The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed financial
statements and related notes included in this Quarterly Report on Form 10-Q, or
Quarterly Report, and the audited financial statements and notes thereto as of
and for the fiscal year ended
This Quarterly Report includes forward-looking statements and information within
the meaning of Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, which are subject to the "safe harbor" created by
those sections, that involve a number of risks, uncertainties and assumptions.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as "may," "will," "intend,"
"plan," "believe," "anticipate," "expect," "seek", "estimate," "predict,"
"potential," "continue," "likely," or "opportunity," the negative of these words
or other similar words. Similarly, statements that describe our plans,
strategies, intentions, expectations, objectives, goals or prospects and other
statements that are not historical facts are also forward-looking statements.
For such statements, we claim the protection of the Private Securities
Litigation Reform Act of 1995. Readers of this Quarterly Report are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the time this Quarterly Report was filed with the
References to "we," "us" and "our" refer to
Overview
We are a clinical-stage biopharmaceutical company committed to realizing the promise of precision medicines for the treatment of cancer. Our pipeline consists of small molecule product candidates that target cancer signaling pathways where there is a strong scientific and clinical rationale to improve outcomes, and we intend to pair them with molecular or cellular diagnostics to identify those patients most likely to respond to treatment. We presently have two clinical-stage product candidates, ziftomenib (ziftomenib is the international nonproprietary name for KO-539) and tipifarnib, one preclinical-stage product candidate, KO-2806, currently in investigational new drug, or IND, -enabling studies, as well as additional programs that are at a discovery stage. We own global commercial rights to all of our programs and product candidates. We plan to advance our product candidates through a combination of internal development and strategic partnerships while maintaining significant development and commercial rights.
Our first product candidate, ziftomenib, is a potent, selective, reversible and oral small molecule inhibitor which blocks the interaction of two proteins, menin and the protein expressed by the Lysine K-specific Methyl Transferase 2A gene, or KMT2A (formerly referred to as the mixed-lineage leukemia 1 gene). We have generated preclinical data that support the potential anti-tumor activity of ziftomenib in genetically defined subsets of acute leukemia, including those with rearrangements or partial tandem duplications in the KMT2A gene as well as those with oncogenic driver mutations in genes such as nucleophosmin 1, or NPM1. Our preclinical data support the hypothesis that ziftomenib targets epigenetic dysregulation and removes a key block to cellular differentiation to drive anti-tumor activity. We believe ziftomenib has the potential to address approximately 35% of acute myeloid leukemia, or AML, including NPM1-mutant AML and KMT2A-rearranged AML. In the pediatric population, KMT2A-rearranged leukemias make up approximately 10% of acute leukemias in all age groups and in the case of infant leukemias, the frequency of KMT2A rearrangements is 70-80%. These pediatric leukemia sub-types portend a poorer prognosis and five-year survival rate that is lower than other leukemia sub-types and therefore represent a significant unmet medical need given the lack of curative therapeutic options.
We received orphan drug designation for ziftomenib for the treatment of AML from
the
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dose escalation portion of the KOMET-001 trial used an accelerated design and the Phase 1b portion of the study seeks to validate a recommended Phase 2 dose and schedule, or RP2D.
On
On
On
Pending determination of the RP2D, we are preparing to conduct a comprehensive clinical development plan for ziftomenib, aimed at broadening the opportunity to develop treatments for patients with acute leukemias. Additional development opportunities include combination studies, other genetic subtypes, a pediatric development strategy and other indications, such as acute lymphocytic leukemia and myelodysplastic syndrome.
On
On
Our second product candidate, tipifarnib, is a potent, selective and orally bioavailable inhibitor of farnesyl transferase that has been previously studied in more than 5,000 cancer patients and demonstrated compelling and durable anti-cancer activity in certain patients with a manageable side effect profile. We are currently evaluating tipifarnib in multiple solid tumor and hematologic indications.
Our most advanced solid tumor indication for tipifarnib is in patients with head and neck squamous cell carcinoma, or HNSCC, that carry mutations in the HRAS gene. We are conducting a global, multi-center, open-label, non-comparative
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registration-directed clinical trial of tipifarnib in HRAS mutant HNSCC designed with two cohorts: a treatment cohort, which we call AIM-HN, and a prospective observational cohort, which we call SEQ-HN.
In
On
In addition to evaluating tipifarnib as a monotherapy in patients with recurrent
or metastatic HRAS mutant HNSCC, we have been evaluating the use of tipifarnib
in combination with other targeted oncology therapies to address larger patient
populations and to pursue earlier lines of therapy. Among these potential
combinations, we have prioritized the combination of tipifarnib and an inhibitor
of the PI3 kinase alpha enzyme for clinical evaluation in patients with
biomarker-defined subsets of HNSCC. On
The KURRENT-HN trial is an ongoing multicenter, open-label, Phase 1/2 trial designed to evaluate the safety of the combination of tipifarnib and alpelisib, determine the recommended combination dose(s) regimen, and evaluate preliminary anti-tumor activity in patients with recurrent/metastatic (R/M) HNSCC whose tumors are dependent upon HRAS and/or PIK3CA signaling. We anticipate enrolling approximately 40 HNSCC patients into two biomarker defined cohorts (Cohort 1, PIK3CA; Cohort 2, HRAS).
We are also evaluating the use of farnesyl transferase inhibitors, or FTIs, in
combination with epidermal growth factor receptor, or EGFR, -targeted therapies
to prevent emergence of resistance to EGFR-targeted therapies. At the
As previously reported, we are developing a next-generation farnesyl transferase
inhibitor which we believe demonstrates improved potency, pharmacokinetic and
physicochemical properties relative to tipifarnib. In
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Liquidity Overview
As of
Financial Operations Overview
Research and Development Expenses
We focus on the research and development of our product programs. Our research
and development expenses consist of costs associated with our research and
development activities including salaries, benefits, share-based compensation
and other personnel costs, clinical trial costs, manufacturing costs for
non-commercial products, fees paid to external service providers and
consultants, facilities costs and supplies, equipment and materials used in
clinical and preclinical studies and research and development. All such costs
are charged to research and development expense as incurred. Payments that we
make in connection with in-licensed technology for a particular research and
development project that have no alternative future uses in other research and
development projects or otherwise and therefore, no separate economic values,
are expensed as research and development costs at the time such costs are
incurred. As of
We cannot determine with certainty the timing of initiation, the duration or the completion costs of current or future preclinical studies and clinical trials of our product candidates. At this time, due to the inherently unpredictable nature of preclinical and clinical development, we are unable to estimate with any certainty the costs we will incur and the timelines we will require in the continued development of our product candidates and our other pipeline programs. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations. Our future research and development expenses will depend on the preclinical and clinical success of each product candidate that we develop, as well as ongoing assessments of the commercial potential of such product candidates. In addition, we cannot forecast which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements.
Completion of clinical trials may take several years or more, and the length of time generally varies according to the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development, including, among others:
• managing the impact of COVID-19 pandemic and related precautions on the operation of our clinical trials;
• per patient clinical trial costs;
• the number of clinical trials required for approval;
• the number of sites included in the clinical trials;
• the length of time required to enroll suitable patients;
• the number of doses that patients receive;
• the number of patients that participate in the clinical trials;
• the drop-out or discontinuation rates of patients;
• the duration of patient follow-up;
• potential additional safety monitoring or other studies requested by regulatory agencies;
• the number and complexity of analyses and tests performed during the clinical trial;
• the phase of development of the product candidate; and
• the efficacy and safety profile of the product candidate.
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General and Administrative Expenses
General and administrative expenses consist primarily of salaries, benefits, share-based compensation and other personnel costs for employees in executive, finance, business development and support functions. Other significant general and administrative expenses include the costs associated with obtaining and maintaining our patent portfolio, professional services for audit, legal, pre-commercial planning, investor and public relations, director and officer insurance premiums, corporate activities and allocated facilities.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income.
Income Taxes
We have incurred net losses and have not recorded any
Results of Operations
The following table sets forth our results of operations for the periods presented, in thousands: Three Months Ended March 31, 2022 2021 Change
Research and development expenses
329 202 127
Comparison of the Three Months Ended
Research and Development Expenses. The following table illustrates the components of our research and development expenses for the periods presented, in thousands: Three Months Ended March 31, 2022 2021 Change Ziftomenib-related costs$ 4,085 $ 2,661 $ 1,424 Tipifarnib-related costs 4,861 10,177 (5,316 ) Discovery stage programs 1,345 770 575 Personnel costs and other expenses 8,166 5,345 2,821 Share-based compensation expense 2,456 1,371 1,085
Total research and development expenses
The increase in ziftomenib-related research and development expenses for the
three months ended
General and Administrative Expenses. The increase in general and administrative
expenses for the three months ended
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Liquidity and Capital Resources
Since our inception, we have funded our operations primarily through equity and debt financings. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities.
In
We have incurred operating losses and negative cash flows from operating
activities since inception. As of
As of
•
the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our product candidates;
•
the costs, timing and outcome of regulatory review of our product candidates;
•
the costs of establishing or contracting for sales, marketing and distribution capabilities if we obtain regulatory approvals to market our product candidates;
•
the costs of securing and producing drug substance and drug product material for use in preclinical studies, clinical trials and for use as commercial supply;
•
the costs of securing manufacturing arrangements for development activities and commercial production;
•
the scope, prioritization and number of our research and development programs;
•
the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements, if any;
•
the extent to which we acquire or in-license other product candidates and technologies;
•
the success of our current or future companion diagnostic test collaborations for companion diagnostic tests; and
•
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims.
To date, we have not generated any revenues from product sales, and we do not have any approved products. We do not know when, or if, we will generate any revenues from product sales. We do not expect to generate significant revenues from product sales unless and until we obtain regulatory approval of and commercialize one of our current or future product candidates. We are subject to all of the risks incident in the development of new therapeutic products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial additional funding in connection with our continuing operations.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of stock offerings, debt financings, collaborations, strategic partnerships or licensing arrangements. We do not have any committed external source of funds. Additional capital may not be available on reasonable terms, if at all. To the extent that we raise additional capital through the sale of stock or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include increased fixed payment obligations and covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, selling or licensing intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through collaborations,
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strategic partnerships or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, including our other technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be unable to carry out our business plan. As a result, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and commercialize our product candidates even if we would otherwise prefer to develop and commercialize such product candidates ourselves, and our business, financial condition and results of operations would be materially adversely affected.
The following table provides a summary of our net cash flow activities for the periods presented, in thousands:
Three Months Ended March 31, 2022 2021 Change
Net cash used in operating activities
79 224
Operating Activities. The increase in net cash used in operating activities for
the three months ended
Investing Activities. The decrease in net cash used in investing activities for
the three months ended
Financing Activities. Net cash provided by financing activities for the three
months ended
Contractual Obligations and Commitments
We lease certain office and laboratory space under non-cancelable operating leases. The leases are also subject to additional variable charges for common area maintenance, property taxes, property insurance and other variable costs. See Note 6 of the unaudited condensed financial statements for additional detail surrounding our lease obligations.
We enter into short-term and cancellable agreements in the normal course of operations with clinical sites and contract research organizations, or CROs, for clinical research studies, professional consultants and various third parties for preclinical research studies, clinical supply manufacturing and other services through purchase orders or other documentation, or that are undocumented except for an invoice. Such short-term agreements are generally outstanding for periods less than one year and are settled by cash payments upon delivery of goods and services. The nature of the work being conducted under these agreements is such that, in most cases, the services may be cancelled upon prior notice of 90 days or less. Payments due upon cancellation generally consist only of payments for services provided and expenses incurred, including non-cancellable obligations of our service providers, up to the date of cancellation.
Our in-license agreements are cancelable by us with written notice within 180
days or less. We may be required to pay up to approximately
Critical Accounting Policies and Management Estimates
The
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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. Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to form our critical accounting estimates.
There have been no material changes to our critical accounting policies and
estimates from the information provided in Part II, Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Critical Accounting Policies and Management Estimates," included in our Annual
Report on Form 10-K for the fiscal year ended
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