What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-10 compared with 2022-11-08 · 59 added, 86 removed, 136 unchanged (52% of the section changed)

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As used below, the words “we,” “us” and “our” may refer to Nuvectis Pharma, Inc.

We are a biopharmaceutical company focused on the development of novel targeted therapies for the treatment of cancer.

Our approach translates key scientific insights relating to oncogenic drivers and cancer addiction pathways into a clinical development strategy of potent and selective anticancer drug candidates.

We are a biopharmaceutical company focused on the development of innovative precision medicines for the treatment of serious conditions of unmet medical need in oncology.

We seek to develop drug candidates in the precision medicine space, and our processes for selection and clinical development of drug candidates is based on scientific insights into cancer-promoting factors, as well as on our understanding of the clinical landscape and regulatory requirements.

NXP800 (HSF1-Pathway Inhibitor)

We have licensed exclusive world-wide commercial rights to NXP800, a novel Heat Shock Factor 1 (“HSF1”) pathway inhibitor, which was discovered at the Institute of Cancer Research (“ICR”) in London, England.

Cancer cells actively exploit HSF1 to overcome diverse stresses and promote biological activities crucial for their survival, progression, immune evasion, and metastasis.

We have licensed exclusive world-wide development and commercial rights to NXP800, a novel Heat Shock Factor 1 (“HSF1”) pathway inhibitor, which was discovered at the Institute of Cancer Research (“ICR”) in London, England.

In preclinical studies, treatment with NXP800 inhibited tumor growth in xenografts models of human ovarian and gastric cancers, in which, a genetic mutation in the AT-rich interactive domain-containing protein 1A (“ARID1a”) gene was present, potentially rendering ARID1a a biomarker for treatment sensitivity.

Based on this work, we plan to clinically investigate NXP800 in Ovarian Clear Cell Carcinoma (“OCCC”) and endometrioid carcinoma, and to investigate the utility of ARID1a deficiency as a patient selection marker.

The genetic screening for the ARID1a mutation is a standard part of the commercially available screening panels being utilized in the clinic for cancer patients.

Based on this work, we have begun to clinically investigate NXP800 in ARID1a-mutated ovarian carcinoma, a type of cancer which is primarily comprised of two histologies, Ovarian Clear Cell Carcinoma (“OCCC”) and ovarian endometrioid carcinoma (“OEC”), and to investigate the utility of ARID1a deficiency as a patient selection marker in additional tumor types.

The genetic screening for the ARID1a mutation is performed using commercially available next generation sequencing-based in vitro diagnostic test, which is routinely utilized in the clinic for cancer patients.

The Phase 1 study was initiated in December 2021 and is comprised of two parts:

dose-escalation (Phase 1a) to be followed by an expansion phase (Phase 1b).

In the Phase 1a, the safety and tolerability of NXP800 is being evaluated in patients with advanced solid tumors to identify a dose and dosing schedule for the Phase 1b.

In the Phase 1b, the safety and preliminary anti-tumor activity of NXP800 will be evaluated, initially in patients with OCCC and endometrioid carcinoma and possibly in patients with other types of solid tumors such as gastric cancer.

In June 2022, the U.S.

Food and Drug Administration (the “FDA”) cleared the Company's Investigational New Drug Application (“IND”) for NXP800, which includes the Phase 1 clinical trial protocol.

dose-escalation (Phase 1a), followed by an expansion phase (Phase 1b).

In Phase 1a, the safety and tolerability of NXP800 is being evaluated in patients with advanced solid tumors to identify a dose and dosing schedule for Phase 1b.

The Phase 1b portion of the study, which was initiated in April 2023, will evaluate the safety and preliminary anti-tumor activity of NXP800 in patients with platinum-resistant, ARID1a-mutated ovarian carcinoma.

In June 2022, the Investigational New Drug Application (“IND”) for NXP800, which was previously submitted to the U.S.

Food and Drug Administration (the “FDA”), was cleared, which included the Phase 1 clinical trial protocol.

Additional preclinical studies are being conducted to identify development opportunities for NXP800 in additional solid tumor types.

In December 2022, we announced that the FDA granted Fast Track Designation status to the development program of NXP800 for the treatment of platinum-resistant, ARID1a-mutated ovarian carcinoma.

NXP900 (SRC/YES1 Kinase Inhibitor)

NXP900 is a preclinical-stage drug candidate designed to preferentially inhibit the Proto-oncogene c-Src (“SRC”) and YES1 kinases.

NXP900 is a SRC Family Kinase (“SFK”) inhibitor that potently inhibits the proto-oncogenes c-Src (“SRC”) and YES1 kinases.

NXP900 was discovered at the University of Edinburgh, Scotland.

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YES1 gene amplification has been reported to be implicated in several tumors including lung, head and neck, bladder and esophageal cancers.

Furthermore, it has been found that YES1 gene amplification is a key mechanism of resistance to Epidermal Growth Factor Receptor (“EGFR”) or (Human Epidermal Growth Factor Receptor 2 (“HER2”) and A1k inhibitors.

In addition, YES1 directly phosphorylates and activates the Yes-associated protein, the main effector of the

Hippo pathway, which has been identified as a promoter of drug resistance, cancer progression, and metastasis in several cancer types, including squamous cell, mesothelioma and papillary kidney cancers.

In vivo, treatment with NXP900 inhibited primary and metastatic tumor growth in xenograft models of breast, cervical, esophageal, head and neck and medulloblastoma cancers, and demonstrated on-target pharmacodynamic effects.

A recent, peer reviewed study published in Nature Communication (not sponsored by the Company) demonstrated that NXP900 is able to re-sensitize resistant non-small cell lung cancer (“NSCLC”) cells to osimertinib (Tagrisso®), the leading EFGR inhibitor used for the treatment of EGFR mutation-positive NSCLC, when used in combination with Tagrisso®.

Preclinically, NXP900 demonstrated potent inhibition of SRC and YES1 kinases and substantial growth inhibition of primary tumors and bone metastases in triple negative breast cancer (“TNBC”), and group IV Medulloblastoma animal models.

Of note, in the animal models tested tumor growth inhibition was associated with substantial improvement of median survival.

We plan to initially develop NXP900 in solid tumors where SRC and/or YES1 are implicated.

We anticipate submitting an IND or an equivalent submission with a foreign agency in early 2023.

We have completed the IND enabling preclinical studies and the IND for NXP900 is currently pending.

Since our inception in 2020, we have devoted all of our efforts and financial resources to organizing and staffing our company, business planning, raising capital, acquiring product candidates and securing related intellectual property rights and conducting research and development activities.

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Results of Operations

From our inception on July 27, 2020, through September 30, 2022, we did not generate any revenue.

Our main activities through September 30, 2022 have been organizational and capital raising activities and the completion of the in-license agreements for our two drug candidates, NXP800 and NXP900, our Clinical Trial Application by the Medicines and Healthcare Regulatory Agency, and preparation for the Phase 1a clinical trial for NXP800, which commenced in December 2021, and beginning our IND-enabling studies for NXP900, which commenced in late 2021.

From our inception on July 27, 2020, through March 31, 2023, we did not generate any revenue.

Our main activities through March 31, 2023 have been organizational and capital raising activities, the completion of the in-license agreements for our two drug candidates, NXP800 and NXP900, our Clinical Trial Application by the Medicines and Healthcare Regulatory Agency, preparation for the Phase 1a and Phase 1b clinical trials for NXP800, which commenced in December 2021 and April 2023, respectively, and beginning our IND-enabling studies for NXP900, which commenced in late 2021.

Additionally, we completed our initial public offering in February 2022 and a private placement offering in July 2022.

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We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research and development activities.

The following table summarizes our results of operations expenses for the three months ended September 30, 2022:

The following table summarizes our results of operations expenses for the three months ended March 31, 2023 and 2022:

(in thousands)

Three Months Ended September 30

Three Months Ended March 31

OPERATING EXPENSES:

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Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended September 30, 2022:

(in thousands)

For the three months ended September 30

Clinical Expense

Employee Compensation and Benefits

Manufacturing

Professional services and other

Total research and development expenses

Research and development expenses increased by $0.4 million or 9% during the three months ended September 30, 2022 compared to the same period in 2021.

The increase in research and development expense was primarily driven by $1.4 million in employee compensation which included a one-time bonus to the three founders totaling $0.6 million which became payable on July 29, 2022 and $0.3 million in non-cash employee stock compensation, $0.4 million increase in clinical trial expenses, $0.2 million in manufacturing expenses associated with the NXP800 and NXP900 programs partially offset by $1.7 million decrease in licensing expenses associated with the one-time payment to UoE in 2021 for NXP900.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended September 30, 2022:

The following table summarizes our research and development expenses for the three months ended March 31, 2023 and 2022:

(in thousands)

For the three months ended September 30

Professional and consulting services

For the three months ended March 31

Employee Compensation and Benefits

Insurance and Other

Total general and administrative expenses

General and administrative expenses increased by $0.9 million or 177% during the three months ended September 30, 2022 compared to the same period in 2021.

This increase was primarily driven by the $0.5 million increase in employee compensation which included a one-time bonus to the three founders totaling $0.2 million which became payable on July 29, 2022, $0.2 in employee stock compensation, $0.4 million increase in D&O insurance and other expenses associated with the IPO.

As a result of the foregoing, our loss from operations for the three months ended September 30, 2022 increased $1.2 million or 26%, compared to the same period in 2021, primarily driven by one-time clinical trial expenses, milestone and license fee payments.

The following table summarizes our results of operations expenses for the nine months ended September 30, 2022:

(in thousands)

Nine Months Ended September 30

OPERATING EXPENSES:

Research and Development

General and Administrative

OPERATING LOSS

Finance Income

Research and Development Expenses

The following table summarizes our research and development expenses for the nine months ended September 30, 2022:

(in thousands)

For the nine months ended September 30

Clinical Expense

Employee Compensation and Benefits

Manufacturing

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Total research and development expenses

Research and development expenses increased by $0.4 million, or 5%, during the nine months ended September 30, 2022 compared to the same period in 2021.

The increase in research and development expense during the nine months ended September 30, 2022 was primarily driven by, $2.0 million increase in clinical expenses paid out in connection with our product candidates NXP800 and NXP900, $2.0 million in employee compensation and benefits including $0.6 million in stock based compensation, $0.9 million in manufacturing expenses mostly associated with our product NXP800 and $0.3 million in professional services and other expenses associated with the company’s drug product programs, partially offset by a $4.8 million decrease in license fees paid during 2021 to CRT for NXP800 and UoE for NXP900 net of fees owed to the UoE associated with the company’s 2022 IPO, 2022 private placement, and the UoE License agreement and payments to CRT for patient enrollment milestones.

Research and development expenses increased by $0.6 million, during the three months ended March 31, 2023 compared to the same period in 2022.

The increase in research and development expense during the three months ended March 31, 2023 was primarily driven by a $0.9 million increase in employee compensation and benefits including $0.4 million in stock based compensation, $0.2 million in clinical expenses paid out in connection with our product candidates NXP800 and NXP900, $0.1 million in manufacturing expenses including $0.2 million associated with one-time expenses associated with our process development of NXP900, partially offset by a $0.4 million decrease in license fees paid during 2022 to UoE for NXP900 net of fees owed to the UoE associated with our 2022 IPO and $0.1 million in professional services and other expenses associated with our drug product programs.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the nine months ended September 30, 2022:

The following table summarizes our general and administrative expenses for the three months ended March 31, 2023 and 2022:

(in thousands)

For the nine months ended September 30

For the three months ended March 31

Professional and consulting services

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Total general and administrative expenses

General and administrative expenses increased by $1.4 million, or 63%, during the nine months ended September 30, 2022 compared to the same period in 2021.

The increase in general and administrative expenses for the nine months ended September 30, 2022, was primarily driven by $1.0 million increase in D&O insurance associated with the IPO, $0.7 million in employee compensation including $0.3 million in stock compensation expense offset by a decrease of $0.3 million in professional and consulting fees paid to third-party providers.

As a result of the foregoing, our loss from operations for the nine months ended September 30, 2022, increased $1.8 million or 17%, compared to the same period in 2021 primarily driven by one time clinical trial expenses, milestone and license fee payments.

General and administrative expenses increased by $0.6 million, during the three months ended March 31, 2023 compared to the same period in 2022.

The increase in general and administrative expenses for the three months ended March 31, 2023, was primarily driven by $0.3 million in employee compensation including $0.2 million in stock compensation expense, an increase of $0.2 million in professional and consulting fees paid to third-party providers including $0.4 million in stock compensation expense and $0.1 million in insurance and other due to public company expenses.

As a result of the foregoing, our loss from operations for the three months ended March 31, 2023, increased $1.1 million, compared to the same period in 2022 primarily driven by employee compensation and benefits, clinical trial expenses, and manufacturing expenses.

Liquidity and Capital Resources

As of September 30, 2022, we had $23.6 million of cash and cash equivalents.

For the three months ended September 30, 2022, and 2021, we had net losses of $5.9 million and $4.7 million, respectively.

For the nine months ended September 30, 2022, and 2021, we had net losses of $12.4 million and $10.6 million, respectively.

As of September 30, 2022, we had an accumulated deficit of $25.3 million.

On February 4, 2022, we entered into an underwriting agreement with H.C.

Wainwright & Co.

(the “Underwriter”), as sole book-running manager, in connection with our initial public offering of common stock (the “IPO”).

On February 4, 2022, we announced the pricing of our IPO of 3,200,000 shares of common stock for a price of $5.00 per share, less certain underwriting discounts and commissions.

As part of the UoE license agreement, we are required to pay UoE 2.5% of the gross amount of each of the Company’s future fund raisings up to a cumulative total of $3.0 million.

Pursuant to the IPO, the Company paid UoE $0.4 million associated with this fundraising.

As of March 31, 2023, we had $15.5 million of cash and cash equivalents.

For the three months ended March 31, 2023, and 2022, we had net losses of $4.0 million and $2.9 million, respectively.

As of March 31, 2023, we had an accumulated deficit of $36 million.

On February 4, 2022, we announced the pricing of our initial public offering of common stock (the “IPO”) of 3,200,000 shares of common stock for a price of $5.00 per share, less certain underwriting discounts and commissions.

As part of the UoE license agreement, we are required to pay UoE 2.5% of the gross amount of each of our future fund raisings up to a cumulative total of $3.0 million.

Pursuant to the IPO, we paid UoE $0.4 million associated with this fundraising.

The IPO closed on February 8, 2022, with gross proceeds of $16.0 million, before deducting underwriting discounts and expenses (for net proceeds of $12.6 million).

In addition, on July 29, 2022, we completed a private placement in which we received gross proceeds of $15.9 million before deducting fees and expenses (for net proceeds of $14.2 million) excluding payments required by the Company’s license agreements.

We believe that the proceeds from our IPO and private placement will enable us to fund our operating expenses and capital expenditures through at least the next 12 months from the issuance of our financial statements.

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Our future viability in the long term is dependent on our ability to raise additional capital to finance our operations.

On March 17, 2023, we filed a shelf registration statement on Form S-3 (the “Registration Statement”).

Pursuant to the Registration Statement, we may offer and sell securities having an aggregate public offering price of up to $150.0 million.

In connection with the filing of the Registration Statement, we also entered into a sales agreement with H.

Wainwright & Co.

(the “Sales Agent”), pursuant to which we may issue and sell shares of our common stock for an aggregate offering price of up to $40.0 million under an at-the-market offering program (the “ATM”), which is included in the $150.0 million of securities that may be offered pursuant to the Registration Statement.

Pursuant to the ATM, we will pay the Sales Agent a commission rate of up to 3.0% of the gross proceeds from the sale of any shares of our common stock.

We are not obligated to make any sales of shares of our common stock under the ATM.

We have not sold any shares of our common stock under the ATM as of March 31, 2023.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our current or future product candidates, including payments of milestones and sponsored research commitments associated with our license agreements for NXP800 and NXP900.

In addition, now that we have closed our IPO, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, and other expenses that we did not incur as a private company.

In addition, following our IPO, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, and other expenses that we did not incur as a private company.

The timing and amount of our operating expenditures will depend largely on our ability to:

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We anticipate that we will require additional capital as we seek regulatory approval of our product candidates and if we choose to pursue in-licenses or acquisitions of other product candidates.

If we receive regulatory approval for our other future product candidates, we

expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize.

If we receive regulatory approval for our other future product candidates, we expect to incur significant commercialization expenses related to product manufacturing, sales, marketing and distribution, depending on where we choose to commercialize.

Because of the numerous risks and uncertainties associated with research, development and commercialization of our product candidates, we are unable to estimate the exact amount of our working capital requirements.

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● the costs, timing and outcome of regulatory review of our current or future product candidates;

the costs, timing and ability to manufacture our current or future product candidates to supply our clinical and preclinical development efforts and our clinical trials;

● the costs, timing and ability to manufacture our current or future product candidates to supply our preclinical development efforts and our clinical trials;

● the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our current or future product candidates for which we receive marketing approval;

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(in thousands)

For the nine months ended September 30

For the three months ended March 31

Net cash used in operating activities

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Operating Activities

During the nine months ended September 30, 2022, $10.0 million of cash was used in operating activities.

During the three months ended March 31, 2023, $4.8 million of cash was used in operating activities.

This was primarily attributable to our net loss of $4.0 million, partially offset by non-cash charges of $1.4 million.

The change in our operating assets and liabilities was primarily due to an increase of $1.0 million in prepaid and other assets, which was primarily due to $1.1 million payment for our director and officer insurance, partially offset by $2.3 million increase in accounts payable and accrued expense, due to growth in our business, the advancement of our research programs, and the timing of vendor invoicing and payments.

During the nine months ended September 30, 2021, $8.4 million of cash was used in operating activities.

The change in our operating assets and liabilities was primarily due to $0.7 million payment of employee compensation and benefits, $0.5 million payment for our director and officer insurance of deferred offering costs, and $0.5 million payments related to public company operations.

During the three months ended March 31, 2022, $3.0 million of cash was used in operating activities.

This was primarily attributable to our net loss of $2.9 million, partially offset by non-cash charges of $0.2 million.

The change in our operating assets and liabilities was primarily due to an increase of $0.5 million in accounts payable and accrued expense, due to growth in our business, the advancement of our research programs, and the timing of vendor invoicing and payments.

The change in our operating assets and liabilities was primarily due to an increase of $0.8 million in prepaid and other assets, which was primarily due to $1.1 million payment for our director and officer insurance, partially offset by $0.5 million increase in accounts payable and accrued expense, due to growth in our business, the advancement of our research programs, and the timing of vendor invoicing and payments.

Financing activities

During the nine months ended September 30, 2022, net cash provided by financing activities was $27.9 million, consisting primarily of proceeds from the sale of our common stock and private placement, offset by $2.6 million of commission and deferred offering costs paid and $1.4 million in private placement costs.

During the nine months ended September 30, 2021, net cash provided by financing activities was $15.2 million, consisting of proceeds from the sale of our redeemable convertible preferred shares.

During the three months ended March 31, 2023, net cash provided by financing activities was $0.3 million, consisting primarily of $0.7 million proceeds from the exercise of warrants associated with our IPO and private placement, offset by $0.4 million of deferred offering costs paid.

During the three months ended March 31, 2022, net cash provided by financing activities was $14.0 million (gross proceeds $16.0 million), consisting primarily of proceeds from the sale of our common stock, offset by $2.0 million of commission and deferred offering costs paid.

Contractual Obligations and Other Commitments

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Pursuant to the NXP800 License Agreement, we are required to make payments to the ICR for certain development and regulatory milestones.

As of September 30, 2022, we were obligated to pay up to $23.0 million in milestone payments to the ICR related to pre-approval milestones, up to $178 million (in addition to the $23.0 million) in regulatory and commercial sales milestones, and mid-single digit to 10% royalties on a tiered basis on net sales, unless development ceases.

As of March 31, 2023, we were obligated to pay up to $22.0 million in milestone payments to the ICR related to pre-approval milestones, up to $178 million (in addition to the $22.0 million) in regulatory and commercial sales milestones, and mid-single digit to 10% royalties on a tiered basis on net sales, unless development ceases.

Additionally, the Company originally agreed to provide the ICR with up to an additional $0.5 million in research and development.

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Pursuant to the NXP900 License Agreement, we are required to make payments to the UoE for certain development and regulatory milestones.

As of September 30, 2022, we were obligated to make up to $46.0 million in milestone payments to the UoE related to pre-approval milestones, including $0.5 million on the first anniversary of the agreement which the Company accrued for as of September 30, 2022, up to $279.50 million in regulatory and commercial sales milestones, mid-single digit to 8% royalties on a tiered basis on net sales and 2.5% of the gross amount of each of the Company’s future fund raising up to a cumulative total of $3.0 million, unless

development ceases.

Additionally, the Company will provide UoE with up to an additional $754,000 in research and development support.

As of March 31, 2023, we were obligated to make up to $45.5 million in milestone payments to the UoE related to pre-approval milestones, including $0.5 million on the first anniversary of the agreement which we accrued for as of March 31, 2023, up to $279.6 million in regulatory and commercial sales milestones, mid-single digit to 8% royalties on a tiered basis on net sales and 2.5%

of the gross amount of each of our future fund raising up to a cumulative total of $3.0 million, unless development ceases.

Additionally, we will provide UoE with up to an additional $754,000 in research and development support.

We do not currently have any long-term leases.

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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