10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended 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: 001-38871

 

Turning Point Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

46-3826166

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

10628 Science Center Drive, Ste. 200

San Diego, California

92121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (858) 926-5251

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

TPTX

The 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 3, 2022, the registrant had 49,666,288 shares of common stock outstanding.


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited)

3

 

Condensed Balance Sheets

3

 

Condensed Statements of Operations and Comprehensive Loss

4

 

Condensed Statements of Stockholders’ Equity

5

 

Condensed Statements of Cash Flows

6

 

Notes to Unaudited Condensed Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

25

Item 4.

Controls and Procedures

25

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

26

Item 1A.

Risk Factors

26

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

72

Item 3.

Defaults Upon Senior Securities

72

Item 4.

Mine Safety Disclosures

72

Item 5.

Other Information

72

Item 6.

Exhibits

73

SIGNATURES

74

 

 

 

2


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

 

Turning Point Therapeutics, Inc.

Condensed Balance Sheets

(In thousands, except share and par value amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

Unaudited

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

309,532

 

 

$

427,879

 

Marketable securities

 

 

608,655

 

 

 

553,703

 

Prepaid and other current assets

 

 

9,244

 

 

 

10,880

 

Total current assets

 

 

927,431

 

 

 

992,462

 

Property and equipment, net

 

 

3,875

 

 

 

3,822

 

Right-of-use lease assets

 

 

5,439

 

 

 

5,158

 

Other assets

 

 

2,041

 

 

 

2,021

 

Total assets

 

$

938,786

 

 

$

1,003,463

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,610

 

 

$

5,656

 

Accrued expenses and other current liabilities

 

 

27,632

 

 

 

25,300

 

Accrued compensation

 

 

6,363

 

 

 

12,503

 

Current portion of operating lease liabilities

 

 

3,961

 

 

 

3,630

 

Total current liabilities

 

 

45,566

 

 

 

47,089

 

Operating lease liabilities, long-term

 

 

1,873

 

 

 

1,949

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 shares authorized at March 31, 2022 and December 31, 2021, zero shares outstanding at March 31, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized at March 31, 2022 and December 31, 2021; 49,664,473 and 49,582,638 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

1,487,906

 

 

 

1,472,421

 

Accumulated other comprehensive loss

 

 

(5,392

)

 

 

(1,274

)

Accumulated deficit

 

 

(591,172

)

 

 

(516,727

)

Total stockholders' equity

 

 

891,347

 

 

 

954,425

 

Total liabilities and stockholders’ equity

 

$

938,786

 

 

$

1,003,463

 

 

See accompanying notes.

3


Turning Point Therapeutics, Inc.

Condensed Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

 

2022

 

 

2021

 

 

Revenue

 

$

429

 

 

$

25,205

 

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

55,050

 

 

 

41,263

 

 

General and administrative

 

 

20,314

 

 

 

19,991

 

 

Total operating expenses

 

 

75,364

 

 

 

61,254

 

 

Loss from operations

 

 

(74,935

)

 

 

(36,049

)

 

Other income, net

 

 

490

 

 

 

545

 

 

Net loss

 

 

(74,445

)

 

 

(35,504

)

 

Unrealized loss on marketable securities, net of tax

 

 

(4,118

)

 

 

(186

)

 

Comprehensive loss

 

$

(78,563

)

 

$

(35,690

)

 

Net loss per share, basic and diluted

 

$

(1.50

)

 

$

(0.73

)

 

Weighted-average common shares outstanding, basic and diluted

 

 

49,611,492

 

 

 

48,920,403

 

 

 

See accompanying notes.

4


Turning Point Therapeutics, Inc.

Condensed Statements of Stockholders’ Equity

(In thousands, except share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

49,582,638

 

 

$

5

 

 

$

1,472,421

 

 

$

(1,274

)

 

$

(516,727

)

 

$

954,425

 

Issuance of common stock under equity incentive plans

 

 

81,835

 

 

 

 

 

 

396

 

 

 

 

 

 

 

 

 

396

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

15,089

 

 

 

 

 

 

 

 

 

15,089

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(74,445

)

 

 

(74,445

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(4,118

)

 

 

 

 

 

(4,118

)

Balance at March 31, 2022

 

 

49,664,473

 

 

$

5

 

 

$

1,487,906

 

 

$

(5,392

)

 

$

(591,172

)

 

$

891,347

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

48,678,540

 

 

$

5

 

 

$

1,389,860

 

 

$

209

 

 

$

(280,176

)

 

$

1,109,898

 

Issuance of common stock under equity incentive plans

 

 

438,500

 

 

 

 

 

 

9,679

 

 

 

 

 

 

 

 

 

9,679

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

17,278

 

 

 

 

 

 

 

 

 

17,278

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,504

)

 

 

(35,504

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(186

)

 

 

 

 

 

(186

)

Balance at March 31, 2021

 

 

49,117,040

 

 

$

5

 

 

$

1,416,817

 

 

$

23

 

 

$

(315,680

)

 

$

1,101,165

 

 

 

 

See accompanying notes.

 

 

 

5


Turning Point Therapeutics, Inc.

Condensed Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(74,445

)

 

$

(35,504

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation expense

 

 

15,089

 

 

 

17,278

 

Depreciation

 

 

393

 

 

 

253

 

Accretion of premium on marketable securities

 

 

893

 

 

 

1,400

 

Amortization of right-of-use operating lease asset

 

 

861

 

 

 

380

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

1,636

 

 

 

1,036

 

Other assets

 

 

(20

)

 

 

 

Accounts payable

 

 

1,954

 

 

 

1,542

 

Accrued expenses and other liabilities

 

 

1,448

 

 

 

2,690

 

Accrued compensation

 

 

(6,140

)

 

 

(4,723

)

Net cash used in operating activities

 

 

(58,331

)

 

 

(15,648

)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchases of marketable securities

 

 

(134,783

)

 

 

(160,650

)

Sales and maturities of marketable securities

 

 

74,818

 

 

 

81,862

 

Purchases of property and equipment

 

 

(447

)

 

 

(143

)

Net cash used in investing activities

 

 

(60,412

)

 

 

(78,931

)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock under equity incentive plans

 

 

396

 

 

 

9,679

 

Net cash provided by financing activities

 

 

396

 

 

 

9,679

 

 

 

 

 

 

 

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(118,347

)

 

 

(84,900

)

Cash, cash equivalents and restricted cash at the beginning of period

 

 

429,755

 

 

 

554,174

 

Cash, cash equivalents and restricted cash at the end of period

 

$

311,408

 

 

$

469,274

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Cash paid for income taxes

 

$

 

 

$

1

 

Supplemental disclosure of non-cash investing and financing information:

 

 

 

 

 

 

Purchases of property and equipment in accounts payable

 

$

42

 

 

$

16

 

Operating lease liabilities arising from obtaining right-of-use assets

 

$

1,142

 

 

$

 

 

See accompanying notes.

6


 

Turning Point Therapeutics, Inc.

Notes to Unaudited Condensed Financial Statements

1. Organization

Description of Business

Turning Point Therapeutics, Inc. (the Company) was organized in October 2013 and commenced operations in 2014. The Company is a clinical-stage precision oncology company designing and developing novel targeted therapies for cancer treatment. The Company’s principal operations are in the United States and the Company operates in one segment with its headquarters in San Diego, California.

The Company’s primary activities since inception have been to build infrastructure, conduct research and development, including clinical trials, perform business and financial planning, and raise capital.

Liquidity

The Company’s activities are subject to significant risks and uncertainties, including concentration on the Company’s lead development program, which has significant competition from cancer therapies in development by other companies or already approved for sale by the U.S. Food and Drug Administration.

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

The COVID-19 pandemic and ongoing geopolitical events continue to rapidly evolve and have already resulted in a significant disruption of global financial markets. The Company’s ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and further disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the pandemic or geopolitical actions. If such further disruption occurs, the Company could experience an inability to access additional capital.

The Company determined that there are no conditions or events that raise substantial doubt about its ability to continue as a going concern for a period of at least twelve months from the date of issuance of these financial statements.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, since they are interim statements, the accompanying condensed financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC. In the opinion of management, the unaudited condensed financial statements and notes thereto include all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. The operating results presented in these unaudited condensed financial statements are not necessarily indicative of the results that may be expected for any future periods.

Use of Estimates

The preparation of the Company's financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in the Company’s financial statements and accompanying notes. The most significant estimates in the Company’s

7

 


 

financial statements relate to determining the standalone selling prices (SSP) of performance obligations associated with license and collaboration arrangements, accrued research and development expenses and stock-based compensation expenses. The Company bases these estimates on historical experience, knowledge of current events and actions it may undertake in the future, and on various other assumptions that are believed to be reasonable. Actual results may differ materially from these estimates and assumptions. Although the impact of the COVID-19 pandemic to the Company’s business and operating results presents additional uncertainty, the Company continues to use the best information available to update its critical accounting estimates.

Cash, Cash Equivalents and Restricted Cash

The following table presents a reconciliation of cash, cash equivalents and restricted cash to the amounts shown in the unaudited condensed statements of cash flows (in thousands):

 

 

March 31, 2022

 

 

March 31, 2021

 

Cash and cash equivalents

 

$

309,532

 

 

$

469,167

 

Restricted cash included in other assets

 

 

1,876

 

 

 

107

 

Total cash, cash equivalents and restricted cash

 

$

311,408

 

 

$

469,274

 

 

Concentration of Credit Risk

Substantially all of the Company’s cash, cash equivalent and marketable securities are held at two financial institutions. Due to the financial strength of the depository institutions, the Company believes these financial institutions represent minimal credit risk. Cash amounts held at financial institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At March 31, 2022, cash, cash equivalents and marketable securities totaling $917.9 million are either not subject to FDIC insurance, or exceed the FDIC insured limit. The Company’s cash, cash equivalents and marketable securities are invested in short term, high credit quality securities, and as a result, the Company believes represent a minimal credit risk.

Net Loss Per Share

Basic net loss per share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s stock options, restricted stock units (RSUs) and performance stock units (PSUs). The Company excluded stock options to purchase common stock, RSUs and PSUs from the number of shares used to calculate diluted shares outstanding because the inclusion of these potentially dilutive securities would have been antidilutive.

Historical outstanding anti-dilutive securities not included in the diluted net loss per share calculation include the following:

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Common stock options

 

 

6,246,784

 

 

 

5,581,907

 

RSUs

 

 

727,643

 

 

 

162,165

 

PSUs

 

 

275,649

 

 

 

176,675

 

Total

 

 

7,250,076

 

 

 

5,920,747

 

 

3. Marketable Securities

The Company invests its excess cash in marketable securities, including debt instruments of financial institutions, corporations with investment grade credit ratings, commercial paper and government agencies.

At March 31, 2022, marketable securities consisted of the following (in thousands):

 

8

 


 

 

 

Maturity

 

Amortized

 

 

Unrealized

 

 

 

 

 

 

in Years

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

U.S. Treasuries

 

2 years or less

 

$

372,647

 

 

$

4

 

 

$

(4,206

)

 

$

368,445

 

U.S. Government agency securities

 

2 years or less

 

 

125,331

 

 

 

 

 

 

(679

)

 

 

124,652

 

Non-U.S. Government agency securities

 

2 years or less

 

 

13,709

 

 

 

 

 

 

(156

)

 

 

13,553

 

Corporate debt securities

 

2 years or less

 

 

88,453

 

 

 

8

 

 

 

(344

)

 

 

88,117

 

Commercial paper

 

Less than 1

 

 

13,888

 

 

 

 

 

 

 

 

 

13,888

 

Total marketable securities

 

 

 

$

614,028

 

 

$

12

 

 

$

(5,385

)

 

$

608,655

 

 

At December 31, 2021, marketable securities consisted of the following (in thousands):

 

 

 

Maturity

 

Amortized

 

 

Unrealized

 

 

 

 

 

 

in Years

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

U.S. Treasuries

 

2 years or less

 

$

305,763

 

 

$

1

 

 

$

(1,006

)

 

$

304,758

 

U.S. Government agency securities

 

2 years or less

 

 

151,047

 

 

 

 

 

 

(180

)

 

 

150,867

 

Non-U.S. Government agency securities

 

2 years or less

 

 

23,787

 

 

 

 

 

 

(49

)

 

 

23,738

 

Corporate debt securities

 

2 years or less

 

 

74,391

 

 

 

5

 

 

 

(56

)

 

 

74,340

 

Total marketable securities

 

 

 

$

554,988

 

 

$

6

 

 

$

(1,291

)

 

$

553,703

 

 

The Company segments its portfolio based on the underlying risk profiles of their current securities being held. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, current and expected future economic conditions. As of March 31, 2022 and December 31, 2021, the Company did not record an allowance for credit loss related to its investment portfolio.

4. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. The Company determines the fair value of financial assets and liabilities using three levels of inputs as follows:

Level 1 — Observable inputs such as quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 — Inputs (other than quoted market prices included in Level 1) that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instrument’s anticipated life; and

Level 3 — Unobservable inputs for assets or liabilities and include little or no market activity.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, prepaid and other current assets, accounts payable, and accrued liabilities, approximate fair value due to the short-term nature of these items.

The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):

9

 


 

 

 

 

Fair Value Measurements at March 31, 2022 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Money market funds

 

$

149,746

 

 

$

 

 

$

 

 

$

149,746

 

U.S. Treasuries

 

 

368,445

 

 

 

 

 

 

 

 

 

368,445

 

U.S. Government agency securities

 

 

 

 

 

124,652

 

 

 

 

 

 

124,652

 

Non-U.S. Government securities

 

 

 

 

 

13,553

 

 

 

 

 

 

13,553

 

Corporate debt securities

 

 

 

 

 

88,117

 

 

 

 

 

 

88,117

 

Commercial paper

 

 

 

 

 

172,807

 

 

 

 

 

 

172,807

 

Total cash equivalents and marketable securities

 

$

518,191

 

 

$

399,129

 

 

$

 

 

$

917,320

 

 

 

 

Fair Value Measurements at December 31, 2021 Using:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Money market funds

 

$

232,813

 

 

$

 

 

$

 

 

$

232,813

 

U.S. Treasuries

 

 

304,758

 

 

 

 

 

 

 

 

 

304,758

 

U.S. Government agency securities

 

 

 

 

 

150,867

 

 

 

 

 

 

150,867

 

Non-U.S. Government securities

 

 

 

 

 

23,738

 

 

 

 

 

 

23,738

 

Corporate debt securities

 

 

 

 

 

77,400

 

 

 

 

 

 

77,400

 

Commercial paper

 

 

 

 

 

191,130

 

 

 

 

 

 

191,130

 

Total cash equivalents and marketable securities

 

$

537,571

 

 

$

443,135

 

 

$

 

 

$

980,706

 

 

5. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Laboratory equipment

 

$

3,611

 

 

$

3,368

 

Computer equipment and software

 

 

1,347

 

 

 

1,283

 

Tenant improvements

 

 

1,557

 

 

 

1,468

 

Furniture and fixtures

 

 

403

 

 

 

358

 

Property and equipment

 

 

6,918

 

 

 

6,477

 

Less: accumulated depreciation

 

 

(3,043

)

 

 

(2,655

)

Property and equipment, net

 

$

3,875

 

 

$

3,822

 

Depreciation expense for the three months ended March 31, 2022 and 2021 was $