What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-04 compared with 2022-05-05 · 74 added, 34 removed, 107 unchanged (50% of the section changed)

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We are a clinical-stage biotechnology company leveraging PLK1 inhibition to develop novel therapies across a range of cancers with the greatest unmet medical need.

Our goal is to target tumor vulnerabilities with treatment combinations that overcome disease resistance and improve disease response to standard treatment regimens and to increase overall survival.

Our goal is to target tumor vulnerabilities with treatment combinations that overcome disease resistance, improve disease response to standard treatment regimens and increase overall survival.

We are developing onvansertib, an oral and highly selective PLK1 inhibitor, in combination with standard-of-care chemotherapy and targeted therapeutics.

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- USC Norris Comprehensive Cancer Center, The Mayo Clinic Cancer Centers (Arizona, Minnesota, and Florida), Kansas University Medical Center, Inova Schar Cancer Institute and CARTI Cancer Center.

The primary objective of this trial is to evaluate the Dose-Limiting Toxicities ("DLTs") and maximum tolerated dose ("MTD") or recommended Phase 2 dose ("RP2D") of onvansertib in combination with FOLFIRI and bevacizumab (Phase 1b) and to continue to assess the safety and preliminary efficacy of onvansertib in combination with FOLFIRI and bevacizumab (Phase 2).

The primary objectives of this trial are to evaluate the Dose-Limiting Toxicities ("DLTs"), maximum tolerated dose ("MTD") and recommended Phase 2 dose ("RP2D") of onvansertib in combination with FOLFIRI and bevacizumab (Phase 1b) and to continue to assess the safety and preliminary efficacy of onvansertib in combination with FOLFIRI and bevacizumab (Phase 2).

The scientific rationale for this clinical trial is based on the two key principles of synthetic lethality and synergy, with the objective of demonstrating a proof-of-concept of clinical benefit within this phase1b/2 trial.

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TROV-053 is a Phase 2 open-label multi-center clinical trial of onvansertib in combination with abiraterone acetate and prednisone in patients with mCRPC, which is being conducted at three clinical trial sites - Beth Israel Deaconess Medical Center, Dana-Farber Cancer Institute and Massachusetts General Hospital.

This trial is now closed for enrollment.

The primary objective of this trial is to observe the effects of onvansertib in combination with abiraterone and prednisone on disease control as assessed by Prostate Specific Antigen ("PSA") decline or stabilization after 12 weeks of treatment in patients with mCRPC showing early signs of resistance to abiraterone.

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The combination of onvansertib and abiraterone acetate synergistically increases mitotic arrest and cell death in prostate cancer cells and has demonstrated significantly greater tumor growth inhibition than either drug alone in vivo .

Data as of April 8, 2022, presented at American Association for Cancer Research ("AACR") Annual Meeting provided evidence of the safety and efficacy of onvansertib in combination with abiraterone.

Data presented on April 8, 2022 at American Association for Cancer Research ("AACR") Annual Meeting provided evidence of the safety and efficacy of onvansertib in combination with abiraterone.

Disease control increased with increasing dose density of onvansertib from 29% to 45% of patients achieving PSA stabilization and from 53% to 75% of patients with radiographic stable disease;

Arm A (n=17) – onvansertib 24mg/m 2 days 1-5 in 21-day cycle to Arm C (n=20) – 12mg/m 2 days 1-14 in 21-day cycle.

Median progression-free survival ("mPFS") has increased with increasing onvansertib dose density from 4.1 months in Arm A to 13.2 months to-date in Arm C patients.

Median progression-free survival ("mPFS") increased with increasing onvansertib dose density from 4.1 months in Arm A to 13.2 months as of the data cut-off date in Arm C patients.

Genomic analysis of ctDNA showed a correlation between alterations in two key genes of the PI3K signaling pathway—MTOR and PTEN, which appears to underly increased pathway activity, and sensitivity to onvansertib/abiraterone combination in mCRPC patients with early abiraterone resistance.

The treatment regimen of onvansertib in combination with abiraterone/prednisone has been well tolerated.

Collaborative Relationship with Pfizer

In November 2021, we entered into a collaborative relationship with Pfizer Inc.

as part of the Pfizer Breakthrough Growth Initiative, pursuant to which Pfizer purchased 2.4 million shares of our common stock for gross proceeds of approximately $15.0 million.

In connection with the stock purchase, we and Pfizer entered into an Information Rights Agreement pursuant to which Adam Schayowitz, Ph.D., MBA, Vice President & Medicine Team Group Lead for Breast Cancer, Colorectal Cancer and Melanoma at Pfizer joined our Scientific Advisory Board, and until May 17, 2024 we agreed to provide Pfizer with rights of first access to any preclinical or clinical data and results generated as part of the onvansertib development program at least two business days prior to us providing such data to a third party.

Company Update

On January 11, 2022 we announced the appointment of Tod Smeal, Ph.D., as Chief Scientific Officer and Charles Monahan, R.Ph., as Senior Vice President, Regulatory Affairs.

Our accumulated deficit through March 31, 2022 is $270.8 million.

To date, we have generated minimal revenues and expect to incur additional losses to perform further research and development activities.

Our drug development efforts are in their early stages, and we cannot make estimates of the costs or the time that our development efforts will take to complete, or the timing and amount of revenues related to the sale of our drug candidates.

The risk of completion of any program is high because of the many uncertainties involved in developing new drug candidates to market, including the long duration of clinical testing, the specific performance of proposed products under stringent clinical trial protocols, extended regulatory approval and review cycles, our ability to raise additional capital, the nature and timing of research and development expenses, and competing technologies being developed by organizations with significantly greater resources.

Preclinical Data

On April 8, 2022 we announced the results of preclinical studies evaluating the anti-cancer activity of onvansertib in combination with the PARP inhibitor ("PARPi") olaparib in PARPi-resistant patient-derived xenograft (PDX) ovarian cancer models.

The results were featured in a poster presentation at the AACR Annual Meeting.

Data showed the combination of onvansertib and olaparib providing statistically significant survival benefits compared to treatment with either agent alone in three PDX ovarian cancer models.

Two of the three PDX models studied were cisplatin-

sensitive with a mutated BRCA1 gene, while the third was cisplatin-resistant with wild type BRCA1.

The onvansertib-olaparib combination was also shown to be well tolerated in mice.

Critical Accounting Policies

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There have been no changes to our critical accounting policies since December 31, 2021.

Three Months Ended March 31, 2022 and 2021

Total revenues were $74,000 for the three months ended March 31, 2022 as compared to $72,000 for the prior period.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2022 and 2021

Total revenues were $91,000 for the three months ended June 30, 2022, as compared to $68,000 for the prior period.

Revenues are from our sales-based or usage-based royalties on other intellectual property licenses, unrelated to onvansertib.

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Research and development expenses consisted of the following:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2022 2021 Increase (Decrease)

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Total research and development $ 7,448 $ 4,119 $ 3,329

Research and development expenses increased by $3.9 million for the three months ended March 31, 2022 compared to the same period in 2021.

The overall increase in research and development expenses was primarily due to costs associated with an increase in outside service costs related to chemistry, manufacturing, and controls ("CMC") and pharmacology for the development of our lead drug candidate, onvansertib.

Salaries and staff costs increased primarily due to a higher headcount in the current period, as compared to the prior period.

Research and development expenses increased by $3.3 million for the three months ended June 30, 2022, compared to the same period in 2021.

The overall increase in expenses was primarily related to chemistry, manufacturing, and controls ("CMC") and clinical pharmacology for studies to support the development of our lead drug candidate, onvansertib.

Salaries and staff costs increased primarily due to additional hires in senior management and our clinical operations team.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consisted of the following:

Three Months Ended June 30,

(in thousands) 2022 2021 Increase (Decrease)

Salaries and staff costs $ 792 $ 513 $ 279

Stock-based compensation 929 964 (35)

Outside services and professional fees 673 914 (241)

Facilities and other 692 447 245

Total selling, general and administrative $ 3,086 $ 2,838 $ 248

Selling, general and administrative expenses increased by $0.2 million for the three months ended June 30, 2022, compared to the same period in 2021.

Salaries and staff costs increased due to merit increases and higher headcount.

Facilities and other costs increased due to higher insurance costs and the amending of our operating lease.

The decrease in outside services and professional fees was due to recruiting fees incurred for the recruitment of officers and directors in the prior period.

Net loss and per share amounts were as follows:

Three Months Ended June 30,

(in thousands, except per share amounts) 2022 2021 Increase (Decrease)

Net loss $ (10,443) $ (6,757) $ 3,686

Preferred stock dividend (6) (6) —

Net loss attributable to common shareholders $ (10,449) $ (6,763) $ 3,686

Net loss per common share — basic and diluted $ (0.24) $ (0.17) $ 0.07

Weighted average shares outstanding — basic and diluted 43,306 38,761 4,545

The $3.7 million increase in net loss attributable to common shareholders was primarily the result of an increase of operating expenses for the three months ended June 30, 2022, compared to the same period in the prior year.

The $0.07 decrease in net loss per share was impacted by the increase in basic weighted average shares outstanding resulting primarily from the issuance of approximately 3.8 million shares of common stock and common stock equivalents from July 1, 2021 through June 30, 2022.

Six Months Ended June 30, 2022 and 2021

Total revenues were $165,000 for the six months ended June 30, 2022, as compared to $140,000 for the prior period.

Revenues are from our sales-based or usage-based royalties on other intellectual property licenses, unrelated to onvansertib.

Revenue recognition of the royalty depends on the timing and overall sales activities of the licensees.

Research and Development Expenses

Research and development expenses consisted of the following:

Six Months Ended June 30,

(in thousands) 2022 2021 Increase (Decrease)

Salaries and staff costs $ 2,130 $ 574 $ 1,556

Stock-based compensation 460 112 348

Clinical trials, outside services, and lab supplies 11,419 6,406 5,013

Facilities and other 647 306 341

Total research and development $ 14,656 $ 7,398 $ 7,258

Research and development expenses increased by $7.3 million for the six months ended June 30, 2022, compared to the same period in 2021.

Salaries and staff costs increased primarily due to additional hires in senior management and our clinical operations team.

The increase in stock-based compensation is primarily due to additional stock option grants to employees granted subsequent to the prior period.

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Selling, general and administrative expenses consisted of the following:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2022 2021 Increase (Decrease)

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Total selling, general and administrative $ 7,026 $ 5,073 $ 1,953

Selling, general and administrative expenses increased by $1.7 million for the three months ended March 31, 2022 compared to the same period in 2021.

The significant components of the increase were outside services and stock-based compensation.

The increase in outside services is primarily related to strategic valuation consulting related to our lead drug candidate, onvansertib.

The increase in stock-based compensation is primarily due to additional stock option grants to employees and directors granted subsequent to the prior period.

Selling, general and administrative expenses increased by $2.0 million for the six months ended June 30, 2022, compared to the same period in 2021.

Salaries and staff costs increased due to merit increases and higher headcount.

The increase in stock-based compensation is primarily due to additional stock option grants to employees granted subsequent to the prior period.

Facilities and other costs increased due to higher insurance costs and the amending of our operating lease.

Net loss and per share amounts were as follows:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands, except per share amounts) 2022 2021 Increase (Decrease)

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Weighted average shares outstanding — basic and diluted 43,269 37,967 5,302

The $5.8 million increase in net loss attributable to common shareholders was primarily the result of an increase in operating expenses for the three months ended March 31, 2022 compared to the same period in the prior year.

The $0.11 increase in basic net loss per share was impacted by the increased net loss attributable to common shareholders and the increase in weighted average shares outstanding resulting primarily from the issuance of approximately 5.8 million shares of common stock from April 1, 2021 through March 31, 2022.

The $9.5 million increase in net loss attributable to common shareholders was primarily the result of an increase in operating expenses for the six months ended June 30, 2022, compared to the same period in the prior year.

The $0.19 increase in basic net loss per share was impacted by the increased net loss attributable to common shareholders and the increase in weighted average shares outstanding resulting primarily from the issuance of approximately 3.8 million shares of common stock from July 1, 2021 through June 30, 2022.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used in operating activities for the three months ended March 31, 2022 was $10.2 million, compared to $5.9 million for the three months ended March 31, 2021.

Our use of cash was primarily a result of the net loss of $11.0 million for the three months ended March 31, 2022, adjusted for non-cash items related to stock-based compensation of $1.2 million, amortization of premiums on short-term investments $0.3 million, and release of clinical trial funding commitment of $0.1 million.

Net cash used in operating activities for the six months ended June 30, 2022, was $16.9 million, compared to $10.2 million for the six months ended June 30, 2021.

Our use of cash was primarily a result of the net loss of $21.4 million for the six months ended June 30, 2022, adjusted for non-cash items related to stock-based compensation of $2.2 million, amortization of premiums on short-term investments of $0.6 million, and release of clinical trial funding commitment of $0.1 million.

The net change in our operating assets and liabilities was $1.5 million increasing cash used in operations.

At our current and anticipated level of operating loss, we expect to continue to incur an operating cash outflow for the next several years.

Net cash provided by investing activities was $18.4 million primarily related to net purchases of marketable securities during the three months ended March 31, 2022, compared to net cash used in investing activities of $111.7 million for net purchases of marketable securities during the same period in 2021.

Net cash provided in financing activities was $0.0 million during the three months ended March 31, 2022, compared to $1.3 million of proceeds from warrant exercises for the same period in 2021.

As of March 31, 2022, and December 31, 2021, we had working capital of $129.1 million and $139.6 million, respectively.

Net cash provided by investing activities was $26.0 million primarily related to sales and maturities in excess of purchases of marketable securities during the six months ended June 30, 2022, compared to net cash used in investing activities of $130.7 million for net purchases of marketable securities during the same period in 2021.

Net cash provided in financing activities was $0 during the six months ended June 30, 2022, compared to $20.5 million of proceeds from the sale of common stock and proceeds from warrant exercises for the same period in 2021.

As of June 30, 2022, and December 31, 2021, we had working capital of $118.9 million and $139.6 million, respectively.

We have incurred net losses since our inception and have negative operating cash flows.

As of March 31, 2022, we had $129.4 million in cash, cash equivalents and short-term investments and we believe we have sufficient cash to meet our funding requirements for at least the next 12 months following the issuance date of this Quarterly Report on Form 10-Q.

As of June 30, 2022, we had $122.0 million in cash, cash equivalents and short-term investments and we believe we have sufficient cash to meet our funding requirements for at least the next 12 months following the issuance date of this Quarterly Report on Form 10-Q.

For the foreseeable future, we expect to continue to incur losses and require additional capital to further advance our clinical trial programs and support our other operations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis