value per share, outstanding.




ALPINE IMMUNE SCIENCES, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
 
TABLE OF CONTENTS
 
 
 
 
 
 
   
   
 
   
 
 
In this report, unless otherwise stated or as the context otherwise requires, references to “Alpine,” “the Company,” “we,” “us,” “our” and similar references refer to Alpine Immune Sciences, Inc. “TIP” and “SIP are registered trademarks and the Company logo is a trademark of Alpine Immune Sciences, Inc. All rights reserved. This report also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks, and trade names appearing in this report are the property of their respective holders. 




SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report captioned “Risk Factors.” The following is a summary of the principal risks we face:

Our approach to the discovery and development of innovative therapeutic treatments based on our technology is unproven and may not result in marketable products.
Our therapeutic candidates are in early stages of development and may fail in development or suffer delays that materially and adversely affect their commercial viability.
Product development involves a lengthy and expensive process with an uncertain outcome, and results of earlier preclinical and clinical trials may not be predictive of future clinical trial results.
We face competition from entities that have developed or may develop therapeutic candidates for our target disease indications, including companies developing novel treatments and technology platforms based on modalities and technology similar to us. If these companies develop technologies or therapeutic candidates more rapidly than we do, or their technologies, including delivery technologies, are more effective, our ability to develop and successfully commercialize therapeutic candidates may be adversely affected.
To date, our revenue has been primarily derived from our collaboration agreements, and our success will be dependent, in part, on our collaborators’ efforts to develop our therapeutic candidates.
If third parties on which we depend to conduct our clinical or preclinical studies, or any future clinical trials, do not perform as expected, fail to satisfy regulatory or legal requirements, or miss expected deadlines, our development program could be delayed, which may result in materially adverse effects on our business, financial condition, results of operations, and prospects.
We may not successfully engage in strategic transactions, including any additional collaborations we seek, which could adversely affect our ability to develop and commercialize therapeutic candidates, impact our cash position, increase our expenses, and present significant distractions to our management.
If any of our therapeutic candidates are approved for marketing and commercialization and we are unable to develop sales, marketing and distribution capabilities on our own or enter into agreements with third parties to perform these functions on acceptable terms, we may be unable to successfully commercialize any such future products.
The COVID-19 coronavirus could adversely impact our business, including our clinical trials.
We depend on our information technology systems and any failure of these systems could harm our business.
We will need to raise substantial additional funds to advance development of our therapeutic candidates, and we cannot guarantee we will have sufficient funds available in the future to develop and commercialize our current or future therapeutic candidates.
We are an early-stage biopharmaceutical company with a history of losses, we expect to continue to incur significant loses for the foreseeable future, we may never achieve or maintain profitability, and we have a limited operating history that may make it difficult for investors to evaluate the potential success of our business.
If we are not able to obtain and enforce patent protection for our technology, including therapeutic candidates, therapeutic products, and platform technology, development of our therapeutic candidates and platform, and commercialization of our therapeutic products may be materially and adversely affected.
We may license patent rights from third-party owners or licensees. If such owners or licensees do not properly or successfully obtain, maintain or enforce the patents underlying such licenses, or if they retain or license to others any competing rights, our competitive position and business prospects may be materially and adversely affected.
We or our licensors, collaborators, or any future strategic partners may become subject to third-party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development of our therapeutic candidates and commercialization of our therapeutic products, or put our patents and other proprietary rights at risk.



If we fail to comply with our obligations under any license, collaboration, or other agreements, we may be required to pay damages and could lose intellectual property rights necessary for developing and protecting our technology, including our platform technology, therapeutic candidates, and therapeutic products, or we could lose certain rights to grant sublicenses, either of which could have a material adverse effect on our results of operations and business prospects.
We may be unable to obtain U.S. or foreign regulatory approval and, as a result, may be unable to commercialize our therapeutic candidates.
The healthcare industry is heavily regulated in the U.S. at the federal, state, and local levels, and our failure to comply with applicable requirements may subject us to penalties and negatively affect our financial condition.
Our stock price may be volatile, and an active, liquid, and orderly trading market may not develop for our common stock. As a result, stockholders may not be able to resell shares at or above their purchase price.
Our officers and directors, and their respective affiliates, have a controlling influence over our business affairs and may make business decisions with which stockholders disagree and which may adversely affect the value of their investment.
Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited).
ALPINE IMMUNE SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 March 31, 2022December 31, 2021
Assets(unaudited) 
Current assets:  
Cash and cash equivalents$34,889 $67,907 
Short-term investments136,980 94,396 
Accounts receivable132 25,000 
Prepaid expenses and other current assets4,095 4,710 
Total current assets176,096 192,013 
Restricted cash, noncurrent254 254 
Property and equipment, net1,728 1,716 
Operating lease, right-of-use asset8,691 8,837 
Long-term investments46,948 52,866 
Deferred tax asset221 214 
Total assets$233,938 $255,900 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$1,903 $3,349 
Accrued liabilities9,203 9,417 
Deferred revenue, current51,760 51,773 
Operating lease liability, current647 617 
Current portion of long-term debt4,652 4,622 
Total current liabilities68,165 69,778 
Deferred revenue, noncurrent37,346 50,830 
Operating lease liability, noncurrent10,794 11,009 
Long-term debt2,206 3,380 
Total liabilities118,511 134,997 
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized at March 31, 2022 and December 31, 2021; zero shares issued and outstanding at March 31, 2022 and December 31, 2021
  
Common stock, $0.001 par value per share; 200,000,000 shares authorized at March 31, 2022 and December 31, 2021; 31,544,901 shares issued and 30,294,434 shares outstanding at March 31, 2022; 31,444,746 shares issued and 30,194,279 shares outstanding at December 31, 2021
30 30 
Treasury stock, at cost; 1,250,467 shares at March 31, 2022 and December 31, 2021
  
Additional paid-in capital290,184 287,345 
Accumulated other comprehensive loss(1,061)(273)
Accumulated deficit(173,726)(166,199)
Total stockholders’ equity115,427 120,903 
Total liabilities and stockholders’ equity$233,938 $255,900 
 The accompanying notes are an integral part of these condensed consolidated financial statements.
1


ALPINE IMMUNE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share amounts)
 
 Three Months Ended
March 31,
 20222021
 (unaudited)
Collaboration revenue$13,629 $3,204 
Operating expenses:
Research and development16,311 10,437 
General and administrative4,775 3,256 
Total operating expenses21,086 13,693 
Loss from operations(7,457)(10,489)
Other income (expense):
Interest expense(154)(217)
Interest income145 63 
Other expense(57) 
Loss before taxes(7,523)(10,643)
Income tax expense(4) 
Net loss$(7,527)$(10,643)
Comprehensive income (loss):
Unrealized loss on investments(774)(5)
Unrealized loss on foreign currency translation(14)(15)
Comprehensive loss$(8,315)$(10,663)
Weighted-average shares used to compute basic and diluted net loss per share30,267,472 23,869,860 
Basic and diluted net loss per share$(0.25)$(0.45)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

2


ALPINE IMMUNE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)
(in thousands, except share amounts)
 Common StockTreasuryAdditional
Paid-in Capital
Accumulated
Other Comprehensive Loss
Accumulated DeficitTotal
Stockholders’ Equity
 SharesAmountSharesAmount
Balance, December 31, 202023,803,183 $24 50,467 $ $177,947 $53 $(115,866)$62,158 
Stock-based compensation— — — — 1,597 — — 1,597 
Issuance of common stock under equity incentive plans78,955 — — — 202 — — 202 
Unrealized loss on investments— — — — — (5)— (5)
Unrealized loss on foreign currency translation— — — — — (15)— (15)
Net loss— — — — — — (10,643)(10,643)
Balance, March 31, 202123,882,138 $24 50,467 $ $179,746 $33 $(126,509)$53,294 
Balance, December 31, 202130,194,279 $30 1,250,467 $ $287,345 $(273)$(166,199)$120,903 
Stock-based compensation— — — — 2,289 — — 2,289 
Issuance of common stock under equity incentive plans100,155 — — — 550 — — 550 
Unrealized loss on investments— — — — — (774)— (774)
Unrealized loss on foreign currency translation— — — — — (14)— (14)
Net loss— — — — — — (7,527)(7,527)
Balance, March 31, 202230,294,434 $30 1,250,467 $ $290,184 $(1,061)$(173,726)$115,427 

The accompanying notes are an integral part of these condensed consolidated financial statements.
3


ALPINE IMMUNE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months Ended
March 31,
 20222021
 (unaudited)
Operating activities  
Net loss$(7,527)$(10,643)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense148 165 
Amortization of premium/discount on investments332 218 
Non-cash interest expense56 72 
Loss on sale of property and equipment57  
Stock-based compensation expense2,289 1,597 
Changes in operating assets and liabilities:
Accounts receivable24,868  
Prepaid expenses and other current assets613 (2,194)
Right-of-use asset146 150 
Accounts payable and accrued liabilities(1,851)(1,955)
Deferred revenue(13,497)(3,203)
Lease liabilities(185)(178)
Net cash provided by (used in) operating activities5,449 (15,971)
Investing activities
Purchases of property and equipment(26)(39)
Purchase of investments(46,277)(9,907)
Maturities of investments8,500 3,400 
Net cash used in investing activities(37,803)(6,546)
Financing activities
Repayment of debt(1,200) 
Proceeds from exercise of stock options550 202 
Net cash (used in) provided by financing activities(650)202 
Effect of exchange rate on cash, cash equivalents and restricted cash(14)(15)
Net decrease in cash and cash equivalents and restricted cash(33,018)(22,330)
Cash and cash equivalents and restricted cash, beginning of period68,161 35,213 
Cash and cash equivalents and restricted cash, end of period$35,143 $12,883 
Supplemental Information
Cash paid for interest$104 $144 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
4


ALPINE IMMUNE SCIENCES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Information as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 is unaudited)

1. Description of Business
Alpine Immune Sciences, Inc. (the “Company”, “Alpine”, “we”, “us”, or “our”), together with its consolidated subsidiaries, is a clinical-stage biopharmaceutical company dedicated to discovering and developing innovative, protein-based immunotherapies to treat cancer and autoimmune and inflammatory diseases. Our approach includes a proprietary scientific platform that converts native immune system proteins into differentiated, multi-targeted therapeutics. We believe our strategies are capable of meaningfully modulating the human immune system and significantly improving outcomes in patients with serious diseases. We were incorporated under the laws of the State of Delaware and are headquartered in Seattle, Washington.
A novel strain of coronavirus, SARS-CoV-2 (“COVID-19”), was first reported in December 2019, and subsequently declared a global pandemic by the World Health Organization in March 2020. As a result of the COVID-19 outbreak, many companies have experienced disruptions in their operations and in markets served. We have implemented some and may take additional temporary precautionary measures intended to help ensure the well-being of our employees and minimize business disruption. We considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts to our results of operations and financial position at March 31, 2022. The full extent of the future impacts of the continuing COVID-19 outbreak on our operations is uncertain and may adversely impact our business, including our clinical trials.
2. Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Significant estimates inherent in the preparation of the accompanying unaudited condensed consolidated financial statements include those used for revenue recognition, accruals for clinical trial activities and other accruals, and the estimated fair value of equity-based awards. We base our estimates and assumptions on historical experience when available and on various factors we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates.
The accompanying unaudited condensed consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 and the related interim information contained within the notes to the condensed consolidated financial statements are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited financial statements and in the opinion of management, reflect all normal recurring adjustments necessary for a fair statement of our financial position for the interim periods presented. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes for the years ended December 31, 2021 and December 31, 2020 included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 17, 2022 (“Annual Report”). The results of our operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year.
Principles of Consolidation
Our unaudited condensed consolidated financial statements include the financial position and results of operations of Alpine Immune Sciences, Inc. and our wholly owned operating company and subsidiary, AIS Operating Co., Inc., and our wholly-owned subsidiary, Alpine Immune Sciences Australia PTY LTD. All inter-company balances and transactions have been eliminated in consolidation. 
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Cash and Cash Equivalents and Restricted Cash
We consider all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits with commercial banks in checking and interest-bearing accounts, and highly liquid money market funds.
Restricted cash represents cash drawn on our line of credit used to establish collateral to support the security deposit on our operating lease to rent office and laboratory space in Seattle, Washington.
Periodically, we maintain deposits in financial institutions in excess of government insured limits. We believe we are not exposed to significant credit risk as our deposits, which are held at financial institutions, are high credit quality securities such as money market funds, U.S. Treasury securities, and commercial paper. To date, we have not realized any losses on these deposits.
Investments
Our investments include funds invested in highly liquid money market funds, U.S. Treasury securities, commercial paper, and corporate debt securities with a final maturity of each security of less than two years. These investments are classified as available-for-sale debt securities, which are recorded at fair value based on quoted prices in active markets. We classify our investments maturing within one year of the reporting date as short-term investments.
If the estimated fair value of a debt security is below its amortized cost basis, we evaluate whether it is more likely than not that we will sell the security before its anticipated recovery in market value and whether credit losses exist for the related securities. A credit loss exists if the present value of expected cash flows is less than the amortized cost basis of the security. Credit-related losses are recognized as an allowance for credit losses on the balance sheet with a corresponding adjustment to earnings. Unrealized gains and losses that are unrelated to credit deterioration are reported in other comprehensive income (loss). Purchase premiums and discounts are recognized as interest income using the interest method over the terms of the securities. Realized gains and losses and declines in fair value deemed to be other than temporary are reflected in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) using the specific-identification method.
3. Net Loss Per Share
Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.
The net loss per share for the three months ended March 31, 2022 reflects 6,489,357 shares of our common stock issued pursuant to a private placement financing completed in September 2021 and 951,980 shares of our common stock issued in December 2021 pursuant to a private placement financing with Horizon Therapeutics Ireland DAC (“Horizon”). The increased number of shares issued during the 2021 period has effected the year-over-year comparability of our net loss per share calculations.
The common stock issuable upon the conversion or exercise of the following dilutive securities has been excluded from the diluted net loss per share calculation because their effect would have been anti-dilutive. Diluted net loss per share, therefore, does not differ from basic net loss per share for the periods presented.
 March 31,
 20222021
 (unaudited)
Warrants to purchase common stock8,848,632 4,459,629 
Stock options and restricted stock units outstanding6,997,922 5,465,582 
Total15,846,554 9,925,211 
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4. Cash Equivalents and Investments
The amortized cost and fair value of our cash equivalents and investments are as follows (in thousands):
 March 31, 2022
(unaudited)
Assets:Amortized CostGross unrealized gainsGross unrealized lossesFair market value
Money market funds$32,953 $ $ $32,953 
U.S. treasury bills59,212 1 (436)58,777 
Corporate debt securities and commercial paper125,726 1 (576)125,151 
Total$217,891 $2 $(1,012)$216,881 
Classified as:
Cash equivalents$32,953 
Short-term investments136,980 
Long-term investments46,948 
Total$216,881 
 December 31, 2021
Assets:Amortized CostGross unrealized gainsGross unrealized lossesFair market value
Money market funds$50,277 $ $ $50,277 
U.S. treasury bills30,006 1 (100)29,907 
Corporate debt securities and commercial paper117,492 2 (139)117,355 
Total$197,775 $3 $(239)$197,539 
Classified as:
Cash equivalents$50,277 
Short-term investments94,396 
Long-term investments52,866 
Total$197,539 
All investments held as of March 31, 2022 and December 31, 2021 were classified as available-for-sale debt securities and had contractual maturities of less than two years. There were no realized gains and losses on these securities for the periods presented. The aggregate fair value of available-for-sale debt securities in an unrealized loss position as of March 31, 2022 and December 31, 2021 was $122.2 million and $83.0 million, respectively. We did not have any investments in a continuous unrealized loss position for more than twelve months as of March 31, 2022 or December 31, 2021. Our available-for-sale debt securities are invested in highly liquid funds with high credit ratings that have a final maturity of two years or less on the date of purchase. Unrealized losses on these investments were primarily due to changes in interest rates. We evaluated our investments that are in an unrealized loss position and believe it is more likely than not that we will hold these investments until maturity and will recover the amortized cost basis of these investments.
5. Fair Value Measurements
Cash and cash equivalents, restricted cash, receivables, accounts payable and accrued liabilities, which are recorded at invoiced amount or cost, approximate fair value based on the short-term nature of these financial instruments. Fair value is defined as the exchange price received for an asset or paid to transfer a liability, or 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. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities.
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Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities.
As of March 31, 2022 and December 31, 2021, cash of $1.9 million and $17.6 million, respectively, is excluded from the fair value table below. The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis (in thousands):
 March 31, 2022
(unaudited)
Assets:Level 1Level 2Level 3Total
Money market funds$32,953 $ $ $32,953 
U.S. treasury bills58,777   58,777 
Corporate debt securities and commercial paper 125,151  125,151 
Total$91,730 $125,151 $ $216,881 
 December 31, 2021
Assets:Level 1Level 2Level 3Total
Money market funds$50,277 $ $ $50,277 
U.S. treasury bills29,907   29,907 
Corporate debt securities and commercial paper 117,355  117,355 
Total$80,184 $117,355 $ $197,539 
Our Level 2 assets consist of commercial paper and corporate debt securities. We review trading activity and pricing for our available-for-sale securities as of the measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data.
6. Additional Balance Sheet Information
Prepaid expenses and other current assets consist of the following (in thousands):
March 31, 2022December 31, 2021
(unaudited)
Prepaid research and development$2,709 $3,315 
Prepaid insurance328 454 
Deferred financing362 352 
Prepaid other375 266 
Other receivables321 323 
Prepaid expenses and other current assets$4,095 $4,710 
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Accrued liabilities consist of the following (in thousands):
 March 31, 2022December 31, 2021
 (unaudited) 
Research and development services$6,903 $5,536 
Employee compensation1,207 3,084 
Legal and professional fees522 394 
Accrued taxes252 127 
Accrued other319 276 
Accrued Liabilities$9,203 $9,417 
7. Long-term Debt
In August 2019 (the “Effective Date”), we entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”), pursuant to which SVB agreed to extend term loans to us with an aggregate principal amount of up to $15.0 million (the “Term Loans”). Borrowings under the Loan Agreement consisted of up to three separate tranches. The initial tranche of $5.0 million was funded in August 2019, $3.0 million of which was used to repay amounts owing under our prior loan and security agreement with SVB (the “Original Agreement”). In March 2020, the second tranche of $5.0 million was funded to us. We did not draw down the final tranche of $5.0 million, which expired on July 31, 2020.
The Term Loans accrue interest at a floating per annum rate of 0.25% above the prime rate, subject to a floor of 5.75%, which interest is payable monthly commencing in September 2019. Upon the occurrence and during the continuance of an event of default, a default interest rate will apply that is 4.0% above the otherwise applicable interest rate. The Term Loans were interest only until September 30, 2020, however, under the Loan Agreement our interest only period automatically extended to June 30, 2021 if we received aggregate new capital of at least $40.0 million no later than June 30, 2020. We met this milestone in June 2020 in conjunction with the execution of the AbbVie agreement, discussed in detail in Note 9. As a result of the interest only extension, the Term Loans are payable in 25 equal monthly installments of principal plus interest, with the final installment due and payable on July 1, 2023.
We may prepay all, but not less than all, of the Term Loans subject to a prepayment fee equal to $75,000, which represents the deferred portion of the final payment due under the Original Agreement, plus the outstanding principal balance under the Term Loans at the time of such prepayment multiplied by a prepayment fee of 2.0% in the first year, 1.0% in the second year, and 0.0% in the third year and thereafter. Additionally, a final payment in the amount of 5.5% of the funded Term Loans is payable to SVB on the date on which the Term Loans are prepaid, paid or become due and payable in full. The final payment fees are recorded in long-term debt with an offsetting reduction to debt discount in our accompanying Condensed Consolidated Balance Sheets.
The Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including, among others, covenants that limit or restrict our ability to, among other things, incur additional indebtedness, grant liens, merge or consolidate, make acquisitions, pay dividends or other distributions or repurchase equity, make investments, dispose of assets, engage in any new lines of business, and enter into certain transactions with affiliates, in each case subject to certain exceptions. We assessed the likelihood of the lender accelerating payment of the loan due to a material adverse change in our business, operations, financial, or other conditions as remote. We were in compliance with our covenants as of March 31, 2022. As such, as of March 31, 2022, the classification of the loan is split between current and noncurrent based on the timing of payment obligations. As security for its obligations under the Loan Agreement, we granted SVB a first priority security interest on substantially all of our assets, except intellectual property, and subject to certain other exceptions.
In connection with the Loan Agreement, we issued a warrant to SVB to purchase up to 52,083 shares of our common stock at a price of $4.32 per share, 17,361 shares of which became exercisable in August 2019 after we drew down the initial tranche. In March 2020, after we drew down the second tranche of our Term Loan, an additional 17,361 shares became exercisable. The remaining warrants did not vest and expired on July 31, 2020, upon the expiration of the third tranche of our Term Loan. The fair value of the warrants on the date of issuance for the initial tranche and second tranche was $60,000 and $60,000, respectively, determined using the Black-Scholes option-pricing model, and was recorded as a component of equity and as a debt discount in our accompanying Condensed Consolidated Balance Sheets. In connection with the predecessor loan agreement with SVB that we entered into in December 2016, SVB also holds 7,069 fully vested common stock warrants at an exercise price of $12.38 per share.
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We recorded a total debt discount of $812,000 in connection with the Loan Agreement, which is being amortized to interest expense using the effective interest method over the repayment term of the loan. Non-cash interest expense associated with the amortization of the discount was $56,000 and $72,000 for the three months ended March 31, 2022 and 2021, respectively. The unamortized discount was $167,000 as of March 31, 2022. 
Scheduled principal payments on our outstanding debt as of March 31, 2022 under our Loan Agreement, excluding final payment fees, are as follows (in thousands):
Total
Year ending December 31,(unaudited)
2022 (remainder of year)3,600 
20232,800 
Total future principal payments$6,400 
8. Contingencies
Certain credits received related to our research and development expenditures and previously recorded within other income in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) are subject to review by foreign taxing authorities. It is reasonably possible we may incur losses upon the completion of these reviews ranging from $0 to $1.8 million, which we could be required to repay to certain tax authorities.
9. License and Collaboration Agreements
AbbVie
In June 2020, we entered into an option and license agreement with AbbVie (the “AbbVie Agreement”) for the development of ALPN-101, (“acazicolcept”). The AbbVie Agreement grants AbbVie the exclusive option to purchase an exclusive worldwide license to acazicolcept (the “License Option”). The License Option is exercisable by AbbVie at any time and will expire 90 days from the achievement of certain development milestones. If AbbVie exercises the License Option, AbbVie will take over the future development and commercialization. Prior to the exercise of the License Option, we will perform research and development services, including conducting our Phase 2 study in systemic lupus erythematosus, based on an agreed-upon development plan (the “Development Plan”). We will be fully responsible for all costs incurred to conduct the activities under the Development Plan, provided that, AbbVie may be responsible for increased costs under the Development Plan in connection with certain material amendments proposed by AbbVie. We will also be solely responsible, at our sole cost and expense, for manufacturing and regulatory filings for acazicolcept necessary to complete activities under the Development Plan.
In June 2020, in connection with the execution of the AbbVie Agreement, AbbVie paid us a nonrefundable upfront payment of $60.0 million. Prior to the exercise of the License Option, AbbVie has agreed to make cash payments upon our achievement of certain predefined pre-option development milestones (the “Alpine Development Milestones”) up to an aggregate amount of $75.0 million. In the third quarter of 2021, we received $45.0 million of the Alpine Development Milestones, which were achieved in June 2021. If AbbVie exercises the License Option, they will pay a one-time cash payment of $75.0 million. Following the exercise of the License Option, AbbVie has also agreed to make aggregate cash payments of up to $205.0 million upon AbbVie’s achievement of certain development and commercial milestones and additional aggregate cash payments of up to $450.0 million upon AbbVie’s achievement of certain sales-based cash milestones, collectively referred to as (the “AbbVie Milestones”). Subsequent to commercialization, we are also eligible to receive high single-digit to low double-digit percentage royalties on worldwide net sales of licensed products.
For revenue recognition purposes, we determined that our contractual promises in the AbbVie Agreement are not distinct and are interdependent with our performance obligation to provide research and development services under the Development Plan. Thus, all contractual promises related to the upfront payment and Alpine’s Development Milestones were combined into a single performance obligation. We determined the Alpine Development Milestone payments are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments were fully constrained and were not initially included in the transaction price. In June 2021, we re-evaluated and updated the transaction price to include the achieved portion of the Alpine Development Milestones. We will continue to re-evaluate the transaction price each reporting period and update as uncertain events are resolved or other changes in circumstances occur. We expect to recognize the remaining deferred revenue over the remaining life of the Development Plan, which began in June 2020 and ends upon the later of the exercise or expiration of the option.
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The License Option and the AbbVie Milestones were determined not to be performance obligations at the inception of the contract as they did not represent material rights. If exercised, the License Option and AbbVie Milestones will be accounted for as a separate contract and will be recognized as revenue if and when triggered. Any consideration related to sales-based royalties and profit-sharing payments will be recognized when the related sales occur.
Horizon
In December 2021, we entered into an exclusive license and collaboration agreement with Horizon (the “Horizon Agreement”) for the development and commercialization of up to four preclinical candidates generated from our unique discovery platform. The agreement includes licensing of one of our existing preclinical biologic therapeutic programs (the “Existing Program”), as well as a research partnership to jointly develop candidates for up to three additional autoimmune and inflammatory disease programs for other designated biological targets (the “Research Programs”). These candidates include previously undisclosed multi-specific fusion protein-based therapeutic candidates for autoimmune and inflammatory diseases. We will advance candidate molecules to predefined preclinical milestones while Horizon will be responsible for the respective costs and, ultimately, Horizon will assume responsibility for development and commercialization activities and costs.
In connection with the execution of the Horizon Agreement in December 2021, we entered into a stock purchase agreement under which Horizon purchased 951,980 shares of our common stock in a private placement for approximately $15.76 per share and aggregate proceeds of $15.0 million. The shares were sold at a 25% premium to the volume-weighted average share price of our common stock for a specified 30-day period prior to entering into the agreement. The fair value of the common stock issued to Horizon of $11.9 million was recorded to equity, based on the closing price of common stock on the effective date of the Horizon Agreement. For accounting purposes, the $3.1 million difference between the cash proceeds and the fair value of the common stock was treated as additional consideration attributable to the Horizon Agreement.
Under the terms of the agreements, Horizon also paid us a non-refundable upfront payment of $25.0 million in the first quarter of 2022. In addition, we are eligible to receive up to $381.0 million per program, or up to approximately $1.5 billion in total, in future success-based payments related to development, regulatory and commercial milestones. Furthermore, we are eligible to receive tiered royalties from a mid-single digit percentage to a low double-digit percentage on global net sales.
For revenue recognition purposes, we determined the transaction price at inception was $28.1 million, which consists of the upfront payment of $25.0 million and the $3.1 million premium on the stock purchase, and that the Existing Program and each Research Program are distinct performance obligations. We allocated revenue to each performance obligation based on its relative stand-alone selling price. The future success-based payments related to development and regulatory milestones are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments are fully constrained and are not initially included in the transaction price. We will continue to re-evaluate the transaction price each reporting period and update as uncertain events are resolved or other changes in circumstances occur. Any consideration related to commercial milestones and royalties will be recognized when the related sales occur.
Adaptimmune
In May 2019, we entered into a collaboration and licensing agreement with Adaptimmune (the “Adaptimmune Agreement”) to develop next-generation SPEAR T cell products. Under the Adaptimmune Agreement, we are to perform certain research services and grant Adaptimmune an exclusive license to programs from our secreted immunomodulatory protein (“SIP”) and transmembrane immunomodulatory protein (“TIP”) technologies. In June 2019, under the terms of the Adaptimmune Agreement, we received an upfront license payment of $2.0 million, and through March 31, 2022 we have received an additional $1.6 million in research support payments to fund ongoing programs. These payments were recorded as deferred revenue upon receipt and were recognized to revenue based on employee hours contributed to each performance obligation. In the fourth quarter of 2020, based on the completion of our initial research and development efforts in connection with our performance obligations, we recognized the remaining balance in deferred revenue associated with Adaptimmune in our accompanying Condensed Consolidated Balance Sheets. We recognized no revenue under the Adaptimmune Agreement for the three months ended March 31, 2022 and 2021. In addition, we are eligible for research support payments, one-time payments and downstream development and commercialization milestones of up to $288.0 million, if respective pre-specified milestones for each program are achieved. We are also eligible to receive low-single digit percentage royalties on worldwide net sales of the applicable products. In February 2022, Adaptimmune selected an additional research program, which will trigger a $1.0 million license payment upon mutual acceptance of the respective research plan.
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Contract balances and revenue recognition
We report contract assets resulting from rights to consideration related to completed but unpaid research and development services within accounts receivable in our accompanying Condensed Consolidated Balance Sheets. Contract liabilities, representing advance consideration for licensing rights bundled with research and development services and other promises for which the underlying performance obligations have not yet been satisfied, are reported as deferred revenue in our accompanying Condensed Consolidated Balance Sheets. Contract liabilities are presented as current and noncurrent based on estimated timing of when the underlying performance obligations will be met. Respective balances are as follows (in thousands):
 March 31, 2022December 31, 2021
 (unaudited)
Contract Assets$132 $25,000 
Contract Liabilities$89,106 $102,603 
We use cost-based input methods to measure progress towards completion of our performance obligations and to calculate the corresponding revenue to recognize under our contracts with customers each period. In applying the cost-based input, we use actual costs incurred relative to budgeted costs for each combined performance obligation. Actual costs consist primarily of labor of internal personnel and third-party contract costs. Revenue is recognized based on the level of costs incurred relative to the total estimated costs for the performance obligation. A cost-based input method of revenue recognition requires management to make estimates of costs to complete our performance obligations. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete our performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.
Collaboration revenue in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) disaggregated by customer is as follows (in thousands):
 Three Months Ended
March 31,
 20222021
 (unaudited)
AbbVie$5,960 $3,204 
Horizon7,669  
Total collaboration revenue$13,629 $3,204 
Revenue recognized during the period that was included in the opening contract liability balance was $13.5 million and $3.2 million for the three months ended March 31, 2022 and 2021, respectively.
10. Stockholders’ Equity
Financing Agreements
In July 2021, we entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“Cowen”) pursuant to which we may sell shares of our common stock from time to time through an “at the market” equity offering for up to $75.0 million in gross cash proceeds. Cowen will act as the sales agent and will be entitled to compensation for services of up to 3.0% of the gross sales price per share of all shares sold through Cowen under the Sales Agreement. The shares would be issued pursuant to our effective shelf registration statement on Form S-3 (File No. 333-256107). We filed a prospectus supplement, dated July 2, 2021, with the SEC in connection with the offer and sale of the shares pursuant to the Sales Agreement. As of March 31, 2022, no sales have been made under the Sales Agreement.
Equity Incentive Plans
On January 1, 2022, in connection with our 2018 Equity Incentive Plan (the “2018 Plan”) annual increase provision, a total of 1,500,000 additional shares were automatically added to the shares authorized under the 2018 Plan.
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During the three months ended March 31, 2022, we issued stock option grants totaling 1,291,150 shares with a weighted average exercise price of $12.08 per share and 3,750 shares of restricted stock units (“RSUs”) at a grant date fair value of $9.00 per share to eligible employees and board members.
Stock-Based Compensation Expense 
We use the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The fair value of RSUs is equal to the closing stock price on the date of grant. We recognize the fair value of stock-based compensation as compensation expense over the requisite service period, which is the vesting period. Stock-based compensation is classified in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as follows (in thousands): 
 Three Months Ended
March 31,
 20222021
 (unaudited)
Employee:
Research and development$1,274 $800 
General and administrative981 787 
Non-Employee:
Research and development34 8 
General and administrative 2 
Total stock-based compensation expense$2,289 $1,597 
11. Income Taxes
We are subject to income taxes in the United States and Australia and our effective tax rate is calculated quarterly based upon current assumptions relating to the full year’s estimated operating results and various tax-related items. Each quarter an estimate of the annual effective tax rate is updated should we revise our forecast of earnings based upon our operating results. If there is a change in the estimated effective annual tax rate, a cumulative adjustment is made. Our effective tax rate was 0.05% and 0% for the three months ended March 31, 2022 and 2021, respectively. The difference between the effective tax rate of 0.05% and 0% and the U.S. federal statutory rate of 21% for the three months ended March 31, 2022 and 2021, respectively, was primarily due to recognizing a full valuation allowance on deferred tax assets. 
As of March 31, 2022, we determined that, based on an evaluation of our sources of income and all available evidence, both positive and negative, including our latest forecasts and cumulative losses in recent years, it was more likely than not that none of our domestic deferred tax assets would be realized and therefore we continued to record a full valuation allowance. We did not record significant current tax liabilities or expense during the three months ended March 31, 2022 and 2021.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following management’s discussion and analysis of financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2021, included in our Annual Report on Form 10-K, or the “Annual Report”, filed with the SEC on March 17, 2022.
Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect,” or similar expressions, or the negative or plural of these words or expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements include, but are not limited to:
 
our ability to identify, develop and commercialize additional products or product candidates;
our estimates regarding our expenses, revenues, anticipated capital requirements and our needs for additional financing;
our ability to obtain funding for our operations;
the implementation of our business model and strategic plans for our business and technology;
the timing of the commencement, progress and receipt of data from any of our preclinical and clinical trials;
the expected results of any preclinical or clinical trial and the impact on the likelihood or timing of any regulatory approval;
the scope of protection we are able to establish and maintain for intellectual property rights covering our technology and product candidates;
the anticipated impact of the COVID-19 pandemic on our business, research and clinical development plans and timelines and results of operations;
the timing or likelihood of regulatory filings and approvals;
the therapeutic benefits, effectiveness and safety of our product candidates;
the rate and degree of market acceptance and clinical utility of any future products;
our ability to maintain and establish collaborations;
our ability to achieve milestones in our current and any future collaborations;
our expectations regarding market risk, including interest rate changes and general macroeconomic conditions;
our expectations regarding the sufficiency of our cash and cash equivalents to fund operations for at least the next 12 months;
developments relating to our competitors and our industry; and
our expectations regarding licensing, acquisitions and strategic operations.
These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A — Risk Factors, and elsewhere in this report. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments, except as required by law.
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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Overview
We are a clinical-stage biopharmaceutical company dedicated to discovering and developing innovative, protein-based immunotherapies to treat cancer and autoimmune and inflammatory diseases. Our approach includes a proprietary scientific platform that converts native immune system proteins into differentiated, multi-targeted therapeutics. We believe our strategies are capable of meaningfully modulating the human immune system and significantly improving outcomes in patients with serious diseases.
Autoimmune/Inflammatory Diseases
Acazicolcept (ALPN-101) is a dual Inducible T cell Costimulator, or ICOS, and CD28 antagonist intended for the treatment of autoimmune and inflammatory diseases. Preclinical studies with acazicolcept have demonstrated efficacy in models of systemic lupus erythematosus, or SLE, Sjögren’s syndrome, or SjS, arthritis, inflammatory bowel disease, multiple sclerosis, type 1 diabetes, uveitis, and graft versus host disease. We have evaluated acazicolcept in a Phase 1 healthy volunteer study and initiated patient dosing in Synergy, a global, randomized, double-blind, placebo-controlled Phase 2 study of acazicolcept in adults with moderate-to-severe SLE. In June 2020, we entered into an Option and License Agreement with AbbVie Ireland Unlimited Company, or AbbVie, which grants AbbVie an exclusive option to take an exclusive license to acazicolcept. Through March 31, 2022, we have received $105.0 million in upfront and pre-option exercise development milestones as part of the AbbVie Agreement.
ALPN-303 is a dual B cell cytokine antagonist, being developed for the treatment of B cell mediated inflammatory and autoimmune diseases. Engineered using our proprietary directed evolution platform, ALPN-303 potently inhibits the pleiotropic B cell cytokines B cell activating factor (BAFF, BLyS), and a proliferation inducing ligand, or APRIL, which play key roles in B cell development, differentiation, and survival, and together may contribute to the pathogenesis of multiple autoimmune diseases, including SLE. Data presented at the American College of Rheumatology, or ACR, Convergence 2021 Annual Meeting demonstrated that ALPN-303 inhibits the activity of the B cell cytokines APRIL and BAFF more potently than wild-type TACI-Fc counterparts, as well as anti-BAFF and anti-APRIL monoclonal antibodies. In addition, ALPN-303 has been well-tolerated in preclinical models and exhibited superior pharmacokinetics and pharmacodynamics over wild-type TACI-Fc counterparts, including superior serum exposure, suppression of T-dependent antibody production, and/or serum immunoglobulins in mice and/or cynomolgus monkeys. A first-in-human, Phase 1 study of ALPN-303 in healthy volunteers began in the fourth quarter of 2021, with preliminary data to be presented as a part of a poster at the 2022 European Alliance of Associations for Rheumatology, or EULAR, congress. This randomized, placebo-controlled study is designed to evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of ALPN-303 administered intravenously and subcutaneously. Following the completion of the Phase 1 study, we plan to initiate a Phase 2 study in SLE and, in parallel, plan to initiate at least one basket study in renal, hematologic and/or dermatologic indications by the end of 2022.
In December 2021, we entered into an exclusive license and collaboration agreement with Horizon Therapeutics Ireland DAC, or Horizon, which grants Horizon an exclusive license for the development, manufacture and commercialization of one Existing Program and up to three additional Research Programs generated from our libraries of proteins and molecules for research, discovery and identification of additional compounds. Under the terms of the agreement, Horizon made an upfront payment to us of $25.0 million as well as an equity investment for which they paid $15.0 million, a 25 percent premium to the 30-day volume-weighted average share price as of December 9, 2021. In addition, we are eligible to receive up to $381.0 million per program, or approximately $1.5 billion in total, in future success-based payments related to development, regulatory and commercial milestones as well as tiered royalties on global net sales.
Immuno-oncology
Davoceticept (ALPN-202), is a conditional CD28 costimulator and dual checkpoint inhibitor intended for the treatment of cancer. Preclinical in vivo data have demonstrated monotherapy efficacy in tumor models superior to approved therapies. Results from the dose-escalation portion of NEON-1 (NCT04186637), a first-in-human, dose-escalation and expansion study of davoceticept monotherapy in 48 evaluable participants with advanced malignancies were presented at the 2022 Annual Meeting of the American Association for Cancer Research, or AACR. Despite a highly heterogeneous, heavily pretreated, advanced solid tumor population, including predominantly tumors considered unresponsive to immunotherapy, early evidence of encouraging clinical benefit and anti-tumor activity has been observed. In addition, davoceticept was well-tolerated and
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exhibited largely dose-dependent pharmacokinetics and pharmacodynamics, including relevant immune activation such as increased T cell activation, expansion of central memory T cells, and reduction in regulatory T cells. Monotherapy expansion cohorts are open for enrollment.
In June 2021, we announced a collaboration and supply agreement with Merck to evaluate the safety and efficacy of davoceticept in combination with Merck’s anti-PD-1 therapy KEYTRUDA (pembrolizumab) in a Phase 1 dose escalation and expansion study. The clinical trial, NEON-2, was initiated in June 2021. On March 7, 2022, we announced that the U.S. Food and Drug Administration, or FDA, placed a partial clinical hold on our NEON-2 trial evaluating davoceticept in combination with pembrolizumab in adults with advanced malignancies. The partial clinical hold was prompted by our report of a Grade 5 serious adverse event (patient death) in the NEON-2 trial. The participant had choroidal melanoma previously treated with nivolumab and ipilimumab, and had received a single dose each of davoceticept and pembrolizumab. The participant’s death was attributed to cardiogenic shock, considered by the treating physicians as likely related to immune-mediated myocarditis, or possibly infection. Participants who are currently enrolled in the NEON-2 trial may continue to receive davoceticept and pembrolizumab, although no new participants may be enrolled until the partial clinical hold is resolved. This partial clinical hold does not affect the ongoing NEON-1 clinical trial of davoceticept as monotherapy (NCT04186637).
Our scientific platform has also generated immune modulatory proteins with the potential of improving engineered cell therapies such as chimeric antigen receptor T cells, T cell receptor-engineered T cells, and tumor infiltrating lymphocytes. In May 2019, we signed a collaboration and license agreement with Adaptimmune Therapeutics plc, or Adaptimmune, to develop next-generation SPEAR™ T cell products which incorporate our secreted and transmembrane immunomodulatory protein (termed SIP™ and TIP™) technology. We intend to continue to leverage our existing pipeline and platform to actively explore and evaluate potential value-creating partnering opportunities.
Our goal is to discover and develop modern therapies to treat patients with serious conditions such as cancer and autoimmune/inflammatory diseases. To achieve our goals, we intend to: 
aggressively move our most advanced autoimmune/inflammatory program acazicolcept through clinical development as part of our Option and License Agreement with AbbVie, or the AbbVie Agreement, including conducting Synergy, our Phase 2 study for the treatment of SLE;
aggressively move our second autoimmune/inflammatory program ALPN-303 through a Phase 1 study in healthy volunteers and into clinical studies for the treatment of B cell mediated autoimmune/inflammatory diseases;
aggressively move our lead oncology program davoceticept through clinical development for the treatment of cancer; and
maximize the value of our pipeline and platform via potential partnering activities.
Our operations to date have been limited to business planning, raising capital, developing our platform technology, identifying potential immunotherapy candidates, clinical studies, and other research and development activities. To date, we have financed operations primarily through private placements of common stock and convertible preferred stock, funds received from license and research agreements, debt financing and assets acquired upon the close of our merger with Nivalis Therapeutics Inc., or Nivalis. We do not have any products approved for sale and have not generated any product sales. Since inception and through March 31, 2022, excluding amounts borrowed through debt financing, we have raised an aggregate of $418.1 million to fund operations, of which $185.6 million was from the sale of common stock and warrants, $49.2 million was from the sale of convertible preferred stock, $139.2 million was through our license and collaboration agreements, and $44.1 million in cash, cash equivalents, and marketable securities acquired through the merger with Nivalis. As of March 31, 2022, we had cash, cash equivalents, restricted cash, and investments totaling $219.1 million.
Our net loss was $7.5 million and $10.6 million for the three months ended March 31, 2022 and 2021, respectively. We expect to continue incurring significant expenses and operating losses for at least the next several years as we:
 
initiate and complete nonclinical studies and clinical trials for our product candidates, including acazicolcept, a dual ICOS/CD28 antagonist program targeting autoimmune/inflammatory disorders, davoceticept, a conditional CD28 costimulator and dual checkpoint inhibitor intended for the treatment of cancer, and ALPN-303, a dual B cell cytokine antagonist for B cell-mediated autoimmune/inflammatory diseases;
contract to manufacture and perform additional process development for our product candidates; 
continue research and development efforts to build our pipeline beyond the current product candidates; 
maintain, expand, and protect our intellectual property portfolio; 
hire additional clinical, quality control, scientific, and management personnel; and 
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add operational and financial personnel to support our product development efforts and operational capabilities applicable to operating as a public company.
We do not expect to generate product revenue unless and until we successfully complete development of, obtain marketing approval for and commercialize our product candidates, either alone or in collaboration with third parties. We expect these activities will take a number of years and our success in these efforts is subject to significant uncertainty. Accordingly, we will need to raise additional capital prior to the regulatory approval and commercialization of any of our product candidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our operating activities through equity or debt financings, collaborations or licenses, capital lease transactions, or other available financing transactions. However, additional capital may not be available on reasonable terms, if at all, and if we raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders and increased fixed payment obligations.
Financial Overview
Collaboration Revenue
We derive our collaboration revenue primarily from our collaboration and licensing agreements. We may generate revenue in the future from milestone payments received pursuant to our collaboration and licensing agreements with AbbVie, Horizon, Adaptimmune, or from payments from future license or collaboration agreements, product sales, or government contracts and grants. We expect revenue we generate, if any, will fluctuate from quarter to quarter.
AbbVie
In June 2020, we entered into the AbbVie Agreement for the development of acazicolcept. The AbbVie Agreement grants AbbVie the exclusive option to purchase an exclusive worldwide license to acazicolcept, or the License Option. The License Option is exercisable by AbbVie at any time and will expire 90 days from the achievement of certain development milestones. If AbbVie exercises the License Option, AbbVie will take over the future development and commercialization. Prior to the exercise of the License Option, we will perform research and development services, including conducting our Phase 2 study in SLE, based on an agreed-upon development plan, or the Development Plan. We will be fully responsible for all costs incurred to conduct the activities under the Development Plan, provided that, AbbVie may be responsible for increased costs under the Development Plan in connection with certain material amendments proposed by AbbVie. We will also be solely responsible, at our sole cost and expense, for manufacturing and regulatory filings for acazicolcept necessary to complete activities under the Development Plan.
In June 2020, in connection with the execution of the AbbVie Agreement, AbbVie paid us a nonrefundable upfront payment of $60.0 million. Prior to the exercise of the License Option, AbbVie has agreed to make cash payments upon our achievement of certain predefined pre-option development milestones, or the Alpine Development Milestones, up to an aggregate amount of $75.0 million. In the second quarter of 2021, we achieved $45.0 million of the Alpine Development Milestones. If AbbVie exercises the License Option, they will pay a one-time cash payment of $75.0 million. Following the exercise of the License Option, AbbVie has also agreed to make aggregate cash payments of up to $205.0 million upon AbbVie’s achievement of certain development and commercial milestones and additional aggregate cash payments of up to $450.0 million upon AbbVie’s achievement of certain sales-based cash milestones, collectively referred to as the AbbVie Milestones. Subsequent to commercialization, we are also eligible to receive high single-digit to low double-digit percentage royalties on worldwide net sales of licensed products.
For revenue recognition purposes, we determined that our contractual promises in the AbbVie Agreement are not distinct and are interdependent with our performance obligation to provide research and development services under the Development Plan. Thus, all contractual promises related to the upfront payment and Alpine’s Development Milestones were combined into a single performance obligation. We determined the Alpine Development Milestone payments are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments were fully constrained and were not initially included in the transaction price. In June 2021, we re-evaluated and updated the transaction price to include the achieved portion of the Alpine Development Milestones. We will continue to re-evaluate the transaction price each reporting period and update as uncertain events are resolved or other changes in circumstances occur.
The License Option and the AbbVie Milestones were determined not to be performance obligations at the inception of the contract as they did not represent material rights. If exercised, the License Option and AbbVie Milestones will be accounted for as a separate contract and will be recognized as revenue if and when triggered. Any consideration related to sales-based royalties and profit-sharing payments will be recognized when the related sales occur.
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We use a cost-based input method to measure progress toward completion of the performance obligation and to calculate the corresponding revenue to recognize each period. In applying the cost-based input, we use actual costs incurred relative to budgeted costs for the combined performance obligation. These costs consist primarily of internal personnel efforts and third-party contract costs relative to the level of patient enrollment in the study. Revenue will be recognized based on the level of costs incurred relative to the total budgeted costs for the performance obligation. A cost-based input method of revenue recognition requires management to make estimates of costs to complete our performance obligation. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete our performance obligation will be recorded in the period in which changes are identified and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.
We recognized revenue from the AbbVie Agreement of $6.0 million and $3.2 million for the three months ended March 31, 2022 and 2021, respectively. We expect to recognize the remaining deferred revenue over the remainder of our Development Plan, which began in June 2020 and will end upon the later of the exercise or expiration of the option.
Horizon
In December 2021, we entered into the Horizon Agreement which grants Horizon an exclusive license for the development, manufacture and commercialization of one Existing Program and up to three additional Research Programs generated from our libraries of proteins and molecules for research, discovery and identification of additional compounds.
Under the terms of the agreement, Horizon made an upfront payment to us of $25.0 million as well as an equity investment for which they paid $15.0 million, a 25 percent premium to the 30-day volume-weighted average share price as of December 9, 2021. In addition, we are eligible to receive up to $381.0 million per program, or approximately $1.5 billion in total, in future success-based payments related to development, regulatory and commercial milestones as well as tiered royalties on global net sales. We will conduct our activities under the Existing Program and up to three Research Programs to deliver compounds meeting agreed criteria. In addition, Horizon will pay us for the costs and expenses of conducting such activities under the deliverables plans. Horizon will then assume responsibility for development and commercialization activities and costs.
For revenue recognition purposes, we determined that the Existing Program and each Research Program are distinct performance obligations. We allocated revenue to each performance obligation based on its relative stand-alone selling price. The future success-based payments related to development and regulatory milestones are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments are fully constrained and are not initially included in the transaction price. We will continue to re-evaluate the transaction price each reporting period and update as uncertain events are resolved or other changes in circumstances occur. Any consideration related to commercial milestones and royalties will be recognized when the related sales occur.
We recognized revenue from the Horizon Agreement of $7.7 million for the three months ended March 31, 2022.
Adaptimmune
In May 2019, we entered into the Adaptimmune Agreement with Adaptimmune, a clinical-stage biopharmaceutical company primarily focused on providing novel cell therapies to patients, particularly for the treatment of solid tumors, to develop next-generation SPEAR T cell products which incorporate our secreted and transmembrane immunomodulatory protein (termed SIP™ and TIP™) technology. Under the Adaptimmune Agreement, we are to perform certain research services and grant Adaptimmune an exclusive license to programs from our SIP and TIP technologies. In June 2019, under the terms of the Adaptimmune Agreement, we received an upfront license payment of $2.0 million and through March 31, 2022 we have received an additional $1.6 million in research support payments to fund ongoing programs. These payments were recorded to deferred revenue upon receipt and were recognized as revenue based on employee hours contributed to each performance obligation. In the fourth quarter of 2020, based on the completion of our initial research and development efforts in connection with our performance obligations, we recognized the remaining balance in deferred revenue associated with Adaptimmune on our accompanying Condensed Consolidated Balance Sheets. Under the Adaptimmune Agreement we recognized no revenue for the three months ended March 31, 2022 and 2021. In addition, we are eligible for additional research support payments, one-time payments and downstream development and commercialization milestones of up to $288.0 million, if all pre-specified milestones for each program are achieved. We are also eligible to receive low-single digit percentage royalties on worldwide net sales of the applicable products.
In February 2022, Adaptimmune selected an additional research program, which will trigger a $1.0 million license payment upon mutual acceptance of the respective research plan.
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Research and Development Expenses
We focus our resources on research and development activities, including the conduct of preclinical studies, product development, regulatory support, and clinical trials for our product candidates. We recognize research and development expenses as they are incurred. Our research and development expenses consist of:
employee-related expenses, including salaries, benefits, taxes, travel, and stock-based compensation expense for personnel in research and development functions;
expenses related to process development and production of product candidates paid to contract manufacturing organizations;
costs associated with preclinical activities and regulatory operations, including the cost of acquiring, developing, and manufacturing research material;
clinical trials and activities related to regulatory filings for our product candidates; and
allocation of facilities, overhead, depreciation, and amortization of laboratory equipment and other expenses.
The table below summarizes our research and development expenses for the periods indicated. Our direct research and development expenses consist primarily of expenses incurred pursuant to agreements with third-party manufacturing organizations for our product candidates, contract research organizations, or CROs, clinical trial sites, collaborators, and consultants. Other direct costs included direct research and development costs incurred before a selected product candidate begins clinical trials.
We use our employee and infrastructure resources across multiple research and development programs that we are advancing in parallel, and therefore do not allocate salaries, stock-based compensation, employee benefit expenses or other indirect costs related to our research and development to specific product candidates. These expenses are included in indirect research and development expense by type in the table below.
Our research and development expenses are summarized as follows (in thousands):
 Three Months Ended
 20222021
Direct research and development expense by program:
Acazicolcept$2,763 $1,224 
Davoceticept3,427 1,253 
ALPN-3032,781 2,840 
Other84 170 
Total direct research and development expense by program9,055 5,487 
Indirect research and development expense by type:
Personnel-related costs5,879 3,367 
Research and development supplies and services664 764 
Allocated facility, equipment and other expenses713 819 
Total indirect research and development expense7,256 4,950 
Total research and development expense$16,311 $10,437 
We expect our research and development expenses to increase for the foreseeable future as we continue to develop our platform and product candidates.
The successful development of our platform and product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing, or costs of the efforts necessary to finish developing any of our product candidates or the period in which material net cash, if any, from these product candidates may commence. This is due to the numerous risks and uncertainties associated with developing therapeutics, including the uncertainty of:
the scope, rate of progress, expense, and results of clinical trials;
the scope, rate of progress, and expense of process development and manufacturing;
preclinical and other research activities; and
the timing of regulatory approvals.
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General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related costs for employees in executive, business development, finance, and administrative functions. Other significant general and administrative expenses include professional fees for accounting and legal services, expenses associated with obtaining and maintaining patents and other intellectual property, and allocation of facility and overhead costs.
We expect general and administrative expenses to increase as we expand infrastructure, headcount, and continue to prosecute our patents and other intellectual property. Other increases could potentially include increased costs for insurance, costs related to the hiring of additional personnel, and increased fees for directors, outside consultants, lawyers, and accountants. We expect to incur significant costs to comply with corporate governance, internal controls, and similar requirements applicable to public companies.
Interest Expense
Interest expense consists primarily of interest associated with our term loan with Silicon Valley Bank, or SVB, and the amortization of the related debt discount. 
Interest Income
Interest income consists of interest earned on our cash, cash equivalents, and investments.
Other Expense
Other expense consists of a loss on the sale of equipment.
JOBS Act
We ceased to be an “emerging growth company” under the JOBS Act effective December 31, 2020. However, for so long as we are not classified as an “accelerated filer” or “large accelerated filer” pursuant to SEC rules, we will continue to be exempt from the auditor attestation requirements of Section 404(b) of Sarbanes-Oxley.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are more fully described in Note 2 of the accompanying unaudited condensed consolidated financial statements and in Note 2 to the audited financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant or material changes in our significant accounting policies during the three months ended March 31, 2022, as compared to those disclosed in our Annual Report.

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Results of Operations
Comparison of Three Months Ended March 31, 2022 and 2021
The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021 (in thousands):
 Three Months Ended
March 31,
Increase/
Decrease
 20222021
 (unaudited)
Collaboration revenue$13,629 $3,204 $10,425 
Operating expenses: 
Research and development16,311 10,437 5,874 
General and administrative4,775 3,256 1,519 
Total operating expenses21,086 13,693 7,393 
Loss from operations(7,457)(10,489)3,032 
Other income (expense):
Interest expense(154)(217)63 
Interest income145 63 82 
Other expense(57)— (57)
Loss before taxes(7,523)(10,643)3,120 
Income tax expense(4)— (4)
Net loss$(7,527)$(10,643)$3,116 
Collaboration Revenue
Revenue for the three months ended March 31, 2022, consists of approximately $7.7 million related to the Horizon Agreement and approximately $6.0 million related to the AbbVie Agreement. Revenue for the three months ended March 31, 2021, consists of $3.2 million related to the AbbVie Agreement.
Research and Development Expenses
The $5.9 million increase in research and development expenses was primarily attributable to increases of $3.8 million in clinical trial activities primarily related to ongoing enrollment in our Synergy, NEON and ALPN-303 studies, $2.5 million in personnel-related expenses, which includes $0.5 million in stock-based compensation, and $0.5 million in direct research activities. These increases were partially offset by decreases of $0.7 million in in contract manufacturing and process development of our product candidates, and a $0.2 million decrease in indirect supplies and allocated overhead and facilities.
General and Administrative Expenses
The $1.5 million increase in general and administrative expenses was primarily attributable to increases of $0.9 million in personnel-related expenses, which includes $0.2 million in stock-based compensation, $0.2 million in legal and professional services and $0.4 million in allocated overhead and facilities to support the growth and expansion of our business.
Liquidity and Capital Resources
Sources of Liquidity
To date, we have financed our operations primarily through the sale of equity securities, debt, and payments received under our collaboration agreements. As of March 31, 2022, we had cash, cash equivalents, restricted cash, and investments totaling $219.1 million. Except for any obligations of our collaborators to make milestone payments under our agreements with them, we do not have any committed external sources of capital. Until such time as we can generate substantial product revenue, if ever, we expect to finance our cash needs through a combination of collaboration agreements and equity or debt
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financings.
Equity Financing Agreements
In December 2021, in connection with the execution of the Horizon Agreement, we entered into a Stock Purchase Agreement with Horizon, or the Purchase Agreement, in which Horizon made an equity investment in Alpine of 951,980 shares of our common stock for approximately $15.76 per share, for an aggregate purchase price of $15.0 million. The purchase price represents a 25% premium to the volume-weighted average share price of our common stock for the 30-day period ended December 9, 2021. The shares are subject to lock-up restrictions, which, subject to certain exceptions, prohibit Horizon from selling the shares for a period of six months after the date of the Purchase Agreement. The shares were recorded at the fair value of our common stock on the effective date of the Horizon Agreement, with the excess of the proceeds recorded to deferred revenue.
In September 2021, we entered into a securities purchase agreement, or the 2021 Securities Purchase Agreement, for a private placement with a select group of institutional investors, pursuant to which we sold 6,489,357 shares of our common stock, or the Shares, and prefunded warrants to purchase 3,191,487 Shares, or the Prefunded Warrants. The purchase price for each Share and for each Prefunded Warrant was $9.40 per share, for an aggregate purchase price of approximately $91.0 million. The Prefunded Warrants became fully exercisable upon the closing date and have an exercise price of $0.001 per share. In connection with the 2021 Securities Purchase Agreement approximately 3.7 million of the Shares issued and approximately 2.3 million of the Prefunded Warrants issued, for gross proceeds of approximately $57.0 million, were issued to certain stockholders whose beneficial ownership exceeded 5% prior to completion of the 2021 Securities Purchases Agreement.
In July 2021, we entered into a sales agreement, or the Sales Agreement, with Cowen and Company, LLC, or Cowen, pursuant to which we may sell shares of our common stock from time to time through an “at the market” equity offering for up to $75.0 million in gross cash proceeds. Cowen will act as the sales agent and will be entitled to compensation for services of up to 3.0% of the gross sales price per share of all shares sold through Cowen under the Sales Agreement. The shares would be issued pursuant to our effective shelf registration statement on Form S-3 (File No. 333-256107). We filed a prospectus supplement, dated July 2, 2021, with the SEC in connection with the offer and sale of the shares pursuant to the Sales Agreement. As of the date of this report, we have made no such sales under the Sales Agreement.
In July 2020, we entered into a securities purchase agreement, or the 2020 Securities Purchase Agreement, for a private placement with a select group of institutional investors, pursuant to which we sold 5,139,610 units, or the Common Units, and 790,710 units, or the Prefunded Warrant Units, for an aggregate purchase price of $60.0 million. Each Common Unit consists of one share of our common stock plus a warrant to purchase 0.3 shares of common stock, or the Common Stock Warrants, and each Prefunded Warrant Unit consists of one prefunded warrant to purchase one share of common stock, or the Prefunded Warrants, plus one Common Stock Warrant to purchase 0.3 shares of common stock. The Prefunded Warrant Units and the Common Units are collectively referred to as the Units and each Unit has a purchase price of $10.1175. The Common Stock Warrants have an exercise price of $12.74 and a term of 3.5 years. The Prefunded Warrants became fully exercisable upon the closing date and have an exercise price of $0.001 per share.
In January 2019, we entered into a securities purchase agreement, or the 2019 Securities Purchase Agreement, with a limited number of accredited investors, pursuant to which we sold approximately 4.7 million units, or the 2019 Units, for an aggregate purchase price of $25.3 million in a private placement, which we refer to as the Private Placement. Each 2019 Unit has a purchase price of $5.37 and consists of one share of our common stock and a warrant to purchase 0.39 shares of common stock. Pursuant to the terms of the 2019 Securities Purchase Agreement, we issued approximately 4.7 million shares of common stock and warrants to purchase an aggregate of approximately 1.8 million shares of common stock. The warrants have an exercise price of $12.74 and have a term of five years.
Debt Financing Agreements
In August 2019, we entered into an Amended and Restated Loan and Security Agreement, or the Loan Agreement, with SVB, pursuant to which SVB agreed to extend term loans to us with an aggregate principal amount of up to $15.0 million, or the Term Loans. Borrowings under the Loan Agreement consisted of up to three separate tranches. The initial tranche of $5.0 million was funded in August 2019, $3.0 million of which was used to repay amounts owing under our prior loan and security agreement with SVB. In March 2020, the second tranche of $5.0 million was funded to us. We did not draw down the final tranche of $5.0 million, which expired on July 31, 2020.
The Term Loans accrue interest at a floating per annum rate of 0.25% above the prime rate, subject to a floor of 5.75%, which interest is payable monthly commencing in September 2019. Upon the occurrence and during the continuance of an event of default, a default interest rate will apply that is 4.0% above the otherwise applicable interest rate. The Term Loans were interest only until September 30, 2020, however, under the Loan Agreement our interest only period automatically
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extended to June 30, 2021 if we received aggregate new capital of at least $40.0 million no later than June 30, 2020. We met this milestone in June 2020 in conjunction with the execution of the AbbVie Agreement, discussed in detail in Note 9. As a result of the interest only extension, the Term Loans became payable in 25 equal monthly installments of $0.4 million principal plus interest, with the final installment and additional $0.6 million final payment fees due and payable on July 1, 2023.
We may prepay all, but not less than all, of the Term Loans subject to a prepayment fee equal to $75,000, which represents the deferred portion of the final payment due under the Original Agreement, plus the outstanding principal balance under the Term Loans at the time of such prepayment multiplied by a prepayment fee of 2.0% in the first year, 1.0% in the second year, and 0.0% in the third year and thereafter. Additionally a final payment in the amount of 5.5% of the funded Term Loans is payable to SVB on the date on which the Term Loans are prepaid, paid or become due and payable in full. The final payment fees are recorded in long-term debt with an offsetting reduction to debt discount on our accompanying Condensed Consolidated Balance Sheets.
The Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants, including, among others, covenants that limit or restrict our ability to, among other things, incur additional indebtedness, grant liens, merge or consolidate, make acquisitions, pay dividends or other distributions or repurchase equity, make investments, dispose of assets, engage in any new lines of business, and enter into certain transactions with affiliates, in each case subject to certain exceptions. Among other events, a failure to make a required loan payment, an uncured covenant breach or a material adverse change in our business, operations or condition (financial or otherwise) could lead to an event of default, and in such case, all amounts then outstanding may become due and payable immediately. We were in compliance with our covenants as of March 31, 2022. As security for its obligations under the Loan Agreement, we granted SVB a first priority security interest on substantially all of our assets, except intellectual property, and subject to certain other exceptions. As of March 31, 2022, we had $7.0 million in outstanding principal and final payment fees due under our term loan agreement. See Note 7 for further discussion of our Term Loans.
Cash Flows
The following is a summary of our cash flows (in thousands):
 Three Months Ended
March 31,
 20222021
 (unaudited)
Net cash provided by (used in) operating activities$5,449 $(15,971)
Net cash used in investing activities(37,803)(6,546)
Net cash (used in) provided by financing activities(650)202 
Net Cash Provided by (Used in) Operating Activities:
Net cash provided by operating activities was $5.4 million during the three months ended March 31, 2022 and consisted of our net loss of $7.5 million, offset by changes of $10.1 million in our net operating assets and liabilities, largely driven by the receipt of a $25.0 million upfront payment from Horizon, and $2.9 million in net non-cash adjustments, which primarily relate to stock-based compensation, depreciation and amortization.
Net cash used in operating activities was $16.0 million during the three months ended March 31, 2021, and consisted of our net loss of $10.6 million and a change of $7.3 million in our net operating assets and liabilities. This was partially offset by an increase of $2.1 million in our net non-cash adjustments, which primarily relate to stock-based compensation, depreciation and amortization..
Net Cash Provided by Investing Activities:
Cash flows from investing activities primarily reflect cash used to purchase investments and proceeds from the maturities and sales of investments, thus causing a shift between our cash and cash equivalents and investment balances. We manage our cash usage with respect to our total cash, cash equivalents and investments.
Net cash used in investing activities was $37.8 million during the three months ended March 31, 2022 and consisted primarily of our purchases and maturities of investments in U.S. Treasury securities, commercial paper, and corporate debt securities, as well as the purchases of property and equipment, primarily lab equipment, to support our research and development efforts.
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Net cash used in investing activities was $6.5 million during the three months ended March 31, 2021 and consisted primarily of the purchases and maturities of investments in U.S. Treasury securities, commercial paper, and corporate debt securities.
Net Cash (Used in) Provided by Financing Activities:
Net cash used in financing activities was $0.7 million during the three months ended March 31, 2022 and consisted primarily of $1.2 million in principal payments on our debt, partially offset by $0.5 million related to the exercise of stock options.
Net cash provided by financing activities was $0.2 million during the three months ended March 31, 2021 and consisted of proceeds received from the exercise of stock options.
Funding Requirements
We have incurred operating losses since inception. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we continue our research and preclinical and clinical development of our product candidates; expand the scope of our current studies for our product candidates; initiate additional preclinical, clinical or other studies for our product candidates, including under any collaboration agreements; change or add additional manufacturers or suppliers; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; seek to identify, evaluate and validate additional product candidates; acquire or in-license other product candidates and technologies; maintain, protect and expand our intellectual property portfolio; attract and retain skilled personnel; and experience any delays or encounter issues with any of the above. Additionally, we have ongoing obligations with respect to our Loan Agreement, as described above, and our Operating Lease and certain contingencies, as described below.
Operating Lease