Olema Pharmaceuticals, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and related notes that are included elsewhere in this Quarterly Report on Form 10‑Q and the audited financial statements and related notes that are included in our Annual Report on Form 10‑K for the fiscal year ended December 31, 2023, filed with the U.S. Securities and Exchange Commission, or the SEC, on March 11, 2024, or our Annual Report on Form 10‑K. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A — “Risk Factors,” and elsewhere in this report. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. We caution investors that our business and financial performance are subject to substantial risks and uncertainties. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject, and these statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. Overview We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of next generation targeted therapies for women’s cancers. We are advancing our pipeline of novel therapies by leveraging our deep understanding of endocrine-driven cancers, nuclear receptors, and mechanisms of acquired resistance. Our lead product candidate, palazestrant (OP-1250), is a novel, orally-available small molecule with dual activity as both a complete estrogen receptor, or ER, antagonist, or CERAN, and selective ER degrader, or SERD, currently being investigated in patients with recurrent, locally advanced or metastatic ER-positive, or ER+, human epidermal growth factor receptor 2-negative, or HER2-, breast cancer. In preclinical models, palazestrant binds and completely blocks ER-driven transcriptional activity in both wild-type and mutant forms of metastatic ER+ breast cancer including activity in central nervous system, or CNS, metastases models. In clinical studies across more than 400 patients, palazestrant has demonstrated strong anti-tumor activity, attractive pharmacokinetics and prolonged drug exposure, favorable tolerability, and combinability with CDK4/6 inhibitors with no significant drug-drug interaction. Palazestrant is being evaluated as a single agent in an ongoing Phase 3 clinical trial, OPERA-01, and in Phase 1/2 combination studies with a CDK4/6 inhibitor (palbociclib or ribociclib), a phosphatidylinositol 3 kinase alpha, or PI3Ka, inhibitor (alpelisib), and a Phase 1b/2 combination study with an mTOR inhibitor (everolimus). We reported positive Phase 2 clinical results for palazestrant as a monotherapy in October 2023 at the European Society for Medical Oncology, or ESMO, Congress 2023, which demonstrated compelling progression-free survival, or PFS, a favorable tolerability profile and attractive pharmacokinetics in a heavily pretreated patient population. These results validated the potential opportunity for palazestrant as a monotherapy agent in later lines of treatment for metastatic breast cancer, and in November 2023 we initiated 25 Table of Contents OPERA-01, our pivotal Phase 3 second-, third-line monotherapy clinical trial. We anticipate the top-line results from the OPERA-01 trial in 2026. We are investigating palazestrant in combination with CDK4/6 inhibitors, palbociclib and ribociclib, a PI3Ka inhibitor, alpelisib, and an mTOR inhibitor, everolimus. In October 2024, at the 2024 EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics (ENA 2024), we presented pre-clinical posters showing that palazestrant demonstrates combinability and enhanced tumor suppression with both everolimus and capivasertib, a pan-AKT inhibitor. We presented interim results from the Phase 2 portion of the palazestrant-ribociclib combination clinical study at the ESMO Breast Cancer Annual Congress 2024 in May 2024 in Berlin, Germany. As of the data cut-off date of March 13, 2024, the combination of the palazestrant recommended Phase 2 dose, or RP2D, of 120 mg in combination with the full U.S. Food and Drug Administration, or FDA-approved label dose of 600 mg of ribociclib was well tolerated with no new safety signals or enhancement of toxicity and palazestrant did not affect ribociclib drug exposure while ribociclib had no clinically meaningful effect on palazestrant drug exposure. Furthermore, the results for the maturing dataset showed anti-tumor activity and prolonged disease stabilization, and a clinical benefit rate, or CBR, of 85% across 13 CBR-eligible patients. We expect the data from the Phase 2 palazestrant-ribociclib combination clinical study will enable us to prepare to initiate a pivotal Phase 3 first-line clinical trial of palazestrant in combination with ribociclib. We anticipate providing updated results from the Phase 2 clinical study at a future medical meeting. We also reported interim results of our ongoing Phase 2 dose expansion clinical studies of palazestrant in combination with palbociclib at the 2023 San Antonio Breast Cancer Symposium in December 2023. The interim results demonstrated no significant drug-drug interaction, no dose-limiting toxicities, and a tolerability profile consistent with the FDA-approved labels of palbociclib plus an endocrine therapy. The study is being conducted at the RP2D for palazestrant combined with the full FDA-approved label dose of palbociclib 125 mg. In October 2023, we announced the expansion of our clinical collaboration with Novartis Institutes for BioMedical Research, Inc., or Novartis, increasing the size of the ongoing Phase 1/2 clinical study testing palazestrant in combination with ribociclib to approximately 60 patients, and in March 2024, we further increased the size of the ongoing Phase 1/2 clinical study testing palazestrant in combination with ribociclib by an additional 15 patients exploring 90 mg of palazestrant in combination with 600 mg of ribociclib. We also initiated our Phase 1b/2 clinical study of palazestrant in combination with an mTOR inhibitor, everolimus, in the third quarter of 2024. In July 2022, we were granted Fast Track designation from the FDA for palazestrant for patients with ER+/HER2- metastatic breast cancer that has progressed following one or more lines of endocrine therapy with at least one line given in combination with a CDK4/6 inhibitor. In addition, in October 2023 we presented new preclinical data regarding the discovery of novel compounds targeting KAT6, an epigenetic target that is dysregulated in breast and other cancers. In January 2024, we nominated a development candidate for this program, OP-3136. In October 2024, we presented new pre-clinical data at ENA 2024 on the combination of OP-3136 with endocrine therapy, including palazestrant, and a CDK4/6 inhibitor, ribociclib. We have completed Investigational New Drug, or IND, enabling studies for OP-3136, and we expect to file the IND application with the FDA in late 2024 and advance into clinical development in early 2025. In non-clinical xenograft models, OP-3136 caused dose-dependent tumor growth inhibition and tumor regression comparable to or better than a positive-control patented KAT6 inhibitor and demonstrated synergy in combination with CDK4/6 inhibitors or palazestrant. We are advancing the development of this program in collaboration with Aurigene Oncology, or Aurigene. On October 17, 2024, we signed an out-license of our de-prioritized TRPM4 targeted research program to Black Shadow Therapeutics LLC in exchange for potential single-digit royalties on world-wide net sales should a product be approved by regulatory authorities. Since our inception, we have devoted substantially all of our resources to organizing and staffing our company, research and development activities, business planning, raising capital, establishing and maintaining our intellectual property portfolio, conducting non-clinical studies and clinical trials and providing general and administrative support for these operations. 26 Table of Contents We do not have any product candidates approved for commercial sale, and we have not generated any revenue from product sales. Our ability to generate product revenue sufficient to achieve profitability, if ever, will depend on the successful development and eventual commercialization of one or more of our product candidates which we expect, if it ever occurs, will take a number of years. We also do not own or operate, and currently have no plans to establish, any manufacturing facilities. We rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for non-clinical and clinical testing, as well as for commercial manufacturing if any of our product candidates obtain marketing approval. We believe that this strategy allows us to maintain a more efficient infrastructure by eliminating the need for us to invest in our own manufacturing facilities, equipment and personnel while also enabling us to focus our expertise and resources on the development of our product candidates. We have incurred significant operating losses since the commencement of our operations. Our net losses were $34.6 million and $21.5 million for the three months ended September 30, 2024 and 2023, respectively, and $95.9 million and $69.9 million for the nine months ended September 30, 2024 and 2023, respectively. We expect to incur significant and increasing losses for the foreseeable future as we continue to advance our product candidates, make potential milestone payments to our licensors, and as we continue to operate as a public company. Our net losses may fluctuate significantly from period to period, depending on the timing of expenditures on our research and development activities. As of September 30, 2024, we had an accumulated deficit of $401.5 million. Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures and general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and other current liabilities. We expect to continue to incur net operating losses for at least the next several years, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase. We expect our expenses and capital requirements will increase significantly in connection with our ongoing activities as we: • continue our ongoing and planned research and development of our lead product candidate, palazestrant, for the treatment of ER+ positive breast cancer; • initiate non-clinical studies and clinical trials for OP-3136 and any additional product candidates that we may pursue in the future; • seek to discover and develop additional product candidates and further expand our clinical product pipeline; • seek regulatory approvals for any product candidates that successfully complete clinical trials; • continue to scale up external manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for clinical trials and potential commercialization; • establish a sales, marketing and distribution infrastructure to commercialize any approved product candidates and related additional commercial manufacturing costs; • develop, maintain, expand, protect and enforce our intellectual property portfolio, including patents, trade secrets and know how; • acquire or in-license other product candidates and technologies; • attract, hire and retain additional clinical, scientific, quality control, and manufacturing management and administrative personnel; • add clinical, operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; 27 Table of Contents • expand our operations in the United States and to other geographies; and • incur additional legal, accounting, investor relations and other expenses associated with operating as a public company. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, potential milestone payments to our licensors, and our expenditures on other research and development activities. We will require substantial additional funding to develop our product candidates and support our continuing operations beyond our current operating plans. Until such time that we can generate significant revenue from product sales or other sources, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, which could include income from collaborations, strategic partnerships or marketing, distribution, licensing or other strategic arrangements with third parties, or from grants. We may be unable to raise additional funds or to enter into such agreements or arrangements on favorable terms, or at all. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and volatility in, the credit and financial markets in the United States and worldwide resulting from geopolitical and macroeconomic conditions. Our failure to obtain sufficient funds on acceptable terms when needed could have a material adverse effect on our business, results of operations or financial condition, including requiring us to have to delay, reduce or eliminate our product development or future commercialization efforts. Insufficient liquidity may also require us to relinquish rights to product candidates at an earlier stage of development or on less favorable terms than we would otherwise choose. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts. We cannot provide assurance that we will ever be profitable or generate positive cash flow from operating activities. Global economic and business activities continue to face widespread geopolitical and macroeconomic uncertainties, including labor shortages, inflation rates and the responses by central banking authorities to control such inflation, monetary supply shifts, and related financial market risks and instability, recession risks, as well as potential disruptions from the Russia-Ukraine conflict and armed conflict between Israel and groups based in surrounding regions, all of which have resulted in volatility in the U.S. and global financial markets, and disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally. The extent of the impact of these factors on our operational and financial performance, including our ability to execute our business strategies and initiatives in the expected time frame, will depend on future developments, which are uncertain and cannot be predicted. Any continued or renewed disruption resulting from these factors could negatively impact our business. We continue to monitor the impact of these geopolitical and macroeconomic factors on our results of operations, financial condition and cash flows. Components of our results of operations Revenue To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future. Operating expenses Research and development Research and development expenses account for a significant portion of our operating expenses and consist primarily of external and internal expenses incurred in connection with the discovery and development of our product candidates. To date, our research and development expenses have related primarily to discovery efforts and non-clinical and clinical development of our lead product candidate, palazestrant, as well as OP-3136. Research and development expenses are recognized as incurred and payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. 28 Table of Contents External expenses include: • expenses incurred in connection with the discovery and non-clinical development of our product candidates, including under agreements with third parties, such as consultants and contract research organizations, or CROs; • costs of manufacturing products for use in our non-clinical studies and clinical trials, including payments to contract manufacturing organizations, or CMOs, and consultants; • costs of funding research performed by third parties; • costs of purchasing lab supplies and non-capital equipment used in designing, developing and manufacturing non-clinical study and clinical trial materials; • costs associated with consultants for chemistry, manufacturing and controls development, regulatory, statistics and other services; • expenses related to regulatory activities, including filing fees paid to regulatory agencies; and • facility costs including rent, depreciation and maintenance expenses. Internal expenses include employee and personnel-related costs and expenses, including salaries, benefits and stock-based compensation expense for employees and personnel engaged in research and development functions. We expense research and development expenses in the periods in which they are incurred. Costs for certain activities, such as manufacturing and non-clinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and collaborators. We typically use our employee, consultant and infrastructure resources across our development programs. We track outsourced development costs by product candidate or non-clinical program, but we do not allocate personnel costs, other internal costs or external consultant costs to specific product candidates or non-clinical programs. While our research and development expenses may fluctuate from period to period, we generally expect our research and development expenses to increase substantially in absolute dollars for the foreseeable future as we advance palazestrant, OP-3136 or any other future product candidates we may develop into and through non-clinical studies and clinical trials and pursue regulatory approval of our product candidates. The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming. The actual probability of success for palazestrant, OP-3136 or any other future product candidates we may develop may be affected by a variety of factors including but not limited to: the safety and efficacy of our product candidates, early clinical data, investment in our clinical program, the ability of collaborators to successfully develop our licensed product candidates, competition, manufacturing capability and commercial viability. We may never succeed in achieving regulatory approval for our product candidates. As a result of the uncertainties discussed above, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of palazestrant, OP-3136 or any other future product candidates we may develop. Clinical and non-clinical development timelines, the probability of success and development costs can differ materially from expectations. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future non-clinical studies and clinical trials, regulatory developments and our ongoing assessments as to each product candidate’s commercial potential. In addition, we cannot forecast whether palazestrant, OP-3136 or any other future product candidates we may develop may be subject to future collaborations, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our development plans and capital requirements. We are also unable to predict when, if ever, we will generate revenue from our product candidates to offset these expenses. Our expenditures on current and future non-clinical and clinical 29 Table of Contents development programs are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of non-clinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including: • the timing and progress of non-clinical and clinical development activities; • the number and scope of non-clinical and clinical programs we decide to pursue; • our ability to maintain our current research and development programs and to establish new ones; • establishing an appropriate safety profile with investigational new drug-enabling toxicology studies; • successful patient enrollment in, and the initiation and completion of, clinical trials; • the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; • establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; • receipt of regulatory approvals from applicable regulatory authorities; • the timing, receipt and terms of any marketing approvals from applicable regulatory authorities; • our ability to establish licensing or collaboration arrangements; • the performance of our future collaborators, if any; • development and timely delivery of commercial-grade product formulations that can be used in our planned clinical trials and for commercial launch; • commercializing the product candidates, if approved, whether alone or in collaboration with others; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates; • obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; • maintaining continued acceptable safety profiles of our products following approval; and • obtaining and retaining key research and development personnel. Any changes in the outcome of any of these factors could significantly impact the costs, timing and viability associated with the development of our product candidates. General and administrative General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense, for personnel in executive, finance, accounting, business development, legal, human resources, information technology, or IT, and administrative functions. General and administrative expenses also include costs not otherwise included in research and development expenses, including corporate facility costs, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of facilities and insurance, and professional fees for legal, patent and consulting services. While our general and administrative expenses may fluctuate from period to period, we generally expect that our general and administrative expenses will increase in the foreseeable future as we increase our headcount 30 Table of Contents to support the continued research and development of our programs and the growth of our business. We also anticipate incurring additional expenses associated with operating as a public company, including increased expenses related to the building and improving of our IT infrastructure, including cyber security monitoring, legal, other regulatory and compliance, director and officer insurance, investor and public relations and tax-related services associated with maintaining compliance with the rules and regulations of the SEC and standards applicable to companies listed on a national securities exchange, additional insurance expenses, investor relations activities and other administrative and professional services. Total other income Total other income consists of interest income and other income. Interest income primarily consists of interest income on our cash equivalents and marketable securities. Other income primarily consists of unrealized foreign currency remeasurement gain (loss) and miscellaneous income (expense) not related to operating activities. Results of operations Comparison of the three months ended September 30, 2024 and 2023 The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023: Three Months Ended September 30, 2024 2023 $ Change (in thousands) Operating expenses: Research and development $ 33,226 $ 19,453 $ 13,773 General and administrative 4,395 3,889 506 Total operating expenses 37,621 23,342 14,279 Loss from operations (37,621 ) (23,342 ) (14,279 ) Other income: Interest income 2,928 1,919 1,009 Other income (expense) 138 (79 ) 217 Total other income 3,066 1,840 1,226 Net loss $ (34,555 ) $ (21,502 ) $ (13,053 ) Research and development expenses The following table summarizes our research and development expenses by functional area for the three months ended September 30, 2024 and 2023: Three Months Ended September 30, 2024 2023 $ Change (in thousands) CROs, CMOs and other clinical development related third-party vendor expenses $ 14,557 $ 7,398 $ 7,159 Other research and development expenses 7,395 4,337 3,058 Compensation and related benefits 6,994 4,917 2,077 Stock-based compensation 4,280 2,801 1,479 Total research and development expenses $ 33,226 $ 19,453 $ 13,773 31 Table of Contents Research and development expenses for the three months ended September 30, 2024 were $33.2 million, compared to $19.5 million for the three months ended September 30, 2023. The increase of $13.8 million was primarily due to (i) increased spending on clinical operations and development-related activities as we continue to advance palazestrant through late-stage clinical trials, (ii) other research and development activities associated with the advancement of our KAT6 inhibitor program, and (iii) personnel-related costs, including an increase in non-cash stock-based compensation expense of $1.5 million. General and administrative expenses General and administrative expenses for the three months ended September 30, 2024 were $4.4 million compared to $3.9 million for the three months ended September 30, 2023. The increase of $0.5 million was primarily due to (i) increased spending on corporate-related costs, and (ii) an increase in non-cash stock-based compensation expense of less than $0.1 million. Other income Other income for the three months ended September 30, 2024 was $3.1 million, compared to $1.8 million for the three months ended September 30, 2023. The increase of $1.2 million was primarily due to an increase in interest income from our marketable securities. Comparison of the nine months ended September 30, 2024 and 2023 The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023: Nine Months Ended September 30, 2024 2023 $ Change (in thousands) Operating expenses: Research and development $ 92,218 $ 60,268 $ 31,950 General and administrative 13,272 14,277 (1,005 ) Total operating expenses 105,490 74,545 30,945 Loss from operations (105,490 ) (74,545 ) (30,945 ) Other income: Interest income 9,388 4,774 4,614 Other income (expense) 195 (112 ) 307 Total other income 9,583 4,662 4,921 Net loss $ (95,907 ) $ (69,883 ) $ (26,024 ) Research and development expenses The following table summarizes our research and development expenses by functional area for the nine months ended September 30, 2024 and 2023: Nine Months Ended September 30, 2024 2023 $ Change (in thousands) CROs, CMOs and other clinical development related third-party vendor expenses $ 37,517 $ 21,766 $ 15,751 Compensation and related benefits 19,306 17,219 2,087 Other research and development expenses 18,470 12,425 6,045 Stock-based compensation 11,925 8,858 3,067 Milestone payment made to Aurigene 5,000 — 5,000 Total research and development expenses $ 92,218 $ 60,268 $ 31,950 32 Table of Contents Research and development expenses for the nine months ended September 30, 2024 were $92.2 million, compared to $60.3 million for the nine months ended September 30, 2023. The increase of $32.0 million was primarily due to (i) increased spending on clinical operations and development-related activities as we continue to advance palazestrant through late-stage clinical trials, (ii) other research and development activities associated with the advancement of our KAT6 inhibitor program, (iii) a $5.0 million milestone payment made to Aurigene in connection with the exclusive global license agreement entered into in June 2022 between the Company and Aurigene, or the Aurigene Agreement, and (iv) personnel-related costs, including an increase in non-cash stock-based compensation expense of $3.1 million. The increase was offset by $1.8 million one-time restructuring charge recorded in the nine months ended September 30, 2023. General and administrative expenses General and administrative expenses for the nine months ended September 30, 2024 were $13.3 million compared to $14.3 million for the nine months ended September 30, 2023. The decrease of $1.0 million was primarily due to (i) decreased spending on corporate- and legal-related costs, and (ii) decreased personnel-related expenses, including a $1.0 million one-time restructuring charge recorded in the first quarter of 2023. The decrease was partially offset by an increase in non-cash stock-based compensation expense of $0.3 million. Other income Other income for the nine months ended September 30, 2024 was $9.6 million, compared to $4.7 million for the nine months ended September 30, 2023. The increase of $4.9 million was primarily due to an increase in interest income from our marketable securities. Liquidity and capital resources Sources of liquidity Since our inception, we have not generated any revenue from product sales and have incurred significant operating losses and negative cash flows from our operations. Our net losses were $34.2 million and $21.5 million for the three months ended September 30, 2024 and 2023, respectively. Through September 30, 2024, we had received aggregate gross proceeds of $551.4 million from sales of our common stock, convertible preferred stock and issuance of convertible promissory notes, stock option exercises, and sale of stock through the Company’s 2020 Employee Stock Purchase Plan, or ESPP. As of September 30, 2024, we had $214.8 million in cash, cash equivalents and marketable securities and accumulated deficit of $401.5 million. We had no debt outstanding as of September 30, 2024. In September 2023, we entered into a stock purchase agreement for a private placement of 13,211,381 shares of our common stock, at a price of $9.84 per share, to selected institutional and accredited investors, or the Private Placement, resulting in gross proceeds of approximately $130.0 million. After deducting offering expenses related to the Private Placement of approximately $0.3 million, the net proceeds to us from the Private Placement were approximately $129.8 million. On September 5, 2023, we entered into a loan and security agreement, or the Original Loan Agreement, with Silicon Valley Bank, a division of First Citizens Bank & Trust Company, or the Bank, which provided us with an aggregate principal amount of up to $50.0 million, or the Original Credit Facility. On June 28, 2024, we entered into the First Amendment to Loan and Security Agreement, or the Amendment, and the Original Loan Agreement as amended by the Amendment, the Loan Agreement, with the Bank. The Amendment amends the Original Loan Agreement in order to, among other things, (i) increase the aggregate principal amount of the Original Credit Facility from up to $50.0 million to up to $100.0 million, or the Credit Facility, of which $25.0 million is currently available, an additional $25.0 million will become available upon achieving certain milestones related to execution of a first-line pivotal Phase 3 clinical trial of palazestrant in combination with ribociclib, and an additional $50.0 million which may be made available upon approval of the Bank in its discretion, and (ii) extend the maturity date to July 1, 2028. As of September 30, 2024, we had not drawn down from the Credit Facility. 33 Table of Contents On January 5, 2024, we entered into a sales agreement, or the Sales Agreement, with Cowen and Company, LLC, or TD Cowen, as sales agent, pursuant to which we may offer and sell, from time to time, shares of our common stock, having an aggregate offering price of up to $150.0 million, or the ATM Shares. The sales, if any, of the ATM Shares will be made by any method permitted that is deemed to be an “at-the-market”, or ATM, equity offering as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through the Nasdaq Global Select Market. We have agreed to pay TD Cowen a commission of up to 3.0% of the aggregate gross proceeds from any ATM Shares sold by TD Cowen. During the nine months ended September 30, 2024, we issued 1,772,278 shares of our common stock under the Sales Agreement at a weighted-average price of $13.19 for net proceeds of $22.8 million after deducting related issuance costs. As of September 30, 2024, approximately $126.6 million remained available for issuance under the Sales Agreement. We expect to incur significant expenses and operating losses for the foreseeable future as we advance the clinical development of palazestrant, OP-3136 and non-clinical studies. We expect that our research and development and general and administrative costs will increase in connection with conducting additional non-clinical studies and clinical trials for our current and future research programs and product candidates, contracting with CMOs to support non-clinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations. As a result, we will need additional capital to fund our operations, which we may obtain from additional equity or debt financings, collaborations, licensing arrangements or other sources. Our primary uses of cash are to fund our research and development activities, including with respect to palazestrant, OP-3136 and other non-clinical programs, business planning, establishing and maintaining our intellectual property portfolio, hiring personnel, raising capital and providing general and administrative support for these operations. Other than as noted above, we currently have no financing commitments, such as lines of credit or guarantees, that are expected to affect our liquidity over the next five years. Future funding and material cash requirements To date, we have not generated any revenue from product sales. We do not expect to generate any meaningful revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates, and we do not know when, or if at all, that will occur. We expect our expenses to increase in connection with our ongoing activities, particularly as we initiate and conduct clinical trials of, and seek marketing approval for, palazestrant or OP-3136. In addition, if we obtain marketing approval for our product candidates, we expect to incur significant commercialization expenses related to program sales, marketing, manufacturing and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential collaborators. Furthermore, we have incurred and expect to continue to incur additional costs associated with operating as a public company. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts. We expect our cash, cash equivalents, and marketable securities as of September 30, 2024, as well as the available balance under the Credit Facility, will enable us to fund our current operating plan for at least the next 12 months from the filing date of these condensed consolidated financial statements. Refer to Note 10 of our notes to the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for further information regarding our material cash requirements; other than as set forth therein, there have been no material changes outside the ordinary course of business during the three months ended September 30, 2024 to our commitments and contingencies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. Our future capital requirements will depend on many factors, including: • the scope, progress, results and costs of product discovery, non-clinical studies and clinical trials; 34 Table of Contents • the scope, prioritization and number of our research and development programs; • the costs, timing and outcome of regulatory review of our product candidates; • our ability to establish and maintain collaborations on favorable terms, if at all; • the achievement of milestones or occurrence of other developments that trigger payments under any collaboration agreements we enter into; • the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under collaboration agreements, if any; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the extent to which we acquire or in-license other product candidates and technologies; • the costs of securing manufacturing arrangements for commercial production; and • the costs of establishing or contracting for sales and marketing capabilities if we obtain regulatory approvals to market our product candidates. Identifying potential product candidates and conducting non-clinical studies and clinical trials is a time- consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of one or more product candidates that we do not expect to be commercially available for many years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of existing stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Cash flows The following table shows a summary of our cash flows for each of the periods presented: Nine Months Ended September 30, (in thousands) 2024 2023 Net cash used in operating activities $ (78,067 ) $ (65,251 ) Net cash provided by investing activities 20,898 26,064 Net cash provided by financing activities 24,518 132,892 Net (decrease) increase in cash and cash equivalents $ (32,651 ) $ 93,705 35 Table of Contents Operating activities Net cash used in operating activities during the nine months ended September 30, 2024 consisted primarily of our net loss of $95.5 million and non-cash interest income on our marketable securities of $6.5 million, offset by non-cash charges of $16.5 million and net increase in operating assets and liabilities of $7.8 million. The net loss consisted primarily of $92.2 million in research and development expenses and $13.3 million in general and administrative expenses. The non-cash charges consisted primarily of stock-based compensation expense of $16.3 million, depreciation and amortization expenses of $0.3 million, and non-cash lease expense of less than $0.1 million, net of cash payments of $0.9 million. The net increase in operating assets and liabilities was primarily due to (i) an increase of $9.0 million in accrued and other current liabilities and (ii) a decrease of $1.5 million in prepaid expenses and other current assets, which is primarily due to the reimbursable research and development costs received from a collaboration partner. The net increases in operating liabilities were primarily offset by (i) an increase of $2.6 million in other assets and long-term deposits. Net cash used in operating activities during the nine months ended September 30, 2023 consisted primarily of our net loss of $69.9 million and a net increase in operating assets and liabilities of $5.4 million, partially offset by non-cash charges of $10.1 million. The net loss consisted primarily of $60.3 million in research and development expenses and $14.3 million in general and administrative expenses. The non-cash charges consisted primarily of stock-based compensation expense of $12.9 million and depreciation and amortization expenses of $0.3 million, primarily offset by non-cash interest income on our marketable securities of $3.3 million. The net increase in operating assets and liabilities was primarily due to (i) an increase of $5.3 million in other assets and long-term deposits, and (ii) a decrease of $2.2 million in accrued and other current liabilities. The changes were partially offset by (i) an increase of $1.8 million in accounts payable, which is primarily a result of timing of invoice payment, and (ii) a decrease of $0.3 million in prepaid expenses and other current assets. Investing Activities Net cash used in investing activities during the nine months ended September 30, 2024 was predominantly due to purchases of marketable securities which were partially offset by maturities of marketable securities. Net cash provided by investing activities during the nine months ended September 30, 2023 was predominantly due to maturities of marketable securities which were offset by purchases of marketable securities. Financing activities Net cash provided by financing activities during the nine months ended September 30, 2024 consists of $22.8 million in net proceeds from the sale of ATM Shares, $1.1 million from the exercise of stock options, and $0.7 million from the sale of our common stock under the ESPP. Net cash provided by financing activities during the nine months ended September 30, 2023 consists of $129.8 million in net proceeds from the Private Placement, $2.4 million from the exercise of stock options, and $0.7 million from the sale of our common stock under the ESPP. 36 Table of Contents Critical accounting policies and significant judgments and estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses and the disclosure of our contingent liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. During the three months ended September 30, 2024, there were no material changes to our critical accounting policies and estimates as reported in our Annual Report on Form 10-K. Item 3. Quantitative and Qualitative Disclosures About Market Risk. During the three months ended September 30, 2024, there were no material changes to our market risk disclosures reported in our Annual Report on Form 10-K.