You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with our unaudited condensed
consolidated financial statements and related notes included in Part I, Item 1
of this report.
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act. Forward-looking statements are identified by words
such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,”
“intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the
negative of these terms or similar 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 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. We caution investors that our
business and financial performance are subject to substantial risks and
uncertainties. In addition, statements that “we believe” and similar statements
reflect our beliefs and opinions on the relevant subject. These statements are
based on information available to us as of the date of this Quarterly Report on
Form 10-
these statements, that information may be limited or incomplete. Our statements
should not be read to indicate that we have conducted an exhaustive inquiry into
or review of, all relevant information. These statements are inherently
uncertain and investors are cautioned not to unduly rely on these statements.
Overview
We are a fully-integrated, clinical stage precision oncology biopharmaceutical
company. Driven by a commitment to rigorous science and a passion for improving
the lives of people impacted by cancer and other life-threatening diseases, we
are advancing a pipeline of investigational, small molecule oncology compounds
with a biomarker-driven approach.
Targeted, Biomarker-Defined Small Molecules
Our core expertise is in oncology, discovering and developing novel small
molecule enzyme inhibitors. We are well-versed and nimble in conducting
biomarker-driven early and late stage clinical trials, and are leveraging this
expertise by developing the mid-stage clinical assets we have recently added to
our precision oncology pipeline.
In
Takeda Pharmaceutical Company Limited, or Takeda, to acquire two clinical-stage
compounds, both of which have demonstrated single-agent clinical activity in
biomarker-defined cancer patient populations. The compounds are the TORC1/2
inhibitor sapanisertib (CB-228) and the spleen tyrosine kinase (SYK) inhibitor
mivavotinib (CB-659), both of which significantly strengthen our precision
oncology pipeline. This was a transformative transaction that aligns with
Calithera’s focus and deep expertise in targeted, small-molecule cancer
therapies. Our near-term clinical development plans are to leverage our
expertise in conducting biomarker focused clinical trials by developing
sapanisertib in NRF2 (also known as NFE2L2)-mutated squamous non-small cell lung
cancer, and mivavotinib in activated B-cell (ABC), or non-GCB, diffuse large
B-cell lymphoma (DLBCL) with and without MYD88/CD79b mutations. By focusing on
well-characterized genetic vulnerabilities with molecules that have already
shown single-agent activity, we will be able to generate phase 2 data with
targeted, efficient study designs and design potential paths for rapid approval
in genetically-defined patient populations. We intend to announce data from
these studies by the first quarter of 2023.
SYK Inhibitor Mivavotinib (CB-659)
DLBCL is the most common form of lymphoma, representing approximately 30% of all
NHL diagnoses. Approximately 24,000 people are diagnosed with DLBCL in the US
each year, with approximately a 60% five-year survival rate. DLBCL treatments
are the same for all patients, despite the fact that it is a biologically
heterogeneous disease with different cell-of-origin: approximately 40% GCB,
approximately 50%
is routinely collected at the time of initial diagnosis, using an
immunohistochemistry (IHC) assay called the Hans algorithm, which classifies
tumors as GCB or non-GCB. Currently, R-CHOP (rituximab plus cyclophosphamide,
doxorubicin, vincristine, and prednisone) is the standard of care for newly
diagnosed DLBCL patients. While a fraction of patients will go into remission
following R-CHOP, 40-50% of patients relapse or are refractory to R-CHOP. For
those patients, the options are salvage chemotherapy, stem cell transplant, and
more recent entrants to the treatment landscape such as chimeric antigen
receptor-T cell therapy (CAR-T), antibody drug conjugates like polatuzumab and
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loncastuximab, and other drugs like tafasitamab and selinexor. However, high
unmet need remains for patients who are ineligible for, or relapse after, CAR-T,
stem cell transplant, or other salvage therapies. Currently, there are no
defined patient selection strategies to optimize therapy for patients in the
relapsed or refractory setting. Patients with ABC DLBCL have a poorer prognosis
than others; they have fewer curative responses to R-CHOP and shorter median
overall survival, or OS. Currently there are no approved treatments specifically
for non-GCB (ABC) DLBCL patients.
Mivavotinib is a SYK inhibitor that targets the constitutively activated B-cell
receptor, or BCR, pathway in DLBCL and other non-Hodgkin lymphomas, or NHL, and
has durable single agent responses in unselected relapsed/refractory DLBCL.
Clinical data show mivavotinib is differentiated from other SYK inhibitors, as
it showed substantially higher single agent response rates than other SYK
inhibitors, which had monotherapy response rates of less than 10 percent in
similar DLBCL patient populations. In separate preclinical experiments,
mivavotinib showed high tissue distribution, a large volume of distribution, and
high tumor:plasma exposure ratio. Therefore, the greater clinical activity seen
with mivavotinib than with other SYK inhibitors could be due to higher tissue
penetration and duration of target engagement.
The safety profile of mivavotinib is favorable for development as a monotherapy
or in combination with other drugs. Over 300 patients with hematologic
malignancies have been treated with mivavotinib, with a wide range of
well-tolerated, therapeutically efficacious doses. The most common adverse
events with mivavotinib monotherapy in NHL patients were asymptomatic and
reversible laboratory abnormalities. Mivavotinib is also combinable with
bendamustine-rituximab, ibrutinib, and R-CHOP, as demonstrated by prior studies.
SYK is known to activate multiple cell-signaling pathways in activated B-cell
like (ABC) DLBCL including NF-kB and phosphoinositide 3-kinase (PI3K) pathways,
compared to germinal center B-cell like (GCB) DLBCL, where it primarily
activates the PI3K pathway. We conducted a retrospective analysis and found a
substantially higher response rate in non-GCB (ABC) of 53% compared to GCB at
22%. In addition, recent preclinical studies have shown enhanced SYK activity,
and sensitivity to SYK inhibition in DLBCL with mutations in MyD88 and/or CD79,
and this subset of
care therapies. Approximately 50% of all ABC DLBCL tumors have one or both of
these mutations. The compelling single agent ORR in non-GCB (ABC) DLBCL, and
potential for further enrichment of in a genetically-defined subset of ABC DLBCL
with MyD88/CD79 mutations provide a well-defined, efficient development path.
Based on the combined clinical and preclinical data, we designed a two-part
phase 2 trial of mivavotinib in relapsed or refractory non-GCB (ABC) DLBCL with
enrichment of MYD88/CD79b mutated tumors using liquid NGS testing. The phase 2a
portion of the study will confirm activity in the biomarker-defined subsets and
further refine dose/schedule. The trial will enroll non-GCB (ABC) DLBCL patients
based on Hans algorithm, and MyD88 and CD79 mutation status will be collected
using ctDNA based liquid NGS to accrue a pre-specified number of patients
harboring MyD88 or CD79b mutations. Patients will be randomized to either a
standard dosing schedule of 100mg QD or an induction dosing schedule of 120mg QD
for 14 days, followed by 80mg QD. First patient in, or FPI, is anticipated to be
in the second quarter of 2022. We intend to announce data from this study by the
first quarter of 2023. Data from Phase 2a will inform Phase 2b, which could be
registration-enabling and could potentially enroll expansion cohorts comprised
of non-GCB (ABC) DLBCL and MyD88 and/or CD79m DLBCL, with a primary endpoint of
ORR to target accelerated approval as a single agent in these biomarker-defined
subsets.
While the single agent biomarker-defined phase 2 may provide an initial
indication in R/R non-GCB (ABC) DLBCL and/or MYD88/CD79b mutated DLBCL, there
will be future opportunities to pursue combination strategies with novel and/or
standard-of-care therapies to expand development in earlier lines of therapy in
DLBCL. Additional paths for monotherapy and combination development include
Waldenstrom’s Macroglobulinemia (which has a 95% prevalence of MYD88 mutation),
a biomarker-defined subset of GCB DLBCL, and other indolent lymphomas where
mivavotinib has shown compelling single agent responses in completed trials.
Lastly, based on its dual SYK and FLT3 inhibition profile, and encouraging
single agent response rate in relapsed/refractory AML, we are also interested in
exploring its activity in biomarker-defined subsets of AML where SYK inhibition
has been shown to be particularly effective.
Mivavotinib has the potential to be the first treatment specifically for non-GCB
(ABC) DLBCL, a population of patients with a historically poorer prognosis and
therefore high unmet need, and potential to be the first treatment for a
genetically-defined subset of
drug with enriched efficacy in a subset of DLBCL with high unmet need would
address an important therapeutic gap in the current treatment landscape.
mTORC1/2 Inhibitor Sapanisertib (CB-228)
A total of 50,000-60,000 sqNSCLC patients are diagnosed in
each year, comprising 25-30% of all NSCLC. Only 1-5% of squamous NSCLC tumors
have actionable mutations, such as EGFR, KRAS, etc. The five-year metastatic
survival rate among sqNSCLC patients is 7%. Standard-of-care for 1L therapy
consists of an anti-PD-1 agent and chemotherapy. For 2L therapy,
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standard of care is salvage chemotherapy, which is associated with a median
progression-free survival, or PFS, of 3 to 4.5 months. NRF2 (also known as
NFE2L2) mutations occur in approximately 15% of patients, and KEAP mutations
occur in approximately 12% of patients with sqNSCLC. Patients with tumors
harboring the NRF2 or KEAP1 mutation are known to have significantly poorer
outcomes compared to wild-type NRF2/KEAP1 tumors. Therefore, NRF2 mutated
sqNSCLC represents an especially high unmet need subpopulation of lung cancer
for which there are currently no effective therapies.
Sapanisertib is a potent and selective, dual mTORC1/2 inhibitor that targets a
key survival mechanism in KEAP1/NRF2-mutated tumor cells. Activating mutations
in NRF2 or inactivating mutations in KEAP1 lead to constitutive activation of
the oxidative stress pathway, enhancing tumor growth and survival. NRF2
activation has been shown to upregulate the mTOR pathway. In preclinical studies
evaluating the anti-tumor activity of sapanisertib across a panel of NSCLC cell
lines, the most potent antitumor activity was seen in NRF2 mutant sqNSCLC, while
it was not active in NRF2 wild-type cell lines. Additionally, it showed moderate
activity in KEAP1 mutant cell lines and was inactive in KEAP1 WT cells. In a
preclinical study where a panel of mTORC inhibitors were tested on a NRF2
mutated sqNSCLC mouse xenograft model, only sapanisertib showed strong single
agent efficacy, while TORC1 inhibitors everolimus and deferolimus were inactive,
supporting the need for dual TORC1/2 inhibition in NRF2 mutated sqNSCLC.
In a recent Phase 2 trial, sapanisertib demonstrated durable single agent
activity with 27% (or 3/11) confirmed ORR in a subset of heavily pretreated
NRF2-mutated sqNSCLC patients. In comparison, ORR was 17% (or 1/6) in
KEAP1-mutated sqNSCLC and 0% (or 0/5) in patients with
KEAP1-mutated/KRAS-mutated adenocarcinoma subtype of NSCLC. Responses in
NRF2-mutated sqNSCLC patients were durable, and the NRF2-mutant cohort had a
median PFS of 8.9 months (95% CI: 7 months, not reached). Historic standard of
care treatment with salvage chemotherapy has a median PFS of 3 to 4.5 months.
These promising data and high unmet need led us to design a two-part phase 2
study of relapsed/refractory sqNSCLC patients with or without NRF2-mutations as
detected by next generation sequencing, or NGS.
Sapanisertib has a well-established and manageable safety profile. In three
separate trials in patients with NSCLC and other R/R solid tumors, sapanisertib
at 3-5mg QD was well tolerated, with treatment-emergent adverse events, or TEAE,
being predominantly Grade 1/2. The most commonly observed TEAE was
hyperglycemia, which was well controlled with oral hypoglycemic therapy and home
glucose monitoring. Out of 93 patients treated across these five studies, only
one patient discontinued for hyperglycemia at evaluated QD doses. The most
common Grade ³3 TEAE was hyperglycemia at 25% (or 23/93), followed by rash
macular and fatigue at 8% each, and hypophosphatemia, abdominal pain, and
hyponatremia at 4% each.
We are initiating a two-part Phase 2 study of sapanisertib monotherapy in
NRF2-mutated sqNSCLC patients. The phase 2a part of the study will evaluate
sapanisertib 2 mg BID or 3 mg QD in patients with sqNSCLC harboring either WT or
mutated NRF2, as detected by NGS. The objectives of phase 2a are dose refinement
and confirmation of the selective activity in NRF2-mutated tumors compared to WT
tumors to validate NRF2 mutation as the selection biomarker. Enrollment is
expected to begin in the second quarter of 2022. Data generated from this study
could position the company to initiate a registrational study in NRF2-mutated
squamous NSCLC. The phase 2b part of the study, which could be registration
enabling, will be informed by data from phase 2a, and is planned to be a
single-arm expansion study evaluating sapanisertib in NRF2-mutated sqNSCLC
patients at the selected dose targeting accelerated approval, and/or a
randomized study comparing sapanisertib versus standard of care.
Subsequent development in sqNSCLC could involve monotherapy and/or combinations
with standard of care therapies in earlier lines of therapy within the
biomarker-defined populations. NRF2- and KEAP1-mutations have been detected
across several tumor types at frequencies up to 27%, providing additional
indications for development of sapanisertib as a monotherapy and in combination
beyond sqNSCLC.
Sapanisertib has the potential to be a first-in-class treatment for NRF2-mutated
sqNSCLC patients, a patient population with poorer prognosis, high unmet need,
and no targeted therapies, as well as a possible treatment for other
NRF2-mutated cancers beyond NSCLC.
Synthetic Lethality Preclinical Pipeline
We continue to leverage our discovery engine to build a preclinical pipeline of
synthetic lethality targets with a focus on paralog genes. In
became a member of the
Institute’s
DepMap initiative at the
biomarkers for precision cancer medicines. Membership in the
is an opportunity for us to generate novel data for discovery programs and forge
deeper collaborations with the
scientists in order to enable translational decisions for our programs. We plan
to utilize this partnership with the
biomarkers for our clinical programs, as well as identify biomarker-defined
subpopulations of cancer patients for undisclosed pipeline programs.
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VPS4A Inhibitors
We presented data describing novel VPS4A inhibitors discovered by Calithera at
the
presented poster detailed Calithera’s discovery of a novel series of VPS4A
inhibitors that are currently advancing through lead optimization. These data
validate the synthetic lethal interaction between the gene paralogs vacuolar
protein sorting-associated protein 4A (VPS4A) and 4B (VPS4B), and provide the
first preclinical evidence supporting a newly discovered series of compounds
designed to target these proteins for cancer treatment.
We mined CRISPR genetic loss-of-function data and associated molecular datasets
from the DepMap project datasets to identify pairs of gene paralogs, which were
then prioritized for potential drug targets. This work resulted in the
identification of VPS4A and VPS4B as promising targets. We then conducted
multiple studies to validate the paralog gene pair, demonstrating that cells
with VPS4B homozygous or heterozygous loss are sensitive to VPS4A knock down
while cells without VPS4B loss are not. In addition, simultaneously knocking
down VPS4A and VPS4B consistently resulted in cell death.
Utilizing the VPS4A and VPS4B paralog genes as targets, we identified a novel
series of small molecule inhibitors. Among the findings shared at AACR are data
detailing the performance of one inhibitor of VPS4A and VPS4B ATPase activity,
compared to notably inactive previously reported VPS4 inhibitors. To our
knowledge, our internally-discovered VPS4 inhibitors are the first active,
on-target inhibitors of VPS4. Potent, selective, and pharmacologically active
VPS4 inhibitors are expected to be well-tolerated and have strong single-agent
activity in tumors with these mutations. We are currently advancing multiple
inhibitors in the series through lead optimization.
Additional Small Molecule Programs
IL4I1 Inhibitor CB-668
We have also discovered CB-668, a first-in-class, potent, orally administered
inhibitor of the immune-suppressive enzyme IL4I1. IL4I1 is an enzyme that is
expressed by tumor cells and antigen presenting cells that metabolizes
phenylalanine, tyrosine and tryptophan to produce hydrogen peroxide, an
inhibitor of T-cell function. In particular, IL4I1 can metabolize tryptophan to
kynurenic acid and other metabolites that lead to immunosuppression in the tumor
microenvironment. Preclinical data were presented at the 2020
Immunotherapy of Cancer
exhibited immune mediated, single agent activity and augmented activity in
combination with checkpoint inhibitors. IL4I1 expression has been correlated
with poor clinical outcomes and expression is elevated in multiple tumor types
including ovarian and B-cell tumors.
Arginase Inhibitor for Cystic Fibrosis (CB-280)
Our product candidate, CB-280 is a novel oral inhibitor of arginase being
evaluated for the treatment of cystic fibrosis, or CF. In 2020, we were awarded
up to
CB-280. In 2021 we presented interim data from the Phase 1b trial at the
American Cystic Fibrosis Conference
tolerated, demonstrated linear pharmacokinetics (PK), and showed complete and
continuous target inhibition in plasma at doses at or above 100mg. CB-280 also
demonstrated robust pharmacodynamic (PD) effects, with rapid and significant
dose-proportional increases in plasma arginine, the key driver of NO production.
The study is now complete. We plan on publishing the Ph1b data in the future. We
are not pursuing further development of CB-280 in CF at this time, due to recent
significant shifts in the CF therapeutic and regulatory landscape.
Glutaminase Inhibitor telaglenastat (CB-839)
In
KEAPSAKE clinical trial in patients with non-squamous NSCLC with genetic
mutations in KEAP1/NRF2 based on a lack of clinical benefit observed in patients
treated with telaglenastat in an interim analysis. The phase 2 randomized,
placebo-controlled, double-blind KEAPSAKE study was designed to evaluate the
safety and anti-tumor activity of telaglenastat plus standard-of-care
chemoimmunotherapy as front-line therapy among patients with stage IV
non-squamous non-small cell lung cancer (NSCLC) whose tumors have a KEAP1 or
NRF2 mutation. At the time of unblinding on
patients randomized. The available efficacy data at unblinding, including
investigator-assessed progression-free survival (PFS), did not demonstrate
clinical benefit, and analysis of the data led to the conclusion that there was
a very low probability for the study to achieve a positive result. No difference
in safety profile was seen between the two arms.
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Partnered Programs
Arginase Inhibitor for Oncology (INCB001158)
An additional arginase inhibitor, INCB001158, was discovered by Calithera and is
being developed by Incyte Corporation, or Incyte, for oncology and hematology
indications, and is currently being evaluated in Phase 1/2 trials in combination
with other anti-cancer agents.
CD73 Inhibitor (CB-708; ATG037) for Oncology
A highly potent, selective, orally-bioavailable small molecule inhibitor of
CD73, CB-708 (now ATG037) was discovered by Calithera. Preclinical data were
presented at the AACR 2019 Annual Meeting and the 2019 SITC meeting
demonstrating that CB-708 has immune-mediated, single agent activity in
syngeneic mouse tumor models. In
with
Antengene Corporation, where we granted Antengene an exclusive, worldwide
license to develop and commercialize CB-708 (now ATG-037). In
Antengene announced the approval of a first-in-human study of ATG-037 in
patients with locally advanced or metastatic solid tumors.
Critical Accounting Policies and Estimates
There have been no significant changes in our critical accounting policies and
estimates disclosed in our Annual Report on Form 10-K for the year ended
Financial Overview
Our Ability to Continue as a Going Concern
We had cash and cash equivalents of approximately
2022
underwriting discounts, commissions and offering costs from our public offering.
In accordance with Accounting Standards Codification, or ASC, 205-40, Going
Concern, we evaluated whether there are conditions and events, considered in the
aggregate, that raise substantial doubt about our ability to continue as a going
concern within one year after the date that the condensed consolidated financial
statements are issued on
into consideration the potential mitigating effect of our plans that have not
been fully implemented as of the date the financial statements are issued. When
substantial doubt exists under this methodology, we evaluate whether the
mitigating effect of our plans sufficiently alleviate substantial doubt about
our ability to continue as a going concern. The mitigating effect of our plans,
however, is only considered if both (1) it is probable that the plans will be
effectively implemented within one year after the date that the financial
statements are issued, and (2) it is probable that the plans, when implemented,
will mitigate the relevant conditions or events that raise substantial doubt
about our ability to continue as a going concern within one year after the date
that the financial statements are issued. In performing this analysis, we
excluded certain elements of our operating plan that cannot be considered
probable. Under ASC 205-40, the future receipt of potential funding from future
sales of shares of our capital stock, if received, cannot be considered probable
at this time because none of the plans are entirely within our control and have
not been approved by our board of directors as of the date of the financial
statements. Therefore, our expectation to generate operating losses and negative
operating cash flows in the future and our need for additional funding to
support our planned operations raise substantial doubt regarding our ability to
continue as a going concern for a period of one year after the date that these
financial statements are issued.
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the ordinary course of business. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might result from the outcome of the uncertainties described above.
Research and Development Expenses
Research and development expenses represent costs incurred to conduct research,
such as the discovery and development of our product candidates. We recognize
all research and development costs as they are incurred. Costs associated with
co-development activities performed under our collaboration agreements and award
are included in research and development expenses, with any reimbursement of
costs reflected as a reduction of such expenses.
Research and development expenses consist primarily of the following:
•
employee-related expenses, which include salaries, benefits and stock-based
compensation;
•
expenses incurred under agreements with clinical trial sites that conduct
research and development activities on our behalf;
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•
laboratory and vendor expenses related to the execution of preclinical studies
and clinical trials;
•
contract manufacturing expenses, primarily for the production of clinical
supplies;
•
facilities and other allocated expenses, which include direct and allocated
expenses for rent and maintenance of facilities, depreciation expense and other
supplies;
•
license fees and milestone payments related to our licensing agreements; and
•
the asset acquisition of sapanisertib and mivavotinib.
The largest component of our total operating expenses has historically been our
investment in research and development activities including the clinical
development of our product candidates. We allocate to research and development
expenses the salaries, benefits, stock-based compensation expense, and indirect
costs of our clinical and preclinical programs on a program-specific basis, and
we include these costs in the program-specific expenses.
The following table shows our research and development expenses for the three
months ended
Three Months Ended March 31,
2022 2021
(in thousands)
Development candidate:
Sapanisertib (CB-228) $ 2,301 $ -
Mivavotinib (CB-659) 1,981 -
Telaglenastat (CB-839) 2,259 11,705
CB-280 847 1,779
Total development 7,388 13,484
Preclinical and research:
Preclinical and research 2,178 1,855
Total $ 9,566 $ 15,339
We expect our research and development expenses will increase during the next
few years as we advance our product candidates into and through clinical trials,
and pursue regulatory approval of our product candidates. The process of
conducting clinical trials necessary to obtain regulatory approval is costly and
time consuming. We may never succeed in achieving marketing approval for our
product candidates. The probability of success of our product candidates may be
affected by numerous factors, including clinical data, competition,
manufacturing capability and commercial viability. As a result, we are unable to
determine the duration and completion costs of our research and development
projects or when and to what extent we will generate revenue from the
commercialization and sale of any of our product candidates.
General and Administrative Expenses
General and administrative expenses consist of personnel costs, allocated
expenses and other expenses for outside professional services, including legal,
audit and accounting services, insurance, investor relations and other expenses
associated with being a public company. Personnel costs consist of salaries,
benefits and stock-based compensation. Allocated expenses consist of facilities
and other allocated expenses, which include direct and allocated expenses for
rent and maintenance of facilities, depreciation expense and other supplies. We
have incurred and expect to continue to incur additional expenses as a result of
operating as a public company, including costs to comply with the rules and
regulations applicable to companies listed on a national securities exchange,
costs related to compliance and reporting obligations pursuant to the rules and
regulations of the
related to increases in our administrative functions to support the growth of
our business as we advance our product candidates.
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Results of Operations
Comparison of the Three Months Ended
Three Months
Ended March 31, Change
2022 2021 $ %
(in thousands, except percentages)
Operating expenses:
Research and development $ 9,566 $ 15,339 $ (5,773 ) -38 %
General and administrative 4,260 5,428 (1,168 ) -22 %
Total operating expenses 13,826 20,767 (6,941 ) -33 %
Loss from operations (13,826 ) (20,767 ) 6,941 -33 %
Interest and other income (expense), net (9 ) 372 (381 ) -102 %
Net loss $ (13,835 ) $ (20,395 ) $ 6,560 -32 %
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Research and Development. Research and development expenses decreased
million
million
increase due to the sapanisertib program, a
mivavotinib program, and a
General and Administrative. General and administrative expenses decreased
million
million
from decreases in stock-based compensation expense, salaries and severance, and
a
Interest and Other Income (Expense), net. Interest and other income (expense),
net decreased
ended
decrease of
liability during the three months ended
Liquidity and Capital Resources
As of
Our operations have been financed by net proceeds from the sale of shares of our
capital stock and payments from our collaboration and licensing agreements.
Public Offering
On
of our common stock at a combined price to the public of
accompanying common warrants for gross proceeds to us of
proceeds of
costs. Each share of common stock is accompanied by a warrant to purchase one
share of common stock at an exercise price of
immediately exercisable and will expire 18 months from the date of issuance, or
a short-term warrant, and a warrant to purchase one share of common stock at an
exercise price of
expire 5 years from the date of issuance, or a long-term warrant.
Millennium Asset Purchase Agreement
On
Millennium. In accordance with the APA, we entered into a Preferred Stock
Purchase Agreement pursuant to which we agreed to issue to Millennium 1,000,000
shares of our Series A convertible preferred stock, or the Series A preferred
stock. The Series A preferred stock is initially convertible at the option of
the holder into approximately 17.2 shares of common stock, based on our
per share closing stock price from
Series A preferred stock is subject to anti-dilution adjustments that if
triggered would result in the issuance of additional shares of common stock upon
conversion. We intend to seek stockholder approval at our next regular
stockholder meeting for the issuance of the shares of common stock above 20% in
accordance with the rules of
shares that may become issuable as a result of any price-based anti-dilution
adjustments. The Series A preferred stock has the preferences, rights and
limitations set forth in the Certificate of Designations, as filed with the
Secretary of State of the
stockholder approval in accordance with the rules of
for the conversion of all of the shares of Series A preferred stock to common
stock, and as a result Millennium is unable to convert any portion of the Series
A preferred stock to common stock, then we and Millennium will negotiate in good
faith the timing and amount per share to be paid to compensate Millennium for
such inability to convert. If we are able to obtain stockholder approval in
accordance with the rules of
all of the shares of Series A preferred stock to common stock but Millennium is
unable to convert as a result of the Accounting Cap (defined as 19.99% of the
outstanding common stock of the Company on any date) any portion of the Series A
preferred stock to common stock by the five year anniversary of the issue date,
then on each yearly anniversary thereafter, any shares of Series A preferred
stock that remain outstanding shall automatically be converted into common stock
at the applicable conversion ratio, in each case subject to the Accounting Cap,
until such point in time as all shares of Series A preferred stock have been
converted.
Shelf Registration Statement
In
and sale by us of up to a maximum aggregate offering price of
our common stock. As of
remained available for sale, of which
pursuant to an “at-the-market” offering program, or ATM program, for sales of
our common stock under a sales agreement with
conditions as specified in the sales agreement. Our ability to sell securities
under the shelf registration statement and the ATM program will be limited until
we are no longer subject to the
29
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Our primary uses of cash are to fund operating expenses, primarily research and
development expenditures. Cash used to fund operating expenses is impacted by
the timing of when we pay these expenses, as reflected in the change in our
outstanding accounts payable and accrued expenses.
Our expectation to generate operating losses and negative operating cash flows
in the future and the need for additional funding to support our planned
operations raise substantial doubt regarding our ability to continue as a going
concern for a period of one year after the date that these condensed
consolidated financial statements are issued on
our existing cash and cash equivalents as of
for us to meet our current operating plan through the second quarter of 2023.
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 based on a number of factors including the extent and magnitude of
the impact from the COVID-19 pandemic, in particular the challenges associated
with opening new and enrolling existing clinical studies. Based on current
planning assumptions, we intend to announce data from our sapanisertib and
mivavotinib Phase 2 studies by the first quarter of 2023. If data from these
trials are not available until after the end of the second quarter of 2023, we
will require additional capital to release these data. In addition, in order to
complete the process of obtaining regulatory approval for our product candidates
and to build the sales, marketing and distribution infrastructure that we
believe will be necessary to commercialize our product candidates, if approved,
we will require substantial additional funding.
We have based our projections of operating capital requirements on assumptions
that may prove to be incorrect and we may use all of our available capital
resources sooner than we expect. Because of the numerous risks and uncertainties
associated with research, development and commercialization of pharmaceutical
products, we are unable to estimate the exact amount of our operating capital
requirements. Our future funding requirements will depend on many factors,
including, but not limited to:
•
the timing and costs of our planned clinical trials for our product candidates;
•
the timing and costs of our planned preclinical studies of our product
candidates;
•
our success in establishing and scaling commercial manufacturing capabilities;
•
the number and characteristics of product candidates that we pursue;
•
the outcome, timing and costs of seeking regulatory approvals;
•
subject to receipt of regulatory approval, revenue received from commercial
sales of our product candidates;
•
the terms and timing of any future collaborations, licensing, consulting or
other arrangements that we may establish;
•
the amount and timing of any payments we may be required to make in connection
with the licensing, filing, prosecution, maintenance, defense and enforcement of
any patents or patent applications or other intellectual property rights; and
•
the extent to which we in-license or acquire other products and technologies.
We plan to continue to fund our operations and capital funding needs through
equity and/or debt financing. We may also consider further collaborations or
selectively partnering for clinical development and commercialization. The sale
of additional equity would result in additional dilution to our stockholders.
The incurrence of debt financing would result in debt service obligations and
the instruments governing such debt could provide for operating and financing
covenants that would restrict our operations. If we are not able to secure
adequate additional funding we may be forced to make reductions in spending,
extend payment terms with suppliers, liquidate assets where possible, and/or
suspend or curtail planned programs. The continued spread of COVID-19 and
uncertain market conditions may limit our ability to access capital. Any of
these actions could harm our business, results of operations and future
prospects.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Three Months
Ended March 31,
2022 2021
(in thousands)
Cash used in operating activities
Cash provided by investing activities $ –
Cash provided by financing activities
Cash used in operating activities was
2021
related to decreased research and development costs, primarily in our
telaglenastat program.
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Cash provided by investing activities was zero and
months ended
ended
investments.
Cash provided by financing activities was
three months ended
ended
respectively, in net proceeds from the sale and issuance of common stock related
to our at-the-market offering program.
Contractual Obligations and Other Commitments
There have been no material changes to the contractual obligations during the
three months ended
Report on Form 10-K for the year ended
Recent Accounting Pronouncements
Please refer to Note 2 to our unaudited condensed consolidated financial
statements appearing under Part I, Item 1 for a discussion of recent accounting
pronouncements.
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