You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations, intentions and belief. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled "Risk Factors" under Part II, Item 1A below. These forward-looking statements may include, but are not limited to, statements regarding our future results of operations and financial position, the impact of the ongoing COVID-19 pandemic, business strategy, market size, potential growth opportunities, preclinical and clinical development activities, efficacy and safety profile of our product candidates, use of net proceeds from our offerings, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of preclinical studies and clinical trials, commercial collaborations with third parties and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates. The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "predict," "target," "intend," "could," "would," "should," "project," "plan," "expect," and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements.
Overview
We are a clinical-stage fully integrated oncology company built on a foundation
of drug discovery excellence to deliver novel precision cancer medicines to
underserved patients. By leveraging our core competencies in cancer biology and
medicinal chemistry, combined with our target class- and technology
platform-agnostic approach, we have built an efficient, fully-integrated drug
discovery engine to identify compelling biological targets and create new
chemical entities, or NCEs, that we rapidly advance into clinical trials. We
believe our approach could result in better targeted cancer therapies. Our
discovery excellence has been validated by our rapid progress in creating a
wholly-owned, internally developed pipeline. Since our inception in 2016, we
have received clearance from the
By focusing on developing agents using broad mechanisms that have multiple links to oncogenic driver pathways in select patients, we have developed a diverse pipeline consisting of multiple distinct programs spanning methyltransferases, kinases, protein-protein interactions and targeted protein degraders. Our pipeline is geared towards serving patients with high unmet medical need where there are limited or no treatment options. We believe we can best address these diseases by developing therapies that target primary and secondary resistance mechanisms.
We have two clinical candidates that are designed to be oral, potent and
selective inhibitors of protein arginine methyltransferase 5, or PRMT5. The
potency and selectivity of our product candidates is supported by preclinical
data demonstrating nanomolar inhibition of PRMT5 and no inhibition of related
enzymes at 1,000 times higher concentration of our product candidates. Our PRMT5
candidates are currently being studied in Phase 1 clinical trials in solid
tumors and myeloid malignancies. In
PRT1419, our next clinical candidate, is designed to be a potent and selective inhibitor of the anti-apoptotic protein, MCL1. The potency and selectivity of PRT1419 is supported by preclinical data demonstrating nanomolar inhibition of MCL1 and no inhibition of related enzymes at 200 times higher concentration of our product candidate.
The IV formulation of PRT1419 has demonstrated a desirable pharmacokinetic, pharmacodynamic and safety profile with potential for differentiation from competitor compounds. We are enrolling patients in a Phase 1 solid tumor dose escalation and confirmation study, including a significant number of patients at the recommended expansion dose of 80 mg/m2. In this study, PRT1419 has been well tolerated, with no cardiotoxicity observed in these patients to date. Cardiovascular parameters including troponin levels and ejection fraction changes were evaluated, in addition to standard safety, pharmacokinetics and target engagement
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metrics. The clinical pharmacodynamic profile of PRT1419 demonstrates the desired level of target engagement, as measured by caspase activation in peripheral mononuclear cells and reduction of CD14+ monocytes to levels associated with tumor regressions in preclinical models of hematological cancers. We intend to evaluate PRT1419 in hematology malignancies in monotherapy and combinations therapies, with the goal of establishing safety, clinical activity and a recommended Phase 2 dose in hematology malignancies in 2023.
PRT2527 is designed to be a potent and selective Cyclin-dependent kinase 9, or CDK9, inhibitor. In preclinical studies, PRT2527 was shown to reduce MCL1 and MYC protein levels and was highly active in preclinical models at well-tolerated doses. PRT2527 has demonstrated high potency and kinase selectivity which may offer improved efficacy and safety compared to less selective CDK9 inhibitors. Preclinical data demonstrated that treatment with PRT2527 depleted oncogenic drivers with short half-lives, such as MYC and MCL1, and effectively induced apoptosis. PRT2527 treatment demonstrated efficacy in both hematological malignancies and solid tumor models with MYC dysregulation. A phase one trial is underway evaluating escalating IV doses of PRT2527 as a monotherapy in patients with selected solid tumors, including sarcoma, prostate cancer, lung cancer, and other cancers with genomic alterations that lead to MYC dependence. Dose dependent increases in exposure and target engagement were observed as evidenced by MYC and MCL1 depletion to levels associated with tumor regression in preclinical models. No adverse events leading to dose reduction or discontinuation have been reported. We remain on track to select a recommended Phase 2 dose in solid tumor by year-end. We will use these safety data to continue the cohort expansion in solid tumors, as well as to inform and rapidly progress PRT2527 in a hematology malignancies clinical trial.
In
We completed IND-enabling studies and received IND clearance in
We were incorporated in
We will need to raise substantial additional capital to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we plan to finance our operations through the sale of equity, debt financings or other capital sources, which may include collaborations with other companies or other strategic transactions. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all. Any failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies. If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.
As of
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COVID-19 Impact
We are continuing to proactively monitor and assess the ongoing COVID-19
pandemic. Since early
Components of Results of Operations
Revenue
To date, we have not recognized any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales. However, there can be no assurance as to when we will generate such revenue, if at all.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred, including:
•
expenses incurred to conduct the necessary discovery-stage laboratory work, preclinical studies and clinical trials required to obtain regulatory approval;
•
personnel expenses, including salaries, benefits and stock-based compensation expense for our employees engaged in research and development functions;
•
costs of funding research performed by third parties, including pursuant to agreements with contract research organizations, or CROs, that conduct our clinical trials, as well as investigative sites, consultants and CROs that conduct our preclinical and nonclinical studies;
•
expenses incurred under agreements with contract manufacturing organizations, or CMOs, including manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical study and clinical trial materials;
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fees paid to consultants who assist with research and development activities;
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expenses related to regulatory activities, including filing fees paid to regulatory agencies; and
•
allocated expenses for facility costs, including rent, utilities, depreciation and maintenance.
We track outsourced development costs and other external research and development costs to specific product candidates on a program-by-program basis, fees paid to CROs, CMOs and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities. However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development.
Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect our research and development expenses to increase significantly over the next several years as we increase personnel costs, including stock-based compensation, conduct our clinical trials, including later-stage clinical trials, for current and future product candidates and prepare regulatory filings for our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense, for employees and consultants in executive, finance and accounting, legal, operations support, information technology and human resource functions. General and administrative expense also includes corporate facility costs not otherwise
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included in research and development expense, including rent, utilities, depreciation and maintenance, as well as legal fees related to intellectual property and corporate matters and fees for accounting and consulting services.
We expect that our general and administrative expense will increase in the
future to support our continued research and development activities and
potential commercialization efforts. These increases will likely include
increased costs related to the hiring of additional personnel and fees to
outside consultants, legal support and accountants, among other expenses. If any
of our current or future product candidates obtains
Other Income, Net
Other income, net consists primarily of interest earned on our cash equivalents
and marketable securities and grant income received from the
Income Taxes
Since our inception, we have not recorded any income tax benefits for the net operating losses, or NOLs, we have incurred or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our NOLs and tax credits will not be realized.
Results of Operations
Comparison of the Three Months Ended
The following table sets forth our results of operations for the three months
ended
Three months ended September 30, Change (in thousands) 2022 2021 Operating expenses: Research and development$ 22,889 $ 22,721 $ 168 General and administrative 7,517 8,115 (598 ) Total operating expenses 30,406 30,836 (430 ) Loss from operations (30,406 ) (30,836 ) 430 Other income, net 448 149 299 Net loss$ (29,958 ) $ (30,687 ) $ 729
Research and Development Expenses
Research and development expenses increased by
Research and development expenses by program are summarized in the table below:
Three months ended September 30, (in thousands) 2022 2021 PRT543$ 2,868 $ 2,797 PRT811 864 2,588 PRT1419 (Oral and IV) 1,396 2,013 PRT2527 611 832 Discovery programs 6,227 4,979
Internal costs, including personnel related 10,923 9,512
$ 22,889 $ 22,721 18
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General and Administrative Expenses
General and administrative expenses decreased by
Other Income, net
Other income, net increased by
Comparison of the Nine Months Ended
The following table sets forth our results of operations for the nine months
ended
Nine months ended September 30, Change (in thousands) 2022 2021 Operating expenses: Research and development$ 67,020 $ 61,600 $ 5,420 General and administrative 23,135 19,125 4,010 Total operating expenses 90,155 80,725 9,430 Loss from operations (90,155 ) (80,725 ) (9,430 ) Other income, net 3,358 1,873 1,485 Net loss$ (86,797 ) $ (78,852 ) $ (7,945 )
Research and Development Expenses
Research and development expenses increased by
Research and development expenses by program are summarized in the table below:
Nine months ended September 30, (in thousands) 2022 2021 PRT543$ 5,912 $ 10,477 PRT811 3,875 8,928 PRT1419 (Oral and IV) 5,872 5,813 PRT2527 2,312 2,410 Discovery programs 17,068 10,788
Internal costs, including personnel related 31,981 23,184
$ 67,020 $ 61,600
General and Administrative Expenses
General and administrative expenses increased by
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Other Income, net
Other income, net increased by
Liquidity and Capital Resources
Overview
Since our inception, we have not recognized any revenue and have incurred
operating losses and negative cash flows from our operations. We have not yet
commercialized any product and we do not expect to generate revenue from sales
of any products for several years, if at all. Since our inception, we have
funded our operations through the sale of convertible preferred stock and common
stock. As of
Funding Requirements
Our primary use of cash is 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, accrued expenses and prepaid expenses.
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 scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates;
•
the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;
•
the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates;
•
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
•
the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies;
•
expenses needed to attract and retain skilled personnel;
•
costs associated with being a public company;
•
the costs required to scale up our clinical, regulatory and manufacturing capabilities;
•
the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval; and
•
revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.
We will need additional funds to meet operational needs and capital requirements for clinical trials, other research and development expenditures, and business development activities. We currently have no credit facility or committed sources of capital. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical studies.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership
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interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated:
Nine months ended September 30, (in thousands) 2022 2021 Cash used in operating activities$ (60,802 ) $ (57,829 )
Cash provided by (used in) investing activities 80,336 (261,999 ) Cash provided by financing activities
660 162,943
Net increase in cash and cash equivalents
Operating Activities
During the nine months ended
During the nine months ended
Investing Activities
During the nine months ended
Financing Activities
During the nine months ended
Critical Accounting Policies
During the three months ended
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JOBS Act Accounting Election
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.
We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging growth company until the earliest of (1) the last day
of our first fiscal year (a) in which we have total annual gross revenues of at
least
Recent Accounting Pronouncements
See Note 3 to our interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our financial statements.
Emerging Growth Company and Smaller Reporting Company Status
In
Subject to certain conditions, as an emerging growth company, we may rely on
certain other exemptions and reduced reporting requirements, including without
limitation, exemption to the requirements for providing an auditor's attestation
report on our system of internal controls over financial reporting pursuant to
Section 404(b) of the Sarbanes-Oxley Act. We will remain an emerging growth
company until the earlier to occur of (a) the last day of the fiscal year (i)
following the fifth anniversary of the completion of our IPO, (ii) in which we
have total annual gross revenues of at least
We are also a "smaller reporting company," meaning that the market value of our
stock held by non-affiliates is less than
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