POIT BIOP The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and notes thereto for the three and six months endedJune 30, 2022 and 2021 (the "Q2 2022 Financial Statements") appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto for the periods endedDecember 31, 2021 and 2020 (the "2021 Financial Statements") contained in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 , as filed with theSecurities and Exchange Commission ("SEC") onMarch 25, 2022 (the "2021 Form 10-K"). Please also see the section entitled "Cautionary Note Regarding Forward-Looking Statements."
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our forward-looking statements include, but are not limited to, statements regarding our or our management team's expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions (including the negative of any of the foregoing) may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These factors include, but are not limited to, the following: •the success, cost and timing of our product development activities and clinical trials, our plans for clinical development of our product candidates and the initiation and completion of any other clinical trials and related preparatory work and the expected timing of the availability of results of the clinical trials; •our ability to recruit and enroll suitable patients in our clinical trials; •the potential attributes and benefits of our product candidates; •our ability to obtain and maintain regulatory approval for our product candidates, and any related restrictions, limitations or warnings in the label of an approved product candidate; •our ability to obtain funding for our operations, including funding necessary to complete further development, approval and, if approved, commercialization of our product candidates; •the period over which we anticipate our existing cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements; •the potential for our business development efforts to maximize the potential value of our portfolio; •our ability to identify, in-license or acquire additional product candidates; •our ability to maintain the license agreements underlying our product candidates; •our ability to compete with other companies currently marketing or engaged in the development of treatments for the indications that we are pursuing for our product candidates; •our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and the duration of such protection; •our ability to contract with and rely on third parties to assist in conducting our clinical trials and manufacture our product candidates; •the development of our own manufacturing facility inIndianapolis, Indiana and the ability of this facility to provide adequate production capacity to meet future clinical and commercial demands for our product candidates; •the size and growth potential of the markets for our product candidates, and our ability to serve those markets, either alone or in partnership with others; •the rate and degree of market acceptance of our product candidates, if approved; •the pricing and reimbursement of our product candidates, if approved; •regulatory developments inthe United States and foreign countries; •the impact of laws and regulations; •our ability to attract and retain key scientific, medical, commercial or management personnel; •our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; 18 -------------------------------------------------------------------------------- Table of Contents •our financial performance; •the ability to recognize the anticipated benefits of the Business Combination, as defined below, which may be affected by, among other things, competition and our ability to grow and manage growth profitably; •our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; •the level of activity in the trading market for our Common Stock and the volatility of the market price of our Common Stock; •the effect of the COVID-19 coronavirus ("COVID-19") pandemic and Russo-Ukrainian conflict on the foregoing; and •other factors detailed under the section entitled "Risk Factors" in the 2021 Form 10-K. These forward-looking statements are based on current expectations and beliefs concerning future developments and their potential effects. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading "Risk Factors" in the 2021 Form 10-K. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them and to the risk factors. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Overview Introduction We are a globally focused radiopharmaceutical company building a platform for the clinical development and commercialization of radioligands that fight cancer. We have a pipeline of product candidates and early-stage development programs, in-house manufacturing capabilities, and a secured supply for rare medical isotopes like Actinium-225 ("225Ac") and Lutetium-177 ("177Lu"). Our team brings decades of combined experience in radiopharmaceutical clinical development and manufacturing. In a space where supply chain is often overlooked, the Company has carved out a unique advantage for itself: a 100% company-owned facility, located inIndianapolis, Indiana , which includes an office space occupying 10,500 square feet and a manufacturing facility occupying 70,200 square feet, and which we believe has the capacity for expansion to commercially supply bothNorth America andEurope with large volumes. Furthermore, management has leveraged their prior relationships to assemble resilient radioisotope supply chains for the Company, which even includes manufacturing the Company's own n.c.a. 177Lu isotope in-house. Our predecessor was incorporated onSeptember 18, 2019 ("Inception") asPOINT Theranostics Inc. under the DGCL and subsequently amended its name to "POINT Biopharma Inc. " onNovember 22, 2019 . Subsequent to the Business Combination,POINT Biopharma Inc. became a wholly-owned subsidiary ofPOINT Biopharma Global Inc. (together with its consolidated subsidiaries, "POINT" or the "Company") onJune 30, 2021 . Business Combination OnJune 30, 2021 , we consummated the Business Combination withPOINT Biopharma Inc. , pursuant to the terms of the Business Combination Agreement, dated as ofMarch 15, 2021 , by and amongTherapeutics Acquisition Corp. ("RACA"),Bodhi Merger Sub, Inc. , aDelaware corporation and wholly-owned subsidiary of RACA ("Merger Sub"), andPOINT Biopharma Inc. Pursuant to the Business Combination Agreement, on the closing date, (i) Merger Sub merged with and intoPOINT Biopharma Inc. , withPOINT Biopharma Inc. as the surviving company in the Business Combination as a wholly-owned subsidiary of RACA and (ii) RACA changed its name to "POINT Biopharma Global Inc. " In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the effective time of the Business Combination, (i) each share and vested equity award ofPOINT Biopharma Inc. outstanding as of immediately prior to the effective time was exchanged for shares of the Common Stock of POINT or comparable vested equity awards that are exercisable for shares of Common Stock, as applicable, based on an impliedPOINT Biopharma Inc. vested equity value of$585,000,000 (which results in a conversion ratio of approximately 3.59:1); (ii) all unvested equity awards of 19 -------------------------------------------------------------------------------- Table of ContentsPOINT Biopharma Inc. were exchanged for comparable unvested equity awards that are exercisable for shares of Common Stock, determined based on the same exchange ratio at which the vested equity awards were exchanged for shares of Common Stock; and (iii) each share of Class A Common Stock of RACA and each share of Class B common stock, par value$0.0001 per share, of RACA that was issued and outstanding immediately prior to the effective time became one share of Common Stock following the consummation of the Business Combination. In addition, concurrently with the execution of the Business Combination Agreement, onMarch 15, 2021 , RACA entered into Subscription Agreements with certain investors (the "PIPE Investors "), pursuant to which thePIPE Investors agreed to subscribe for and purchase, and RACA agreed to issue and sell to thePIPE Investors , an aggregate of 16,500,000 shares of Class A Common Stock at a price of$10.00 per share, for aggregate gross proceeds of$165,000,000 (the "PIPE Financing"). The PIPE Financing was consummated concurrently with the closing of the Business Combination. We received net proceeds of approximately$260.0 million consisting of proceeds of the PIPE Financing and the proceeds remaining in RACA's trust account. Transaction costs of approximately$27.0 million consisted of investment banker, legal, audit, tax, accounting, consulting, insurance, board retainer fees and listing fees.
Recent Developments
PNT2002: 177Lu-based PSMA-targeted radiopharmaceutical
InApril 2022 , the Company dosed its firstEuropean Union patient in the SPLASH trial. The SPLASH trial is currently enrolling patients across 53 sites inNorth America ,Europe , andUK , and site activations remain ongoing to expedite accrual. The Company continues to expect to report top line data from SPLASH mid-2023.
PNT2004: fibroblast activation protein-alpha (FAP-alpha) inhibitor
The Company filed a clinical trial application (CTA) withHealth Canada at the end of the first quarter of 2022 for PNT6555, the lead of the pan-cancer PNT2004 fibroblast activation protein-alpha (FAP-alpha) targeted program, and a No Objection Letter was received fromHealth Canada inMay 2022 . The first patient was dosed in FRONTIER inJuly 2022 .
The Company also presented posters on PNT6555 at two recent academic conferences
including the
Management Updates
InJune 2022 , the Company appointedChris Horvath as Executive Vice President, Commercial.Mr. Horvath brings almost twenty years of experience in the pharmaceutical industry, having led or worked on the launch of a number of key oncology products, including Pluvicto (lutetium 177Lu vipivotide tetraxetan), Locametz (gallium 68Ga gozetotide), Nubeqa (darolutamide), and Zytiga (abiraterone acetate). In his new role at POINT,Mr. Horvath will lead the commercial strategy for POINT's pipeline.Mr. Horvath began his career as a scientist, working at bothDuPont andNovartis Institutes for BioMedical Research . He then transitioned to commercial roles of increasing responsibility at Janssen, Dendreon, Merck, Bayer, and most recentlyAdvanced Accelerator Applications (Novartis).Mr. Horvath holds a BSc in Chemistry & Biology fromWilfrid Laurier University , a MSc in Analytical Science from theUniversity of Guelph , and an MBA fromRutgers Business School .
Risks & Liquidity
Drug research and development is very expensive and involves a high degree of
risk. Only a small number of research and development programs result in the
commercialization of a product. We will not generate revenue from product sales
unless and until we successfully complete clinical development and are able to
obtain regulatory approval for and successfully commercialize the product
candidates we are currently developing or may develop. We currently do not have
any product candidates approved for commercial sale.
Our product candidates, currently under development or that we may develop, will
require significant additional research and development efforts, including
extensive clinical testing and regulatory approval prior to commercialization.
These efforts require significant amounts of additional capital, adequate
personnel infrastructure and extensive compliance and reporting capabilities.
There can be no assurance that our research and development activities will be
successfully completed, that adequate protection for our licensed or developed
technology will be obtained and maintained, that products developed will obtain
necessary regulatory approval or that any approved products will be commercially
viable.
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If we obtain regulatory approval for one or more of our product candidates, we
expect to incur significant expenses related to developing our commercialization
capabilities to support product sales, marketing, and distribution activities,
either alone or in collaboration with others. Further, as a public company
following the Business Combination, we have incurred and expect to continue
incurring additional costs associated with operating as a public company. As a
result, we will require substantial additional funding to support our continuing
operations and pursue our growth strategy.
We have incurred significant net losses since our Inception and have relied on
the ability to fund operations through equity financings. We expect to continue
to incur significant operating and net losses, as well as negative cash flows
from operations, for the foreseeable future as we continue to complete clinical
trials for our products and prepare for potential future regulatory approvals
and commercialization of our products, if approved. We have not generated any
revenue to date and do not expect to generate product revenue unless and until
we successfully complete development and obtain regulatory approval for at least
one of our product candidates.
We believe that the net proceeds from the Business Combination and PIPE Financing, together with our available resources and existing cash and investments are sufficient to fund our operating expenses and capital expenditure requirements into the first quarter of 2024.
As losses continue to be incurred, we are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, successful discovery and development of our product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of macroeconomic disruptions, such as those arising from the COVID-19 pandemic and the Russo-Ukrainian conflict, the ability to secure additional capital to fund operations and commercial success of our product candidates. Product candidates currently under development will require extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if our drug development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.
We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:
•advance our clinical-stage product candidates: 177Lu-PNT2003 and 177Lu-PNT2002 through clinical development; •advance our preclinical stage product candidates: 177Lu-PNT2004, 177Lu-PNT2001, along with candidates developed with our CanSEEKTM Prodrug Platform into clinical development; •seek to identify, acquire, and develop additional product candidates, including through business development efforts to invest in or in-license other technologies or product candidates; •hire additional clinical, quality control, medical, scientific, and other technical personnel to support our clinical operations; •expand our operational, financial and management systems and increase personnel to support our operations; •meet the requirements and demands of being a public company; •maintain, expand, and protect our intellectual property portfolio; •make milestone, royalty, or other payments due under various in-license or collaboration agreements; •seek regulatory approvals for any product candidates that successfully complete clinical trials; and •undertake any pre-commercialization activities to establish sales, marketing, and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own or jointly with third parties.
COVID-19 Pandemic and other geopolitical events
The COVID-19 pandemic, which was declared by theWorld Health Organization as a pandemic inMarch 2020 and has since spread worldwide, has caused many governments to implement measures to slow the spread of the outbreak through quarantines, travel restrictions, heightened border security and other measures. The impact of this pandemic has been, and will likely continue to be, extensive in many aspects of society, which has resulted, and will likely continue to result, in significant disruptions to the global economy as well as businesses and capital markets around the world. The future progression of the pandemic and its effects on our business and operations are uncertain. In response to public health directives and orders and to help minimize the risk of the virus to employees, we have taken precautionary measures, including implementing work-from-home policies, mandatory vaccination, masking and weekly testing for certain employees. The impact of the virus, including work-from-home policies, may negatively impact 21 -------------------------------------------------------------------------------- Table of Contents productivity, disrupt our business, and delay our preclinical research and clinical trial activities and our development program timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course. Specifically, we may not be able to fulfill enrollment expectations on our planned timeline or visit clinics to conduct on-site monitoring due to disruptions at our clinical trial sites. We are currently unable to predict when potential disruptions to our clinical programs resulting from the pandemic will resolve. Other impacts to our business may include temporary closures of our suppliers and disruptions or restrictions on our employees' ability to travel. Any prolonged material disruption to our employees or suppliers could adversely impact our preclinical research and clinical trial activities, financial condition and results of operations, including our ability to obtain financing. Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, including escalating military fighting betweenRussia andUkraine , terrorism or other geopolitical events. TheU.S. and other nations in response to the Russo-Ukrainian conflict have announced economic sanctions which may have an adverse effect on the global financial markets, which, in turn, could have an adverse effect on our business, financial condition and results of operations. We are monitoring the continuing impact of the COVID-19 pandemic and the potential impact of the Russo-Ukrainian conflict on our business and consolidated financial statements. To date, we have not experienced any material business disruptions or incurred any impairment losses in the carrying values of our assets as a result of these events and we are not aware of any specific related event or circumstance that would require us to revise our estimates reflected in the Q2 2022 Financial Statements.
Components of Operating Results
See Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Components of Operating Results" in our 2021 Form 10-K, for a discussion of the nature of our operating expense line items within our accompanying Condensed Consolidated Statements of Operations.
Results of Operations
The following table summarizes our results of operations for the three months
ended
For the three For the three
months months
ended ended
June 30, June 30,
2022 2021 Change
(In U.S. dollars) $ $ $ %
Operating expenses:
Research and development 20,813,882 6,700,862 14,113,020 210.6 %
General and administrative 4,080,401 1,949,552 2,130,849 109.3 %
Total operating expenses 24,894,283 8,650,414 16,243,869 187.8 %
Loss from operations (24,894,283) (8,650,414) (16,243,869) 187.8 %
Other income (expenses):
Finance income (costs) 509,700 (2,863) 512,563 (17,903.0) %
Foreign currency loss (12,259) (27,599) 15,340 (55.6) %
Total other income (expenses) 497,441 (30,462) 527,903 (1733.0) %
Loss before provision for income taxes (24,396,842) (8,680,876) (15,715,966) 181.0 %
Provision for income taxes (183,405) (123,782) (59,623) 48.2 %
Net loss (24,580,247) (8,804,658) (15,775,589) 179.2 %
Research and Development
The following table summarizes the components of research and development
expense for the three months ended
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For the three For the three
months months
Ended Ended
June 30, June 30,
2022 2021 Change
(In U.S. dollars) $ $ $ %
Clinical trials 8,286,606 2,419,972 5,866,634 242.4 %
Salaries and benefits 4,312,716 1,568,283 2,744,433 175.0 %
Sponsored research & product licenses 3,805,325 1,460,982 2,344,343 160.5 %
Contract manufacturing 3,374,158 1,170,677 2,203,481 188.2 %
Depreciation and overhead 975,241 - 975,241 100.0 %
Regulatory consulting 59,836 80,948 (21,112) (26.1) %
Total 20,813,882 6,700,862 14,113,020 210.6 %
For the three months ended June 30, 2022 as compared to the three months ended
June 30, 2021 , the increase in research and development expense was primarily
due to increases in (a) costs incurred in clinical trials and contract
manufacturing as we continue to increase the scale of our trials and operations,
(b) personnel costs as the Company continues to expand its research and
development headcount and (c) costs associated with our licensing agreements and
related sponsored research in connection with our product candidates both
preclinical and clinical, including a $2,000,000 expense related to the
amendment fee in connection with the exclusive global licensing agreement with
Bach Biosciences and (d) depreciation and overhead related to our manufacturing
facility. Although the Company does not currently track its research and
development expenditures by product, it intends to begin tracking such
expenditures by product in the near future.
General and administrative
For the three months endedJune 30, 2022 as compared to the three months endedJune 30, 2021 , the increase in general and administrative expenses was primarily due to increased (a) personnel costs as the Company continues to expand its finance, information technology, human resources and other administrative headcount, and (b) insurance, legal, professional and consulting services, as the Company continues to increase the scale of its operations.
Other Income (Expenses)
For the three months endedJune 30, 2022 , other income (expenses) consist mainly of (a) interest and other income earned on the Company's cash, cash equivalents and investments, partially offset by (b) a foreign exchange loss primarily associated with foreign currency transactions occurring within the Company's Canadian subsidiary. For the three months endedJune 30, 2021 , other expenses mainly consisted of (i) a foreign exchange loss associated with foreign currency transactions primarily occurring within the Company's Canadian subsidiary, and (ii) accretion expense related to the amortization of capitalized transaction costs in connection with our previous mortgage payable.
Income Tax Expense
For the three months ended
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Results of Operations
The following table summarizes our results of operations for the six months
ended
For the six For the six
months months
Ended Ended
June 30, June 30,
2022 2021 Change
(In U.S. dollars) $ $ $ %
Operating expenses:
Research and development 33,314,730 10,970,160 22,344,570 203.7 %
General and administrative 7,888,343 3,414,244 4,474,099 131.0 %
Total operating expenses 41,203,073 14,384,404 26,818,669 186.4 %
Loss from operations (41,203,073) (14,384,404) (26,818,669) 186.4 %
Other income (expenses):
Finance income (costs) 557,673 (5,662) 563,335 (9,949.4) %
Foreign currency loss (43,900) (34,806) (9,094) 26.1 %
Total other income (expenses) 513,773 (40,468) 554,241 (1369.6) %
Loss before provision for income taxes (40,689,300) (14,424,872) (26,264,428) 182.1 %
Provision for income taxes (271,521) (164,207) (107,314) 65.4 %
Net loss (40,960,821) (14,589,079) (26,371,742) 180.8 %
Research and Development
The following table summarizes the components of research and development
expense for the six months ended
For the six For the six
months months
Ended Ended
June 30, June 30,
2022 2021 Change
(In U.S. dollars) $ $ $ %
Clinical trials 13,015,747 4,213,751 8,801,996 208.9 %
Salaries and benefits 8,051,246 2,586,653 5,464,593 211.3 %
Contract manufacturing 6,083,741 1,533,770 4,549,971 296.7 %
Sponsored research & product licenses 4,555,325 2,383,269 2,172,056 91.1 %
Depreciation and overhead 1,483,462 - 1,483,462 100.0 %
Regulatory consulting 125,209 252,717 (127,508) (50.5) %
Total 33,314,730 10,970,160 22,344,570 203.7 %
For the six months ended June 30, 2022 as compared to the six months ended June
30, 2021 , the increase in research and development expense was primarily due to
increases in (a) costs incurred in clinical trials and contract manufacturing as
we continue to increase the scale of our trials and operations, (b) increased
personnel costs as the Company continues to expand its research and development
headcount, (c) costs associated with our licensing agreements and related
sponsored research in connection with our product candidates both preclinical
and clinical, including a $2,000,000 expense related to the amendment fee in
connection with the exclusive global licensing agreement with Bach Biosciences
and (d) depreciation and overhead related to our manufacturing facility.
Although the Company does not currently track its research and development
expenditures by product, it intends to begin tracking such expenditures by
product in the near future.
General and administrative
For the six months endedJune 30, 2022 as compared to the six months endedJune 30, 2021 , the increase in general and administrative expenses was primarily due to increased (a) personnel costs as the Company continues to expand its finance, information technology, human resources and other administrative headcount, and (b) insurance, legal, professional and consulting services, as the Company continues to increase the scale of its operations. 24 -------------------------------------------------------------------------------- Table of Contents Other Income (Expenses) For the six months endedJune 30, 2022 , other income (expenses) consist mainly of (a) interest and other income earned on the Company's cash, cash equivalents and investments, partially offset by (b) a foreign exchange loss primarily associated with foreign currency transactions occurring within the Company's Canadian subsidiary. For the six months endedJune 30, 2021 , other expenses mainly consisted of (i) a foreign exchange loss associated with foreign currency transactions primarily occurring within the Company's Canadian subsidiary, and (ii) accretion expense related to the amortization of capitalized transaction costs in connection with our previous mortgage payable.
Income Tax Expense
For the six months ended
Liquidity and Capital Resources
Sources of Liquidity and Capital
We have incurred significant net losses since the Company's inception and currently rely on the proceeds for the Business Combination to fund our operations. Operating losses and negative cash flows from operations and investing activities are expected to continue for the foreseeable future. As losses continue to be incurred, we are subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, successful discovery and development of our product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of COVID-19, the ability to secure additional capital to fund operations and commercial success of our product candidates. Product candidates currently under development will require extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel, and infrastructure and extensive compliance-reporting capabilities. Even if our drug development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales. Net losses totaled$24.6 million and$8.8 million for the three months endedJune 30, 2022 and 2021, respectively and$41.0 million and$14.6 million for the six months endedJune 30, 2022 and 2021, respectively. OnJanuary 28, 2021 , warrants for the purchase of common shares ofPOINT Biopharma Inc. were exercised resulting in net proceeds of$20.0 million . OnMarch 8, 2021 , we received cash proceeds of$0.5 million for a non-employee consultant's exercise of stock options. OnJune 30, 2021 , we received net proceeds of approximately$260.0 million in connection with the Business Combination consisting of proceeds of the PIPE Financing and the proceeds remaining in RACA's trust account. We intend to use the net proceeds from these transactions for general corporate purposes, funding of development programs, payment of milestones pursuant to our license agreements, general and administrative expenses, licensing of additional product candidates and to support our working capital needs.
Future Funding Requirements
Our primary use of cash is to fund operating expenses, primarily related to our research and development activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses. We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future. We will require additional capital to meet operational needs and capital requirements for clinical trials, other research and development expenditures, and business development activities. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our current and anticipated clinical trials and preclinical studies.
Our future funding requirements will depend on many factors, including, but not limited to:
•the scope, progress, results and costs of researching and developing our current product candidates, as well as other additional product candidates we may develop and pursue in the future;
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•the timing of, and the costs involved in, obtaining marketing approvals for our
product candidates and any other additional product candidates we may develop
and pursue in the future;
•the number of future product candidates that we may pursue and their
development requirements;
•subject to receipt of regulatory approval, the costs of commercialization
activities for our product candidates, to the extent such costs are not the
responsibility of any future collaborators, including the costs and timing of
establishing product sales, marketing, distribution, and manufacturing
capabilities;
•subject to receipt of regulatory approval, revenue, if any, received from
commercial sales of our product candidates or any other additional product
candidates we may develop and pursue in the future;
•the achievement of milestones that trigger payments under our various license
agreements;
•the extent to which we in-license or acquire rights to other products, product
candidates or technologies;
•our ability to establish collaboration arrangements for the development of our
product candidates on favorable terms, if at all;
•our headcount growth and associated costs as we expand our research and
development and establish a commercial infrastructure;
•the costs of preparing, filing and prosecuting patent applications, maintaining
and protecting our intellectual property rights, including enforcing and
defending intellectual property related claims; and
•the costs of operating as a public company.
As of
OnJuly 11, 2022 theSEC declared effective our shelf registration statement on Form S-3 (the "S-3") that allows the Company to offer and sell to the public up to$400,000,000 of our Common Stock, preferred stock, debt securities, warrants to purchase our Common Stock, preferred stock or debt securities, subscription rights to purchase our Common Stock, preferred stock or debt securities and/or units consisting of some or all of these securities, from time to time in one or more offerings. The details of any future offerings, along with the use of proceeds from any securities offered, will be described in a prospectus supplement or other offering materials, at the time of offering. Also covered under the S-3 as part of the$400,000,000 total amount is an at-the-market offering ("ATM") of up to$150,000,000 of our Common Stock pursuant to a distribution agreement withPiper Sandler & Co. To date, we have not sold any Common Stock under the ATM or any equity under the S-3 and have no current plans to issue additional equity, but have the S-3 and the ATM available if needed. Until such time as we can generate substantial product revenue, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders' ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Going Concern
We assess and determine our ability to continue as a going concern in accordance
with the provisions of ASC Topic 205-40, Presentation of Financial
Statements-Going Concern. We have determined that the Company will continue as a
going concern, which contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business.
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Working Capital
Working capital is defined as current assets less current liabilities.
The following table summarizes our total working capital and current assets and
liabilities as of
As of As of
June 30, December 31,
2022 2021 Change
(In U.S. dollars) $ $ $ %
Current assets 204,905,051 243,846,556 (38,941,505) (16.0) %
Current liabilities 18,796,727 7,979,964 10,816,763 135.5 % Total working capital 186,108,324 235,866,592 (49,758,268) (21.1) %
The decrease in working capital as ofJune 30, 2022 , primarily reflects cash used for (a) operating expenses, including, personnel costs and research and development costs as we advance our clinical trials and continue to expand our pipeline, (b) capital expenditures for equipment and machinery used in our manufacturing facility inIndiana , and (c) the acquisition of long-term investments.
Cash Flows
The following table summarizes our sources and uses of cash for the three months
ended
For the six For the six
months months
Ended Ended
June 30, June 30,
2022 2021 Change
(In U.S. dollars) $ $ $ %
Net cash flows used in operating activities (31,068,981) (19,444,565) (11,624,416) 59.8 %
Net cash flows used in investing activities (129,643,171)
(3,242,281) (126,400,890) 3,898.5 %
Net cash flows provided by financing activities 4,403 285,876,917 (285,872,514) (100.0) %
Net (decrease)/increase in cash and cash
equivalents (160,707,749) 263,190,071 (423,897,820) (161.1) %
Cash flows used in operating activities
Net cash flows used in operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities. We expect cash provided by financing activities, including cash provided in connection with the ATM discussed above, will continue to be our primary source of funds to finance operating needs and capital expenditures for the foreseeable future. Cash used in operating activities increased for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 as we advance our clinical trials and continue to expand our pipeline, as described above.
Cash flows used in Investing Activities
For the six months endedJune 30, 2022 and 2021, cash used in investing activities reflected$129.6 million and$3.2 million , respectively. The increase in cash used in investing activities relates to (a) the Company's investment of its available cash resources into short and long-term investments and (b) increased capital expenditures for purchases in connection with ourIndiana manufacturing facility.
Cash flows provided by Financing Activities
For the six months endedJune 30, 2022 , net cash provided by financing activities totaled$4,403 , which consisted of the proceeds from the exercise of stock options issued to non-employee consultants. For the six months endedJune 30, 2021 , net cash provided by financing activities totaled$285.9 million , which consisted of (a) the net proceeds in connection with 27 -------------------------------------------------------------------------------- Table of Contents the Business Combination and related PIPE Financing and (b) the proceeds from the exercise of warrants and stock options, each as discussed above.
Contractual Obligations and Other Commitments
The Company in the normal course of business enters into various services and supply agreements in connection with its clinical trials to ensure the supply of certain product and product lines during the Company's clinical phase. These agreements often have minimum purchase commitments and generally terminate upon the termination of the clinical trial. For additional information, see Note 12 to the Q2 2022 Financial Statements.
For additional information related to our license agreements, please also see Note 12 to the Q2 2022 Financial Statements and Notes 12 and 13 to the 2021 Financial Statements.
Off-balance sheet arrangements
We do not have any off-balance sheet arrangements or holdings in any variable interest entities.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results of operations is based on our Q2 2022 Financial Statements, which have been prepared in accordance with generally accepted accounting principles inthe United States ("GAAP") and include the accounts of the Company and its wholly-owned subsidiaries,POINT Biopharma Inc. ,POINT Biopharma Corp. ,POINT Biopharma USA, Inc. andWest 78th Street , LLC, for financial information and pursuant to the rules and regulations of theSEC . The preparation of the Q2 2022 Financial Statements in conformity with GAAP requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Q2 2022 Financial Statements and the reported amounts of expenses during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our 2021 Form 10-K.
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