TURG POIN 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 (Quarterly Report) and the audited financial statements and notes thereto as of and for the year endedDecember 31, 2021 and the related Management's Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 filed with theSecurities and Exchange Commission (SEC) onFebruary 28, 2022 .
Unless the context requires otherwise, references in this Quarterly Report to
"we," "us," and "our" refer to
Forward-Looking Statements
This Quarterly Report includes forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (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," "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 theSEC . These forward-looking statements are based largely on our expectations and projections about future events and future trends affecting our business, and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include, without limitation, the risk factors identified in ourSEC reports, including this Quarterly Report. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance, and you should not use our historical performance to anticipate results or future period trends. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. Except as required by law, we undertake no obligation to update publicly or revise our forward-looking statements.
Pending Acquisition by Bristol-Myers Squibb
OnJune 2, 2022 , we entered into an Agreement and Plan of Merger (the Merger Agreement) with Bristol-Myers Squibb Company, aDelaware corporation (Bristol-Myers Squibb), andRhumba Merger Sub Inc. , aDelaware corporation and wholly owned subsidiary of Bristol-Myers Squibb (Purchaser). Pursuant to the terms of the Merger Agreement, and upon the terms and subject to the conditions thereof, onJune 17, 2022 , Purchaser commenced a tender offer (the Offer) to purchase all of the outstanding shares of our common stock (the Shares) for$76.00 per share in cash, without interest and subject to applicable withholding of taxes. Promptly following the completion of the Offer, Purchaser will merge with and into our company (the Merger), with our company continuing as the surviving corporation and as a wholly owned subsidiary of Bristol-Myers Squibb. The Merger Agreement contemplates that the Merger will be effected pursuant to Section 251(h) of the Delaware General Corporation Law, which permits completion of the Merger without a vote of our stockholders upon the acquisition by Purchaser of a majority of the aggregate voting power of our common stock. As a result of the Merger, we will cease to be a publicly traded company. The Merger Agreement contains customary representations and warranties. The Merger is anticipated to close in the third quarter of 2022, subject to the satisfaction or waiver of certain closing conditions, including, among others, that the number of Shares tendered in the Offer represent a majority of the Shares outstanding at the time of the expiration of the Offer. The Merger Agreement provides Bristol-Myers Squibb and us with certain termination rights and, under certain circumstances, may require us to pay BristolMyers Squibb a termination fee of$138.0 million . For additional information related to the Merger Agreement, refer to the Solicitation/Recommendation Statement on Schedule 14D-9 we filed with theSEC onJune 17, 2022 , together with the exhibits and annexes thereto and as amended or supplemented from time to time. Please also see "Item 1A. Risk Factors-Risks Related to Our Pending Acquisition by Bristol-Myers Squibb.
Overview
We are a clinical-stage precision oncology company designing and developing novel targeted therapies for cancer treatment. We have developed a macrocycle platform from which we designed our current pipeline of proprietary small, compact tyrosine kinase
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inhibitors (TKIs) with rigid structures that have the potential to bind to their
targets with greater precision and affinity than other kinase inhibitors. Our
drug discovery approach integrates tumor biology with structure-based drug
design to develop a new generation of orally available proprietary agents that
we believe will have the potential to address important unmet medical needs for
patients.
Repotrectinib
Our lead drug candidate, repotrectinib, is being evaluated in an ongoing Phase
1/2 clinical trial called TRIDENT-1 for the treatment of patients with ROS1+
advanced non-small cell lung cancer (NSCLC) and patients with NTRK+ advanced
solid tumors. The U.S. Food and Drug Administration (FDA) has granted
repotrectinib breakthrough therapy designations (i) for the treatment of
patients with ROS1+ metastatic NSCLC who have not been treated with a ROS1 TKI;
(ii) for the treatment of patients with ROS1+ metastatic NSCLC who have been
previously treated with one ROS1 TKI and who have not received prior
platinum-based chemotherapy; and (iii) for the treatment of patients with
advanced solid tumors that have an NTRK gene fusion who have progressed
following treatment with one or two prior TRK TKIs, with or without prior
chemotherapy, and have no satisfactory alternative treatments. In addition, the
FDA has granted repotrectinib orphan drug designation for the treatment of
advanced NSCLC with adenocarcinoma histology; and four fast track designations
for the treatment of patients with: (1) ROS1+advanced NSCLC who have not been
previously treated with a ROS1 TKI; (2) ROS1+ advanced NSCLC who have been
previously treated with one prior line of platinum-based chemotherapy and one
prior line of a ROS1 TKI; (3) ROS1+ advanced NSCLC who have been previously
treated with one prior ROS1 TKI and who have not received prior platinum-based
chemotherapy; and (4) NTRK+ advanced solid tumors who have been previously
treated with one prior line of chemotherapy and one or two prior TRK TKIs.
Our multi-cohort Phase 2 registrational portion of TRIDENT-1 is ongoing at sites
in North America , Europe and the Asia-Pacific regions. The Phase 2 portion of
TRIDENT-1 is a registrational trial for potential approval in ROS1+ advanced
NSCLC and NTRK+ advanced solid tumors. In the second quarter of 2021 we reached
enrollment of 50 patients pooled from the Phase 1 and Phase 2 portions of the
TRIDENT-1 study in EXP-1 and in the first quarter of 2022 we reached enrollment
of 60 patients from the Phase 2 portion of the TRIDENT-1 study in EXP-4 and 40
patients from the Phase 2 portion of the TRIDENT-1 study in EXP-6. Enrollment is
ongoing in all cohorts in the study. We reported topline blinded independent
central review (BICR) data from all of the ROS1+ NSCLC cohorts from the Phase
1/2 TRIDENT-1 study in April 2022 . The primary objective of the TRIDENT-1 study
is to determine the confirmed objective response rate (cORR) based on BICR as
assessed by RECIST 1.1, and the key secondary objectives include duration of
response (DOR), progression free survival (PFS) and intracranial activity.
As of the
•
In the ROS1+ TKI-naïve advanced NSCLC patients (EXP-1: n=71), the cORR was 79%, with four patients achieving a complete response (CR) and 52 patients achieving a partial response (PR). The cORR does not include one patient in an unconfirmed partial response (uPR) with tumor regression of -38% on the last scan, who remained on treatment awaiting the next scan as of the data cutoff date. DOR ranged from 1.4+ to 35.1+ months and PFS ranged from 0+ to 40.4+ months.
•
In the ROS1+ advanced NSCLC population pretreated with one prior TKI and prior platinum-based chemotherapy (EXP-2: n=26), the cORR was 42%, with 1 patient achieving a CR and 10 patients achieving a PR. DOR ranged from 3.6 to 18.3+ months.
•
In the ROS1+ advanced NSCLC population pretreated with two prior TKIs without prior chemotherapy (EXP-3: n=18), the cORR was 28%, with 1 patient achieving a CR and 4 patients achieving a PR. DOR ranged from 1.9+ to 20.3+ months.
•
In the ROS1+ advanced NSCLC population pretreated with one prior TKI without prior chemotherapy (EXP-4: n=56), the cORR was 36%, with 4 patients achieving a CR and 16 patients achieving a PR. The cORR does not include two patients with an uPR who both had tumor regressions of -47% on their last scans, both of whom remained on treatment awaiting their next scans as of the data cutoff date. DOR ranged from 1.9+ to 17.8 months.
•
Across the ROS1+ TKI-pretreated advanced NSCLC population (EXP-2, EXP-3 and EXP-4), 17 patients had an identified ROS1 G2032R solvent front mutation detected, of which the cORR was 59%, with 1 patient achieving a CR and 9 patients achieving a PR. DOR ranged from 1.9+ to 20.3+ months.
•
Repotrectinib was generally well tolerated in a total of 380 patients with a
safety and tolerability profile that was consistent with previously reported
findings. The most commonly reported treatment emergent adverse event was
dizziness, of which 76% of patients who reported dizziness had a maximum
severity of grade 1.
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We discussed the BICR data with the FDA at a pre-new drug application (NDA)
meeting in June 2022 and received positive feedback in July 2022 that the FDA
agreed with our plan to provide data for ROS1+ TKI-naïve and TKI-pretreated
advanced NSCLC patients with at least six months of follow-up from the first
post-baseline scan at the time of NDA submission. We also plan on providing a
detailed update, including intracranial activity, from the ROS1+ advanced NSCLC
cohorts of the TRIDENT-1 study at an upcoming medical conference in the second
half of 2022. We also anticipate reporting additional data from patients with
NTRK+ advanced solid tumors in the second half of 2022. We plan to conduct a
pre-NDA meeting with the FDA in the first quarter of 2023 to discuss topline
BICR results from 40 patients from the NTRK+ TKI-pretreated patient cohort
(EXP-6) and at least 30 patients from the NTRK+ TKI-naïve patient cohort (EXP-5)
with responders having at least six months of follow-up.
In addition to the TRIDENT-1 study, we are also conducting our Phase 1/2 CARE
study of repotrectinib in pediatric and young adult patients with ALK+, ROS1+ or
NTRK+ advanced solid tumors and our Phase 1b/2 TRIDENT-2 study of repotrectinib
in combination with trametinib in KRAS mutant G12D advanced solid tumors.
Elzovantinib (TPX-0022)
Elzovantinib, our MET/SRC/CSF1R inhibitor, is currently being evaluated in our ongoing Phase 1 SHIELD-1 clinical trial, in patients with advanced solid tumors harboring genetic alterations in MET. The FDA has granted elzovantinib orphan drug designation for the treatment of gastric cancer, including gastroesophageal junction adenocarcinoma and fast track designation for the treatment of patients with MET amplified advanced or metastatic gastric cancer or gastroesophageal junction (GEJ) adenocarcinoma after prior chemotherapy. Our Phase 1 SHIELD-1 clinical trial is designed to evaluate the overall safety profile, pharmacokinetics and preliminary efficacy of elzovantinib and includes a dose-finding portion followed by dose expansion in multiple cohorts of MET alterations and tumor types. We have completed enrollment into the 60 mg QD to 60 mg BID intermediate dose level cohort within the dose escalation portion of SHIELD-1. In parallel, we continue to enroll patients in the Phase 1 dose expansion portion of the study at 40 mg QD to 40 mg BID. We anticipate providing a clinical data update from the Phase 1 SHIELD-1 study in the second half of 2022. We also anticipate initiating the planned Phase 2 portion of SHIELD-1 in the second half of 2022 pending feedback from the FDA on data from the intermediate dose level. InOctober 2021 we entered into a clinical trial collaboration agreement with EQRx, Inc. (EQRx) to evaluate elzovantinib in combination with aumolertinib (EQ143), EQRx's drug candidate targeting EGFR, in patients with EGFR mutant MET-amplified advanced NSCLC. Our investigational new drug (IND) submission for our planned Phase 1b/2 SHIELD-2 combination study of elzovantinib and aumolertinib was cleared by the FDA inJanuary 2022 and we initiated the study inJune 2022 . Preclinical data suggest the combination of MET and EGFR inhibition has the potential to increase anti-tumor activity based on complementary mechanisms. It is estimated that 15% to 20% of patients who progress on a first-line EGFR inhibitor develop MET amplification as the basis of acquired resistance. TPX-0046 The Phase 1 dose-finding portion of our Phase 1/2 SWORD-1 clinical trial of our RET inhibitor, TPX-0046, in patients with advanced solid tumors harboring RET genetic alterations is ongoing at sites inNorth America and theAsia-Pacific regions. The trial is designed to enroll TKI-naïve and TKI-pretreated patients with RET-altered non-small-cell lung, thyroid, and other advanced cancers in multiple cohorts to assess safety, tolerability, pharmacokinetics and preliminary clinical activity of TPX-0046, in a Phase 1 dose-finding portion, followed by multiple Phase 1 dose expansion cohorts after determination of the recommended Phase 2 dose. We are continuing to further characterize the pharmacokinetics, safety, and efficacy profile of TPX-0046 before determining the recommended Phase 2 dose.
TPX-0131
Our fourth drug candidate, TPX-0131, is a next-generation ALK inhibitor.
TPX-0131 has been designed with a compact macrocyclic structure and in
preclinical studies has been shown to potently inhibit wildtype ALK and numerous
ALK mutations, in particular the clinically observed G1202R solvent front
mutation, L1196M gatekeeper mutation and G1202R/L1196M compound mutation.
Additionally, preclinical in vivo studies have shown that TPX-0131 has
significant brain tissue penetration after repeat oral dosing supporting the
potential to cross the blood-brain barrier.
We initiated our Phase 1/2 FORGE-1 study of TPX-0131 in patients with locally
advanced or metastatic TKI-pretreated ALK-positive NSCLC in the second quarter
of 2021. The study endpoints include safety and tolerability, determination of
the maximum tolerated dose and/or the recommended Phase 2 dose, and objective
response rate by RECIST 1.1. The dose-finding portion of the
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Phase 1/2 FORGE-1 study is ongoing. We anticipate providing early interim data
from initial patients treated in the dose-finding portion of the FORGE-1 study
in the fourth quarter of 2022 or early 2023.
TPX-4589 (LM-302)
OnMay 4, 2022 , we entered into a license agreement (the LaNova License Agreement) withLaNova Medicines Limited (LaNova) for an exclusive, royalty-bearing license to intellectual property related to LM-302, a clinical stage anti-Claudin18.2 antibody drug conjugate (the LaNova Product), on a worldwide basis excludingGreater China andSouth Korea (the Company Territory). Under the LaNova License Agreement, we have the exclusive right to research, develop, use, register, offer for sale, import and otherwise commercialize the LaNova Product in the Company Territory and non-exclusive rights to manufacture the LaNova Product worldwide in support of activities in the Company Territory. Pursuant to the LaNova License Agreement, we paid LaNova an upfront cash payment of$25.0 million inJune 2022 and may be obligated to pay milestone payments, which include up to$195.0 million in development and regulatory milestones and up to$880.0 million in sales milestones, and tiered royalty payments based on percentages (ranging from the mid-single digits to the mid-teens) of net sales (subject to customary deductions). As part of the LaNova License Agreement, we also obtained the right of first negotiation for an exclusive license to develop, use, manufacture and commercialize other products containing components of the LaNova Product. In addition, we have the option to collaborate with LaNova on up to three additional antibody drug conjugate programs, initiated or proposed by either us or LaNova. LM-302, now designated TPX-4589, is a potentially first-in-class anti-Claudin18.2 ADC that suppresses cell proliferation of gastric and pancreatic cell lines with nanomolar potency in preclinical models. It also has demonstrated efficacy in gastric and pancreatic cancer xenograft models. TPX-4589 is currently in Phase 1 clinical trials in boththe United States andChina , and the FDA has granted TPX-4589 three orphan drug designations for the treatment of pancreatic cancer, for the treatment of gastric cancer, including cancer of the gastroesophageal junction, and for the treatment of cholangiocarcinoma. The Phase 1 clinical trial inthe United States is designed to evaluate the overall safety profile, pharmacokinetics, and preliminary efficacy and immunogenicity of TPX-4589 and includes a dose-finding portion followed by dose expansion in subjects with Claudin18.2+advanced solid tumors who have progressed or are intolerant to standard therapy or for whom standard therapy is not available. We anticipate providing additional guidance on the clinical development plan for TPX-4589 by early 2023, as well as presenting preclinical data at an upcoming medical conference by early 2023.
Business Development and Pipeline Expansion
We will continue to engage in business development efforts to expand our portfolio where we can leverage our deep expertise in drug development and clinical trial execution in oncology. Our focus is to actively explore opportunities for acquisitions, partnerships, collaborations and license agreements for targeted therapy product candidates that would complement our strategic goals and research and development pipeline. We have evaluated a number of preclinical and clinical assets and platforms and continue to actively review opportunities. InJune 2022 , we entered into a five-year strategic collaboration agreement (the MD Anderson Collaboration Agreement) withThe University of Texas M.D. Anderson Cancer Center ("MD Anderson"). Under the terms of the MD Anderson Collaboration Agreement, we will provide funding and support for preclinical and clinical studies to be conducted by MD Anderson in several solid tumors, including non-small cell lung cancers, gastrointestinal malignancies and endocrine cancers (the Studies). The initial focus of the Studies will be repotrectinib, and additional studies will include elzovantinib or TPX-0131. Pursuant to the MD Anderson Collaboration Agreement, we will provide total funding in an amount of$10.0 million for the performance of the Studies, such funding to be provided in increments of$1.0 million on a twice-yearly basis. The Studies will be overseen by a joint steering committee, which will provide technical, scientific, clinical and regulatory guidance, discuss and approve study budgets, and monitor the progress of the Studies.
Discovery Platform
Our approach to the discovery of new and potentially differentiated
small-molecule drug candidates is to use a methodology anchored by our
significant structure-based drug design expertise that exploits innovative
protein-ligand interactions, coupled with a disciplined chemistry approach and
deep enabling biology. We anticipate our internal and external exploration of
oncology candidates will continue to include kinase targets and other oncogenic
signaling proteins and pathways that address high unmet medical need. We
currently have four internal discovery programs targeting aberrant GTPase
signaling known to drive genomically defined cancers with significant unmet
medical need. The most advanced programs target KRAS G12D and the p21 activated
kinase, or "PAK" family. We are targeting the identification of two development
candidates in the second half of 2022 with a goal to achieve at least one new
IND
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--------------------------------------------------------------------------------per year beginning in 2023. We anticipate providing details on our other two GTPase signaling discovery programs in the second half of 2022.
COVID-19 Pandemic
We have experienced disruptions to our business operations as a result of the COVID-19 pandemic. Due to the continued evolving and uncertain global impacts of the COVID-19 pandemic, including the omicron variant and future potential variants, we cannot precisely determine or quantify the impact this pandemic will have on our ongoing business, operations and financial performance. For our ongoing and planned clinical trials, while we anticipate and have experienced some temporary delays or disruptions due to the COVID-19 pandemic, in particular with respect to activation of additional clinical trial sites and patient enrollment, we continue to work closely with our contract research organizations (CROs) and clinical sites as we navigate and seek to mitigate the impact of COVID-19 on our clinical studies and current timelines. Measures we have taken in response to COVID-19, include where feasible, conducting remote clinical trial site activations and data monitoring, enabling patients to have routine tests conducted closer to home, allowing trial sites to evaluate certain patients remotely, in compliance with their local procedures, and direct-to-patient study drug shipping. In addition, we believe our current supply and plans for supply will be sufficient to meet our anticipated clinical development needs for our drug candidates through 2022. However, depending on the length and ultimate impact of the COVID-19 pandemic, and available manufacturing capacity at our suppliers, our suppliers could be adversely impacted, which may result in delays or disruptions in our current or future supply chain. We will continue to assess the duration, scope and severity of the COVID-19 pandemic and the existing and potential impacts on our business, operations and financial performance, and we will continue to work closely with our third-party vendors, CROs, collaborators and other parties in order to seek to advance our drug candidates as quickly as possible, while making the health and safety of our employees and their families, healthcare providers, patients and communities a top priority. Please refer to our Risk Factors in Part II, Item IA of this Quarterly Report for further discussion of risks related to the COVID-19 pandemic.
Liquidity Overview
Since our inception, we have incurred significant operating losses. Our ability to generate product revenue sufficient to achieve profitability will depend heavily on the successful development and eventual commercialization of one or more of our drug candidates. As ofJune 30, 2022 , we had an accumulated deficit of$714.3 million . For the six months endedJune 30, 2022 and for the year endedDecember 31, 2021 , we incurred net losses of approximately$197.5 million and$236.6 million , respectively. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. To date, our operations have been financed primarily through the sale of common stock and convertible preferred stock. AtJune 30, 2022 , we had$818.3 million of cash, cash equivalents and marketable securities. InAugust 2020 , we entered into an Open Market Sale AgreementSM withJefferies LLC (ATM facility) under which we may offer and sell, from time to time, at our sole discretion, up to$250.0 million shares of our common stock. As ofJune 30, 2022 , we had not yet sold any shares of our common stock under the ATM facility. We will not generate revenue from product sales until we successfully complete clinical development and obtain regulatory approval for our drug candidates. If we obtain regulatory approval for any of our drug candidates and do not enter into a commercialization partnership, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, 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. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. The COVID-19 pandemic and ongoing geopolitical events continue to evolve and have already resulted in a significant disruption of global financial markets. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and further disruptions to, and volatility in, the credit and financial markets inthe United States and worldwide resulting from the pandemic or geopolitical actions. If such further disruption occurs, we could experience an inability to access additional capital. If we fail to raise capital or enter into such agreements we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our drug candidates. 23 --------------------------------------------------------------------------------
Components of Our Results of Operations
Revenue
To date, we have not generated any revenue from product sales. If our development efforts for our drug candidates are successful and result in regulatory approval, we may generate revenue in the future from product sales. If we enter into license or collaboration agreements for any of our drug candidates or intellectual property, such as our license agreements with Zai Lab (Shanghai) Co., Ltd. (Zai) that we executed inJuly 2020 (the Zai Repotrectinib Agreement) andJanuary 2021 , which was amended inMarch 2021 (the Zai Elzovantinib Agreement, and together with the Zai Repotrectinib Agreement, the Zai License Agreements), we may generate revenue in the future from payments as a result of such license or collaboration agreements. Under the Zai License Agreements, we recognized$0.1 million and$5.2 million of revenue for the three months endedJune 30, 2022 and 2021, respectively, and$0.5 million and$30.4 million of revenue for the six months endedJune 30, 2022 and 2021, respectively. Unless and until we are able to generate revenue from future product sales, we expect that our revenue, if any, will be derived primarily from the Zai License Agreements, as well as any collaborations or additional license agreements that we may enter into in the future. We cannot provide assurance as to the timing of future milestone or royalty payments or that we will receive any of these payments at all. We cannot predict if, when, or to what extent we will generate revenue from the commercialization and sale of our drug candidates. We may never succeed in obtaining regulatory approval for any of our drug candidates. Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of:
•
employee-related expenses, including salaries, related benefits, travel and stock-based compensation expense for employees engaged in research and development functions;
•
expenses incurred in connection with the preclinical and clinical development of our drug candidates, including expenses incurred under the agreements with the CROs;
•
the cost of consultants and contract manufacturing organizations (CMOs) that manufacture drug products for use in our preclinical studies and clinical trials;
•
facilities, depreciation and other expenses, which include allocated expenses for rent and maintenance of facilities, insurance and supplies; and
•
costs incurred in obtaining technology licenses.
We expense research and development costs to operations as incurred.
Nonrefundable advance payments for services in advance of the performance of the
related research and development activities are recorded as prepaid assets and
recognized as expense in the period when the services are performed. Costs
incurred in obtaining technology licenses are charged to research and
development expenses if the technology licensed has not reached technological
feasibility and has no alternative future use.
Our direct research and development expenses are tracked on a program-by-program
basis and consist primarily of external costs, such as fees paid to consultants,
central laboratories, contractors, CMOs and CROs in connection with our
preclinical and clinical development activities. We allocate indirect expenses,
such as employee salaries, fringe benefits, facilities, travel and other
miscellaneous expenses, based on an estimated percentage of time worked on
programs.
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--------------------------------------------------------------------------------The table below summarizes our research and development expenses incurred by development program for the periods presented (in thousands):
Three Months Ended June 30 ,
Six Months Ended
2022 2021 2022 2021
Research and development expenses
Repotrectinib $ 37,179 $ 24,377 $ 68,234 $ 48,070
Elzovantinib 7,893 7,835 15,290 13,639
TPX-0046 1,592 3,578 3,286 7,340
TPX-0131 3,261 1,634 6,703 4,666
TPX-4589 (a) 25,681 - 25,681 -
Other research programs 11,182 7,226 22,644 12,198
Total research and development
expenses $ 86,788 $ 44,650
(a) Includes a
Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our ongoing and planned clinical and preclinical development activities in the near term and in the future. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our drug candidates.
The successful development of our drug candidates is highly uncertain. This is due to the numerous risks and uncertainties, including the following:
•
successful completion of preclinical studies and clinical trials;
•
the impact of the COVID-19 pandemic and ongoing geopolitical events on our business, operations and financial condition;
•
delays in regulators or institutional review boards authorizing us or our investigators to commence our clinical trials or in our ability to negotiate agreements with clinical trial sites or CROs;
•
the number and location of clinical sites included in the trials;
•
raising additional funds necessary to complete clinical development of our drug candidates;
•
obtaining and maintaining patent, trade secret and other intellectual property protection and regulatory exclusivity for our drug candidates;
•
making arrangements with third-party manufacturers, or establishing manufacturing capabilities, for clinical supplies of our drug candidates;
•
the ability to obtain clearance or approval of companion diagnostic tests, if required, on a timely basis, or at all;
•
the results of our clinical trials;
•
protecting and enforcing our rights in our intellectual property portfolio; and
•
maintaining a continued acceptable safety profile of the products following approval.
A change in the outcome of any of these variables with respect to the development of our drug candidates may significantly impact the costs and timing associated with the development of our drug candidates. We may never succeed in obtaining regulatory approval for any of our drug candidates. Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our drug candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs.
General and Administrative Expenses
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--------------------------------------------------------------------------------General and administrative expenses consist primarily of salaries and employee-related costs, including stock-based compensation expense, for personnel in executive, finance, legal, commercial and other administrative functions. General and administrative expenses also include professional fees for legal, patent, accounting and tax-related services, insurance costs, recruiting costs, travel expenses and facility-related costs.
We anticipate that our general and administrative expenses will continue to increase as a result of transaction costs associated with the pending acquisition by Bristol-Myers Squibb, as well as increased payroll, expanded infrastructure and higher consulting, legal, accounting and investor relations costs, and director and officer insurance premiums associated with being a public company.
Other Income, net
Other income, net consists of interest earned on cash, cash equivalents and our marketable securities.
Critical Accounting Policies, Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles inthe United States of America . The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. We evaluate these estimates and assumptions on an ongoing basis. We base our estimates on historical experience, knowledge of current events and actions we may undertake in the future, and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates and assumptions. There have been no significant changes to our critical accounting policies and use of estimates from our disclosure reported in "Critical Accounting Policies, Significant Judgements and Estimates" in the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 , except as described in Note 2 to the interim unaudited condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.
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 June 30,
2022 2021 Change
Revenue $ 119 $ 5,164 $ (5,045 )
Operating expenses:
Research and development 86,788 44,650 42,138
General and administrative 37,695 17,171 20,524
Total operating expenses 124,483 61,821 62,662
Loss from operations (124,364 ) (56,657 ) (67,707 )
Other income, net 1,276 384 892
Net loss $ (123,088 ) $ (56,273 ) $ (66,815 )
Revenue
Revenue recognized during the three months ended June 30, 2022 was $0.1 million
from the sale of clinical supply to Zai for supporting the Phase 1 clinical
trial for elzovantinib in the Zai Territory. Revenue recognized during the three
months ended June 30, 2021 was $5.2 million , consisting of $5.0 million earned
upon the achievement of development milestones under the Zai Repotrectinib
Agreement and $0.2 million from the sale of clinical supply to Zai for
supporting the TRIDENT-1 Phase 2 clinical trials in the Zai Territory.
Research and Development Expenses
Research and development expenses increased$42.1 million to$86.8 million during the three months endedJune 30, 2022 compared to$44.7 million during the three months endedJune 30, 2021 . The increase was primarily attributable to a$25.0 million 26 -------------------------------------------------------------------------------- charge in the second quarter of 2022 for an upfront payment to LaNova for the in-licensing of its intellectual property that has not yet achieved regulatory approval, increased activities related to the ongoing clinical trials for the Phase 2 registrational portion of TRIDENT-1, discovery efforts and higher personnel-related expenses due to an increase in headcount. We expect that our research and development expenses will continue to increase in future periods with the advancement of our clinical programs and additional future clinical trials and discovery efforts.
General and Administrative Expenses
General and administrative expenses increased$20.5 million to$37.7 million during the three months endedJune 30, 2022 compared to$17.2 million during the three months endedJune 30, 2021 . The increase was primarily attributable to$17.7 million of transaction costs incurred in the second quarter of 2022 in connection with the pending acquisition by Bristol-Myers Squibb, primarily for outside legal and external financial advisory fees, and higher personnel-related expenses as a result of increased employee headcount, facility-related costs and professional fees, including those associated with product launch readiness.
We anticipate that our general and administrative expenses will continue to increase as a result of transaction costs associated with the pending acquisition by Bristol-Myers Squibb, as well as increased payroll, expanded infrastructure and higher consulting, legal, accounting and investor relations costs, and director and officer insurance premiums associated with being a public company.
Other Income, net
Other income, net increased$0.9 million to$1.3 million during the three months endedJune 30, 2022 compared to$0.4 million during the three months endedJune 30,2021 , primarily due to higher overall yields on our marketable securities and money market funds.
Comparison of the Six Months Ended
The following table summarizes our results of operations for the six months
ended
Six Months Ended June 30,
2022 2021 Change
Revenue $ 548 $ 30,369 $ (29,821 )
Operating expenses:
Research and development 141,838 85,913 55,925
General and administrative 58,009 37,162 20,847
Total operating expenses 199,847 123,075 76,772
Loss from operations (199,299 ) (92,706 ) (106,593 )
Other income, net 1,766 929 837
Net loss $ (197,533 ) $ (91,777 ) $ (105,756 )
Revenue
Revenue recognized during the six months ended June 30, 2022 was $0.5 million
from the sale of clinical supply to Zai for supporting the TRIDENT-1 Phase 2
clinical trials and the Phase 1 clinical trial for elzovantinib in the Zai
Territory. Revenue recognized during the six months ended June 30, 2021 was
$30.4 million , consisting of $25.0 million related to an upfront payment
received under the Zai Elzovantinib Agreement, $5.0 million earned upon the
achievement of development milestones under the Zai Repotrectinib Agreement and
$0.4 million from the sale of clinical supply to Zai for supporting the
TRIDENT-1 Phase 2 clinical trials in the Zai Territory. We recognized the
upfront payment as license revenue upon the delivery to Zai of the license and
the associated technical know-how under the Zai Elzovantinib Agreement.
Research and Development Expenses
Research and development expenses increased$55.9 million to$141.8 million during the six months endedJune 30, 2022 compared to$85.9 million during the six months endedJune 30, 2021 . The increase was primarily attributable to a$25.0 million charge in the second quarter of 2022 for an upfront payment to LaNova for the in-licensing of its intellectual property that has not yet achieved regulatory approval, increased activities related to the ongoing clinical trials for the Phase 2 registrational portion of TRIDENT-1, discovery efforts and higher personnel-related expenses due to an increase in headcount. We expect that our research 27 -------------------------------------------------------------------------------- and development expenses will continue to increase in future periods with the advancement of our clinical programs and additional future clinical trials and discovery efforts.
General and Administrative Expenses
General and administrative expenses increased$20.8 million to$58.0 million during the six months endedJune 30, 2022 compared to$37.2 million during the six months endedJune 30, 2021 . The increase was primarily attributable to$17.7 million of transaction costs incurred in the second quarter of 2022 in connection with the pending acquisition by Bristol-Myers Squibb, primarily for outside legal and external financial advisory fees, and higher personnel-related expenses as a result of increased employee headcount, facility-related costs and professional fees, including those associated with product launch readiness, partially offset by a decrease in stock-based compensation expense of$2.2 million . During the six months endedJune 30, 2021 , we recorded a one-time charge of$5.6 million as stock-based compensation expense associated with the resignations of two board members and foreign tax withholding expenses of$1.6 million related to the upfront payment and development milestone payments received from Zai under the Zai License Agreements.
We anticipate that our general and administrative expenses will continue to increase as a result of transaction costs associated with the pending acquisition by Bristol-Myers Squibb, as well as increased payroll, expanded infrastructure and higher consulting, legal, accounting and investor relations costs, and director and officer insurance premiums associated with being a public company.
Other Income, net
Other income, net increased$0.8 million to$1.8 million during the six months endedJune 30, 2022 compared to$0.9 million during the six months endedJune 30,2021 , primarily due to higher overall yields on our marketable securities and money market funds.
Liquidity and Capital Resources
AtJune 30, 2022 , we had$818.3 million of cash, cash equivalents and marketable securities. Based on our current and anticipated level of operations, we believe that our cash, cash equivalents and marketable securities as ofJune 30, 2022 will be sufficient to fund current operations for at least one year from the date that this Quarterly Report is filed with theSEC . Our cash, cash equivalents and marketable securities include money market funds, government agency securities, corporate debt, commercial paper andU.S. treasuries. We maintain established guidelines relating to diversification and maturities of our investments to preserve principal and maintain liquidity. Since inception, our operations have been financed primarily through the sale of common stock and convertible preferred stock. ThroughJune 30, 2022 , we received net proceeds of approximately$1.3 billion from the issuance of common stock and convertible preferred stock and through stock option exercises. InAugust 2020 , we entered into the ATM facility, under which we may offer and sell, from time to time, at our sole discretion, up to$250.0 million shares of our common stock. As ofJune 30, 2022 , we had not yet sold any shares of our common stock under the ATM facility. OnMay 4, 2022 , we entered into the LaNova License Agreement with LaNova. Pursuant to the LaNova License Agreement, we paid LaNova an upfront cash payment of$25.0 million inJune 2022 and may be obligated to pay milestone payments, which include up to$195.0 million in development and regulatory milestones and up to$880.0 million in sales milestones, and tiered royalty payments based on percentages (ranging from the mid-single digits to the mid-teens) of net sales (subject to customary deductions). OnJune 23, 2022 , we entered into the MD Anderson Collaboration Agreement, pursuant to which we will provide total funding in an amount of$10.0 million for the performance of certain preclinical and clinical studies to be conducted by MD Anderson, such funding to be provided in increments of$1.0 million on a twice-yearly basis. As ofJune 30, 2022 , we have not made any funding to MD Anderson.
Since inception, we have primarily devoted our resources to build infrastructure, conduct research and development, including clinical trials, perform business and financial planning, and raise capital. To fund future operations, we will need to raise significant additional capital.
Additionally, we are subject to a variety of specified liquidity and
capitalization restrictions under the Merger Agreement. Unless we obtain
Bristol-Myers Squibb's prior written consent (which consent may not be
unreasonably withheld, delayed or conditioned) and except (i) as required or
expressly contemplated by the Merger Agreement, (ii) as required by applicable
laws or (iii)
28--------------------------------------------------------------------------------
as set forth in the confidential disclosure schedule we delivered to Bristol-Myers Squibb, we may not, among other things and subject to certain exceptions and aggregate limitations, incur additional indebtedness, issue additional shares of our common stock outside of our equity incentive plans, repurchase shares of our common stock, pay dividends, acquire or dispose of material assets or property, amend, modify or enter into material contracts or make certain additional capital expenditures. Without taking into account the planned acquisition by Bristol-Myers Squibb, the amount and timing of future funding requirements will depend on many other factors, including the timing and results of our ongoing development activities, the potential expansion of our current development programs, potential new development programs and related general and administrative support. We may seek to obtain additional financing in the future through equity or debt financings or other sources, such as potential collaboration agreements. We cannot make assurances that anticipated additional financing will be available to us on favorable terms, or at all. The COVID-19 pandemic and ongoing geopolitical events continue to evolve and have already resulted in a significant disruption of global financial markets. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and further disruptions to, and volatility in, the credit and financial markets inthe United States and worldwide resulting from the pandemic or geopolitical actions. If such further disruption occurs, we could experience an inability to access additional capital, which could in the future negatively affect our capacity to fund research and development programs, including discovery research, preclinical and clinical development activities and activities to support commercialization. Although we have previously been successful in obtaining financing through our equity securities offerings, there can be no assurance that we will be able to do so in the future.
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