SIERRA ONCOLOGY, INC. The following discussion contains management's discussion and analysis of our
financial condition and results of operations and should be read together with
the unaudited condensed consolidated financial statements and the notes thereto
included in Part I, Item 1 of this Quarterly Report and with our audited
consolidated financial statements and related notes thereto for the year ended
Proposed Merger with GlaxoSmithKline
On
For additional information regarding the Merger, please see Note 1 to our
Condensed Consolidated Financial Statements under Part 1 of this Form 10-Q and
refer to the Merger Agreement filed as an exhibit to a Current Report on Form
8-K which was filed with the
Overview
We are a late-stage biopharmaceutical company on a mission to deliver targeted therapies that treat rare forms of cancer. Our main focus is the potential commercialization of momelotinib, an investigational agent for the treatment of myelofibrosis.
In
In the fourth quarter of 2019, we launched MOMENTUM, a randomized double-blind
Phase 3 trial designed to enroll 180 myelofibrosis patients who were symptomatic
and anemic and had been treated previously with a JAK inhibitor. The Primary
Endpoint of the trial is the Total Symptom Score (TSS) response rate of
momelotinib compared to danazol at Week 24. Danazol has been selected as an
appropriate treatment comparator given its use to ameliorate anemia in
myelofibrosis patients, as recommended by
During 2020 and 2021, we operationalized the MOMENTUM trial on a global basis
despite the ongoing COVID-19 pandemic. In
SRA515 (formerly AZD5153), is a potent and selective bromodomain-containing
protein 4 (BRD4) bromodomain and extraterminal (BET) inhibitor with a novel
bivalent binding mode that we acquired in
Our portfolio also includes SRA737, a selective, orally bioavailable small
molecule inhibitor of Checkpoint kinase 1 (Chk1), an emerging target for the
treatment of cancer which has a key role in the DNA Damage Response (DDR). In
17
--------------------------------------------------------------------------------
development of SRA737. We continue to evaluate several options for combination studies with momelotinib, SRA515 and SRA737 and hope to initiate one or more of them in 2022.
We wholly own momelotinib, subject to future milestone payments and royalties, and retain the global commercialization rights to SRA515 and SRA737.
COVID-19
The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak and any variants which have resulted in increased cases and has led to the reimplementation of restrictions in many areas, impact on our clinical studies, employee or industry events, and effect on our suppliers and manufacturers, all of which are uncertain and cannot be predicted. Due to the COVID-19 pandemic, we have begun to experience some supply chain delays including resourcing constraints by some of our manufacturing partners. There is a risk that if our supply chain is further interrupted, it would limit our ability to source drug substance and drug product for our clinical trials and may result in delays to the timing of our commercialization plans and could potentially increase our costs which would materially harm our business. We may experience constrained supply of momelotinib, SRA515 or, with respect to our planned clinical trials, we could again experience delays in planned site initiations and activations, or experience delays in enrollment, participant dosing, distribution of clinical trial materials, study monitoring and data analysis that could materially adversely impact our business, results of operations and overall financial performance in future periods. Further, infections and deaths related to the COVID-19 pandemic that occur in clinical trial subjects could negatively impact the safety and efficacy results of the clinical trials by increasing the occurs of adverse events including deaths or contributing to missed visits or early discontinuation of study therapy or study participation. We may experience impact from changes in how we and companies worldwide conduct business due to the COVID-19 pandemic, including but not limited to restrictions on travel and in-person meetings, prioritization of hospital resources toward pandemic effort, delays in review by the FDA and comparable foreign regulatory agencies, and further disruptions in our supply chain for momelotinib or SRA515. Any such delays to our planned development timelines and pre-commercialization efforts could also impact the use and sufficiency of our existing cash reserves, and we may be required to raise additional capital. We may be unable to raise additional capital if and when needed, which may result in delays or suspension of our development and potential commercial launch plans. Finally, inflation may affect us by increasing our labor and operating costs. As of the filing date of this Quarterly Report on Form 10-Q, the extent to which COVID-19 may impact our financial condition, results of operations or guidance is uncertain. The effect of the COVID-19 pandemic will not be fully reflected in our results of operations and overall financial performance until future periods. See the section entitled "Risk Factors" included elsewhere in this report for further discussion of the possible impact of the COVID-19 pandemic on our business.
Components of Statements of Operations
Operating Expenses
Research and Development
Research and development expenses consist primarily of the following:
• fees, milestone payments or other expenses incurred in connection with
license and asset purchase agreements and their related amendments;
• personnel-related costs, which include salaries, benefits, stock-based
compensation, recruitment fees and travel costs;
• costs associated with research and preclinical studies, clinical trials,
regulatory activities and manufacturing activities to support clinical
activities;
• fees paid to external service providers that conduct certain research and
development, clinical and manufacturing activities on our behalf; and
• facility-related costs, which include direct and allocated expenses for rent
and maintenance of facilities, depreciation and amortization expenses and
other supplies.
The largest recurring component of our total operating expenses has historically
been our investment in research and development activities, including the
development of momelotinib. We expect our research and development expenses will
increase over the next few years as we continue to advance momelotinib, pursue
regulatory approval of momelotinib in
18
--------------------------------------------------------------------------------
The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in achieving marketing approval for our lead product candidate, momelotinib. The probability of success of our product candidate may be affected by numerous factors, including clinical data, regulatory developments, competition, manufacturing capability and commercial viability. As a result, 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 of momelotinib.
General and Administrative
General and administrative expenses consist of personnel-related costs, facility-related costs, business insurance, allocated expenses and professional fees for services, including legal, activities in preparation for potential commercialization, patent prosecution and maintenance, human resources, audit and accounting services. Personnel-related costs consist of salaries, benefits, stock-based compensation, recruitment fees, severance costs and travel costs.
We expect to incur additional expenses associated with supporting our growing research and development activities, preparing for potential commercialization, continuing to operate as a public company and other administration and professional services.
Other Expense, net
Other expense, net primarily consists of interest earned on our cash and cash
equivalents and foreign currency exchange gains and losses related to
transactions and monetary asset and liability balances denominated in currencies
other than the
Provision for (benefit from) Income Taxes, net
Provision for (benefit from) income taxes, net consists of federal and state
income taxes in
Results of Operations
Three Months Ended
Three Months Ended
March 31, Change
2022 2021 $
(in thousands)
Operating expenses:
Research and development $ 17,554 $ 13,953 $ 3,601
General and administrative 10,329 5,865 4,464
Total operating expenses 27,883 19,818 8,065
Loss from operations (27,883 ) (19,818 ) (8,065 )
Other expense, net 59 29 30
Loss before provision for (benefit from)
income taxes, net (27,942 ) (19,847 ) (8,095 )
Provision for (benefit from) income taxes,
net (14 ) 68 (82 )
Net loss $ (27,928 ) $ (19,915 ) $ (8,013 )
Research and Development
Research and development expenses increased
19
--------------------------------------------------------------------------------
General and Administrative
General and administrative expenses increased
Liquidity and Capital Resources
Capital Resources
Since our inception, we have never generated product revenue and have incurred
significant net losses. We have funded our operations to date primarily from the
issuance and sale of our common stock, pre-funded warrants and convertible
voting preferred stock and accompanying warrants through public offerings
(including ATM equity offerings), our convertible and redeemable convertible
preferred stock in private financings and, to a lesser extent, through exercises
of our stock options and warrants. Our net losses were
In
During the first quarter of 2022, we issued 3,056,477 shares of common stock
pertaining to the exercise of the Series A warrants, Series B warrants and a
warrant that was previously issued to Gilead pursuant to the securities purchase
agreement for aggregate proceeds of
In
In
We filed prospectus supplements pursuant to which can issue and sell an
aggregate of up to
We expect to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:
• hire additional personnel to support potential commercialization efforts,
and additional clinical, regulatory, scientific, drug development and
management personnel;
• invest to further develop our product candidates, potentially including
combination studies as the field of myelofibrosis evolves;
• establish a sales, marketing and distribution infrastructure to
commercialize any drugs for which we may obtain marketing approval;
• invest in scaling our manufacturing capacity to support development and our
global commercialization strategy;
• seek regulatory and marketing approvals for any product candidates that we
may develop;
• achieve regulatory milestones that trigger payments due under our Asset
Purchase Agreement with Gilead, including a milestone payment of $25.0
million due upon the approval of momelotinib from the FDA;
• achieve certain milestones that trigger payments due under our license
agreement with AstraZeneca;
20--------------------------------------------------------------------------------
• acquire or in-license additional product candidates and technologies;
• develop additional product candidates;
• defend against potential lawsuits or other legal issues;
• maintain, expand and protect our intellectual property portfolio; and
• add operational, financial and management information systems and personnel
to continue to operate as a public company.
Our existing cash and cash equivalents may not be sufficient for us to prepare for the commercialization and the potential launch of momelotinib. Accordingly, we may need additional capital to continue our clinical development programs, fund our pre-commercial, and launch activities, however, we believe that our existing cash and cash equivalents will be sufficient to fund our current operating plans for at least the next twelve months. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities. Our forecast for the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. The amount and timing of the potential need for future funding requirements will depend on many factors, including costs related to our pre-commercialization, potential launch, and clinical development efforts including combination studies, the potential impacts of the COVID-19 pandemic on these efforts, or costs to develop additional product candidates.
We evaluate opportunities for strategic transactions, such as collaborations, strategic partnerships and alliances or licensing arrangements from time to time. To the extent that we raise additional capital through future equity financings, 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 existing common stockholders. If we raise additional funds through the issuance of debt securities, these securities could contain covenants that would restrict our operations. If we raise additional funds through strategic partnerships and alliances with third parties, we may have to relinquish valuable rights to our technologies or momelotinib or grant licenses on terms unfavorable to us. There can be no assurance that such additional financing, if available, can be obtained on terms acceptable to us. If we are to need but be unable to obtain additional financing, we would need to reevaluate our future operating plans.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Three Months Ended
March 31,
2022 2021
(in thousands)
Cash used in operating activities $ (25,737 ) $ (16,961 )
Cash used in investing activities (62 ) -
Cash provided by financing activities 195,065 20,580
Effect of foreign exchange rate changes on cash, cash
equivalents and restricted cash - (16 )
Net increase in cash, cash equivalents and
restricted cash$ 169,266 $ 3,603
Cash Flows from Operating Activities
For the three months ended
For the three months ended
Cash Flows from Investing Activities
For the three months ended
21
--------------------------------------------------------------------------------
Cash Flows from Financing Activities
For the three months ended
For the three months ended
Off-Balance Sheet Arrangements
We do not currently engage in off-balance sheet financing arrangements. In addition, we do not have any interest in entities referred to as variable interest entities, which includes special purpose entities and other structure finance entities.
Critical Accounting Policies and Estimates
Our unaudited condensed consolidated financial statements are prepared in
accordance with
We believe that the assumptions and estimates associated with research and development expenses and stock-based compensation have the most significant impact on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.
There have been no significant changes in our critical accounting policies and
estimates as compared to the critical accounting policies and estimates
disclosed in Management's Discussion and Analysis of Financial Condition and
Operations included in our Annual Report on Form 10-K for the year ended
© Edgar Online, source
