What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-10 compared with 2021-05-11 · 61 added, 40 removed, 202 unchanged (33% of the section changed)

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OP-1250, both as a monotherapy and in combination with inhibitors of CDK4/6 demonstrated robust tumor shrinkage in several xenograft models, including a breast cancer brain metastasis model.

In August 2020, we initiated an ongoing Phase 1/2 dose escalation and expansion trial evaluating OP-1250 for the treatment of recurrent, locally advanced or metastatic ER+, HER2- breast cancer, and expect to report initial data from the dose-escalation portion of trial in the second half of 2021.

We own worldwide development and commercialization rights to OP-1250.

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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.

As of March 31, 2021, we had cash, cash equivalents, and marketable securities of $327.0 million.

As of June 30, 2021, we had cash, cash equivalents, and marketable securities of $318.1 million.

Based on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to fund our planned operating expenses and capital expenditure requirements through the end of 2023.

We have incurred significant operating losses since the commencement of our operations.

Our net losses were $15.3 million and $1.7 million for the three months ended March 31, 2021 and 2020, respectively, and we expect to incur significant and increasing losses for the foreseeable future as we continue to advance our product candidate, and as we transition to operating as a public company.

Our net losses were $16.4 million and $2.5 million for the three months ended June 30, 2021 and 2020, respectively, and $31.7 million and $4.1 million for the six months ended June 30, 2021 and 2020, respectively, and we expect to incur significant and increasing losses for the foreseeable future as we continue to advance our product candidate, and as we transition to operating 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 March 31, 2021, we had an accumulated deficit of $48.4 million.

As of June 30, 2021, we had an accumulated deficit of $64.8 million.

Our primary use of cash is to fund operating expenses, which consist primarily of research and development expenditures and general and administrative expenditures.

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We continue to actively monitor the rapidly evolving situation related to the COVID-19 pandemic and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business.

Through March 31, 2021, although we modified our operations and practices due to the COVID-19 pandemic and to comply with federal, state and local requirements, our business, operations and development timelines were not material adversely affected.

Through June 30, 2021, although we modified our operations and practices due to the COVID-19 pandemic and to comply with federal, state and local requirements, our business, operations and development timelines were not material adversely affected.

However, the extent to which the COVID-19

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We track outsourced development costs by product candidate or nonclinical program, but we do not allocate personnel costs, other internal costs or external consultant costs to specific product candidates or nonclinical programs.

Research and development expenses to advance the development of our lead product candidate and nonclinical program were $10.7 million and $0.8 million for the three months ended March 31, 2021 and 2020, respectively.

Research and development expenses to advance the development of our lead product candidate and nonclinical program were $11.9 million and $1.9 million for the three months ended June 30, 2021 and 2020, respectively, and $22.6 million and $2.7 million for the six months ended June 30, 2021 and 2020, respectively.

We expect our research and development expenses to increase substantially in absolute dollars for the foreseeable future as we advance OP-1250 or any other future product candidates we may develop into and through nonclinical studies and clinical trials and pursue regulatory approval of our product candidates.

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We expect that our general and administrative expenses will increase substantially in the foreseeable future as we increase our headcount 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 ongoing financial statement audit and interim-period quarterly reviews, internal control over financial reporting compliance and audit, 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.

We also anticipate incurring additional expenses associated with operating as a public company, including increased expenses related to ongoing financial statement audit and interim-period quarterly reviews, internal control over financial reporting compliance and audit, legal, other regulatory and compliance, director and officer insurance, investor and public relations, IT infrastructure, 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, and other administrative and professional services.

Total other income (expense), net

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Interest income primarily consists of interest income on our cash, cash equivalents, and marketable securities.

Interest expense primarily consists of interest on our convertible promissory notes, and in the three months ended March 31, 2020, a non-cash interest charge related to a beneficial conversion feature on a convertible note issued in January 2020.

Interest expense during the six months ended primarily consisted of interest on our convertible promissory notes, and a non-cash interest charge related to a beneficial conversion feature on a convertible note that was issued in January 2020.

Other income and expense consists of miscellaneous income and expenses not related to operating activities.

Results of operations

Comparison of the three months ended March 31, 2021 and 2020

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31,

Comparison of the three months ended June 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

(in thousands)

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Interest expense

Other income (expense)

Total other income (expense), net

Research and development expenses

Research and development expenses for the three months ended March 31, 2021 were $10.7 million, compared to $0.8 million for the three months ended March 31, 2020.

The increase of $9.9 million was primarily due to increased spending in (i) advancing our lead product candidate OP-1250 clinical study and the associated contract manufacturing costs, (ii) other nonclinical research and discovery program costs, and (iii) personnel-related costs due to increased headcount, and an increase in the non-cash stock-based compensation of $1.7 million recognized during the three months ended March 31, 2021.

Research and development expenses for the three months ended June 30, 2021 were $11.9 million, compared to $1.9 million for the three months ended June 30, 2020.

The increase of $10.0 million was primarily due to increased spending in (i) advancing our lead product candidate OP-1250 clinical study and the associated contract manufacturing costs, (ii) other nonclinical research and discovery program costs, and (iii) personnel-related costs due to increased headcount, and an increase in the non-cash stock-based compensation of $2.2 million recognized during the three months ended June 30, 2021.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2021 were $4.8 million compared to $0.2 million for the three months ended March 31, 2020.

The increase of $4.6 million was primarily due to increased (i) personnel-related costs due to increased headcount, including expanded executive team (ii) expenses associated with external consultants for accounting and regulatory compliance as a result of operating as a public company, and (iii) the non-cash stock-based compensation of $1.5 million recognized during the three months ended March 31, 2021.

General and administrative expenses for the three months ended June 30, 2021 were $4.6 million compared to $0.5 million for the three months ended June 30, 2020.

The increase of $4.1 million was primarily due to increased (i) personnel-related costs due to increased headcount, including expanded executive team (ii) expenses associated with external consultants for accounting and regulatory compliance as a result of operating as a public company, and (iii) the non-cash stock-based compensation of $1.6 million recognized during the three months ended June 30, 2021.

Other income (expense), net

Other income (expense), net for the three months ended March 31, 2021 was $0.1 million, which primarily consisted of interest income from our marketable securities.

Other income (expense), net for the three months ended June 30, 2021 was $0.1 million, which primarily consisted of interest income from our marketable securities.

Comparison of the six months ended June 30, 2021 and 2020

The following table summarizes our results of operations for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense), net:

Interest income

Interest expense

Other income (expense)

Total other income (expense), net

Research and development expenses

Research and development expenses for the six months ended June 30, 2021 were $22.6 million, compared to $2.7 million for the six months ended June 30, 2020.

The increase of $19.9 million was primarily due to increased spending in (i) advancing our lead product candidate OP-1250 clinical study and the associated contract manufacturing costs, (ii) other nonclinical research and discovery program costs, and (iii) personnel-related costs due to increased headcount and an increase in the non-cash stock-based compensation of $3.9 million recognized during the six months ended June 30, 2021.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2021 were $9.4 million compared to $0.8 million for the six months ended June 30, 2020.

The increase of $8.6 million was primarily due to increased (i) personnel-related costs due to increased headcount, including expanded executive team (ii) expenses associated with external consultants for accounting and regulatory compliance as a result of operating as a public company, and (iii) the non-cash stock-based compensation of $3.1 million recognized during the six months ended June 30, 2021.

Other income (expense), net

Other income (expense), net for the six months ended June 30, 2021 was $0.2 million, which primarily consisted of interest income from our marketable securities, compared to $0.6 million expense for the six months ended June 30, 2020.

The increase of $0.8 million was primarily due to the non-cash interest charge related to a beneficial conversion feature on a convertible note that was issued in January 2020.

Liquidity and capital resources

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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 $15.3 million and $1.7 million for the three months ended March 31, 2021 and 2020, respectively.

Through March 31, 2021, we had received aggregate gross proceeds of $391.3 million from sales of our common stock from the initial public offering in November 2020, convertible preferred stock and issuance of convertible promissory notes since inception.

As of March 31, 2021, we had $327.0 million in cash, cash equivalents and marketable securities.

As of March 31, 2021, we had accumulated deficit of $48.4 million.

We had no debt outstanding as of March 31, 2021.

Our net losses were $31.7 million and $4.1 million for the six months ended June 30, 2021 and 2020, respectively.

Through June 30, 2021, we had received aggregate gross proceeds of $391.8 million from sales of our common stock from the initial public offering in November 2020, issuances of convertible preferred stock and convertible promissory notes since

our inception, stock option exercises, and the sale of stock through the ESPP.

As of June 30, 2021, we had $318.1 million in cash, cash equivalents and marketable securities.

As of June 30, 2021, we had accumulated deficit of $64.8 million.

We had no debt outstanding as of June 30, 2021.

We expect to incur significant expenses and operating losses for the foreseeable future as we advance the nonclinical and clinical development of OP-1250.

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The following table shows a summary of our cash flows for each of the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Operating activities

Net cash used in operating activities in the three months ended March 31, 2021 consisted primarily of our net loss of $15.3 million, partially offset by non-cash charges of $3.3 million and a net change of $1.0 million in net operating assets and liabilities.

Net cash used in operating activities in the six months ended June 30, 2021 consisted primarily of our net loss of $31.7 million, partially offset by non-cash charges of $7.3 million and a net change of $4.4 million in net operating assets and liabilities.

The net loss consisted primarily of $22.6 million in research and development expenses and $9.4 million in general and administrative expenses.

The non-cash charges consisted primarily of stock-based compensation of $7.1 million and depreciation and amortization expenses of $0.2 million, primarily related to premium amortization on our marketable securities.

The change in operating assets and liabilities was primarily due to an increase of $1.0 million in other current liabilities, primarily related to the increased spending in contract manufacturing expenses as a result of our continued advancement of our lead

product program.

The increase is partially offset by a decrease of $0.3 million in accounts payable, primarily as a result of timing of invoice payment, and a decrease in prepaid expenses and other current assets of $0.3 million.

Net cash used in operating activities in the three months ended March 31, 2020 consisted primarily of our net loss of $1.7 million, and a net change of $1.1 million in net operating assets and liabilities, partially offset by non-cash interest expense of $0.6 million related to a beneficial conversion feature on a convertible note issued in January 2020.

The net loss primarily consisted of $0.8 million in research and development expenses and $0.2 million in general and administrative expenses.

The net change in operating assets and liabilities was primarily due to a decrease of $0.7 million in accounts payable and an increase of $0.4 million in prepaid expenses and other current assets.

The decrease in accounts payable was due to the timing of the posting of the invoices and payments and the increase in prepaid and other current assets related to upfront payments to certain contract research and manufacture vendors in the three months ended March 31, 2020.

The change in operating assets and liabilities was primarily due to an increase of $3.9 million in other current liabilities, primarily related to the increased spending in (i) research and development related costs, including contract manufacturing and clinical

research organization expenses as a result of our continued advancement of our lead product program, and (ii) personnel related expenses, including employee bonuses, due to increased headcount, and a decrease in prepaid expenses and other current assets of $0.9 million.

Net cash used in operating activities in the six months ended June 30, 2020 consisted primarily of our net loss of $4.1 million, partially offset by non-cash interest expense of $0.6 million related to a beneficial conversion feature on a convertible note issued in January 2020 and $0.2 million related to stock-based compensation expense.

The net loss primarily consisted of $2.7 million in research and development expenses, $0.8 million in general and administrative expenses, and $0.7 million in non-cash interest charge related to a beneficial conversion feature on a convertible note that was issued in January 2020.

Investing Activities

Net cash used in investing activities in the three-month ended March 31, 2021 was predominately due to purchases of marketable securities which was financed through the use of proceeds from the IPO and convertible preferred stock sale.

Net cash used in investing activities in the three months ended March 31, 2020 was for purchases of equipment.

Net cash used in investing activities in the six months ended June 30, 2021 was predominately due to purchases of marketable securities which was financed through the proceeds from the IPO and convertible preferred stock sale, and purchases of equipment, partially offset by the maturities of marketable securities.

Net cash used in investing activities in the six months ended June 30, 2020 was for purchases of equipment.

Financing activities

There were no financing activities during the three months ended March 31, 2021.

Net cash provided by financing activities in the three months ended March 31, 2020 consisted primarily of $27.0 million and $3.0 million in net proceeds from sale and issuance of our Series B convertible preferred stock, and the issuance of our convertible promissory notes, respectively.

Net cash provided by financing activities in the six months ended June 30, 2021 consisted of $0.4 million and $0.1 million in net proceeds from the sale of our common stock under the 2020 ESPP and the exercise of stock options, respectively.

Net cash provided by financing activities in the six months ended June 30, 2020 consisted primarily of $50.7 million and $3.0 million in net proceeds from sale and issuance of our Series B convertible preferred stock, and the issuance of our convertible promissory notes, respectively.

Contractual obligations and commitments

Refer to Note 11 of our notes to the Company’s condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for further information.

There have been no significant changes outside the ordinary course of business during the three months ended March 31, 2021 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 for the year ended December 31, 2020 filed on March 17, 2021 with the SEC.

There have been no significant changes outside the ordinary course of business during the six months ended June 30, 2021 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 for the year ended December 31, 2020 filed on March 17, 2021 with the SEC.

Off-balance sheet arrangements

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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.

generally accepted accounting principles, or 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 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

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 March 31, 2021, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K.

During the six months ended June 30, 2021, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K.

Quantitative and Qualitative Disclosures About Market Risk.

During the three months ended March 31, 2021, there were no material changes to our market risk disclosures reported in our Annual Report on Form 10-K.

During the six months ended June 30, 2021, there were no material changes to our market risk disclosures reported in our Annual Report on Form 10-K.

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