What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-09 · 75 added, 60 removed, 184 unchanged (42% of the section changed)

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We reported initial data from the Phase 1 dose escalation portion of this trial in November 2021, which provide proof-of-concept for OP-1250 as a monotherapy treatment for ER+/HER2- breast cancer.

We are continuing to enroll patients in the dose expansion phase of our ongoing Phase 1/2 trial and expect to report updated clinical results in 2022.

We have also initiated a Phase 1b dose escalation trial evaluating OP-1250 in combination with palbociclib for the treatment of recurrent, locally advanced or metastatic ER-positive, or ER+, human epidermal growth factor receptor 2-negative, or HER2-, breast cancer.

In June 2022, we selected 120 mg as the Recommended Phase 2 dose for OP-1250 to advance into Phase 2 evaluation.

Phase 2 enrollment has initiated and will include three cohorts:

patients with measurable disease (N=50), patients with non-measurable disease (N=15) and patients with CNS metastasis (N=15).

In January 2022, we initiated a Phase 1b dose escalation trial evaluating OP-1250 in combination with palbociclib for the treatment of recurrent, locally advanced or metastatic ER-positive, or ER+, human epidermal growth factor receptor 2-negative, or HER2-, breast cancer.

We expect to report updated monotherapy and initial combination data for OP-1250 in the fourth quarter of 2022.

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

We believe OP-1250’s oral formulation and dual mechanism of action directly address the limitations of current endocrine therapies, such as fulvestrant and tamoxifen, and position OP-1250 as a potential endocrine therapy of choice for the treatment of ER+ breast cancers.

Our goal is to transform the standard of care for women living with cancers by developing more effective therapies that apply

our deep understanding and collective expertise in endocrine-driven cancers, nuclear receptor activities and mechanisms of acquired resistance .

We believe OP-1250’s oral formulation and dual mechanism of action directly address the

limitations of current endocrine therapies, such as fulvestrant and tamoxifen, and position OP-1250 as a potential endocrine therapy of choice for the treatment of ER+ breast cancers.

Our goal is to transform the standard of care for women living with cancers by developing more effective therapies that apply our deep understanding and collective expertise in endocrine-driven cancers, nuclear receptor activities and mechanisms of acquired resistance .

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 nonclinical studies and clinical trials and providing general and administrative support for these operations .

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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, 2022, we had cash, cash equivalents, and marketable securities of $267.9 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 into 2024.

As of June 30, 2022, we had cash, cash equivalents, and marketable securities of $240.7 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 into the second half of 2024.

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

Our net losses were $23.0 million and $15.3 million for the three months ended March 31, 2022 and 2021, 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 continue to operate as a public company.

Our net losses were $32.9 million and $16.4 million for the three months ended June 30, 2022 and 2021, respectively, and $55.9 million and $31.7 million for the six months ended June 30, 2022 and 2021, respectively.

We expect to incur significant and increasing losses for the foreseeable future as we continue to advance our product candidate, 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 March 31, 2022, we had an accumulated deficit of $127.2 million.

As of June 30, 2022, we had an accumulated deficit of $160.1 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 cannot provide assurance that we will ever be profitable or generate positive cash flow from operating activities .

The COVID-19 pandemic continues to rapidly evolve.

As a result of the COVID-19 pandemic, we experienced some delays in setting up our current Phase 1/2 clinical trial and in clinical site initiation, including delays in recruiting clinical site investigators and clinical site staff, which we may experience again in the future.

The extent of the impact of the COVID-19 pandemic on our business, operations and development timelines and plans remains uncertain, and will depend on certain developments, including the duration of the outbreak and its impact on our development activities, planned clinical trial enrollment, future trial sites, CROs, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel and with many of our employees working remotely.

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.

During 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.

In October 2021, we re-opened our offices to administrative employees, however due to the resurgence of cases relating to the spread of the Delta and Omicron variants, we continued to limit access to its offices.

The COVID-19 pandemic continues to evolve.

The extent of the impact of the COVID-19 pandemic on our business, operations and development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain, and will depend on certain developments, including the duration of the COVID-19 pandemic, frequency of outbreaks and its impact on our development activities, planned clinical trial enrollment, future trial sites, contract research organizations, or CROs, third-party manufacturers, and other third parties with whom we do business, as well as its impact on regulatory authorities and our key scientific and management personnel.

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.

During 2021 and 2022, 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.

In March 2022, we fully re-opened our offices to all employees and continue to comply with protocols implemented by respective health authorities.

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The extent to which the COVID-19 pandemic may affect our business, operations and development timelines and plans in the future, including the resulting impact on our expenditures and capital needs, remains uncertain .

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies and estimates disclosed in our Annual Report on Form 10-K.

Components of our results of operations

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● expenses incurred in connection with the discovery and nonclinical development of our product candidates, including under agreements with third parties, such as consultants and CROs;

● costs of manufacturing products for use in our nonclinical studies and clinical trials, including payments to CMOs and consultants;

● costs of manufacturing products for use in our nonclinical studies and clinical trials, including payments to contract manufacturing organizations, or CMOs, and consultants;

● costs of funding research performed by third parties;

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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 $16.0 million and $10.7 million for the three months ended March 31, 2022 and 2021, respectively.

Research and development expenses to advance the development of our lead product candidate and nonclinical program were $27.1 million and $11.9 million for the three months ended June 30, 2022 and 2021, respectively, and $43.1 million and $22.6 million for the six months ended June 30, 2022 and 2021, 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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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.

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 expect that our general and administrative expenses will increase 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 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

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Results of operations

Comparison of the three months ended March 31, 2022 and 2021

The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

Comparison of the three months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the three months ended June 30, 2022 and 2021:

Three Months Ended June 30,

(in thousands)

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Loss from operations

Other income:

Other income (expense):

Interest income

Other income (expense)

Total other income

Research and development expenses

Research and development expenses for the three months ended March 31, 2022 were $16.0 million, compared to $10.7 million for the three months ended March 31, 2021.

The increase of $5.3 million was primarily due to increased spending in (i) advancing the clinical study for our lead product candidate OP-1250 and the associated contract manufacturing costs, (ii) other nonclinical research and discovery program costs, and (iii) personnel-related costs due to increased headcount, including non-cash stock-based compensation expenses increase of $1.3 million.

Research and development expenses for the three months ended June 30, 2022 were $27.1 million, compared to $11.9 million for the three months ended June 30, 2021.

The increase of $15.1 million was primarily due to increased spending in (i) advancing the clinical study for our lead product candidate OP-1250 and the associated contract manufacturing costs, (ii) other nonclinical research and discovery program costs, including the $8.0 million upfront payment in connection with the Aurigene Agreement, and (iii) personnel-related costs due to increased headcount, including non-cash stock-based compensation expenses increase of $0.9 million.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2022 were $7.2 million compared to $4.8 million for the three months ended March 31, 2021.

The increase of $2.5 million was primarily due to higher personnel-related expenses, including non-cash stock-based compensation expenses increase of $0.4 million, and other corporate costs.

Other income for the three months ended March 31, 2022 was $0.2 million, which primarily consisted of interest income from our marketable securities.

General and administrative expenses for the three months ended June 30, 2022 were $6.2 million compared to $4.6 million for the three months ended June 30, 2021.

The increase of $1.6 million was primarily due to increased spending in (i) personnel-related expenses, which was partially offset by a non-cash stock-based compensation expenses decrease of $0.1 million, and (ii) public entity related costs, including legal compliance and other corporate costs.

Other income for the three months ended June 30, 2022 was $0.4 million, which primarily consisted of interest income from our marketable securities.

Comparison of the six months ended June 30, 2022 and 2021

The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest income

Other income (expense)

Total other income

Research and development expenses

Research and development expenses for the six months ended June 30, 2022 were $43.1 million, compared to $22.6 million for the six months ended June 30, 2022.

The increase of $20.5 million was primarily due to increased spending in (i) advancing the clinical study for our lead product candidate OP-1250 and the associated contract manufacturing costs, (ii) other nonclinical research and discovery program costs, including the $8.0 million upfront payment in connection with the Aurigene Agreement, and (iii) personnel-related costs due to increased headcount, including non-cash stock-based compensation expenses increase of $2.3 million.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2022 were $13.5 million compared to $9.4 million for the six months ended June 30, 2022.

The increase of $4.1 million was primarily due to increased spending in (i) personnel-related expenses, including non-cash stock-based compensation expenses increase of $0.3 million, and (ii) public entity related costs, including legal compliance and other corporate costs.

Other income for the six months ended June 30, 2022 was $0.7 million, which primarily consisted of interest income from our marketable securities.

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 $23.0 million and $15.3 million for the three months ended March 31, 2022 and 2021, respectively.

Through March 31, 2022, we had

received aggregate gross proceeds of $392.7 million from sales of our common stock, convertible preferred stock and issuance of convertible promissory notes, stock option exercises, and the sale of stock through the ESPP.

As of March 31, 2022, we had $267.9 million in cash, cash equivalents and marketable securities.

As of March 31, 2022, we had accumulated deficit of $127.2 million.

We had no debt outstanding as of March 31, 2022.

Through June 30, 2022, we had received aggregate gross proceeds of $392.8 million from sales of our common stock, convertible preferred stock and issuance of convertible promissory notes, stock option exercises, and the sale of stock through the ESPP.

As of June 30, 2022, we had $240.7 million in cash, cash equivalents and marketable securities.

As of June 30, 2022, we had accumulated deficit of $160.1 million.

We had no debt outstanding as of June 30, 2022.

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

We expect that our research and development and general and administrative costs will increase in connection with conducting additional nonclinical studies and clinical trials for our current and future research programs and product candidates, contracting with CMOs to support nonclinical studies and clinical trials, expanding our intellectual property portfolio, and providing general and administrative support for our operations.

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.

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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 existing cash, cash equivalents, and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into 2024 at which point we would need to obtain substantial additional funding in connection with our continuing operations.

We expect our existing cash, cash equivalents, and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the second half of 2024 at which point we would need to obtain substantial additional funding in connection with our continuing operations.

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.

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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, 2022 consisted primarily of our net loss of $23.0 million, offset by non-cash charges of $5.1 million and a net increase in net operating assets and liabilities of $0.1 million.

Net cash used in operating activities in the six months ended June 30, 2022 consisted primarily of our net loss of $55.9 million, partially offset by non-cash charges of $9.9 million and a net increase in operating assets and liabilities of $1.7 million.

The net loss consisted primarily of $43.1 million in research and development expenses and $13.5 million in general and administrative expenses.

The non-cash charges consisted primarily of stock-based compensation of $9.7 million and depreciation and amortization expenses of $0.1 million, and non-cash lease expense of less than $0.1 million, net of cash payments of $0.6 million.

The net increase in operating assets and liabilities was primarily due to (i) a net decrease of $0.2 million in prepaid expenses and other current assets and (ii) an increase of $0.2 million in accounts payable, which is primarily a result of timing of invoice payment.

The changes are partially offset by (i) a net increase of $0.2 million in other assets and (ii) a net decrease of $0.1 million in other current liabilities.

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.

The net increase in operating assets and liabilities was primarily due to (i) an increase of $1.9 million in other current liabilities, (ii) an increase of $0.1 million in accounts payable, which is primarily a result of timing of invoice payment, and (iii) a decrease of $0.2 million in prepaid expenses and other current assets.

The changes are partially offset by a net increase of $0.5 million in other assets.

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 $3.2 million and depreciation and amortization expenses of $0.1 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.

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 $3.9 million in other current liabilities, primarily related to the increased spending in (i) research and development related costs, including contract manufacturing and CRO 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 .

Investing Activities

Net cash provided by investing activities in the three-month ended March 31, 2022 was predominately due to maturities of marketable securities which was offset by purchase of marketable securities.

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 provided by investing activities in the six-month ended June 30, 2022 was predominately due to maturities of marketable securities which was partially offset by purchase of marketable securities.

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 .

Financing activities

Net cash provided by financing activities during the three months ended March 31, 2022 represents less than $0.1 million from the exercise of stock options.

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

Contractual obligations and commitments

Refer to Note 10 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, 2022 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, 2021 filed on February 28, 2022 with the SEC.

Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Net cash provided by financing activities during the six months ended June 30, 2022 represents $0.1 million in net proceeds from the sale of our common stock under the 2020 ESPP and exercise of stock options.

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 .

Critical accounting policies and significant judgements and estimates

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Our actual results may differ from these estimates under different assumptions or conditions.

During the three months ended March 31, 2022, 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, 2022, there were no material changes to our critical accounting policies and estimates as reported in our Annual Report on Form 10-K.

Quantitative and Qualitative Disclosures About Market Risk.

During the three months ended March 31, 2022, 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, 2022, 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