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, 2022 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.
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•
In November 2022, Ipsen announced the Phase III NAPOLI 3 trial of Onivyde®
(irinotecan liposome injection) plus 5-fluorouracil/leucovorin and oxaliplatin
(the "NALIRIFOX regimen") met its primary endpoint demonstrating clinically
meaningful and statistically significant improvement in overall survival
compared to nab-paclitaxel plus gemcitabine in 770 previously untreated patients
with metastatic pancreatic ductal adenocarcinoma ("mPDAC") and key secondary
efficacy outcome of progression-free survival (PFS) also showed significant
improvement over the comparator arm. Ipsen also announced that the safety
profile of Onivyde in the NAPOLI 3 trial was consistent with those observed in
the previous phase I/II mPDAC study. Ipsen also stated that it intends to file a
supplemental New Drug Application with the U.S. Food and Drug Administration for
Onivyde in combination with oxaliplatin plus 5-fluorouracil/leucovorin for the
treatment of patients with previously untreated mPDAC following the Fast Track
Designation granted in 2020. In January 2023, Ipsen presented clinical trial
results at the 2023 American Society of Clinical Oncology (ASCO)
Gastrointestinal Cancers Symposium. In February 2023 Ipsen provided guidance to
investors that it intends to file a supplemental New Drug Application with the
U.S. Food and Drug Administration during the first half of 2023 following the
Fast Track Designation granted in 2020 for the use of Onivyde in combination
with oxaliplatin plus 5-fluorouracil/leucovorin for the treatment of patients
with previously untreated mPDAC.
•
In August 2022, Ipsen announced that the Phase III RESILIENT trial did not meet
its primary endpoint of overall survival compared to topotecan. The trial is
evaluating Onivyde® (irinotecan liposomal injection) versus topotecan in
patients with small cell lung cancer, who have progressed on or after
platinum-based first-line therapy treatment. RESILIENT is a Phase III trial
conducted in two parts; the first part read out in 2020 confirming the safety,
dosing and efficacy of Onivyde; part two is evaluating the efficacy of Onivyde
versus topotecan. The analysis concluded that the primary endpoint overall
survival was not met in patients treated with Onivyde versus topotecan. However,
a doubling of the secondary endpoint of objective response rate in favor of
Onivyde was observed. The safety and tolerability of Onivyde was consistent with
its already-known safety profile, and no new safety concerns emerged. The
clinical study results will be communicated with the regulatory agency. Ipsen
indicated that while the results from the analysis of the RESILIENT trial have
not demonstrated an overall survival benefit with Onivyde in patients in
second-line small cell lung cancer, Ipsen intends to analyze the data further
before decisions regarding next steps are made. To date, there have been no
further public announcements by Ipsen regarding these matters and it remains
unclear as to whether Ipsen will continue to seek approval for the use of
ONIVYDE in the small cell lung cancer application. If Ipsen elects not to
proceed with seeking regulatory approval, or if regulatory approval is not
obtained, we would not be entitled to the $150 million milestone payment tied to
approval of Onivyde for treating small cell lung cancer.
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. 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 did 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.
In January 2023, Elevation announced it is pausing further investment in the
clinical development of seribantumab and intends to pursue further development
only in collaboration with a partner. On March 14, 2023, Elevation Oncology
announced that it would be presenting two posters on NRG1 fusions, including
updated data from the Phase 2 CRESTONE study evaluating seribantumab in
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patients with solid tumors harboring NRG1 fusions at the American Association
for Cancer Research (AACR) Annual Meeting 2023, held April 14-19, 2023.
On March 27, 2020, we entered into an Asset Purchase Agreement (the "Celator
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 Celator Asset Purchase Agreement. Under the terms of the Celator 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, pursuant to which the
third party obtained an exclusive 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 third party paid to us the option fee of $0.1
million.. On March 1, 2022, the third party exercised the option and we received
consideration of $0.5 million and a gain of $0.5 million was recognized in March
2022.
On January 23, 2023, we entered into an Asset Purchase Option Agreement (the
"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
the Company's preclinical programs with a consideration of $700 thousand. Under
the terms of the Option Agreement, the Purchaser paid to us the Option fee of
$150 thousand and we incurred transaction cost of $11 thousand. A net gain of
$139 thousand was recognized in January 2023. The Purchaser may exercise the
Option prior to July 23, 2023.
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 March 31, 2023, we had unrestricted cash and cash equivalents of $19.4
million. We expect that our cash and cash equivalents as of March 31, 2023 will
be sufficient to continue our operations beyond 2027, when we estimate the
longest-term potential Ipsen milestone may be achieved.
As of March 31, 2023, we had an accumulated deficit of $547.9 million. Our net
loss from our continuing operations was $0.3 million and $0.1 million for the
three months ended March 31, 2023 and 2022, 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.
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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, 2023, the date we filed
our Annual Report on Form 10-K for the year ended December 31, 2022. For more
information on our critical accounting policies, refer to our Annual Report on
Form 10-K for the year ended December 31, 2022.
Results of Operations
Comparison of the three months ended March 31, 2023 and 2022
Three Months Ended
March 31,
(in thousands) 2023 2022
Operating expenses:
General and administrative expenses $ 586 $ 577
Gain on sale of assets (139 ) (445 )
Total operating expenses 447 132
Loss from operations (447 ) (132 )
Interest income 176 -
Net loss $ (271 ) $ (132 )General and administrative expenses
General and administrative expenses were $0.6 million for the three months ended
March 31, 2023 and 2022, no significant changes during the three months ended
March 31, 2023.
Gain on sale of assets
Gain on sale of assets was $0.1 million and $0.5 million for the three months
ended March 31, 2023 and 2022, respectively, attributable to the sale of certain
of our preclinical programs to third parties.
Interest income
Interest income was $0.2 million for the three months ended March 31, 2023 and
nil for the three months ended March 31, 2022, primarily attributable to the
increase of interest rate associated with our money market fund.
Liquidity and Capital Resources
Sources of liquidity
We have financed our operations through March 31, 2023 primarily through private
placements of convertible preferred stock, collaborations, public offerings of
our securities, secured debt financings, sales of our common stock, sales of our
commercial and in-process research and development assets and exercise of stock
options. As of March 31, 2023, we had unrestricted cash and cash equivalents of
$19.4 million.
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Cash flows
The following table provides information regarding our cash flows for the three
months ended March 31, 2023 and 2022:
Three Months Ended
March 31,
(in thousands) 2023 2022
Net cash used in operating activities $ (356 ) $ (354 )
Net cash provided by investing activities 139 445
Net cash provided by financing activities 179 -
Net (decrease) increase in cash and cash equivalents $ (38 ) $ 91
Operating activities
Cash used in operating activities of $0.4 million during the three months ended
March 31, 2023 was primarily a result of our $0.3 million net loss from
operations. The net loss was adjusted by $0.1 million gain on the sale of
in-process research and development, a decrease in accounts payable, accrued
expenses and other of $0.1 million and offset by a net decrease in prepaid
expenses and other current assets of $0.2 million.
Cash used in operating activities of $0.4 million during the three months ended
March 31, 2022 was primarily a result of our $0.1 million net loss from
operations. The net loss was adjusted by a $0.4 million gain on the sale of
in-process research and development assets and offset by a net decrease in
prepaid expense and other assets of $0.2 million.
Investing activities
Cash provided by investing activities of $0.1 million and $0.4 million during
the three months ended March 31, 2023 and 2022, respectively, was due to
proceeds from the sale of in-process research and development.
Financing activities
Cash provided by financing activities of $0.2 million during the three months
ended March 31, 2023 was due to proceeds from the exercise of stock options.
There was no cash provided by or used in financing activities during the three
months ended March 31, 2022.
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;
•
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.
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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, 2022, as filed with the SEC on March 9, 2023.
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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