Tyra Biosciences, Inc. (TYRA) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties, including those described in the section entitled “Forward Looking Statements and Market Data.” Our actual results and the timing of selected events could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those set forth under the section entitled “Risk Factors” or in other parts of this Annual Report.

Overview

We are a clinical-stage biotechnology company focused on developing next-generation precision medicines for large opportunities in targeted oncology and genetically defined conditions, with an initial focus on Fibroblast Growth Factor Receptor (FGFR) biology.

Our in-house precision medicine platform, SNÅP, enables rapid and precise drug design through iterative molecular SNÅPshots that help us design and predict which product candidates may demonstrate the highest potency, selectivity and tolerability in the clinic. We have initially leveraged our SNÅP approach to develop TYRA-300, TYRA-200 and TYRA-430: three clinical-stage, novel small molecules designed to overcome the toxicity and resistance liabilities of first generation pan-FGFR inhibitors.

Our FGFR3 Programs - TYRA-300 for Bladder Cancer and Skeletal Conditions

Mutations in the protein receptor FGFR3 are a key driver in two indications with large market opportunities: bladder cancer and skeletal conditions. In bladder cancer, uncontrolled activation of FGFR3 on the cell surface stimulates cellular proliferation. In skeletal conditions, increased activity of FGFR3 expressed in growth plate chondrocytes (cartilage cells) results in excessive limitation of long bone growth.

Our lead program, TYRA-300, was designed to be more selective for FGFR3 over FGFR1, FGFR2, and FGFR4 to minimize off-target side effects, providing potential clinical advantages over less selective first-generation compounds and potentially addressing key unmet needs across both bladder cancer and skeletal conditions.

TYRA-300 is to be evaluated in three Phase 2 studies: SURF301, for the treatment of metastatic urothelial carcinoma (mUC); SURF302, for the treatment of non-muscle invasive bladder cancer (NMIBC); and BEACH301, for the treatment of pediatric achondroplasia (ACH).

SURF301 for mUC: This ongoing study is an international, multi-center, open label Phase 1/2 clinical trial that was designed to determine the optimal and maximum tolerated doses (MTD), and the recommended Phase 2 dose (RP2D) of TYRA-300, as well as to evaluate the preliminary antitumor activity of TYRA-300. In late October 2024, we reported interim data that in patients with FGFR3+ mUC who received doses ≥ 90 mg once daily (QD), 6 out of 11 (54.5%) patients achieved a confirmed partial response. Preliminary data, as of the August 15, 2024 data cutoff, suggested TYRA-300 was generally well-tolerated, with infrequent FGFR2- and FGFR1-associated toxicities. Dose optimization is ongoing in this study.

SURF302 for NMIBC: This study is an open-label Phase 2 clinical trial evaluating the efficacy and safety of TYRA-300 at lower doses (50 and 60mg QD) in participants with FGFR3-altered low-grade, intermediate risk (IR) NMIBC. We expect to dose the first patient in this study in the second quarter of 2025.

BEACH301 for ACH: This study is an open-label, Phase 2 dose-escalation/dose-expansion trial evaluating TYRA-300 at lower doses (0.125, 0.25, 0.375, 0.50 mg/kg) in children ages 3 to 10 with ACH with open growth plates. Prior to initiation of the first two cohorts, the study will enroll a safety sentinel cohort of up to 3 treatment-naïve participants per dose level in children ages 5 to 10. We expect to dose the first child in this study in the second quarter of 2025.

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Our FGFR2 Program - TYRA-200 for Intrahepatic Cholangiocarcinoma

FGFR2 is a protein receptor present on the cell surface that promotes cellular proliferation and transformation upon binding of fibroblast growth factor. Activating gene alterations of FGFR2 have been implicated in the tumorigenesis of multiple solid tumor types, with pan-FGFR inhibitors approved for intrahepatic cholangiocarcinoma (ICC).

TYRA-200 is an FGFR1/2/3 inhibitor designed to be active against nearly all of the clinically identified acquired resistant mutations that arise during treatment with pan-FGFR inhibitors, which we believe is necessary to address the problem of disease progression due to polyclonal resistance. TYRA-200 is currently being evaluated in a multi-center, open label Phase 1 clinical study, SURF201 that is designed to evaluate the safety, tolerability, and pharmacokinetics (PK) of TYRA-200, determine the optimal dose for further development and the MTD and RP2D, and evaluate preliminary antitumor activity, with a focus on achieving proof-of-concept in a cohort of FGFR2-driven ICC resistant to previous FGFR inhibitors.

Our FGF19+ Program - TYRA-430 for Hepatocellular Carcinoma

FGF19 is a post-prandial enterohepatic hormone that signals through FGFR4 and its associated co-receptor Klotho Beta (KLB) to exert its normal cellular functions. In certain cancers, FGF19 is aberrantly expressed due to focal chromosomal amplifications or epigenetic mechanisms, promoting tumor cells to become dependent on the FGFR4/KLB/FGF19 oncogenic axis. Recent insights into FGF/FGFR signaling in HCC have indicated an important bypass mechanism in FGFR3, which shares the Klotho Beta coreceptor.

TYRA-430 was designed to be biased for FGFR4 and FGFR3 over the FGFR1 and FGFR2 isoforms specifically to address the FGF19 signaling pathway, while also potentially limiting side effects due to inhibition of FGFR1 and FGFR2, as well as to address acquired resistance mutations that have limited the efficacy of previous FGFR4-specific inhibitors. TYRA-430 will be initially studied in SURF431, a global Phase 1 multicenter, open-label, study in advanced HCC and other solid tumors with activating FGF/FGFR pathway aberrations (SURF431). We expect to dose the first patient in this study in the second quarter of 2025.

Financial Overview

Since the commencement of our operations in 2018, we have devoted substantially all of our resources to organizing and staffing the company, business planning, raising capital, developing our proprietary SNÅP platform, undertaking research and development activities for our development programs, establishing our intellectual property portfolio, and providing general and administrative support for our operations. We have not generated any revenue to date and have funded our operations primarily from our initial public offering (IPO), private placements of our convertible preferred stock, the issuance of Simple Agreements for Future Equity and the issuance of common stock and pre-funded common stock warrants through a private placement. Our net losses for the years ended December 31, 2024 and 2023 were $86.5 million and $69.1 million, respectively. As of December 31, 2024, we had an accumulated deficit of $251.3 million. As of December 31, 2024, we had cash, cash equivalents, and marketable securities of $341.4 million.

We have incurred significant operating losses since inception. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical development activities, other research and development activities and capital expenditures. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future particularly if and as we conduct preclinical studies and clinical trials, continue our research and development activities, utilize third parties to manufacture our product candidates and related raw materials, hire additional personnel, expand and protect our intellectual property, and incur additional costs associated with being a public company.

Based on our current operating plan, we believe that our cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient to fund our operating expenses and capital expenditures through at least 2027. We have never generated any revenue and do not expect to generate any revenue from product sales unless and until we successfully complete the development of and obtain regulatory approval for our product candidates,

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which will not be for several years, if ever. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. Accordingly, until we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. However, we may not be able to raise additional funds or enter into such other arrangements when needed or on favorable terms, or at all. If we are unable to raise additional capital or enter into such arrangements when needed, we could be forced to delay, limit, reduce or terminate our research and development programs or future commercialization efforts, or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

Components of Results of Operations

Operating Expenses

Research and Development Expenses

To date, our research and development expenses consist primarily of external and internal costs related to the development of our SNÅP platform and our product candidates and development programs. Our research and development expenses primarily include:

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external costs, including:

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expenses incurred in connection with conducting clinical trials, including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations (CROs), central laboratories and other vendors and service providers engaged to conduct our trials;

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expenses incurred in connection with the discovery and preclinical development of our product candidates, including under agreements with third parties, such as consultants and CROs;

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costs associated with consultants for chemistry, manufacturing and controls (CMC) development, and other services;

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the cost of manufacturing compounds for use in our preclinical studies, including under agreements with third parties, such as consultants and third-party manufacturers; and

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costs related to compliance with drug development regulatory requirements; and

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internal costs, including:

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

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the costs of laboratory supplies and acquiring, developing and manufacturing preclinical study materials; and

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facilities, depreciation and other indirect expenses, which include allocated expenses for rent and maintenance of facilities and supplies.

We expense research and development expenses in the periods in which they are incurred. External expenses are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our service providers or our estimate of the level of service that has been performed at each reporting date. We track external expenses on a development program and other program-specific basis. However, we do not track internal costs on a program-specific basis because these costs primarily relate to compensation, early research and consumable costs, which are deployed across multiple programs under development.

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Research and development activities are central to our business model. There are numerous factors associated with the successful development of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs. Product candidates in later stages of development generally have higher development costs than those in earlier stages of development. As a result, we expect that our research and development expenses will increase substantially over the next several years as we advance our product candidates through preclinical studies into and through clinical trials, continue to discover and develop additional product candidates and expand our pipeline, maintain, expand, protect and enforce our intellectual property portfolio, and hire additional personnel.

Our future research and development expenses may vary significantly based on a wide variety of factors, such as:

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the number and scope, rate of progress, expense and results of our discovery and preclinical development activities and clinical trials;

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the number of trials required for approval;

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the number of sites included in each of our trials;

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the countries in which the trials are conducted;

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the length of time required to enroll eligible patients;

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the number of patients that participate in the trials;

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the ability to identify appropriate patients eligible for our clinical trials;

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the number of doses that patients receive;

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the drop-out or discontinuation rates of patients;

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potential additional safety monitoring requested by regulatory agencies;

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the duration of patient participation in the trials and follow-up;

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the phase of development of the product candidate;

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the efficacy and safety profile of the product candidate;

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the timing, receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators;

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maintaining a continued acceptable safety profile of our product candidates following approval, if any;

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the cost and timing of manufacturing our product candidates;

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significant and changing government regulation and regulatory guidance;

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the ability to attract and retain personnel;

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the impact of any business interruptions to our operations or to those of the third parties with whom we work;

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geopolitical instability, such as the war and other conflicts in Ukraine and the Middle East;

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adverse effects on the financial markets, the global economy, the supply chain and our expenses due to pandemic or epidemic diseases, geopolitical instability, inflation, interest rates and other factors; and

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the extent to which we establish additional strategic collaborations or other arrangements.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate.

The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for our product candidates or any future candidates may be affected by a variety of factors. We may never succeed in achieving regulatory approval for any of our product candidates or any future candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel-related expenses, including employee salaries, bonuses, benefits, and stock-based compensation charges for personnel in executive, finance and other administrative functions. Other significant general and administrative expenses include legal fees relating to intellectual property and corporate matters, allocated facility-related costs, professional fees for accounting, tax, business development and consulting services and insurance costs. We expect our general and administrative expenses will increase for the foreseeable future to support our increased research and development activities, manufacturing activities, and the increased costs associated with operating as a public company. These increased costs will likely include increased expenses related to hiring additional personnel, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and the Securities and Exchange Commission (SEC) requirements, director and officer insurance costs, and investor and public relations costs.

Other Income

Other income consist primarily of interest income from cash, cash equivalents and marketable securities and accretion income from marketable securities.

Results of Operations for the Years Ended December 31, 2024 and 2023

The following table summarizes our results of operations for the periods indicated (in thousands):

Research and Development Expenses

We track most external development costs by development program. We do not allocate internal costs, such as personnel-related expenses, stock-based compensation expense, facility, supplies and certain external consultant costs, to individual development programs.

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The following table summarizes our research and development expenses by development program for the periods indicated (in thousands):

Research and development expenses were $80.1 million and $62.5 million for the years ended December 31, 2024 and 2023, respectively. The overall increase of $17.6 million was driven by:

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$7.3 million increase in clinical costs driven by progression of SURF301 and SURF201 clinical trials and start-up activities related to BEACH301, SURF302 and SURF431 study launches;

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$1.7 million decrease in preclinical costs due to a decrease in early drug discovery and toxicology costs as various programs moved into clinical development;

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$0.3 million decrease in CMC costs for most programs in the clinical stage, except for TYRA-300ACH and certain preclinical programs;

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$10.4 million increase in compensation and other personnel expenses, including an increase in stock-based compensation costs of $6.0 million, driven by headcount growth; and

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$1.9 million increase in facilities and other operating costs due to our continuing expansion efforts.

General and Administrative Expenses

General and administrative expenses were $24.1 million and $17.4 million for the years ended December 31, 2024 and 2023, respectively. The increase of $6.7 million was driven by:

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$4.9 million increase in compensation and other personnel expenses, including an increase in stock-based compensation costs of $3.3 million, driven by headcount growth;

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$1.4 million increase in professional services, legal and other public company costs; and

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$0.4 million increase in facilities and other operating costs to support growing operations.

Other Income

Other income was $17.7 million and $10.8 million for the years ended December 31, 2024 and 2023, respectively. The increase of $6.9 million was primarily related to an increase in our cash, cash equivalents and marketable securities balances due to proceeds received from our private placement completed in February 2024.

Liquidity and Capital Resources

Sources of Liquidity

On September 17, 2021, we completed our IPO and issued 12,420,000 shares of common stock for net proceeds of approximately $181.2 million. Prior to our IPO, we funded our operations primarily through private

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placements of our convertible preferred stock with net proceeds of $157.2 million, excluding issuance costs of $0.4 million.

On February 6, 2024, we completed a private placement and issued 9,286,023 shares of our common stock and pre-funded warrants to purchase an aggregate of 6,087,230 shares of our common stock (the 2024 Private Placement) for net proceeds of approximately $199.6 million, excluding issuance costs of $0.4 million.

On October 3, 2022, we entered into an ATM Sales Agreement (the Sales Agreement) with Virtu Americas LLC (the Agent), under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $150.0 million in “at the market” offerings through the Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale or as otherwise agreed with the Agent. The Agent will receive a commission from us of up to 3.0% of the gross proceeds of any shares of common stock sold under the Sales Agreement. As of December 31, 2024, we have not sold any shares under the Sales Agreement.

Cash Flows

The following table sets forth a summary of our cash flows for the periods indicated (in thousands):

Operating Activities

Net cash used in operating activities for the year ended December 31, 2024 was $69.8 million, consisting primarily of our net loss of $86.5 million, adjusted for $17.4 million of non-cash charges primarily related to stock-based compensation expense and accretion on marketable securities, partially offset by $0.7 million for net changes in operating assets and liabilities.

Net cash used in operating activities for the year ended December 31, 2023 was $50.1 million, consisting primarily of our net loss of $69.1 million, adjusted for $12.6 million of non-cash charges primarily related to stock-based compensation expense and accretion on marketable securities and $6.4 million for net changes in operating assets and liabilities.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2024 was $98.4 million, consisting of $263.6 million for purchases of marketable securities available-for-sale and $0.7 million for purchases of property and equipment, offset by $165.9 for maturities of marketable securities available-for-sale.

Net cash used in investing activities for the year ended December 31, 2023 was $144.6 million, consisting of $143.8 million for purchases of marketable securities available-for-sale and $0.8 million for purchases of property and equipment.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024 was $202.1 million, consisting primarily of proceeds from the issuance of common stock and pre-funded warrants from the 2024 Private Placement of $200 million, offset by issuance costs of $0.4 million, and proceeds from the issuance of common stock under benefit plans of $2.5 million.

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Net cash provided by financing activities for the year ended December 31, 2023 was $1.5 million, related to proceeds from the issuance of common stock under benefit plans.

Material Cash Requirements

Our material cash requirements consist of expected operating expenses to conduct our clinical trials and other research and development activities, facility and operating lease obligations.

Our primary uses of cash to date have been to fund our research and development activities, including with respect to TYRA-300, TYRA-300 ACH, TYRA-430 and TYRA-200 and other research programs, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital, and providing general and administrative support for these operations.

Based on our current operating plan, we believe that our existing cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient to meet our anticipated operating expenses and capital expenditures through at least 2027. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. Additionally, the process of conducting preclinical studies and testing product candidates in clinical trials is costly, and the timing of progress and expenses in these studies and trials is uncertain.

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

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the initiation, type, number, scope, results, costs and timing of our ongoing and planned preclinical studies and clinical trials of existing product candidates or clinical trials of other potential product candidates we may choose to pursue in the future, including based on feedback received from regulatory authorities;

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the costs and timing of manufacturing for current or future product candidates, including commercial scale manufacturing if any product candidate is approved;

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the costs, timing and outcome of regulatory review of current or future product candidates;

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the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights;

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our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal controls over financial reporting;

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the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development personnel, as well as retaining personnel;

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the costs and timing of establishing or securing sales and marketing capabilities if any current or future product candidate is approved;

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our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

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costs associated with any products or technologies that we may in-license or acquire; and

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delays or issues with any of the above, including that the risk of each may be exacerbated by any future pandemics or epidemic diseases, potential geopolitical instability and war, inflation or rising interest rates.

Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including

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potential collaborations, licenses and other similar arrangements. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves.

We lease our corporate office and laboratory space in Carlsbad, California. As of December 31, 2024, total future aggregate operating lease commitments were $8.7 million, with approximately $0.9 million due in 2025, and the remaining due in periods from 2026 through 2033. These obligations are further described in Note 10 to our audited financial statements.

In addition, we enter into agreements and purchase orders in the normal course of business with vendors for the provision of goods and services. These agreements may include certain provisions for termination, with notice, which typically consist of payments for services provided or expenses incurred through the date of cancellation. We believe that our non-cancelable obligations under these agreements are not material.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events, and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values 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.

While our significant accounting policies are described in more detail in Note 1 to our financial statements included elsewhere in this filing, we believe the following accounting policies and estimates to be most critical to the preparation of our financial statements.

Accrued Research and Development Expenses

Research and development expenses consist of external and internal costs associated with the Company’s research and development activities, including its discovery and research efforts and the preclinical and clinical development of its product candidates. Research and development costs are expensed in the period incurred.

The Company has entered into various research and development contracts with clinical research organizations, clinical manufacturing organizations, clinical sites and other vendors and consultants. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and payments made in advance of or after the performance are reflected in the accompanying balance sheets as prepaid expenses or accrued liabilities, respectively. The Company records accruals for estimated costs incurred for ongoing research and development activities. When evaluating the adequacy of the accrued liabilities, the Company analyzes the progress of the services, including the phase or completion of events, invoices received and contracted costs. The Company holds discussions with applicable personnel and outside service providers as to the progress of clinical trials, or the services completed. Significant judgments and estimates may be made in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the

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Company’s estimates. Nonrefundable advance payments for goods and services, including fees for process development, are deferred and recognized as expenses in the period that the related goods are consumed or services are performed.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 1 to our financial statements appearing elsewhere in this Annual Report on Form 10-K.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (JOBS Act). We will remain an emerging growth company until the earliest to occur of: (i) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (ii) the date we qualify as a “large accelerated filer,” with at least $700 million of equity securities held by non-affiliates; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (iv) December 31, 2026. As a result of this status, we have taken advantage of reduced reporting requirements in this Annual Report on Form 10-K and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. In particular, in this Annual Report on Form 10-K, we have provided only two years of audited financial statements and have not included all of the executive compensation-related information that would be required if we were not an emerging growth company.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. We have elected to use the extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date on which we (i) are no longer an emerging growth company and (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

We are also a “smaller reporting company” as defined in the Exchange Act. We may continue to be a smaller reporting company if either (i) the market value of our stock held by non-affiliates is less than $250 million measured on the last business day of our second fiscal quarter or (ii) our annual revenue was less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million measured on the last business day of our second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation and other matters.