BIOMEA FUSION, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described, in or implied, by these forward-looking statements. We were established in the state ofDelaware inAugust 2017 asBiomea Fusion, LLC . InDecember 2020 , all outstanding membership interests inBiomea Fusion, LLC were converted into equity interests inBiomea Fusion, Inc. The capitalization information included in this Quarterly Report is consistently presented as the information ofBiomea Fusion, Inc. , even during the prior period when our stockholders held their equity interests inBiomea Fusion, LLC .
Overview
We are a clinical-stage biopharmaceutical company focused on the discovery and
development of irreversible small molecules to treat patients with genetically
defined cancers. An irreversible small molecule drug is a synthetic compound
that forms a permanent bond to its target protein and offers a number of
potential advantages over conventional reversible drugs, including greater
target selectivity, lower drug exposure and the ability to drive a deeper, more
durable response. Leveraging our extensive expertise in irreversible binding
chemistry and development, we built our proprietary FUSION System discovery
platform to advance a pipeline of novel irreversible, small molecule therapies.
Our lead product candidate, BMF-219, is an orally bioavailable, potent and
selective irreversible inhibitor of menin, an important transcriptional
regulator known to play a direct role in oncogenic signaling in multiple
cancers. In preclinical studies, administration of BMF-219 has resulted in
robust anti-tumor responses across a range of liquid and solid tumor models and
has been well-tolerated in animal studies. We are developing BMF-219 for the
treatment of liquid and solid tumors that are highly dependent on menin,
including leukemias containing the mixed lineage leukemia ("MLL") fusion
protein. In September 2021 , we announced that the U.S. Food and Drug
Administration ("FDA") had cleared our investigational new drug ("IND")
application to begin our first Phase I trial of BMF-219 in adult patients with
relapsed or refractory acute leukemia including those with an MLL/KM2TA gene
rearrangement or NPM1 mutation.
Additionally, literature has implicated menin inhibition as a potential
therapeutic strategy for the treatment of various forms of diabetes, including
type 2 diabetes. We have initiated preclinical work to assess the potential of
the menin pathway in type 2 diabetes and expect to report findings in the first
quarter of 2022. Beyond BMF-219, we are utilizing our novel platform to develop
irreversible treatments against other high-value oncogenic drivers of cancer and
expect to nominate our second development candidate in the first half of 2022.
Our goal is to utilize our capabilities and platform to become a leader in
developing irreversible small molecules in order to maximize the depth and
durability of clinical benefit when treating various cancers.
Since commencing operations in 2017, we have devoted substantially all of our
efforts and financial resources to conducting research and development
activities, including drug discovery and preclinical studies, establishing and
maintaining our intellectual property portfolio, the manufacturing of clinical
and research material, organizing and staffing our company, business planning,
raising capital and providing general and administrative support for these
operations. We have not generated any revenue from product sales and, as a
result, we have never been profitable and have incurred net losses since
commencement of our operations.
As of September 30, 2021 , we had an accumulated deficit of $35.0 million . We
incurred net losses of $12.6 million and $26.9 million , respectively, for the
three and nine months ended September 30, 2021 . We expect to continue to incur
significant expenses and increasing operating losses for the foreseeable future,
and our net losses may fluctuate significantly from period to period, depending
on the timing of and expenditures on our planned research and development
activities.
We do not expect to generate revenue from product sales unless and until we
obtain regulatory approval for and commercialize a product candidate, and we
cannot assure you that we will ever generate significant revenue or profits. We
expect that our expenses will continue to increase for the foreseeable future.
We expect to continue to incur significant losses for the foreseeable future,
and we expect these losses to increase substantially if and as we:
• continue our research and development efforts and submit additional INDs;
• conduct preclinical studies and clinical trials;
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--------------------------------------------------------------------------------• seek marketing approvals for any product candidates that successfully complete
clinical trials;
• experience any delays or encounter any issues with any of the above, including
but not limited to failed studies, complex results, safety issues or other
regulatory challenges;
• establish a sales, marketing and distribution infrastructure and scale-up
manufacturing capabilities, whether alone or with third parties, to commercialize any product candidates for which we may obtain regulatory approval, if any;
• obtain, expand, maintain, enforce and protect our intellectual property
portfolio;
• hire additional clinical, regulatory and scientific personnel; and
• operate as a public company.
We may need to raise additional capital in the future to fund our operations, including to complete clinical trials for any product candidates. If sufficient funds on acceptable terms are not available when needed, we could be required to significantly reduce our operating expenses and delay, reduce the scope of, or eliminate one or more of our development programs. We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates. All of our product candidates are small molecules and are manufactured with synthetic processes from available or custom synthesized starting materials. The chemistry is scalable and uses commonly available pharmaceutical equipment in the manufacturing process. We expect to continue to develop product candidates that can be produced cost-effectively at contract manufacturing facilities. In addition, we do not yet have a marketing or sales organization or commercial infrastructure. Accordingly, we will incur significant expenses to develop a marketing and sales organization and commercial infrastructure in advance of generating any product sales. InApril 2021 we completed our initial public offering ("IPO") and issued an aggregate of 9,000,000 shares of our common stock at a price of$17.00 per share. Subsequent to the close, an additional 823,532 shares were issued in connection with the partial exercise by the underwriters of their option to purchase additional shares of common stock. In addition, immediately prior to the closing of the IPO, all outstanding shares of our convertible preferred stock automatically converted into 7,064,925 shares of common stock. Proceeds from the IPO, net of underwriting discounts and commissions and offering costs were approximately$152.8 million . The global COVID-19 pandemic continues to evolve rapidly, and we will continue to monitor it closely. The extent of the impact of the COVID-19 pandemic on our business, operations, and product development timelines and plans remain uncertain and will depend on certain developments, including the duration and spread of the outbreak and its impact on our clinical trial enrollment, trial sites, clinical research organizations ("CROs"), contract manufacturing organizations ("CMOs"), and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel. We have not experienced delays in our discovery and development activities as a result of the COVID-19 pandemic, but may in the future as some of our CRO and other service providers continue to be impacted.
Components of Operating Results
Revenue
To date, we have not generated any revenue and do not expect to generate any revenue from the sale of products in the near future.
Operating Expenses
Research and Development
Our research and development expenses consist primarily of external and internal costs incurred in connection with the research and development of our research programs and product candidates.
External costs include:
• expenses incurred under agreements with third-party CMOs, CROs, research and
development service providers, academic research institutions and consulting
costs; and
• laboratory expenses, including supplies and services.
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--------------------------------------------------------------------------------Internal costs include:
• personnel-related expenses, including salaries, benefits and stock-based
compensation for personnel in research and product development roles; and • facilities and other allocated expenses, including expenses for rent and
facilities maintenance, and amortization.
We expense research and development costs in the periods in which they are incurred. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and as services are performed. We track direct costs by stage of program, clinical or preclinical. However, we do not track indirect costs on a program specific or stage of program basis because these costs are deployed across multiple programs and, as such, are not separately classified. We expect our research and development expenses to increase substantially during the next few years as we seek to initiate and complete clinical trials, pursue regulatory approval of BMF-219, and advance other programs through preclinical and clinical development. Predicting the timing or the final cost to complete our clinical program or validation of our manufacturing and supply processes is difficult and delays may occur because of many factors. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. To the extent that our product candidates continue to advance into clinical trials, as well as advance into larger and later stage clinical trials, our expenses will increase substantially and may become more variable.
Our future research and development costs may vary significantly based on a wide variety of factors, such as:
• the scope, rate of progress, expense and results of preclinical development
activities, as well as of any future clinical trials of our product
candidates, and other research and development activities we may conduct;
• uncertainties in clinical trial design;
• per patient trial costs;
• the number of trials required for approval;
• the number of sites included in the trials;
• the number of patients that participate in the trials;
• the countries in which the trials are conducted;
• the length of time required to enroll eligible patients;
• the drop-out or discontinuation rates of patients, particularly in light of
the COVID-19 pandemic environment;
• the safety and efficacy profiles of our product candidates;
• the timing receipt, and terms of any approvals from applicable regulatory
authorities including the FDA and non-
• maintaining a continued acceptable safety profile of our product candidates
following approval, if any, if any of our product candidates;
• significant and changing government regulation and regulatory guidance;
• establishing clinical and commercial manufacturing capabilities or making
arrangements with third-party manufacturers in order to ensure that we or our
third-party manufacturers are able to make product successfully;
• the impact of any business interruptions to our operations or to those of the
third parties with whom we work, particularly considering the COVID-19
pandemic environment; and
• the extent to which we establish additional strategic collaborations or other
arrangements.
A change in the outcome of any of these variables with respect to the
development of any or our product candidates could significantly change the
costs and timing associated with the development of that product candidate. The
actual probability of success for our product candidates may be affected by a
variety of factors, including the safety and efficacy of our product candidates,
investment in our clinical programs, manufacturing capability and competition
with other products. As a result of these variables, 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 our product candidates. We may never succeed in achieving regulatory
approval for any of our product candidates.
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--------------------------------------------------------------------------------General and Administrative General and administrative expenses consist principally of personnel-related costs including payroll and stock-based compensation expense for personnel in executive, finance, human resources, business and corporate development, and other administrative functions, professional fees for legal, consulting, and accounting services, rent and other facilities costs, depreciation, and other general operating expenses not otherwise classified as research and development expenses. We anticipate that our general and administrative expenses will increase substantially during the next few years as a result of staff expansion and additional occupancy costs, as well as costs associated with being a public company, including compliance with the rules and regulations of theSEC and those of any national securities exchange on which our securities are traded, higher legal and auditing fees, investor relations costs, higher insurance premiums and other compliance costs associated with being a public company. We also expect that our future intellectual property expenses may increase as we expand our product portfolio of product candidates due to advances in our research and development programs.
Other Income (Expense), Net
Other income consists primarily of interest earned on our investments and non-cash interest income (expense) related to accretion (amortization) of the discount (premium) on marketable securities.
Results of Operations
Comparison of the Three and Nine Months Ended
The following table summarizes our results of operations for the periods
indicated (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 $ Change 2021 2020 $ Change
Operating expenses:
Research and development $ 7,886 $ 789 $ 7,097 $ 16,908 $ 1,339 $ 15,569
General and administrative 4,752 346 4,406 10,022 489 9,533
Total operating expenses 12,638 1,135 11,503 26,930 1,828 25,102
Loss from operations (12,638 ) (1,135 ) (11,503 ) (26,930 ) (1,828 ) (25,102 )
Other income (expense), net 32 - 32 73 2 71
Net loss $ (12,606 ) $ (1,135 ) $ (11,471 ) $ (26,857 ) $ (1,826 ) $ (25,031 ) Research and Development Expenses
The following table summarizes our research and development expenses for the
three and nine months ended
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
External costs $ 4,364 $ 570 $ 10,031 $ 1,019
Internal costs:
Personnel-related expenses (including
stock-based compensation) 2,667 101 4,838 173
Facilities and other allocated expenses 855 118
2,039 147
Total research and development expenses
Research and development expenses were$7.9 million for the three months endedSeptember 30, 2021 , compared to$0.8 million for the three months endedSeptember 30, 2020 . Research and development expenses were$16.9 million for the nine months endedSeptember 30, 2021 , compared to$1.3 million for the nine months endedSeptember 30, 2020 . The increases of$7.1 million and$15.6 million , respectively, were primarily due to an increase in personnel-related expenses, as well as an increase in pre-clinical development costs, including manufacturing and external consulting, related to our IND-enabling studies for BMF-219. 22
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General and Administrative Expenses
General and administrative expenses were$4.8 million for the three months endedSeptember 30, 2021 , compared to$0.3 million for the three months endedSeptember 30, 2020 . General and administrative expenses were$10.0 million for the nine months endedSeptember 30, 2021 , compared to$0.5 million for the nine months endedSeptember 30, 2020 . The increases of$4.4 million and$5.5 million respectively, were primarily due to increased personnel-related expenses and other corporate costs to support our expanding operations, including legal and accounting, as well as additional costs we have incurred as a public company.
Liquidity and Capital Resources
Liquidity
We have funded our operations primarily through the sale and issuance of shares of our common and convertible preferred stock from inception throughDecember 2020 . InApril 2021 , we completed our IPO and issued an aggregate of 9,000,000 shares of our common stock at a price of$17.00 per share. Following the close of the IPO, an additional 823,532 shares were issued in connection with the partial exercise by the underwriters of their option to purchase additional shares of common stock. Proceeds from the IPO, net of underwriting discounts and commissions and offering costs were approximately$152.8 million . As ofSeptember 30, 2021 , we had cash, cash equivalents, restricted cash, and investments of$191.9 million . As ofSeptember 30, 2021 , we had an accumulated deficit of$35.0 million . Based on our current business plan, we believe that our existing cash and cash equivalents will provide sufficient resources to meet our working capital and capital expenditure needs for at least the next 12 months following the filing date of this Quarterly Report on Form 10-Q.
Future Funding Requirements
We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. We may seek to raise capital through private or public equity or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:
• the scope, rate of progress and costs of our drug discovery, preclinical
development activities, laboratory testing and clinical trials for our product
candidates;
• the number and scope of clinical programs we decide to pursue;
• the scope and costs of manufacturing development and commercial manufacturing
activities;
• the extent to which we discover and develop additional product candidates;
• the cost, timing and outcome of regulatory review of our product candidates;
• the cost and timing of establishing sales and marketing capabilities, if any
of our product candidates receive marketing approval;
• the costs of preparing, filing and prosecuting patent applications,
maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims;
• our ability to establish and maintain collaborations on favorable terms, if at
all;
• licensing, or other arrangements into which we may enter in the future,
including the timing of receipt of any milestone or royalty payments under
these agreements;
• the timing, receipt and amount of sales from our potential products;
• our need and ability to hire additional management, scientific and medical
personnel;
• our need to implement additional internal systems and infrastructure,
including financial and reporting systems;
• our efforts to enhance operational systems and our ability to attract, hire
and retain qualified personnel, including personnel to support the development
of our product candidates;
• the costs associated with being a public company;
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--------------------------------------------------------------------------------• the cost associated with commercializing our product candidates, if they
receive regulatory approval; and
• the impact of the COVID-19 pandemic, which may exacerbate the magnitude of the
factors discussed above.
If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to others rights to our product candidates in certain territories or indications that we would prefer to develop and commercialize ourselves.
See the section of this Quarterly Report on form 10-Q titled "Risk factors" for additional risks associated with our substantial capital requirements.
Debt
OnMay 5, 2020 , we entered into a promissory note withCity National Bank , which provided a loan in the amount of$36,000 (the "PPP Loan") pursuant to the Paycheck Protection Program, or PPP, administered by theSmall Business Administration under the CARES Act. The PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for seven months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The PPP loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. We used the entire PPP loan amount for qualifying expenses and repaid the loan in full during the three months endedJune 30, 2021 .
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