The following discussion of our financial condition and results of operations
should be read in conjunction with our financial statements and the notes to
those financial statements appearing elsewhere in this Quarterly Report on Form
10-Q and the audited consolidated financial statements and notes thereto and
management's discussion and analysis of financial condition and results of
operations for the year ended December 31, 2021 included in our Annual Report on
Form 10-K. This discussion contains forward-looking statements that involve
significant risks and uncertainties. As a result of many factors, such as those
set forth in Part II, Item 1A. Risk Factors of this Quarterly Report on Form
10-Q, which are incorporated herein by reference, our actual results may differ
materially from those anticipated in these forward-looking statements.
Overview
We are a biopharmaceutical company based in Cambridge, Massachusetts that is
entitled to receive up to $450.0 million in contingent milestone payments
related to our sale of ONIVYDE® to Ipsen S.A., or Ipsen, in April 2017 and up to
$54.5 million in contingent milestone payments related to our sale of MM-121 and
MM-111 to Elevation Oncology, Inc. (formerly known as 14ner Oncology, Inc.), or
Elevation, in July 2019. We do not have any ongoing research or development
activities and are seeking potential acquirers for our remaining preclinical and
clinical assets. We do not have any employees and instead use external
consultants for the operation of our company.
On April 3, 2017, we completed the sale of ONIVYDE® and MM-436 (the "commercial
business") to Ipsen (the "Ipsen sale"). In connection with the Ipsen sale, we
are eligible to receive up to $450.0 million in additional regulatory
approval-based milestone payments.
The remaining up to $450.0 million in potential milestone payments resulting
from the Ipsen sale consist of:
•
$225.0 million upon approval by the U.S. Food and Drug Administration, or FDA,
of ONIVYDE® for the first-line treatment of metastatic adenocarcinoma of the
pancreas, subject to certain conditions;
•
$150.0 million upon approval by the FDA of ONIVYDE® for the treatment of
small-cell lung cancer after failure of first-line chemotherapy; and
•
$75.0 million upon approval by the FDA of ONIVYDE® for an additional indication
unrelated to those described above.
Our non-commercial assets, including our clinical and preclinical development
programs, were not included in the Ipsen sale and remain assets of ours.
On May 30, 2019, we announced the completion of our review of strategic
alternatives, following which our board of directors implemented a series of
measures which we believe allow us to extend our cash runway into 2027 and
preserve our ability to capture the potential milestone payments resulting from
the Ipsen sale. We have based this estimate on assumptions that may prove to be
wrong, and we could use our financial resources sooner than we currently expect.
In connection with that announcement, we discontinued the discovery efforts on
our remaining preclinical programs: MM-401, an agonistic antibody targeting a
novel immuno-oncology target, TNFR2; and MM-201, a highly stabilized agonist-Fc
fusion protein targeting death receptors 4 and 5. We are seeking potential
acquirers for our remaining preclinical and clinical assets.
The termination of our executive management team and all other employees was
substantially completed by June 28, 2019 and fully completed by July 12, 2019.
As of July 12, 2019, we do not have any employees. We have engaged external
consultants to run our day-to-day operations. We have also entered into
consulting agreements with certain former members of our executive management
team who are supporting our relationship with current partners, assisting with
the potential sale of remaining preclinical and clinical assets, and assisting
with certain legal and regulatory matters and the continued wind-down of
operations.
On July 12, 2019, we completed the sale to Elevation, or the Elevation sale, of
our anti-HER3 antibody programs, MM-121 (seribantumab) and MM-111. In connection
with the Elevation sale, we received an upfront cash payment of $3.5 million and
are eligible to receive up to $54.5 million in additional potential development,
regulatory approval and commercial-based milestone payments, consisting of:
•
$3.0 million for achievement of the primary endpoint in the first registrational
clinical study of either MM-121 or MM-111;
•
Up to $16.5 million in total payments for the achievement of various regulatory
approval and reimbursement-based milestones in the United States, Europe and
Japan; and
•
Up to $35.0 million in total payments for achieving various cumulative worldwide
net sales targets between $100.0 million and $300.0 million for MM-121 and
MM-111.
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On March 27, 2020, we entered into an Asset Purchase Agreement (the "Asset
Purchase Agreement") with Celator Pharmaceuticals, Inc. (the "Buyer"), pursuant
to which the Buyer agreed to purchase certain assets (the "Transferred Assets")
relating to certain of our preclinical nanoliposome programs (the
"Transaction"). We completed the Transaction simultaneously with the execution
of the Asset Purchase Agreement. Under the terms of the Asset Purchase
Agreement, the Buyer paid to us a cash payment of $2.3 million and reimbursed us
for $0.2 million related to certain specified expenses and to assume certain
liabilities with respect to the Transferred Assets. We incurred $0.4 million
expenses related to the Transaction.
On September 15, 2021, we entered into an Asset Purchase Option Agreement (the
"Asset Purchase Option Agreement") with a third party (the "Purchaser"),
pursuant to which the Purchaser agreed to obtain an exclusive option (the
"Option"), to purchase one of our preclinical programs with a consideration of
$0.5 million. Under the terms of the Asset Purchase Option Agreement, the
Purchaser paid to us the Option fee of $0.1 million. The Purchaser had the right
to exercise the Option within 24 months from September 15, 2021. We recognized a
gain of $0.1 million related to the Option fee payment for the year ended
December 31, 2021. On January 18, 2022, the Purchaser provided written notice to
us of its intent to exercise such Option. On March 1, 2022, we entered the Asset
Purchase Agreement with the Purchaser. The consideration of $0.5 million was
paid to us and a gain of $0.5 million was recognized in March 2022.
We previously devoted substantially all of our resources to our drug discovery
and development efforts, including conducting clinical trials for our product
candidates, protecting our intellectual property and providing general and
administrative support for these operations. We have financed our operations
primarily through private placements of convertible preferred stock,
collaborations, public offerings of our securities, secured debt financings,
sales of ONIVYDE® and the Ipsen sale.
As of September 30, 2022, we had unrestricted cash and cash equivalents of $13.1
million. We expect that our cash and cash equivalents as of September 30, 2022
will be sufficient to continue our operations into 2027, when we estimate the
longest-term potential Ipsen milestone may be achieved.
As of September 30, 2022, we had an accumulated deficit of $547.1 million. Our
net loss from our continuing operations was $1.1 million and $2.0 million for
the nine months ended September 30, 2022 and 2021, respectively. We do not
expect to have any research and development expenses going forward. We do not
expect to be profitable from our continuing operations in the future.
Financial Operations Overview
General and administrative expenses
General and administrative expenses consist primarily of stock-based
compensation expenses, legal, intellectual property, business development,
finance, information technology, corporate communications and investor
relations. Other general and administrative expenses include costs for board of
director's costs, insurance expenses, legal and professional fees, and
accounting and information technology services fees.
Interest income
Interest income consists primarily of interest income associated with our money
market fund.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results
of operations is based on our condensed consolidated financial statements, which
we have prepared in accordance with the rules and regulations of the Securities
and Exchange Commission, or the SEC, and generally accepted accounting
principles in the United States, or GAAP. The preparation of these condensed
consolidated financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements, as
well as the reported expenses during the reporting periods. We evaluate our
estimates and judgments on an ongoing basis. We base our estimates on historical
experience and on various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources. Our actual results may differ from these estimates under
different assumptions or conditions.
Our critical accounting policies and the methodologies and assumptions we apply
under them have not materially changed since March 9, 2022, the date we filed
our Annual Report on Form 10-K for the year ended December 31, 2021. For more
information on our critical accounting policies, refer to our Annual Report on
Form 10-K for the year ended December 31, 2021.
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Results of Operations
Comparison of the three months ended September 30, 2022 and 2021
Three Months Ended
September 30,
(in thousands) 2022 2021
Operating expenses:
General and administrative expenses $ 504 $ 619
Gain on sale of assets - (94 )
Total operating expenses 504 525
Loss from operations (504 ) (525 )
Interest income 62 -
Net loss $ (442 ) $ (525 )General and administrative expenses
General and administrative expenses were $0.5 million for the three months ended
September 30, 2022 compared to $0.6 million for the three months ended September
30, 2021, a decrease of $0.1 million, or 19%. This decrease was primarily
attributable to the decrease in both stock-based compensation expense and
consulting fees.
Gain on sale of assets
There was no gain on sale of assets for the three months ended September 30,
2022. Gain on sale of assets was $0.1 million for the three months ended
September 30, 2021, attributable to the sale of certain of our preclinical
programs to a third party.
Interest income
Interest income was $0.1 million for the three months ended September 30, 2022
and nil for the three months ended September 30, 2021, primarily attributable to
the increase of interest rate associated with our money market fund.
Comparison of the nine months ended September 30, 2022 and 2021
Nine Months Ended
September 30,
(in thousands) 2022 2021
Operating expenses:
General and administrative expenses $ 1,567 $ 2,143
Gain on sale of assets (445 ) (144 )
Total operating expenses 1,122 1,999
Loss from operations (1,122 ) (1,999 )
Interest income 70 19
Net loss $ (1,052 ) $ (1,980 )General and administrative expenses
General and administrative expenses were $1.6 million for the nine months ended
September 30, 2022 compared to $2.1 million for the nine months ended September
30, 2021, a decrease of $0.5 million, or 27%. This decrease was primarily
attributable to the decrease in both stock-based compensation expense and
consulting fees.
Gain on sale of assets
Gain on sale of assets was $0.5 million for the nine months ended September 30,
2022, primarily attributable to the Option fee to purchase one of our
preclinical programs paid by the Purchaser. Gain on sale of assets was $0.1
million for the nine months ended September 30, 2021, attributable to the sale
of certain of our preclinical programs to a third party.
Interest income
Interest income was $0.1 million for the nine months ended September 30, 2022
and less than $0.1 million for the nine months ended September 30, 2021,
primarily attributable to the increase of interest rate associated with our
money market fund.
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Liquidity and Capital Resources
Sources of liquidity
We have financed our operations through September 30, 2022 primarily through
private placements of convertible preferred stock, collaborations, public
offerings of our securities, secured debt financings, sales of our common stock
and sales of our commercial and in-process research and development assets. As
of September 30, 2022, we had unrestricted cash and cash equivalents of $13.1
million.
Cash flows
The following table provides information regarding our cash flows for the nine
months ended September 30, 2022 and 2021:
Nine Months Ended
September 30,
(in thousands) 2022 2021
Net cash (used in) provided by operating activities $ (1,557 ) $ 137
Net cash provided by investing activities
445 144
Net cash provided by financing activities - 239
Net (decrease) increase in cash and cash equivalents $ (1,112 ) $ 520
Operating activities
Cash used in operating activities of $1.6 million during the nine months ended
September 30, 2022 was primarily a result of our $1.1 million net loss from
operations. The net loss was off set by stock-based compensation expense of $0.1
million, and also adjusted by $0.4 million gain on the sale of in-process
research and development and a net decrease in accounts payable, accrued
expenses and other of $0.1 million.
Cash provided by operating activities of $0.1 million during the nine months
ended September 30, 2021 was primarily a result of our $2.0 million net loss
from operations and offset by $0.4 million of stock-based compensation expense.
The net loss was adjusted by a decrease in assets and liabilities of $1.9
million. The increase in operating assets and liabilities during the nine months
ended September 30, 2021 was primarily driven by a decrease of $2.0 million in
prepaid expense and other assets related to our federal tax refund of $2.0
million, and offset by a $0.1 million decreases to accounts payable, accrued
expenses and other expenses due to timing of payments. This net loss was
adjusted by a $0.1 million gain on the sale of in-process research and
development.
Investing activities
Cash provided by investing activities of $0.4 million and $0.1 million during
the nine months ended September 30, 2022 and 2021, respectively, was due to
proceeds from the sale of in-process research and development.
Financing activities
There was no cash provided by or used in financing activities during the nine
months ended September 30, 2022. Cash provided by financing activities of $0.2
million during the nine months ended September 30, 2021 was due to proceeds from
the exercise of stock options.
Funding requirements
We have incurred significant expenses and operating losses to date. On May 30,
2019, we announced the completion of our review of strategic alternatives,
following which our board of directors implemented a series of measures designed
to extend our cash runway into 2027 and preserve our ability to capture the
potential milestone payments resulting from the Ipsen sale. In connection with
that announcement, we discontinued the discovery efforts on our remaining
preclinical programs and implemented a reduction in headcount resulting in the
termination of all remaining employees as of July 12, 2019. Our future capital
requirements will depend on many factors, including:
•
the timing and amount of potential milestone payments related to ONIVYDE® that
we may receive from Ipsen;
•
the timing and amount of potential milestone payments that we may receive from
Elevation;
•
the timing and amount of any special dividend to our stockholders that our board
of directors may declare;
•
the timing and amount of general and administrative expenses required to
continue to operate our company;
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•
the extent to which we owe any taxes for current, future or prior periods,
including as a result of any audits by taxing authorities;
•
the extent to which we invest in any future research or development activities
of our product candidates;
•
the costs of preparing, filing and prosecuting patent applications and
maintaining, enforcing and defending intellectual property-related claims;
•
the extent to which we acquire or invest in businesses, products and
technologies; and
•
the costs associated with operating as a public company and maintaining
compliance with exchange listing and SEC requirements.
We do not believe that we will be able to raise a material amount of capital
through the sale of our equity securities or debt financing. Rather, our goal is
to judiciously expend our remaining cash until such time, if ever, as we receive
additional milestone payments from Ipsen and Elevation. There can be no
assurance as to the timing, terms or consummation of any financing. We do not
have any committed external sources of funds. To the extent that we raise
additional capital through the sale of equity or convertible debt securities,
the ownership interest of our stockholders will be diluted, and the terms of
these securities may include liquidation or other preferences that adversely
affect the rights of our stockholders. Debt 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 additional funds through arrangements with
third parties, we may have to relinquish valuable rights to our future revenue
streams or product candidates.
Contractual Obligations and Commitments
There were no material changes to our contractual obligations and commitments
described under Management's Discussion and Analysis of Financial Condition and
Results of Operations in our Annual Report on Form 10-K for the year ended
December 31, 2021, as filed with the SEC on March 9, 2022.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined under SEC rules.
Recent Accounting Pronouncements
See Note 7, "Recent Accounting Pronouncements," in the accompanying notes to the
condensed consolidated financial statements for a full description of recent
accounting pronouncements.
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