What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-08 compared with 2022-08-09 · 67 added, 60 removed, 199 unchanged (39% of the section changed)

19 unchanged sentences

Our lead product candidate, OP-1250, is a novel oral therapy with combined activity as both a complete ER antagonist, or CERAN, and a selective ER degrader, or SERD, which we believe will drive deeper, more durable responses than existing therapies.

OP-1250, both as a monotherapy and in combination with inhibitors of cyclin-dependent kinase 4 and 6, or CDK4/6, demonstrated robust tumor shrinkage in several xenograft models, including a breast cancer brain metastasis model.

OP-1250, both as a monotherapy and in combination with inhibitors of cyclin-dependent kinase 4 and 6, or CDK4/6, demonstrated robust anti-tumor activity in a range of preclinical xenograft models of breast cancer, including in ESR1 and PIK3CA mutations and central nervous system (CNS) metastasis.

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-positive, or ER+, human epidermal growth factor receptor 2-negative, or HER2-, breast cancer.

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.

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.

In June 2022, we selected 120 mg as the Recommended Phase 2 dose (“RP2D”) for OP-1250 to advance into Phase 2 evaluation.

Following the selection of RP2D based on pharmacokinetics, safety and tolerability, and encouraging early anti-tumor activity, the Phase 2 monotherapy study is rapidly advancing with primary cohorts fully enrolled:

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

In October 2022, we reported preliminary results from the Phase 1b dose expansion of OP-1250 at doses of 60 and 120 mg.

Based on our clinical results to date, we are actively planning to initiate a pivotal Phase 3 monotherapy study in second- and third-line patients in mid-2023 and intend to request an End of Phase 2 meeting with FDA prior to initiating such

We anticipate reporting preliminary results from this study in the fourth quarter of 2022.

Concurrently, in the third quarter of 2022 we initiated a Phase 1b dose escalation trial of OP-1250 in combination with ribociclib and apelisib.

In July 2022 we were granted Fast Track designation from FDA for OP-1250 for 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 CDK 4/6 inhibitor.

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.

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 differentiated ER antagonist and 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 .

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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 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.

As of September 30, 2022, we had cash, cash equivalents, and marketable securities of $222.6 million.

Based on our current operating plan, we believe that our cash, cash equivalents, and marketable securities at September 30, 2022 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 $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.

Our net losses were $22.7 million and $17.7 million for the three months ended September 30, 2022 and 2021, respectively, and $78.6 million and $49.5 million for the nine months ended September 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 June 30, 2022, we had an accumulated deficit of $160.1 million.

As of September 30, 2022, we had an accumulated deficit of $182.8 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 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 the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic and otherwise.

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.

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The COVID-19 pandemic continues to 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 for clinical trials.

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 for clinical trials, including ongoing clinical trials involving OP-1250 in combination with other therapies.

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.

We continue to actively monitor the 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.

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

We continue to monitor developments related to COVID-19 and may close its offices again in the future as the COVID-19 pandemic continues to evolve.

We continue to monitor developments related to COVID-19 and may close our offices again in the future.

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 .

In addition to the ongoing COVID-19 pandemic, global economic and business activities continue to face widespread macroeconomic uncertainties, including labor shortages, inflation and monetary supply shifts, recession risks and potential disruptions from the Russia-Ukraine conflict, 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 macroeconomic factors on our results of operations, financial condition and cash flows.

Components of our results of operations

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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 $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.

Research and development expenses to advance the development of our lead product candidate and nonclinical program were $17.6 million and $12.5 million for the three months ended September 30, 2022 and 2021, respectively, and $60.7 million and $35.1 million for the nine months ended September 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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Our expenditures on current and future nonclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion.

The duration, costs and timing of nonclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:

The duration, costs and timing of

nonclinical studies and clinical trials and development of our product candidates will depend on a variety of factors, including:

● the timing and progress of nonclinical and clinical development activities;

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Total other income

Total other income consists of interest income and other income (expense).

Total other income consists of interest income and other expense.

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

Other income (expense) consists of miscellaneous income (expense) not related to operating activities.

Other expense 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 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,

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

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

Three Months Ended September 30,

(in thousands)

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Research and development expenses

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.

Research and development expenses for the three months ended September 30, 2022 were $17.6 million, compared to $12.5 million for the three months ended September 30, 2021.

The increase of $5.1 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, and (iii) personnel-related costs due to increased headcount, including non-cash stock-based compensation expenses increase of $0.4 million.

General and administrative expenses

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,

General and administrative expenses for the three months ended September 30, 2022 were $5.6 million compared to $5.2 million for the three months ended September 30, 2021.

The increase of $0.4 million was primarily due to increased spending in (i) personnel-related expenses, which was offset by non-cash stock-based compensation expenses decrease of $0.3 million, and (ii) public entity related costs, including legal compliance and other corporate costs.

Other income for the three months ended September 30, 2022 was $0.5 million, which primarily consisted of interest income from our marketable securities of $0.6 million, partially offset by unrealized foreign currency remeasurement loss on our foreign-currency denominated monetary accounts.

Comparison of the nine months ended September 30, 2022 and 2021

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

Nine Months Ended September 30,

(in thousands)

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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.

Research and development expenses for the nine months ended September 30, 2022 were $60.7 million, compared to $35.1 million for the nine months ended September 30, 2021.

The increase of $25.6 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 $2.7 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.

General and administrative expenses for the nine months ended September 30, 2022 were $19.1 million compared to $14.6 million for the nine months ended September 30, 2021.

The increase of $4.5 million was primarily due to increased spending in (i) personnel-related expenses, including non-cash stock-based compensation expenses increase of less than $0.1 million, and (ii) public entity related costs, including legal compliance and other corporate costs.

Other income for the nine months ended September 30, 2022 was $1.2 million, which primarily consisted of interest income from our marketable securities of $1.3 million, partially offset by unrealized foreign currency remeasurement loss on our foreign-currency denominated monetary accounts.

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.

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.

Through September 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 September 30, 2022, we had $222.6 million in cash, cash equivalents and marketable securities.

As of September 30, 2022, we had accumulated deficit of $182.8 million.

We had no debt outstanding as of September 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.

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 the second half of 2024 at which point we would need to obtain substantial additional funding in connection with our continuing operations.

We expect our cash, cash equivalents, and marketable securities at September 30, 2022 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:

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

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Operating activities

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.

Net cash used in operating activities in the nine months ended September 30, 2022 consisted primarily of our net loss of $78.6 million, partially offset by non-cash charges of $14.0 million and a net increase in operating assets and liabilities of $2.2 million.

The net loss consisted primarily of $60.7 million in research and development expenses and $19.1 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) 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 non-cash charges consisted primarily of stock-based compensation of $14.0 million and depreciation and amortization expenses of less than $0.1 million , including premium amortization on our marketable securities , and non-cash lease expense of less than $0.1 million, net of cash payments of $1.0 million.

The net increase in operating assets and liabilities was primarily due to (i) an increase of $3.3 million in other current liabilities and (ii) a decrease of $0.1 million in prepaid expenses and other current assets.

The changes are partially offset by (i) a net increase of $1.1 million in other assets and (ii) an increase of less than $0.1 million in accounts payable, which is primarily a result of timing of invoice payment.

Net cash used in operating activities in the nine months ended September 30, 2021 consisted primarily of our net loss of $49.5 million, partially offset by non-cash charges of $11.6 million and a net change of $5.8 million in net operating assets and liabilities.

The net loss consisted primarily of $35.1 million in research and development expenses and $14.6 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 $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 .

The non-cash charges consisted primarily of stock-based compensation of $11.3 million and depreciation and amortization expenses of $0.3 million, primarily related to premium amortization on our marketable securities.

The change in operating assets and liabilities was primarily due to an increase of $5.1 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 $1.2 million, offset by a decrease in accounts payable of $0.5 million .

Investing Activities

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 .

Net cash provided by investing activities in the nine months ended September 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 nine months ended September 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 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 .

Net cash provided by financing activities during the nine months ended September 30, 2022 consists of $0.1 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 nine months ended September 30, 2021 consisted of $0.4 million and $0.2 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 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.

During the nine months ended September 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 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.

During the nine months ended September 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