CLOVIS ONCOLOGY, INC. Forward-Looking Information
This Quarterly Report on Form 10-Q and the information incorporated herein by
reference includes statements that are, or may be deemed, "forward-looking
statements." In some cases, these forward-looking statements can be identified
by the use of forward-looking terminology, including the terms "believes,"
"estimates," "anticipates," "expects," "plans," "intends," "may," "could,"
"might," "will," "should," "approximately" or, in each case, their negative or
other variations thereon or comparable terminology, although not all
forward-looking statements contain these words. They appear in a number of
places throughout this Quarterly Report on Form 10-Q and include statements
regarding our intentions, beliefs, projections, outlook, analyses or current
expectations concerning, among other things, the market acceptance and
commercial viability of our approved product, the development and performance of
our sales and marketing capabilities, the performance of our clinical trial
partners, third party manufacturers and our diagnostic partners, our ongoing and
planned non-clinical studies and clinical trials, the timing of and our ability
to make regulatory filings and obtain and maintain regulatory approvals for our
product candidates, including our ability to confirm clinical benefit and safety
of our approved product through confirmatory trials and other post-marketing
requirements, the degree of clinical utility of our products, particularly in
specific patient populations, expectations
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regarding clinical trial data, expectations regarding sales of our products, our results of operations, financial condition, liquidity, our ability to raise capital, prospects, growth and strategies, the industry in which we operate, including our competition and the trends that may affect the industry or us. By their nature, forward-looking statements involve risks and uncertainties because they relate to events, competitive dynamics and industry change and depend on the economic circumstances that may or may not occur in the future or may occur on longer or shorter timelines than anticipated. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity and the development of the industry in which we operate may differ materially from the forward-looking statements contained herein. Any forward-looking statements that we make in this Quarterly Report on Form 10-Q speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events. You should also read carefully the factors described in the "Risk Factors" in Part I, Item 1A in our most recent Annual Report on Form 10-K filed with theU.S. Securities and Exchange Commission ("SEC") as supplemented by the risk factors set forth herein, as updated from time to time in our subsequentSEC filings, to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. You are advised, however, to consult any further disclosures we make on related subjects in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and our website. Clovis Oncology®, the Clovis logo and Rubraca® are trademarks ofClovis Oncology, Inc. inthe United States and in other selected countries. All other brand names or trademarks appearing in this report are the property of their respective holders. Unless the context requires otherwise, references in this report to "Clovis," the "Company," "we," "us" and "our" refer toClovis Oncology, Inc. , together with its consolidated subsidiaries.
Overview
We are a biopharmaceutical company focused on acquiring, developing and commercializing innovative anti-cancer agents inthe United States ,Europe and additional international markets. We target our development programs for the treatment of specific subsets of cancer populations, and simultaneously develop, with partners, for those indications that require them, diagnostic tools intended to direct a compound in development to the population that is most likely to benefit from its use. Our marketed product Rubraca, an oral small molecule inhibitor of poly ADP-ribose polymerase ("PARP"), is marketed inthe United States for two indications specific to recurrent epithelial ovarian, fallopian tube or primary peritoneal cancer and also an indication specific to metastatic castration-resistant prostate cancer ("mCRPC"). The initial indication received approval from the FDA inDecember 2016 and covers the treatment of adult patients with deleterious BRCA (human genes associated with the repair of damaged DNA) mutation (germline and/or somatic)-associated epithelial ovarian, fallopian tube, or primary peritoneal cancer who have been treated with two or more chemotherapies and selected for therapy based on an FDA-approved companion diagnostic for Rubraca. Rubraca received a second approval from the FDA inApril 2018 for the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy. Diagnostic testing is not required for patients to be prescribed Rubraca in this maintenance treatment indication. InMay 2020 , the FDA approved Rubraca for the treatment of adult patients with mCRPC associated with a deleterious BRCA mutation (germline and/or somatic) who have been treated previously with androgen receptor-directed therapy and a taxane-based chemotherapy and selected for therapy based on an FDA-approved companion diagnostic for Rubraca. The FDA approved this indication under accelerated approval based on objective response rate and duration of response data from the TRITON2 clinical trial. As an accelerated approval, continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials. The TRITON3 clinical trial is expected to serve as the confirmatory study for Rubraca's approval in mCRPC as well as the basis for us to seek a potential second-line label expansion. We anticipate the initial data readout from TRITON3 in the third quarter of 2022. InEurope , theEuropean Commission granted a conditional marketing authorization inMay 2018 for Rubraca as monotherapy treatment of adult patients with platinum-sensitive, relapsed or progressive, BRCA mutated (germline and/or somatic), high-grade epithelial ovarian, fallopian tube, or primary peritoneal cancer, who have been treated with two or more prior lines of platinum-based chemotherapy, and who are unable to tolerate further platinum-based 28
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chemotherapy. InJanuary 2019 , theEuropean Commission granted a variation to the marketing authorization to include the maintenance treatment of adult patients with recurrent epithelial ovarian, fallopian tube, or primary peritoneal cancer who are in a complete or partial response to platinum-based chemotherapy. With this approval, Rubraca is now authorized inEurope for certain patients in the recurrent ovarian cancer maintenance setting regardless of their BRCA mutation status. Following successful reimbursement negotiations, Rubraca is marketed in each ofGermany ,United Kingdom ,Italy ,France ,Spain ,the Netherlands andSwitzerland . Beyond our labeled indications, we have a clinical development program underway to further evaluate Rubraca in a variety of solid tumor types, either as monotherapy or in combination with other agents, including the ATHENA Phase 3 study as part of our ongoing clinical collaboration with Bristol Myers Squibb to evaluate its immunotherapy OPDIVO® (nivolumab) in combination with Rubraca. OnMarch 31, 2022 , we announced positive top-line data from the monotherapy portion of the ATHENA (GOG 3020/ENGOT-ov45) trial (ATHENA-MONO) demonstrating that Rubraca as maintenance treatment successfully achieved the primary endpoint of significantly improved investigator-assessed PFS compared with placebo. Benefit was observed in both primary efficacy analyses of newly-diagnosed patients with advanced ovarian cancer following successful treatment with platinum-based chemotherapy: those who had homologous recombination deficiency (HRD-positive), including deleterious BRCA mutations, as well as all patients randomized in the trial (overall intent-to-treat population ("ITT")). Benefit in PFS was also seen in the exploratory subgroups of patients with BRCA mutant (BRCAm) tumors, BRCA wild type HRD-negative and BRCA wild type HRD-positive and in patients with unknown biomarker status. The safety of Rubraca observed in the ATHENA-MONO study was consistent with both the US and European labels. Based on these results, we plan to prepare an sNDA for submission to the FDA and, subject to EMA agreement, a Type II variation for submission to the EMA for a first-line maintenance treatment indication for women with advanced ovarian cancer who have responded to first-line platinum-based chemotherapy. These approvals, if and when obtained, would provide the potential to reach a significantly two to three times larger patient population in an earlier line of therapy for ovarian cancer, in which Rubraca is currently approved in later-line indications. We are currently evaluating the timing of our planned sNDA and Type II variation submissions. As suggested by the recentOncologic Drugs Advisory Committee ("ODAC") involving PI3K inhibitors, and our recent discussions with the FDA onMay 3 and 4, 2022, the FDA is placing increasing emphasis on overall survival ("OS") in oncology trials. Despite the fact that the ATHENA-MONO trial met its primary endpoint, and OS is a secondary endpoint, the FDA advised us that we should not submit the first line maintenance sNDA until OS data from the ATHENA-MONO trial are as much as 50% mature, and if we do choose to submit prior to that, we should expect the FDA to require a discussion at an ODAC meeting in connection with its review of such sNDA submission. This recommendation by the FDA was also influenced by their interpretation of the ARIEL4 survival data. Currently, the OS data are approximately 25% mature and our initial estimates suggest we would reach 50% maturity in approximately 2 years. We have not yet initiated discussions with EMA. At the current maturity, the hazard ratios of the OS in ATHENA-MONO in the HRD-positive and ITT populations are 0.96 and 0.97, respectively. As reported in theNew England Journal of Medicine , the OS in the PRIMA first line maintenance trial of niraparib was only 11% mature at the time it reported its primary endpoint. Hazard ratios in the HRD and ITT populations of PRIMA were 0.61 and 0.71, respectively. At the time the primary results of the PAOLA-1 first line maintenance trial of olaparib+bevacizumab primary endpoint were reported, OS was 26% mature and the HR in the ITT population was 1.01 as described in the European Public Assessment Report. As reported in theNew England Journal of Medicine , at the time the SOLO-1 first line maintenance trial of olaparib primary endpoint was reported, OS was 21% mature and the HR in the ITT population was 0.95.
In light of this unexpected recommendation from the FDA, we are developing our strategy for next steps and potential timing of our sNDA submission in consultation with clinical advisors and outside counsel.
ATHENA is a double-blind, placebo-controlled, Phase 3 trial of rucaparib in
first-line ovarian cancer maintenance treatment. It has two parts which are
statistically independent. The top-line results reported were from the
ATHENA-MONO part (rucaparib vs. placebo), with results from the ATHENA-COMBO
part (rucaparib+nivolumab vs. rucaparib) expected in the first quarter of 2023
based on a slower than expected event count.
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ATHENA-MONO enrolled 538 women with high-grade ovarian, fallopian tube, or primary peritoneal cancer. The primary efficacy analysis evaluated two prospectively defined molecular sub-groups in a step-down manner: 1) HRD-positive (inclusive of BRCAm tumors), and 2) all patients randomized (ITT) in ATHENA-MONO.
Following is a summary of the primary efficacy analyses by investigator review, the primary analysis of ATHENA-MONO.
Significant Improvement in PFS in the HRD-positive Patient Population
The rucaparib arm (n=185) successfully achieved statistical significance over the placebo arm (n=49) for the primary endpoint of PFS with a hazard ratio of 0.47 (95% CI: 0.31-0.72). The median PFS for the HRD-positive patient population treated with rucaparib was 28.7 months vs. 11.3 months among those who received placebo (p=0.0004). Significant Improvement in PFS in All Patients Studied (ITT or all comers) Rucaparib also showed statistical significance in all 538 patients randomized in the ATHENA-MONO comparison. The rucaparib arm (n=427) successfully achieved statistical significance over the placebo arm (n=111) for the primary endpoint of PFS with a hazard ratio of 0.52 (95% CI: 0.40-0.68). The median PFS for all patients enrolled in ATHENA-MONO and treated with rucaparib was 20.2 months vs. 9.2 months among those who received placebo (p<0.0001). Benefit in PFS was also observed in the exploratory subgroups of patients with BRCAm tumors, those with BRCA wild-type, HRD-positive and HRD-negative tumors, and those whose biomarker status could not be determined.
Treatment Benefit in PFS Endpoint for Exploratory BRCA wild type HRD-negative Subgroup
The PFS endpoint in the exploratory subgroup of HRD-negative demonstrated a hazard ratio of 0.65 (95% CI: 0.45-0.95). The median PFS for these patients treated with rucaparib (n=189) was 12.1 months vs. 9.1 months for those who received placebo (n=49) (p=0.0284).
Treatment Benefit in PFS Endpoint for Exploratory BRCA wild type HRD-positive Subgroup
The PFS endpoint in the exploratory subgroup of HRD-positive demonstrated a hazard ratio of 0.58 (95% CI: 0.33-1.01). The median PFS for these patients treated with rucaparib (n=94) was 20.3 months vs. 9.2 months for those who received placebo (n=25) (p=0.0584).
Treatment Benefit in PFS Endpoint for Exploratory BRCAm Subgroup
The PFS endpoint in the exploratory subgroup of BRCAm demonstrated a hazard ratio of 0.40 (95% CI: 0.21-0.75). The median PFS for these patients treated with rucaparib (n=91) was Not Reached vs 14.7 months for those who received placebo (n=24) (p=0.0041). Results were consistent for the germline BRCA (n=68) and somatic BRCA (n=33) and unknown (n=14) populations.
Treatment Benefit in PFS Endpoint for Exploratory Biomarker Status Unknown Subgroup
The PFS endpoint in the exploratory subgroup of patients whose biomarker status could not be determined demonstrated a hazard ratio of 0.39 (95% CI: 0.20-0.78). The median PFS for these patients treated with rucaparib (n=53) was 17.5 months vs. 8.9 months for those who received placebo (n=13) (p=0.0068).
Summary of ATHENA-MONO Safety Data
The safety of Rubraca observed in ATHENA-MONO was consistent with both the
current US and European labels. The most common (?5%) treatment-emergent grade
3/4 adverse events (TEAEs) among all patients treated with rucaparib in the
monotherapy portion of the ATHENA study were anemia/decreased hemoglobin
(28.7%), neutropenia (14.6%), ALT/AST increase (10.6%), and thrombocytopenia
(7.1%). The discontinuation rate for TEAEs was 11.8% for rucaparib-treated
patients and 5.5% for the placebo arm. The rate of treatment-emergent
myelodysplastic syndrome
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(MDS)/acute myeloid leukemia (AML) in the rucaparib arm was 0.2%, and no patients on the placebo arm experienced treatment-emergent MDS/AML.
These data have been accepted for oral presentation at the ASCO Annual Meeting
in
About Ovarian Cancer Ovarian cancer is the eighth leading cause of cancer-related death among women worldwide. In 2020, GLOBOCAN estimated 314,000 women received a new diagnosis of ovarian cancer and approximately 207,200 women died from ovarian cancer. According to theAmerican Cancer Society , an estimated more than 19,000 women will be diagnosed with ovarian cancer inthe United States and there will be an estimated nearly 13,000 deaths from ovarian cancer in 2022. According to GLOBOCAN, an estimated 66,000 women inEurope are diagnosed each year with ovarian cancer, and ovarian cancer is among those cancers with the highest rate of deaths. According to theNIH National Cancer Institute , more than 75% of women are diagnosed with ovarian cancer at an advanced stage. Despite recent advances in the therapeutic landscape of newly diagnosed ovarian cancer, advanced ovarian cancer is still considered incurable for the majority of patients and the optimal treatment strategy has yet to be determined, according to a 2021 report in theInternational Journal of Gynecological Cancer . Although most respond initially to this treatment, 80% of patients with advanced ovarian cancer will have a recurrence and require subsequent therapies, according to a 2012 study published in the Annals of Oncology.
About Biomarkers in Ovarian Cancer
In the high-grade epithelial ovarian cancer setting, a patient's tumor can be classified based on the genetic biomarker status: those with homologous recombination deficiencies, or HRD-positive, include those with a mutation of the BRCA gene (BRCAm), inclusive of germline and somatic mutations of BRCA, which represent approximately 25 percent of patients, according to studies published inCancer and Clinical Cancer Research , and those with a range of genetic abnormalities other than BRCAm, which result in other homologous recombination deficiencies that represent an additional estimated 25 percent of patients (HRD-positive, BRCAwt), according to a 2015 study published in Cancer Discovery; in addition, those whose test results show no deficiencies in homologous recombination repair (HRD-negative) represent the remaining approximate 50 percent of patients, according to a 2022 study published in Cancers. HRD-positive may also be referred to as HR-deficient, HRD, HRD+, HRd, or biomarker positive. HRD-negative may also be referred to as HR-proficient, HRD-, HRp, or biomarker negative. The timing for Phase 3 data readouts from each of TRITON3 and ATHENA-COMBO is contingent upon the occurrence of the protocol-specified PFS events, and timing estimates are based on event-based projections. We previously announced top line data from ARIEL4, a Phase 3 multicenter, randomized study of Rubraca versus chemotherapy, which enrolled 349 relapsed ovarian cancer patients with BRCA mutations (inclusive of germline and/or somatic) who had received two or more prior lines of chemotherapy. The primary endpoint of the study is investigator-assessed progression-free survival ("InvPFS"), with a step-down analysis from the efficacy population (if significant) to the intent to treat ("ITT") population. The efficacy population comprised the group of patients with a deleterious tumor BRCA mutation and excluded those with a BRCA reversion mutation as determined by a blood test. InDecember 2020 , we announced that Rubraca met the primary study endpoint of significantly improving InvPFS versus chemotherapy in the primary efficacy population with a hazard ratio ("HR") of 0.64 (p=0.001). The median PFS for the patients in the efficacy population treated with rucaparib was 7.4 months versus 5.7 months among those who received chemotherapy. Additionally, in the ITT population, the rucaparib arm achieved statistical significance over the chemotherapy arm for the primary endpoint of PFS with an HR of 0.67 (p=0.002). The median PFS for the patients in the ITT population treated with rucaparib was 7.4 months versus 5.7 months among those who received chemotherapy. Adverse events were consistent with the known safety profiles of Rubraca and chemotherapy. Patients with a BRCA reversion mutation represented 7% of patients enrolled in the study and as anticipated, InvPFS results for those patients showed limited benefit from Rubraca therapy. InDecember 2020 , we also announced that an interim analysis of OS, a secondary endpoint in the study in which 51% of events had occurred in the intent-to-treat population, showed a trend toward an OS advantage in the chemotherapy arm, but was confounded by the high rate (64%) of per-protocol crossover to Rubraca following progression on chemotherapy. An analysis of the ITT population of patients showed a trend toward an OS advantage for those patients who received Rubraca at any point in the trial versus those who did not. 31
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InApril 2022 , we read out the final OS data from ARIEL4, and in the ITT population, the HR is 1.313 with a nominal p of 0.0507. In the platinum resistant subgroup, the HR is 1.511 with a nominal p of 0.0251. In the platinum sensitive subgroup, the HR is 1.071 with a nominal p of 0.7455. We believe that ARIEL4 is the only randomized phase 3 trial of a PARP inhibitor in the advanced ovarian cancer treatment setting that has included both platinum resistant and platinum sensitive cohorts in its study design. The results of the randomized phase 3 trial of olaparib, SOLO-3, which included platinum sensitive patients only, were presented at the SGO 2022 Annual Meeting on Women's Cancer inMarch 2022 , and reported a HR of 1.07, which is exactly the same as the HR of the platinum sensitive subgroup in ARIEL4. In ARIEL4, patients randomized to chemotherapy were allowed to cross over and receive Rubraca at the time of disease progression. 69% of the chemotherapy patients did cross over and overall, 90% of all ARIEL4 participants received Rubraca within the clinical trial. The survival outcomes in the rucaparib arm are within the expected range for standard of care therapy. Statistical analyses that adjust for the effect of crossover suggest no difference in OS outcomes between the two arms. Therefore, these data are not straightforward to interpret and highlight the complexity of OS analyses in clinical trials where crossover is a mandated component of study design. We expect to present the final ARIEL4 OS data at a medical meeting later this year. Data from ARIEL4, including the interim OS data, were initially submitted to the EMA inAugust 2021 and the FDA inSeptember 2021 . InApril 2022 , we submitted the final OS data to both the FDA and the EMA. The EMA has begun an Article 20 referral procedure to review the ARIEL4 dataset, specifically to evaluate the risk:benefit of Rubraca in the third-line and later treatment indication. An Article 20 referral is a procedure used to resolve issues such as concerns around benefit-risk balance of a medicine or a class of medicines. In a referral, the EMA is requested to conduct a scientific assessment of a particular medicine or class of medicines on behalf of theEuropean Union ("EU"). EMA has explicitly stated that there are no new safety concerns with Rubraca, and this review does not include the use of Rubraca as maintenance treatment following chemotherapy in the second-line setting. While the Article 20 procedure is ongoing, EMA has asked physicians not to start new patients on the treatment indication. We will distribute a Dear Healthcare Professional ("DHCP") letter inEurope communicating EMA's recommendation, which we expect to occur inMay 2022 . We expect the Article 20 procedure to last 3-6 months. We also plan to distribute a DHCP letter inthe United States recommending that physicians not start new patients in the treatment indication. OnMay 4, 2022 we had discussions with the FDA regarding the impact of the ARIEL4 OS data on the treatment indication in the Rubraca prescribing information, which may ultimately lead us to withdraw the treatment indication in theU.S. , and possibly inEurope . The treatment indication currently represents a very small portion of our total sales in both theU.S. andEurope , and with respect toEurope , this indication is currently only reimbursed inGermany andthe Netherlands . Although these regulatory actions do not affect our broader maintenance indication in theU.S. orEurope , we cannot be certain there will be no commercial impact on overall Rubraca sales.
We hold worldwide rights to Rubraca.
FAP-2286 is our initial product candidate to emerge from our targeted radionuclide collaboration with 3BPharmaceuticals GmbH ("3BP"). FAP-2286 is a peptide-targeted radionuclide therapy ("PTRT") and imaging agent targeting fibroblast activation protein ("FAP"). PTRT uses cancer cell-targeting peptides to deliver radiation-emitting radionuclides specifically to tumors. Following the clearance by the FDA of two INDs submitted inDecember 2020 to support the use of FAP-2286 as an imaging and treatment agent, we initiated the phase 1 portion of the LuMIERE clinical study inJune 2021 . LuMIERE is a phase 1/2 study of FAP-2286 labeled with lutetium-177 (177Lu-FAP-2286) evaluating the compound in patients with advanced solid tumors to determine the dose, schedule, and tolerability of FAP-2286 as a therapeutic agent with expansion cohorts planned in multiple tumor types as part of a global development program. We are currently enrolling patients in the third dose cohort, and we plan to initiate phase 2 expansion cohorts during the fourth quarter of 2022. FAP-2286 labeled with gallium-68 (68Ga-FAP-2286) is being utilized to identify tumors that contain FAP for treatment in this study. We plan to present phase 1 clinical data from LuMIERE in an oral presentation at the SNMMI 2022 Annual Meeting in June. During 2022, we also anticipate additional presentations of non-clinical data for FAP-2286 and the launch of our combination study program to explore FAP-2286 in combination with other oncology compounds, and in 2023, a potential IND filing of FAP-2286 linked to a FAP-targeted alpha-emitter PTRT. We holdU.S. and global rights to FAP-2286, excludingEurope (defined to includeRussia ,Turkey andIsrael ), where 3BP retains rights. We are also collaborating with 3BP on a discovery program directed to up to three additional, 32
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undisclosed targets for targeted radionuclide therapy, to which we would have global rights for any resulting product candidates.
Lucitanib, our product candidate currently in clinical development, is an
investigational, oral, potent angiogenesis inhibitor which inhibits vascular
endothelial growth factor receptors 1 through 3 ("VEGFR1-3"), platelet-derived
growth factor receptors alpha and beta ("PDGFR ?/?") and fibroblast growth
factor receptors 1 through 3 ("FGFR1-3"). Lucitanib inhibits the same three
pathways as Lenvima® (lenvatinib), which has received an FDA approval for use in
certain populations of patients with endometrial cancer in combination with
Keytruda® (pembrolizumab), a PD-1 inhibitor. This, together with preclinical
data for lucitanib in combination with a PD-1 inhibitor that demonstrated
enhanced anti-tumor activity compared to that of single agents, represent a
scientific rationale for development of lucitanib in combination with a PD-1
inhibitor, and in February 2019 , lucitanib was added to our clinical
collaboration with Bristol Myers Squibb. The phase 1b/2 LIO-1 study evaluated
the combination of lucitanib and Opdivo in gynecologic cancers. Interim data
from the non-clear cell ovarian cancer expansion cohort were presented at ASCO
2021 and the initial efficacy data do not support further development in
non-clear cell ovarian cancer. The remaining three cohorts, which include
non-clear cell endometrial, cervical and clear-cell ovarian and endometrial
cancers, showed sufficient responses in stage one of each of the cohorts to
advance to stage 2. The data from the cervical cohort was presented at the SGO
2022 Annual Meeting on Women's Cancer in March 2022 and represent encouraging
data in this subset of gynecological cancers. Phase 2 LIO-1 efficacy and safety
data results across the different types of gynecologic cancers will also be
presented at the ASCO 2022 Annual Meeting in June. However, given the competing
priorities, including development of FAP-2286, we have determined that we will
not pursue further development of lucitanib in gynecological cancers at this
time.
We hold the global (excluding
We have three key strategies on which we remain focused: first, we seek to drive Rubraca revenue growth; second, we intend to be an emerging leader in targeted radionuclide therapy, which includes the LuMIERE phase 1/2 clinical study of FAP-2286, which is the first peptide-targeted radionuclide therapy targeting FAP and is now enrolling; and third, we seek to achieve long-term financial stability. We commenced operations inApril 2009 . To date, we have devoted substantially all of our resources to identifying and in-licensing product candidates, performing development activities with respect to those product candidates and the general and administrative support of these operations. For the three months endedMarch 31, 2022 and 2021, we have generated$34.2 million and$38.1 million , respectively, in product revenue related to sales of Rubraca. We have never been profitable and, as ofMarch 31, 2021 , we had an accumulated deficit of$2,937.4 million . We incurred net losses of$60.2 million and$66.3 million for the three months endedMarch 31, 2022 and 2021, respectively. We had cash and cash equivalents totaling$122.2 million atMarch 31, 2022 .
We have incurred significant net losses since inception and we expect operating losses and negative cash flows to continue for the foreseeable future.
License Agreements
Rucaparib
InJune 2011 , we entered into a license agreement with Pfizer to obtain the exclusive global rights to develop and commercialize Rubraca. The exclusive rights are exclusive even as to Pfizer and include the right to grant sublicenses. Pursuant to the terms of the license agreement, we made a$7.0 million upfront payment to Pfizer and are required to make additional payments to Pfizer for the achievement of certain development and regulatory and sales milestones and royalties on sales as required by the license agreement. Prior to the FDA approval of Rubraca, we made milestone payments of$1.4 million , which were recognized as acquired in-process research and development expense. During 2016 through 2020, we paid Pfizer a total of$82.5 million in milestone payments related to the FDA andEuropean Commission approvals received for Rubraca. These milestone payments were recognized as intangible assets and are amortized over the estimated remaining useful life of Rubraca.
We are obligated under the license agreement to use commercially reasonable efforts to develop and commercialize Rubraca and we are responsible for all ongoing development and commercialization costs for Rubraca.
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We are required to make regulatory milestone payments to Pfizer of up to an additional$8.0 million in aggregate if specified clinical study objectives and regulatory filings, acceptances and approvals are achieved. In addition, we are obligated to make sales milestone payments to Pfizer if specified annual sales targets for Rubraca are met, which relate to annual sales targets of$250.0 million and above, which, in the aggregate, could amount to total milestone payments of$170.0 million , and tiered royalty payments at a mid-teen percentage rate on net sales, with standard provisions for royalty offsets to the extent we need to obtain any rights from third parties to commercialize Rubraca. The license agreement with Pfizer will remain in effect until the expiration of all of our royalty and sublicense revenue obligations to Pfizer, determined on a product-by-product and country-by-country basis, unless we elect to terminate the license agreement earlier. If we fail to meet our obligations under the agreement and are unable to cure such failure within specified time periods, Pfizer can terminate the agreement, resulting in a loss of our rights to Rubraca and an obligation to assign or license to Pfizer any intellectual property rights or other rights we may have in Rubraca, including our regulatory filings, regulatory approvals, patents and trademarks for Rubraca. InApril 2012 , we entered into a license agreement with AstraZeneca to acquire exclusive rights associated with Rubraca under a family of patents and patent applications that claim methods of treating patients with PARP inhibitors in certain indications. The license enables the development and commercialization of Rubraca for the uses claimed by these patents. AstraZeneca also receives royalties on net sales of Rubraca.
FAP-2286 and the Radionuclide Therapy Development Program
InSeptember 2019 , we entered into a global license and collaboration agreement with 3BP to develop and commercialize a PTRT and imaging agent targeting FAP. The lead candidate, designated internally as FAP-2286, is being developed pursuant to a global development plan agreed to by the parties. We are responsible for the costs of all preclinical and clinical development activities described in the plan, including the costs for a limited number of 3BP full-time equivalents and external costs incurred during the preclinical development phase of the collaboration. Upon the signing of the license and collaboration agreement inSeptember 2019 , we made a$9.4 million upfront payment to 3BP, which we recognized as acquired in-process research and development expense. Pursuant to the terms of the FAP agreement, we are required to make additional payments to 3BP for annual technology access fees and upon the achievement of certain development and regulatory milestone events (or on certain dates, whichever occur earlier). We are also obligated to pay 3BP single- to low-double-digit royalties on net sales of the FAP-targeted therapeutic product and imaging agent, based on the volume of annual net sales achieved. In addition, 3BP is entitled to receive 34% of any consideration, excluding royalties on the therapeutic product, pursuant to any sublicenses we may grant. We are obligated under the license and collaboration agreement to use diligent efforts to develop FAP-2286 and commercialize a FAP-targeted therapeutic product and imaging agent, and we are responsible for all commercialization costs in our territory. The agreement with 3BP will remain in effect until the expiration of our royalty obligations to 3BP, determined on a product-by-product and country-by-country basis, unless we elect to terminate the agreement earlier. If we fail to meet our obligations under the agreement and are unable to cure such failure within specified time periods, 3BP can terminate the agreement, resulting in a loss of our rights. 3BP also has the right to terminate the agreement under certain circumstances in connection with our change of control in which the acquiring party retains a product competitive with the FAP-targeted therapeutic product or, in the event marketing authorization has not yet been obtained, does not agree to the then-current global development plan. We submitted two INDs for FAP-2286 for use as imaging and treatment agents inDecember 2020 to support an initial phase 1 study to determine the dose and tolerability of FAP-2286 as a therapeutic agent with expansion cohorts planned in multiple tumor types as part of a global development program. InApril 2021 , we made a milestone payment to 3BP under the license and collaboration agreement of$2.2 million as a result of theFDA's acceptance of the IND for the treatment agent. InSeptember 2021 , we made a$3.3 million milestone payment to 3BP under the license and collaboration agreement. InFebruary 2020 , we finalized the terms of a drug discovery collaboration agreement with 3BP to identify up to three additional, undisclosed targets for PTRT, to which we will obtain global rights for any resulting product candidates. We are responsible for the costs of all preclinical and clinical development activities conducted under the discovery program, including the costs for a limited number of 3BP full-time equivalents and external costs incurred during the discovery and preclinical development phase for each collaboration target. The discovery collaboration 34
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agreement was effective
Pursuant to the terms of the discovery collaboration agreement, we are required to make additional payments to 3BP for annual technology access fees and upon the achievement of certain development and regulatory milestone events (or on certain dates, whichever occur earlier). We are also obligated to pay 3BP a 6% royalty on net sales of License Products (as defined in the agreement), based on the volume of quarterly net sales achieved. We are obligated under the discovery collaboration agreement to use diligent efforts to develop and commercialize the product candidates, if any, that result from the discovery program, and we are responsible for all clinical development and commercialization costs. The agreement with 3BP will remain in effect until the expiration of our royalty obligations to 3BP, determined on a product-by-product and country-by-country basis, unless we elect to terminate the agreement earlier. If we fail to meet our obligations under the agreement and are unable to cure such failure within specified time periods, 3BP can terminate the agreement, resulting in a loss of our rights.
Lucitanib
OnNovember 19, 2013 , we acquired all of the issued and outstanding capital stock of EOS pursuant to the terms set forth in that certain Stock Purchase Agreement, dated as ofNovember 19, 2013 (the "Stock Purchase Agreement"), by and among the Company, EOS, its shareholders (the "Sellers") andSofinnova Capital V FCPR, acting in its capacity as the Sellers' representative. Following the acquisition, EOS became a wholly-owned subsidiary of the Company. Under the terms of the Stock Purchase Agreement, in addition to the initial purchase price paid at the time of the closing of the acquisition and other license fees due to Advenchen described below, we will also be obligated to pay to the Sellers a milestone payment of$65.0 million upon obtaining the first NDA approval from the FDA with respect to lucitanib. InOctober 2008 , Ethical Oncology Science, S.p.A. ("EOS") (now known as Clovis Oncology Italy Srl) entered into an exclusive license agreement withAdvenchen Laboratories LLC ("Advenchen") to develop and commercialize lucitanib on a global basis, excludingChina . We are obligated to pay Advenchen tiered royalties at percentage rates in the mid-single digits on net sales of lucitanib, based on the volume of annual net sales achieved. In addition, after giving effect to the first and second amendments to the license agreement, we are required to pay to Advenchen 25% of any consideration, excluding royalties, we receive from sublicensees, in lieu of the milestone obligations set forth in the agreement. We are obligated under the agreement to use commercially reasonable efforts to develop and commercialize at least one product containing lucitanib, and we are also responsible for all remaining development and commercialization costs for lucitanib. The license agreement with Advenchen will remain in effect until the expiration of all of our royalty obligations to Advenchen, determined on a product-by-product and country-by-country basis, unless we elect to terminate the agreement earlier. If we fail to meet our obligations under the agreement and are unable to cure such failure within specified time periods, Advenchen can terminate the agreement, resulting in a loss of our rights to lucitanib.
Financial Operations Overview
Revenue
Product revenue is derived from sales of our product, Rubraca, inthe United States andEurope . We distribute our product principally through a limited number of specialty distributor and specialty pharmacy providers, collectively, our customers. Our customers subsequently sell our products to patients and healthcare providers. Separately, we have arrangements with certain payors and other third parties that provide for government-mandated and privately-negotiated rebates, chargebacks and other discounts. Revenue is recorded net of estimated rebates, chargebacks, discounts and other deductions as well as estimated product returns (collectively, "variable considerations"). Revenue from product sales are recognized when customers obtain control of our product, which occurs at a point in time, typically upon delivery to the customers. For further discussion of our revenue recognition policy, see Note 2, Summary of Significant Accounting Polices in the Revenue Recognition section. In the three months endedMarch 31, 2022 , we recorded product revenue of$34.2 million related to sales of Rubraca. Our ability to generate revenue and become profitable depends upon our ability to successfully commercialize 35
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products. Any inability on our part to successfully commercialize Rubraca inthe United States ,Europe and any foreign territories where it may be approved, or any significant delay in such approvals, could have a material adverse impact on our ability to execute upon our business strategy and, ultimately, to generate sufficient revenues from Rubraca to reach or maintain profitability or sustain our anticipated levels of operations. We supply commercially labeled Rubraca free of charge to eligible patients who qualify due to financial need through our patient assistance program and the majority of these patients are on Medicare. This product is distributed through a separate vendor who administers the program on our behalf. It is not distributed through our specialty distributor and specialty pharmacy network. This product is neither included in the transaction price nor the variable considerations to arrive at product revenue. Manufacturing costs associated with this free product is included in selling, general and administrative expenses. For the three months endedMarch 31, 2022 , the supply of this free drug was approximately 19% of the overall commercial supply or the equivalent of$5.9 million in commercial value. Our ability to generate product revenue for the quarter endedMarch 31, 2022 continued to be negatively affected by the COVID-19 pandemic, primarily due to the ongoing effect the pandemic has had on oncology treatment and practice, and in particular, in ovarian cancer, resulting in fewer diagnoses and fewer patients going to in-person office visits in theU.S. As a result of the COVID-19 pandemic, ourU.S. and European sales forces have had physical access to hospitals, clinics, doctors and pharmacies curtailed and/or have been limited. Our European launches occurred in an environment in which our field-based personnel have not been allowed to visit hospitals since as early as lateFebruary 2020 . Similarly, we launched Rubraca for prostate cancer in theU.S beginning inMay 2020 , but our physical access to hospital, clinics, doctors and pharmacies has been limited.
Cost of Sales - Product
Product cost of sales consists primarily of materials, third-party manufacturing costs as well as freight and royalties owed to our licensing partners for Rubraca sales.
Cost of Sales - Intangible Asset Amortization
Cost of sales for intangible asset amortization consists of the amortization of capitalized milestone payments made to our licensing partners upon the FDA approval of Rubraca. Milestone payments are amortized on a straight-line basis over the estimated remaining patent life of Rubraca.
Research and Development Expenses
Research and development expenses consist of costs incurred for the development of our product candidates and companion diagnostics, which include:
license fees and milestone payments related to the acquisition of in-licensed
? products, which are reported on our Consolidated Statements of Operations and
Comprehensive Loss as acquired in-process research and development;
? employee-related expenses, including salaries, benefits, travel and share-based
compensation expense;
? expenses incurred under agreements with contract research organizations
("CROs") and investigative sites that conduct our clinical trials;
? the cost of acquiring, developing and manufacturing clinical trial materials;
? costs associated with non-clinical activities and regulatory operations;
? market research and disease education; and
? activities associated with the development of companion diagnostics for our
product candidates.
Research and development costs are expensed as incurred. License fees and milestone payments related to in-licensed products and technology are expensed if it is determined that they have no alternative future use. Costs for certain development activities, such as clinical trials and manufacturing of clinical supply, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors. Our research and development expenses decreased during the three months endedMarch 31, 2022 compared to the same period in the prior year. We expect research and development costs in the full year 2022 to be comparable to 2021. We did not see material disruption to our clinical trials as a result of the COVID-19 pandemic for the three months endedMarch 31, 2022 . However, we may see disruption during the remainder of 2022. For example, new patient 36
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recruitment in certain clinical studies may be affected and the conduct of clinical trials may vary by geography as some regions are more adversely affected. Additionally, we may slow or delay enrollment in certain trials to manage expenses.
The following table identifies research and development costs on a
program-specific basis for our products under development. Personnel-related
costs, depreciation and share-based compensation are not allocated to specific
programs, as they are deployed across multiple projects under development and,
as such, are separately classified as personnel and other expenses in the table
below (in thousands):
Three months ended March 31,
2022 2021
Rucaparib Expenses
Research and development $ 17,992 $ 29,010
Rucaparib Total 17,992 29,010
FAP Expenses
Research and development 2,452 2,214
FAP Total 2,452 2,214
Lucitanib Expenses
Research and development 1,685 2,498
Lucitanib Total 1,685 2,498
Rociletinib Expenses
Research and development 19 17
Rociletinib Total 19 17
Personnel and other expenses 20,102 19,066
Total $ 42,250 $ 52,805 Selling, General and Administrative Expenses
Selling, general and administrative expenses consist principally of salaries and related costs for personnel in executive, commercial, finance, legal, investor relations, human resources and information technology functions. Other general and administrative expenses include facilities expenses, communication expenses, information technology costs, corporate insurance and professional fees for legal, consulting and accounting services. With the FDA approval of Rubraca onDecember 19, 2016 , all sales and marketing expenses associated with Rubraca are included in selling, general and administrative expenses. The COVID-19 pandemic has accelerated a preference by oncology practices for more digital programming, including digital, peer-to-peer interactions and reduced in-person promotion. In order to meet these changing preferences, we adopted a hybrid commercial strategy combining increased digital promotion activities, greater online resources and more peer-to-peer interactions with reduced and more targeted in-person promotion. New tools and performance indicators based on this hybrid approach were rolled out during the fourth quarter of 2020. We adopted this strategy in order to better reach customers in the way they want to be reached with the goal of returning to growth, especially as the ongoing impact of COVID-19 is reduced.
We expect selling, general and administrative expenses in the full year 2022 to be comparable to 2021.
Acquired in-process research and development expenses consist of upfront payments to acquire a new drug compound, as well as subsequent milestone payments. Acquired in-process research and development payments are immediately expensed provided that the drug has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use. Once regulatory approval is received, payments to acquire rights, and the related milestone payments, are capitalized and the amortization of such assets recorded to intangible asset amortization cost of sales.
Other Income and Expense
Other income and expense is primarily comprised of foreign currency gains and losses resulting from transactions with CROs, investigative sites and contract manufacturers where payments are made in currencies other than theU.S. dollar. Other expense also includes interest expense recognized related to our convertible senior notes. 37 Table of Contents
Critical Accounting Policies and Significant Judgments and Estimates
Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance withU.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, revenue and related disclosures. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue, intangible asset impairment, clinical trial accruals and share-based compensation expense. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For a description of our critical accounting policies, please see Management's
Discussion and Analysis of Financial Condition and Results of Operations
included in our Annual Report on Form 10-K for the fiscal year ended
New Accounting Standards
From time to time, the FASB or other standards-setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through the issuance of an Accounting Standards Update. To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 2, Summary of Significant Accounting Policies, in the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Results of Operations
Comparison of Three Months Ended
Three months ended March 31,
2022 2021
U.S. ex-U.S. Total U.S. ex-U.S. Total
Transaction price $ 30,810 $ 17,096 $ 47,906 $ 40,062 $ 11,077 $ 51,139
Sales deductions:
Government rebates and
chargebacks (3,984) (6,661) (10,645) (5,086) (4,124) (9,210)
Discounts and fees (2,317) (697) (3,014) (3,275) (601) (3,876)
Total sales deductions (6,301) (7,358) (13,659) (8,361) (4,725) (13,086)
Product revenue 24,509 9,738 34,247 31,701 6,352 38,053
Operating expenses:
External cost of sales -
product 4,835 3,235 8,070 6,157 2,111 8,268
Cost of sales -
intangible asset
amortization 620 723 1,343 620 723 1,343Research and development 40,465 1,785 42,250 50,830 1,975 52,805 Selling, general and administrative 23,919 5,294 29,213 24,321 5,620 29,941 Other operating expenses 3,730 - 3,730 3,707 - 3,707 Total expenses 73,569 11,037 84,606 85,635 10,429 96,064 Operating loss$ (49,060) $ (1,299) (50,359)$ (53,934) $ (4,077) (58,011) Other income (expense): Interest expense (9,100) (8,037) Foreign currency loss (978) (546) Other income 148 183 Other income (expense), net (9,930) (8,400) Loss before income taxes (60,289) (66,411) Income tax benefit 120
134
Net loss $ (60,169) $ (66,277) Product revenue. Total product revenue for the three months endedMarch 31, 2022 decreased compared to the same period in the prior year primarily due to fewer diagnoses and fewer patient starts in theU.S. , primarily caused by the ongoing COVID-19 pandemic as there have been fewer patients going to in-person office visits as oncology practices and patients continue to adapt to the impact of the virus and competition from other products on the market, including 38
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the impact on second-line maintenance that may result from an increase in first-line maintenance treatment of ovarian cancer.
U.S. product revenue for the three months endedMarch 31, 2022 decreased$7.2 million compared to the same period in the prior year while ex-U.S. product revenue for the three months endedMarch 31, 2022 increased$3.4 million compared to the same period in the prior year. The increase in ex-U.S. product revenue is due to Rubraca being launched in countries inEurope throughout 2019 and 2020. Product revenue is recorded net of variable considerations comprised of rebates, chargebacks and other discounts. Product revenue for the three months endedMarch 31, 2022 was$24.5 million inthe United States and$9.7 million outside ofthe United States . Total variable considerations increased during the three months endedMarch 31, 2022 compared to the three months endedMarch 31, 2021 at 28.5% and 25.6% of the transaction price, respectively. External cost of sales - product. Product cost of sales for the three months endedMarch 31, 2022 remained consistent compared to the same period in the prior year. Product cost of sales primarily relate to manufacturing, freight and royalties costs associated with Rubraca sales in the period.U.S. product cost of sales for the three months endedMarch 31, 2022 decreased$1.3 million compared to the same period in the prior year due to the decrease in product revenue.
Ex-
Cost of sales - intangible asset amortization. In the three months endedMarch 31, 2022 and 2021, we recognized cost of sales of$1.3 million associated with the amortization of capitalized milestone payments related to the approvals of Rubraca by the FDA and theEuropean Commission . Research and development expenses. Except for activities related to medical research and disease education, research and development expenses are attributable to ourU.S. segment. Research and development expenses decreased during the three months endedMarch 31, 2022 compared to the same period in the prior year primarily due to lower research and development costs for Rubraca. The decrease related to our TRITON studies for prostate cancer and our ARIEL and ATHENA studies for ovarian cancer.
Selling, general and administrative expenses. Selling, general and
administrative expenses for the three months ended
Other operating expenses. During the three months endedMarch 31, 2022 and 2021, we recognized other operating expenses related to our production train at Lonza. We expect these expenses to remain consistent during the remainder of 2022 due to our fixed facility fee each quarter since we expect to have sufficient inventory and do not plan to produce inventory at Lonza during the remainder of 2022. Interest expense. Interest expense increased during the three months endedMarch 31, 2022 compared to the same period in the prior year primarily due to interest expense under our financing agreement related to our ATHENA trial.
Liquidity and Capital Resources
Going Concern and Management Plans
We have incurred significant net losses since inception and have relied on our
ability to fund our operations through debt and equity financings. We expect
operating losses and negative cash flows to continue for the foreseeable future
even with Rubraca now generating revenues. Rubraca revenues have not been
consistent in prior quarters, mainly as a result of the impact of COVID-19 and
competition from other products on the market, including the impact on
second-line maintenance that may result from an increase in first-line
maintenance treatment of ovarian cancer, which has made forecasting revenues
difficult. In addition to factors described, future Rubraca revenues will
depend, in part, on the timing and extent of any recovery from the impacts of
COVID-19, with any such recovery of revenues expected to take several quarters
to have a meaningful impact on our financial results. We do not expect to
generate a sufficient amount of Rubraca revenues to finance our cash
requirements in the foreseeable future, and which we may never be able to do in
sufficient amounts. We require significant cash resources to execute our
business plans and we will need to raise
39
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additional cash to continue to fund our operating plan. We cannot be certain that additional funding will be available on acceptable terms, or at all, especially given that we will need our stockholders to approve an amendment to our certificate of incorporation to increase the number of shares of common stock that we are authorized to issue. The aforementioned factors, which are largely outside of our control, raise substantial doubt about our ability to continue as a going concern within one year from the date of filing of this quarterly report. In the near term, we believe there is some flexibility within our operating plan, particularly with managing certain discretionary expenses, to adjust to variations in our expected Rubraca revenues and the availability and timing of potential sources of financings to meet our working capital requirements. However, based on our current cash, cash equivalents and liquidity available under our ATHENA clinical financing agreement, together with current estimates for revenues generated by sales of Rubraca, we will need to raise additional capital in the near term in order to fund our operating plan for the next 12 months and to continue as a going concern. Our ability to obtain additional financing (including through collaborating and licensing arrangements) will depend on a number of factors, including, among others, our ability to generate positive data from our clinical studies and to obtain label expansions through regulatory approvals, the condition of the capital markets and the other risks described under Risk Factors in our Annual Report on Form 10-K for the year endedDecember 31, 2021 ("2021 Form 10-K"). We expect to finance our operating plan through a combination of public or private equity or debt offerings, collaborations, strategic alliances and other similar licensing arrangements in both the short term and the long term. We currently have capacity to issue approximately$16.5 million of additional shares of common stock under our previously established ATM Program, assuming the remaining authorized but unissued shares of our common stock are sold at an offering price of$2.03 per share, the closing price of our common stock on the Nasdaq Global Select Market onMay 2, 2022 . There can be no assurance that we will be able to sell any shares of our common stock under the ATM Program or regarding the price at which we will be able to sell any such shares, and any sales of shares of our common stock under the ATM Program may be at prices that result in additional dilution to existing stockholders of the Company. We will not be able to raise sufficient additional capital through public or private equity offerings (or offerings of securities convertible into our equity securities) until our stockholders approve a proposed reverse stock split of our common stock at our 2022 Annual Meeting of Stockholders, which, when implemented by our board of directors, will have the effect of increasing the number of authorized but unissued and unreserved shares of our common stock that are available to be issued. We cannot be certain that our stockholders will approve such a proposal. In the event our stockholders do not approve such a proposal, our ability to raise capital to fund our operations beyond the next 12 months will be significantly limited. In light of the uncertainty about our ability to raise sufficient capital through potential equity offerings (or offerings of securities convertible into equity securities), we are considering other sources of funding, potentially through incurring further indebtedness or entering into strategic partnerships or licensing arrangements for one or more of our products or product candidates in which we may have to give up certain of our future commercialization or other rights to obtain interim funding. We are exploring various partnership and licensing arrangements for our products and product candidates outside theU.S. , but those will largely depend on our ability to generate positive data from our clinical studies and to obtain label expansions through regulatory approvals. We cannot be certain that such other sources of funding will be available to us or on acceptable terms or in sufficient amounts to meet our requirements. In the event that we are unable to raise sufficient additional capital, which is dependent on factors outside of our control, we will need to cut expenses further, including potentially delaying, scaling back or eliminating certain of our pipeline development programs, and undertake a more significant restructuring of our operations, in order to continue as a going concern and fund our committed obligations and working capital requirements. There can be no assurances that we will be able to achieve such a restructuring or that such a restructuring will be successful over the long term to allow us to fund our requirements and our plan to invest sufficient amounts to fund the development of FAP-2286 to its potential. 40 Table of Contents Sources and Uses of Cash
The following table sets forth the primary sources and uses of cash for the
three months ended
Three months ended March 31,
2022 2021
Net cash used in operating activities $ (58,495) $ (61,890)
Net cash used in investing activities (62) (118)
Net cash provided by financing activities 37,857 13,376
Effect of exchange rate changes on cash and cash equivalents (487) (675)
Net decrease in cash and cash equivalents $
(21,187)
Operating Activities
Net cash used in operating activities was lower during the three months endedMarch 31, 2022 compared to the same period in the prior year primarily due
to a lower net loss. Investing Activities
There were no significant investing activities during the three months ended
Financing Activities Net cash provided by financing activities for the three months endedMarch 31, 2022 included$28.6 million net proceeds resulting from our "at the market" offerings that occurred during January throughMarch 2022 and$9.2 million proceeds from borrowings under our financing agreement related to our ATHENA trial.
Net cash provided by financing activities for the three months ended
OnMay 17, 2021 , we entered into a distribution agreement (the "Distribution Agreement") withJ.P. Morgan Securities LLC andBofA Securities, Inc. , as agents (the "Agents"), pursuant to which we may offer and sell, from time to time, through the Agents, shares of our common stock having an aggregate offering price of up to$75.0 million in transactions that are deemed to be "at the market" offerings as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers' transactions, including directly on the Nasdaq Global Select Market or into any other existing trading market for the shares, or sales made to or through a market maker, in block transactions or by any other method permitted by law, including negotiated transactions. Sales may be made at market prices prevailing at the time of a sale or at prices related to prevailing market prices or at negotiated prices. During the period betweenMay 18, 2021 andJune 9, 2021 , we sold an aggregate of 13,492,231 shares of our common stock under the Distribution Agreement resulting in gross proceeds of$75.0 million and net proceeds to us of$72.5 million , after deducting commissions and offering expenses, effectively closing out sales we may make pursuant to the Distribution Agreement. The issuance and sale of the shares under the Distribution Agreement were be made pursuant to our effective registration statement on Form S-3 filed with theU.S. Securities and Exchange Commission (the "SEC") onFebruary 25, 2021 (File No. 333-253485) as amended by pre-effective Amendment No. 1 thereto filed with theSEC onMay 5, 2021 . The offering is described in the Company's prospectus datedMay 7, 2021 , as supplemented by a prospectus supplement datedMay 17, 2021 , as filed with theSEC onMay 17, 2021 . We have used and intend to use the net proceeds of this offering for general corporate purposes, including funding of our development programs, sales and marketing expenses associated with Rubraca, repayment, repurchase or refinance of our debt obligations, payment of milestones pursuant to our license agreements, general and administrative expenses, acquisition or licensing of additional product candidates or businesses and working capital. OnAugust 16, 2021 , we entered into a distribution agreement (the "August Distribution Agreement") with the Agents, pursuant to which we may offer and sell, from time to time, through the Agents, shares of our common stock, having an aggregate offering price of up to$125.0 million in transactions that are deemed to be "at the market" offerings as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers' transactions, including directly on the Nasdaq Global Select Market or into any other existing trading market 41
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for the shares, or sales made to or through a market maker, in block transactions or by any other method permitted by law, including privately negotiated transactions. Sales may be made at market prices prevailing at the time of a sale or at prices related to prevailing market prices or at negotiated prices. During the period betweenAugust 17, 2021 andSeptember 15, 2021 , we sold an aggregate of 9,379,976 shares of our common stock under the August Distribution Agreement resulting in gross proceeds of$43.0 million and net proceeds to us of$41.5 million , after deducting commissions and offering expenses. During the period betweenNovember 5, 2021 andNovember 16, 2021 , we sold an aggregate of 731,292 shares of our common stock resulting in gross proceeds of$3.1 million and net proceeds to us of$3.0 million , after deducting commissions and offering expenses. During the period betweenJanuary 18, 2022 andMarch 3, 2022 , we sold an aggregate of 13,870,410 shares of our common stock resulting in gross proceeds of$29.8 million and net proceeds to us of$28.6 million , after deducting commissions and offering expenses. The issuance and sale of the shares under the August Distribution Agreement will be made pursuant to our effective registration statement on Form S-3 filed with theSEC onFebruary 25, 2021 (File No. 333-253485) as amended by pre-effective Amendment No. 1 thereto filed with theSEC onMay 5, 2021 . The offering is described in the Company's prospectus datedMay 7, 2021 , as supplemented by a prospectus supplement datedAugust 16, 2021 , as filed with theSEC onAugust 16, 2021 . We have used and intend to use the net proceeds of this offering for general corporate purposes, including funding of our development programs, sales and marketing expenses associated with Rubraca, repayment, repurchase or refinance of our debt obligations, payment of milestones pursuant to our license agreements, general and administrative expenses, acquisition or licensing of additional product candidates or businesses and working capital.
Cash Requirements
We expect to incur significant losses for the foreseeable future, as we commercialize Rubraca and expand our selling, general and administrative functions to support the growth in our commercial organization.
As of
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, it is difficult to estimate the exact amounts of our working capital requirements. Our future funding requirements will depend on many factors, including but not limited to:
? revenues from the sale of our Rubraca product;
? the number and characteristics of the product candidates, companion diagnostics
and indications we pursue;
the achievement of various development, regulatory and commercial milestones
? resulting in required payments to partners pursuant to the terms of our license
agreements;
the scope, progress, results and costs of researching and developing our
? product candidates and related companion diagnostics and conducting clinical
and non-clinical trials;
? the timing of, and the costs involved in, obtaining regulatory approvals for
our product candidates and companion diagnostics;
? the cost of commercialization activities, including marketing and distribution
costs;
? the cost of manufacturing any of our product candidates we successfully
commercialize;
the costs involved in preparing, filing, prosecuting, maintaining, defending
? and enforcing patent claims, including litigation costs and outcome of such
litigation; and
? the timing, receipt and amount of sales, if any, of our product candidates.
For a discussion of our contractual obligations, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2021 Annual Report on Form 10-K. For further information regarding our contractual obligations and commitments, see Note 14, Commitments and Contingencies to our unaudited consolidated financial statements included elsewhere in this report.
Impact of COVID-19 Pandemic
Our ability to generate product revenues for the three months endedMarch 31, 2022 was negatively affected by the COVID-19 pandemic, primarily due to the ongoing effect the pandemic has had on oncology treatment and practice, and in particular, in ovarian cancer, resulting in fewer diagnoses and fewer patients going to in-person office visits in theU.S. As recently reported by a competitor, ovarian cancer diagnoses are down approximately 29% from pre-pandemic 42 Table of Contents levels and in the fourth quarter of 2021, new patient starts for PARP inhibitors across all indications were down 19% compared to the first quarter of 2021 and down 26% compared to the first quarter of 2020. As a result of the COVID-19 pandemic, ourU.S. and European sales forces have had physical access to hospitals, clinics, doctors and pharmacies curtailed and/or have been limited. Our European launches occurred in an environment in which our field-based personnel were not allowed to visit hospitals beginning as early as lateFebruary 2020 . Similarly, we launched Rubraca for prostate cancer in theU.S beginning inMay 2020 , but our physical access to hospital, clinics, doctors and pharmacies remains limited. It is difficult to discern or predict any trend in new patient starts due to the unpredictability of the COVID-19 situation and the changing competitive landscape. The COVID-19 pandemic has accelerated a preference by oncology practices for more digital programming, including digital, peer-to-peer interactions and reduced in-person promotion. In order to meet these changing preferences, we adopted a hybrid commercial strategy combining increased digital promotion activities, greater online resources and more peer-to-peer interactions with reduced and more targeted in-person promotion. New tools and performance indicators based on this hybrid approach were rolled out during the fourth quarter of 2020. We adopted this strategy in order to better reach customers in the way they want to be reached with the goal of returning to growth, especially as the ongoing impact of COVID-19 is reduced. We did not see material disruption to our clinical trials as a result of the COVID-19 pandemic for the three months endedMarch 31, 2022 . However, we may see disruption during the remainder of 2022. For example, new patient recruitment in certain clinical studies may be affected and the conduct of clinical trials may vary by geography as some regions are more adversely affected. Additionally, we may slow or delay enrollment in certain trials to manage expenses. We believe that we have sufficient supply of Rubraca and our product candidates to continue our commercial and clinical operations as planned. OnMarch 18, 2020 , the Families First Coronavirus Response Act ("FFCR Act"), and onMarch 27, 2020 , the Coronavirus Aid, Relief and Economic Security ("CARES") Act were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning afterDecember 31, 2017 . OnMarch 11, 2021 ,President Biden signed an additional coronavirus relief package entitled the American Rescue Plan Act of 2021 ("ARPA"), which included, among other things, provisions relating to stimulus payments to some Americans, extension of several CARES Act relief programs, expansion of the child tax credit, funding for vaccinations and other COVID-19 related assistance programs. The CARES Act, FFCR Act, and the ARPA have not had a material impact on the Company; however, we will continue to examine the impacts that these Acts, as well as any future economic relief legislation, may have on our business. The trading prices for our common stock and of other biopharmaceutical companies have been highly volatile as a result of the coronavirus pandemic. As a result of this volatility and uncertainties regarding future impact of COVID-19 on our business and operations, we may face difficulties raising capital or may only be able to raise capital on unfavorable terms.
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