OLEMA PHARMACEUTICALS, INC. You should read the following discussion and analysis of our financial condition
and results of operations together with the unaudited condensed consolidated
financial statements and related notes that are included elsewhere in this
Quarterly Report on Form 10-Q and the audited financial statements and related
notes that are included in our Annual Report on Form 10-K for the fiscal year
ended
This Quarterly Report on Form 10-Q contains forward-looking statements 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. Forward-looking statements are identified by words
such as "believe," "will," "may," "estimate," "continue," "anticipate,"
"intend," "should," "plan," "expect," "predict," "could," "potentially" or the
negative of these terms or similar expressions. You should read these statements
carefully because they discuss future expectations, contain projections of
future results of operations or financial condition, or state other
"forward-looking" information. These statements relate to our future plans,
objectives, expectations, intentions and financial performance and the
assumptions that underlie these statements. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this report in Part II, Item 1A - "Risk Factors," and
elsewhere in this report. Forward-looking statements are based on our
management's beliefs and assumptions and on information currently available to
our management. These statements, like all statements in this report, speak only
as of their date, and we undertake no obligation to update or revise these
statements in light of future developments. We caution investors that our
business and financial performance are subject to substantial risks and
uncertainties. In addition, statements that "we believe" and similar statements
reflect our beliefs and opinions on the relevant subject. These statements are
based on information available to us as of the date of this Quarterly Report on
Form 10-
Overview
We are a clinical-stage biopharmaceutical company focused on the discovery,
development and commercialization of next generation targeted therapies for
women's cancers. Our team has spent the past decade characterizing the structure
and function of the estrogen receptor, or ER, a key driver of breast cancer in
approximately 75% of patients, in order to develop more potent, oral therapies
that completely inactivate this signaling pathway. Our lead product candidate,
OP-1250, is a novel oral therapy with combined activity as both a complete ER
antagonist, or
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trial. In
Since our inception, we have devoted substantially all of our resources to organizing and staffing our company, research and development activities, business planning, raising capital, establishing and maintaining our intellectual property portfolio, conducting nonclinical studies and clinical trials and providing general and administrative support for these operations.
We do not have any product candidates approved for commercial sale, and we have not generated any revenue from product sales. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development and eventual commercialization of one or more of our product candidates which we expect, if it ever occurs, will take a number of years. We also do not own or operate, and currently have no plans to establish, any manufacturing facilities. We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for nonclinical and clinical testing, as well as for commercial manufacturing if any of our product candidates obtain marketing approval. We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment and personnel while also enabling us to focus our expertise and resources on the development of our product candidates.
As of
We have incurred significant operating losses since the commencement of our
operations. Our net losses were
We expect to continue to incur net operating losses for at least the next several years, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. We expect our expenses and capital requirements will increase significantly in connection with our ongoing activities as we:
? continue our ongoing and planned research and development of our lead product
candidate OP-1250 for the treatment of ER+ positive breast cancer;
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? initiate nonclinical studies and clinical trials for any additional product
candidates that we may pursue in the future;
? seek to discover and develop additional product candidates and further expand
our clinical product pipeline;
? seek regulatory approvals for any product candidates that successfully complete
clinical trials;
continue to scale up external manufacturing capacity with the aim of securing
? sufficient quantities to meet our capacity requirements for clinical trials and
potential commercialization;
establish a sales, marketing and distribution infrastructure to commercialize
? any approved product candidates and related additional commercial manufacturing
costs;
? develop, maintain, expand, protect and enforce our intellectual property
portfolio, including patents, trade secrets and know how;
? acquire or in-license other product candidates and technologies;
? attract, hire and retain additional clinical, scientific, quality control, and
manufacturing management and administrative personnel;
add clinical, operational, financial and management information systems and
? personnel, including personnel to support our product development and planned
future commercialization efforts;
? expand our operations in
? incur additional legal, accounting, investor relations and other expenses
associated with operating as a public company.
We also expect to increase the size of our administrative function to support the growth of our business. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.
We will require substantial additional funding to develop our product candidates
and support our continuing operations. Until such time that we can generate
significant revenue from product sales or other sources, if ever, we expect to
finance our operations through the sale of equity, debt financings or other
capital sources, which could include income from collaborations, strategic
partnerships or marketing, distribution, licensing or other strategic
arrangements with third parties, or from grants. We may be unable to raise
additional funds or to enter into such agreements or arrangements on favorable
terms, or at all. Our ability to raise additional funds may be adversely
impacted by potential worsening global economic conditions and the recent
disruptions to, and volatility in, the credit and financial markets in
The COVID-19 pandemic continues to evolve. As a result of the COVID-19 pandemic, we experienced some delays in setting up our current Phase 1/2 clinical trial and in clinical site initiation, including delays in recruiting
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clinical site investigators and clinical site staff, which we may experience
again in the future for clinical trials, including ongoing clinical trials
involving OP-1250 in combination with other therapies. The extent of the impact
of the COVID-19 pandemic on our business, operations and development timelines
and plans, including the resulting impact on our expenditures and capital needs,
remains uncertain, and will depend on certain developments, including the
duration of the COVID-19 pandemic, frequency of outbreaks and its impact on our
development activities, planned clinical trial enrollment, future trial sites,
contract research organizations, or CROs, third-party manufacturers, and other
third parties with whom we do business, as well as its impact on regulatory
authorities and our key scientific and management personnel. We continue to
actively monitor the evolving situation related to the COVID-19 pandemic and may
take further actions that alter our operations, including those that may be
required by federal, state or local authorities, or that we determine are in the
best interests of our employees and other third parties with whom we do
business. During 2021 and 2022, although we modified our operations and
practices due to the COVID-19 pandemic and to comply with federal, state and
local requirements, our business, operations and development timelines were not
materially adversely affected. In
In addition to the ongoing COVID-19 pandemic, global economic and business
activities continue to face widespread macroeconomic uncertainties, including
labor shortages, inflation and monetary supply shifts, recession risks and
potential disruptions from the
Components of our results of operations
Revenue
To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future.
Operating expenses
Research and development
Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal expenses incurred in connection with the discovery and development of our product candidates. To date, our research and development expenses have related primarily to discovery efforts and nonclinical and clinical development of our product candidate OP-1250. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received.
External expenses include:
expenses incurred in connection with the discovery and nonclinical development
? of our product candidates, including under agreements with third parties, such
as consultants and CROs;
costs of manufacturing products for use in our nonclinical studies and clinical
? trials, including payments to contract manufacturing organizations, or CMOs,
and consultants;
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? costs of funding research performed by third parties;
? costs of purchasing lab supplies and non-capital equipment used in designing,
developing and manufacturing nonclinical study and clinical trial materials;
? costs associated with consultants for chemistry, manufacturing and controls
development, regulatory, statistics and other services;
? expenses related to regulatory activities, including filing fees paid to
regulatory agencies; and
? facility costs including rent, depreciation and maintenance expenses.
Internal expenses include employee and personnel-related costs and expenses, including salaries, benefits and stock-based compensation expense for employees and personnel engaged in research and development functions.
We expense research and development expenses in the periods in which they are incurred. Costs for certain activities, such as manufacturing and nonclinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators.
We typically use our employee, consultant and infrastructure resources across our development programs. We track outsourced development costs by product candidate or nonclinical program, but we do not allocate personnel costs, other internal costs or external consultant costs to specific product candidates or nonclinical programs.
Research and development expenses to advance the development of our lead product
candidate and nonclinical program were
We expect our research and development expenses to increase substantially in absolute dollars for the foreseeable future as we advance OP-1250 or any other future product candidates we may develop into and through nonclinical studies and clinical trials and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for OP-1250 or any other future product candidates we may develop may be affected by a variety of factors including but not limited to: the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our OP-1250 or any other future product candidates we may develop. Clinical and nonclinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future nonclinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate's commercial potential. In addition, we cannot forecast whether OP-1250 or any other future product candidates we may develop 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. We are also unable to predict when, if ever, we will generate revenue from our product candidates to offset these expenses. Our expenditures on current and future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of
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nonclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:
? the timing and progress of nonclinical and clinical development activities;
? the number and scope of nonclinical and clinical programs we decide to pursue;
? our ability to maintain our current research and development programs and to
establish new ones;
? establishing an appropriate safety profile with investigational new
drug-enabling toxicology studies;
? successful patient enrollment in, and the initiation and completion of,
clinical trials;
the successful completion of clinical trials with safety, tolerability and
? efficacy profiles that are satisfactory to the FDA or any comparable foreign
regulatory authority;
? establishing commercial manufacturing capabilities or making arrangements with
third-party manufacturers;
? receipt of regulatory approvals from applicable regulatory authorities;
? the timing, receipt and terms of any marketing approvals from applicable
regulatory authorities;
? our ability to establish licensing or collaboration arrangements;
? the performance of our future collaborators, if any;
? development and timely delivery of commercial-grade product formulations that
can be used in our planned clinical trials and for commercial launch;
? commercializing the product candidate, if approved, whether alone or in
collaboration with others;
? obtaining and maintaining patent and trade secret protection and regulatory
exclusivity for our product candidates;
? obtaining, maintaining, defending and enforcing patent claims and other
intellectual property rights;
? maintaining a continued acceptable safety profiles of our products following
approval; and
? obtaining and retaining key research and development personnel.
Any changes in the outcome of any of these factors could significantly impact the costs, timing and viability associated with the development of our product candidates.
General and administrative
General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense, for personnel in executive, finance, accounting, business development, legal, human resources, information technology, and administrative functions. General and administrative expenses also include costs not otherwise included in research and development expenses, including corporate facility costs, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of facilities and insurance, and professional fees for legal, patent and consulting services.
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We expect that our general and administrative expenses will increase in the
foreseeable future as we increase our headcount to support the continued
research and development of our programs and the growth of our business. We also
anticipate incurring additional expenses associated with operating as a public
company, including increased expenses related to the building and improving of
our IT infrastructure, including cyber security monitoring, legal, other
regulatory and compliance, director and officer insurance, investor and public
relations and tax-related services associated with maintaining compliance with
the rules and regulations of the
Total other income
Total other income consists of interest income and other expense. Interest income primarily consists of interest income on our cash equivalents and marketable securities. Other expense primarily consists of unrealized foreign currency remeasurement gain (loss) and miscellaneous income (expense) not related to operating activities.
Results of operations
Comparison of the three months ended
The following table summarizes our results of operations for the three months
ended
Three Months Ended September 30,
2022 2021 $ Change
(in thousands)
Operating expenses:
Research and development $ 17,627 $ 12,523 $ 5,104
General and administrative 5,595 5,239 356
Total operating expenses 23,222 17,762 5,460
Loss from operations (23,222) (17,762) (5,460)
Other income (expense):
Interest income 622 105 517
Other income (expense): (120) (56) (64)
Total other income 502 49 453
Net loss $ (22,720) $ (17,713) $ (5,007) Research and development expenses
Research and development expenses for the three months ended
General and administrative expenses
General and administrative expenses for the three months ended
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Other income
Other income for the three months ended
Comparison of the nine months ended
The following table summarizes our results of operations for the nine months
ended
Nine Months Ended September 30,
2022 2021 $ Change
(in thousands)
Operating expenses:
Research and development $ 60,690 $ 35,125 $ 25,565
General and administrative 19,079 14,609 4,470
Total operating expenses 79,769 49,734 30,035
Loss from operations (79,769) (49,734) (30,035)
Other income (expense):
Interest income 1,255 333 922
Other income (expense): (94) (57) (37)
Total other income 1,161 276 885
Net loss $ (78,608) $ (49,458) $ (29,150) Research and development expenses
Research and development expenses for the nine months ended
General and administrative expenses
General and administrative expenses for the nine months ended
Other income
Other income for the nine months ended
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Liquidity and capital resources
Sources of liquidity
Since our inception, we have not generated any revenue from product sales and
have incurred significant operating losses and negative cash flows from our
operations. Our net losses were
As of
We expect to incur significant expenses and operating losses for the foreseeable future as we advance the nonclinical and clinical development of OP-1250. We expect that our research and development and general and administrative costs will increase in connection with conducting additional nonclinical studies and clinical trials for our current and future research programs and product candidates, contracting with CMOs to support nonclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources.
Our primary uses of cash are to fund our research and development activities, including with respect to OP-1250 and other nonclinical programs, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations.
We currently have no financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years.
Future funding requirements
To date, we have not generated any revenue from product sales. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if at all, that will occur. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of, continue or initiate clinical trials of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for our product candidates, we expect to incur significant commercialization expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we have incurred and expect to continue to incur additional costs associated with operating as a public company. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.
We expect our cash, cash equivalents, and marketable securities at
? the scope, progress, results and costs of product discovery, nonclinical
studies and clinical trials;
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? the scope, prioritization and number of our research and development programs;
? the costs, timing and outcome of regulatory review of our product candidate;
? our ability to establish and maintain collaborations on favorable terms, if at
all;
? the achievement of milestones or occurrence of other developments that trigger
payments under any collaboration agreements we enter into;
? the extent to which we are obligated to reimburse, or entitled to reimbursement
of, clinical trial costs under collaboration agreements, if any;
the costs of preparing, filing and prosecuting patent applications, maintaining
? and enforcing our intellectual property rights and defending intellectual
property-related claims;
? the extent to which we acquire or in-license other product candidates and
technologies;
? the costs of securing manufacturing arrangements for commercial production; and
? the costs of establishing or contracting for sales and marketing capabilities
if we obtain regulatory approvals to market our product candidates.
Identifying potential product candidates and conducting nonclinical studies and clinical trials is a time- consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidate, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of a product candidate that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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Cash flows
The following table shows a summary of our cash flows for each of the periods presented:
Nine Months Ended September 30,
(in thousands) 2022 2021
Net cash used in operating activities $ (62,354) $ (32,087)
Net cash provided by (used in) investing activities 75,143 (281,438)
Net cash provided by financing activities 203 573
Net increase (decrease) in cash and cash equivalents
Operating activities
Net cash used in operating activities in the nine months ended
Net cash used in operating activities in the nine months ended
Investing Activities
Net cash provided by investing activities in the nine months ended
Net cash used in investing activities in the nine months ended
Financing activities
Net cash provided by financing activities during the nine months ended
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Net cash provided by financing activities in the nine months ended
Critical accounting policies and significant judgements and estimates
Our management's discussion and analysis of our financial condition and results
of operations are based on our condensed consolidated financial statements,
which have been prepared in accordance with
During the nine months ended
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