What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-08 · 125 added, 181 removed, 353 unchanged (46% of the section changed)

3 unchanged sentences

(Amounts in thousands, except for share amounts)

September 30,

Current assets:

16 unchanged sentences

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

no shares issued and outstanding as of September 30, 2022 and December 31, 2021.

10,000,000 shares authorized as of March 31, 2023 and December 31, 2022;

no shares issued and outstanding as of March 31, 2023 and December 31, 2022.

Common stock, $ 0.0001 par value;

490,000,000 shares authorized as of September 30, 2022 and December 31, 2021;

40,455,427 and 40,337,046 shares issued as of September 30, 2022 and December 31, 2021, respectively;

40,084,568 and 39,797,263 shares outstanding as of September 30, 2022 and December 31, 2021, respectively.

490,000,000 shares authorized as of March 31, 2023 and December 31, 2022;

40,696,563 and 40,601,648 shares issued as of March 31, 2023 and December 31, 2022, respectively;

40,438,320 and 40,287,097 shares outstanding as of March 31, 2023 and December 31, 2022, respectively.

Additional paid-in capital

7 unchanged sentences

(Amounts in thousands, except for share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

3 unchanged sentences

Loss from operations

Other income (expense):

Other income:

Interest income

Other income (expense):

Other income:

Total other income

Net loss per share, basic and diluted

Weighted average shares used to compute net loss per share, basic and diluted

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive (loss) gain:

Net unrealized (loss) gain on marketable securities

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders, basic and diluted

Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted

Three Months Ended March 31,

Other comprehensive gain (loss):

Net unrealized gain (loss) on marketable securities

Total comprehensive loss

5 unchanged sentences

Stockholders'

Balances at June 30, 2022

Vesting of early exercised stock options

Vesting of restricted stock awards

Exercise of stock options

Stock-based compensation expense

Employee stock purchase plan expense

Net unrealized loss on marketable securities

Balances at September 30, 2022

Comprehensive

Stockholders'

Balances at December 31, 2022

2 unchanged sentences

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Stock-based compensation expense

Employee stock purchase plan expense

Net unrealized loss on marketable securities

Balances at September 30, 2022

Comprehensive

Stockholders'

Income (Loss)

Balances at June 30, 2021

Vesting of early exercised stock options

Vesting of restricted stock awards

Exercise of stock options

Stock-based compensation expense

Employee stock purchase plan expense

Net unrealized gain on marketable securities

Balances at September 30, 2021

Balances at March 31, 2023

Comprehensive

4 unchanged sentences

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Stock-based compensation expense

Employee stock purchase plan expense

Net unrealized gain on marketable securities

Balances at September 30, 2021

Net unrealized loss on marketable securities

Balances at March 31, 2022

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

14 unchanged sentences

Purchases of marketable securities

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from exercise of stock options

Proceeds from issuance of common stock under employee stock purchase plan

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

2 unchanged sentences

Reclassification of prepaid expenses and other current liabilities into other assets

Vesting of early exercised stock options

Purchases of property and equipment included in accounts payable

See accompanying notes to the condensed consolidated financial statements.

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The Company’s wholly-owned, lead product candidate, OP-1250, is a novel oral therapy with combined activity as both a complete estrogen receptor (“ER”) antagonist (“CERAN”) and a selective ER degrader (“SERD”).

It is currently being evaluated as a single agent in an ongoing Phase 1/2 clinical trial, and in Phase 1b combination with palbociclib, in patients with recurrent, locally advanced or metastatic estrogen receptor-positive (“ER+”), human epidermal growth factor receptor 2-negative (“HER2-“) breast cancer.

It is currently being evaluated as a single agent in an ongoing Phase 1/2 clinical study, and in Phase 1b/2 clinical studies in combination with palbociclib, ribociclib, and alpelisib, in patients with recurrent, locally advanced or metastatic estrogen receptor-positive (“ER+”), human epidermal growth factor receptor 2 negative (“HER2-”) breast cancer.

The Company is located in San Francisco, California and was incorporated in Delaware on August 7, 2006 under the legal name of CombiThera, Inc.

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It operates in one business segment and therefore has only one reportable segment.

The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, successful discovery and development of its product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of COVID-19 and other geopolitical and macroeconomic events, the ability to secure additional capital to fund operations and commercial success of its product candidates.

The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry, including, but not limited to, successful discovery and development of its product candidates, development by competitors of new technological innovations, dependence on key personnel, the ability to attract and retain qualified employees, protection of proprietary technology, compliance with governmental regulations, the impact of geopolitical and macroeconomic events, such as the COVID-19 pandemic, ongoing conflict between Ukraine and Russia and related sanctions, recent and potential future bank failures and financial instability, the ability to secure additional capital to fund operations and commercial success of its product candidates.

OP-1250 and any future product candidates the Company may develop will require extensive nonclinical and clinical testing and regulatory approval prior to commercialization.

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Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

The Company had $ 222.6 million of cash, cash equivalents and marketable securities at September 30, 2022, which management believes is sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2024.

Impact of COVID-19 and Other Geopolitical and Macroeconomic Events

The extent of the impact of the COVID-19 pandemic on the Company’s 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 the Company’s development activities, planned clinical trial enrollment, future trial sites, contract research organizations (“CROs”), third-party manufacturers, and other third parties with whom the Company does business, as well as its impact on regulatory authorities and the Company’s key scientific and management personnel.

During 2021 and 2022, although the Company modified its operations and practices due to the COVID-19 pandemic and to comply with federal, state and local requirements, its business, operations and development timelines were not material adversely affected.

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

In March 2022, the Company fully re-opened its offices to all employees and continues to comply with protocols implemented by respective health authorities.

The Company continues to monitor developments related to COVID-19 and may

close its offices again in the future.

The extent to which the COVID-19 pandemic may affect the Company’s business, operations and development timelines and plans in the future, including the resulting impact on its 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, which has resulted in volatility in the U.S.

The Company had $ 186.0 million of cash, cash equivalents and marketable securities at March 31, 2023, which management believes is sufficient to fund its operating expenses and capital expenditure requirements into 2025.

Impact of Geopolitical and Macroeconomic Events

Global economic and business activities continue to face widespread geopolitical and macroeconomic uncertainties, including labor shortages, inflation and monetary supply shifts, bank failures and related financial market risks and instability, recession risks, as well as potential disruptions from the Russia-Ukraine conflict, which has resulted in volatility in the U.S.

and global financial markets and which has led to, and may continue to lead to, additional disruptions to trade, commerce, pricing stability, credit availability and supply chain continuity globally.

1 unchanged sentence

Any continued or renewed disruption resulting from these factors could negatively impact the Company’s business.

The Company continues to monitor the impact of these macroeconomic factors on its results of operations, financial condition and cash flows.

continues to monitor the impact of these geopolitical and macroeconomic factors on its results of operations, financial condition and cash flows.

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements.

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting, and the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

These condensed consolidated financial statements include the accounts of Olema Pharmaceuticals, Inc.

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Unaudited Interim Financial Information

The interim condensed consolidated balance sheet as of September 30, 2022, the statements of operations and comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, and the statements of cash flows for the nine months ended September 30, 2022 and 2021 are unaudited.

The interim condensed consolidated balance sheet as of March 31, 2023, and the statements of operations and comprehensive loss, stockholders’ equity and cash flows for the three months ended March 31, 2023 and 2022 are unaudited.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s condensed consolidated financial statements included in this report.

The financial data and the other information disclosed in these notes to the condensed consolidated financial statements related to the three- and nine-month periods are also unaudited.

The results of operations for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period.

The financial data and the other information disclosed in these notes to the condensed consolidated financial statements related to the three-month periods are also unaudited.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other future annual or interim period.

The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Form 10-K as filed with the SEC on February 28, 2022.

These interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Form 10-K as filed with the SEC on March 9, 2023 (the “Annual Report”).

Use of Estimates

The accompanying condensed consolidated financial statements are prepared in accordance with US GAAP.

The preparation of the condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of expenses during the reporting period.

The accompanying condensed consolidated financial statements are prepared in accordance with GAAP.

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of expenses during the reporting period.

Significant areas that require management’s estimates include accruals of research and development expenses, including accrual of research contract costs, stock-based compensation assumptions, including the fair value of common stock.

On an ongoing basis, the Company evaluates its estimates and

judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances.

On an ongoing basis, the Company evaluates its estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that management believes to be reasonable under the circumstances.

Actual results could differ from those estimates.

1 unchanged sentence

Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of 90 days or less at the date of purchase.

Cash deposits are all in reputable financial institutions in the United States and as of September 30, 2022 and December 31, 2021.

Cash deposits are all in reputable financial institutions in the United States as of March 31, 2023 and December 31, 2022.

Cash and cash equivalents consisted of cash on deposit with U.S.

26 unchanged sentences

The Company’s future results of operations involve a number of other risks and uncertainties.

Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations

include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current and potential future product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals or sole-source suppliers.

Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s current and potential future product candidates, uncertainty of market acceptance of the Company’s product candidates, competition from substitute products and larger companies, securing and protecting proprietary technology, strategic relationships, dependence on key individuals or sole-source suppliers, and geopolitical and macroeconomic factors.

The Company’s product candidates require approvals from the U.S.

2 unchanged sentences

If the Company were denied approval, approval was delayed or the Company was unable to maintain approval for any product candidate, it could have a materially adverse impact on the Company.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued new lease accounting guidance in Accounting Standard Update (“ASU”) 2016-02, Leases , and in July 2018 issued ASU 2018-10, Codification Improvements to Topic 842, Leases , and ASU 2018-11, Leases (Topic 842):

Targeted Improvements (the foregoing ASUs collectively referred to as “Topic 842”).

Under the new guidance, lessees are required to recognize for all leases (with the exception of short-term leases) at the commencement date:

The Company adopted Accounting Standard Update (“ASU”) 2016-12, Leases , Topic 842, (“Topic 842”) as of January 1, 2021.

Under Topic 842, lessees are required to recognize for all leases (with the exception of short-term leases) at the commencement date:

(1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis;

and (2) a right-of-use (“ROU”) asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the consolidated statements of operations and comprehensive loss.

Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the condensed consolidated statements of operations and comprehensive loss.

At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on the facts and circumstances present in that arrangement.

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The Company elected to not apply the recognition requirements of Topic 842 to short-term leases with terms of 12 months or less.

Additional information and disclosures required by Topic 842 are contained in Note 13 “Lease” in the Company’s Form 10-K as filed with the SEC on February 28, 2022.

Additional information and disclosures required by Topic 842 are contained in Note 11 “Lease” in the Annual Report.

Research and Development Costs

1 unchanged sentence

Research and development expenses consist of costs incurred to discover, research and develop product candidates.

These costs are recorded within research and development expenses in the condensed consolidated statements of operations and include personnel expenses, stock-based compensation expenses, allocated general and administrative expenses, and external costs including fees paid to consultants and CROs and contract manufacturing organizations (“CMOs”), in connection with nonclinical studies and clinical trials, and other related clinical trial fees, such as for investigator fees, patient screening, laboratory work, clinical trial database management, clinical trial material management and statistical compilation and analysis.

and statistical compilation and analysis.

Non-refundable prepayments for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses and other current assets.

Such amounts are recognized as an expense as the goods are delivered or the related services are performed.

Costs incurred in obtaining technology licenses are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.

Costs incurred in obtaining technology licenses that do not meet the definition of a business are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.

Reimbursements of certain costs associated with research activities performed under the agreement with Novartis Institutes for BioMedical Research, Inc.

(“Novartis”) are recorded as a reduction of research and development expenses, as described in Note 10, Commitments and Contingencies – Clinical Collaboration and Supply Agreement .

(“Novartis”) are recorded as a reduction of research and development expenses and as a receivable due from Novartis, which is recorded under prepaid expenses and other current assets in the accompanying condensed consolidated financial statements, as described in Note 10, Commitments and Contingencies – Clinical Collaboration and Supply Agreement.

Research Contract Costs and Accruals

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The Company’s historical accrual estimates have not been materially different from the actual costs.

Foreign Currency Transactions

The functional currency of Olema Oncology Australia Pty Ltd, the Company’s wholly-owned subsidiary, is the U.S.

Accordingly, all monetary assets and liabilities of the subsidiary are remeasured into U.S.

dollars at the current period-end exchange rates and non-monetary assets are remeasured using historical exchange rates.

Income and expense elements are remeasured to U.S.

dollars using the average exchange rates in effect during the period.

Remeasurement gains and losses are recorded as other income (expense) on the condensed consolidated statements of operations.

The Company is subject to foreign currency risk with respect to its clinical and manufacturing contracts denominated in currencies other than the U.S.

dollar, predominantly the Australian dollar and the Euro.

Payments on contracts denominated in foreign currencies are made at the spot rate on the day of payment.

Changes in the exchange rate between billing dates and payment dates are recorded within other income (expense) on the condensed consolidated statements of operations.

Net Loss Per Common Share

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Diluted net loss per common share is computed by adjusting net loss to reallocate undistributed earnings based on the potential impact of dilutive securities, and by dividing the diluted net loss by the weighted average number of common shares outstanding for the period, including potential dilutive common shares.

For purpose of this calculation, outstanding stock options, including unvested early exercised options, unvested restricted stock awards, and contingently issuable common stock related to the 2020 Employee Stock Purchase Plan (the “ESPP”) are considered potential dilutive common shares.

Since the Company was in a loss position for both periods presented, basic net loss per share is the same as diluted net loss per share for both periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.

For purpose of this calculation, outstanding stock options, including unvested early exercised options, unvested restricted stock awards, unvested performance-based restricted stock unit awards, contingently issuable common stock related to the 2020 Employee Stock Purchase Plan (the “ESPP”) are considered potential dilutive common shares.

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.

Recent Accounting Pronouncements

The Company lost its status as an emerging growth company on December 31, 2021, when it qualified as a large accelerated filer based on its market capitalization as of June 30, 2021, according to Rule 12b-2 of the Securities Exchange Act of 1934, as amended.

As a result, the Company adopted all accounting pronouncements formerly deferred under the extended transition period available for emerging growth companies according to public company standards at December 31, 2021.

There were no new accounting pronouncements that were relevant to the Company as of and for the three months ended March 31, 2023.

Fair Value Measurement

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● Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

September 30, 2022

March 31, 2023

(in thousands)

4 unchanged sentences

Government-sponsored enterprise securities

September 30, 2022

March 31, 2023

(in thousands)

2 unchanged sentences

Short-term marketable securities (<12 months to maturity)

Long-term marketable securities (>12 months to maturity)

The Company considers its marketable securities with maturities beyond one year as current assets, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

The Company considers its investment portfolio of marketable securities to be available-for-sale.

As of March 31, 2023, the Company does not have any marketable securities with maturities beyond one year.

The Company periodically reviews its available-for-sale marketable securities for other-than-temporary impairment.

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For debt securities, the Company also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses.

There was one marketable security that has been in a consecutive loss position for more than 12 months as of September 30, 2022.

It had $ 0.1 million unrealized loss with a fair value of $ 6.9 million as of September 30, 2022.

The Company does not believe that the total unrealized losses of $ 2.7 million as of September 30, 2022 are credit related but are rather a reflection of current market yields and/or current marketplace bid/ask spreads.

During the three and nine months ended September 30, 2022, the Company did not recognize any other-than-temporary impairment loss.

As of September 30, 2022, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

As of September 30, 2022, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S.

banks denominated in U.

There were 23 marketable securities that have been in a consecutive loss position for more than 12 months as of March 31, 2023.

They had $ 0.8 million unrealized loss with a fair value of $ 63.7 million as of March 31, 2023.

The Company does not believe that the total unrealized losses of $ 1.0 million as of March 31, 2023 are credit-related but are rather a reflection of current market yields and/or current marketplace bid/ask spreads.

During the three months ended March 31, 2023 and 2022, respectively, the Company did not recognize any other-than-temporary impairment loss.

As of March 31, 2023, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

As of March 31, 2023, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S.

banks denominated in U.S.

dollars and Australian dollars.

1 unchanged sentence

Property and equipment, net consisted of the following (in thousands):

September 30,

Lab equipment

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Prepaid expenses and other current assets consisted of the following (in thousands):

September 30,

Prepaid insurance

Reimbursable research and development costs from a collaboration partner

Interest receivable on marketable securities

Prepaid clinical development costs

Prepaid subscriptions and licenses

Prepaid insurance

Prepaid research contracts

Prepaid clinical trial costs

Interest receivable

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

September 30,

Accrued R&D related costs

Accrued employee bonuses

Accrued professional fees

Accrued research and development related costs

Accrued payroll related costs

Early exercise of unvested stock options

Accrued professional fees

Accrued employee bonuses

Accrued taxes

Early exercise of unvested stock options

Stock-Based Compensation

In 2014, the Company’s Board of Directors and stockholders approved and adopted the 2014 Stock Plan (the “2014 Plan”).

In 2014, the Company’s Board of Directors and stockholders approved and adopted the Company’s 2014 Stock Plan (the “2014 Plan”).

The 2014 Plan permitted the grant of options and restricted stock awards (including restricted stock purchase rights and restricted stock bonus awards).

The 2014 Plan was terminated on the date the 2020 Equity Incentive Plan (the “2020 Plan”), which is described below, became effective, and no additional awards will be made pursuant to the 2014 Plan.

The 2014 Plan was terminated on the date the Company’s 2020 Equity Incentive Plan (the “2020 Plan”), which is described below, became effective, and since that date, no additional awards have been or will be made pursuant to the 2014 Plan.

However, any outstanding awards granted under the 2014 Plan will remain outstanding, subject to the terms of the 2014 Plan award agreements, until such outstanding options are exercised or until any awards terminate or expire by their terms.

In 2020, the Company’s Board of Directors and stockholders approved and adopted the 2020 Plan.

In 2020, the Company’s Board of Directors and stockholders approved and adopted the 2020 Equity Incentive Plan (the “2020 Plan”).

The 2020 Plan permits the grant of options, restricted stock awards, stock appreciation rights, restricted stock unit awards, performance awards, and other awards.

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or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price.

immediately preceding year, or (2) a lesser number of shares determined by the Company’s board of directors no later than December 31 of the immediately preceding year.

In addition, the number of shares of the Company’s common stock reserved for issuance under the 2020 Plan automatically increases on January 1 of each year for a period of ten years , beginning on January 1, 2021 and continuing through January 1, 2030, in an amount equal to the lesser of (1) 5 % of the total number of shares of the Company’s common stock outstanding on December 31 of the immediately preceding year, or (2) a lesser number of shares determined by the Company’s Board of Directors no later than December 31 of the immediately preceding year.

In 2022, the Company’s Board of Directors approved and adopted the 2022 Inducement Plan (the “2022 Inducement Plan”).

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Specific vesting for stock options and stock appreciation rights is service related and determined in each award agreement, where stock options and stock appreciation rights are fully vested at the grant date or follow a graded vesting schedule.

Stock options and stock appreciation rights granted under the Plan generally expire ten years after the date of grant.

Stock options and stock appreciation rights granted under the plans generally expire ten years after the date of grant.

Stock Option Valuation

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The assumptions that the Company used to determine the estimated grant-date fair value of stock options granted to employees and directors under the 2020 Plan and the 2022 Inducement Plan were as follows, presented as a weighted average:

Nine Months Ended September 30,

Risk-free interest rate

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Outstanding as of December 31, 2022

Outstanding as of September 30, 2022(2)

Options vested and exercisable as of September 30, 2022

Options expected to vest as of September 30, 2022

Outstanding as of March 31, 2023(2)

Options vested and exercisable as of March 31, 2023

Options expected to vest as of March 31, 2023

(1) Exercised amount includes vesting of early exercised options.

(2) Balance as of September 30, 2022 includes 25,629 unvested early exercised stock options.

(2) Balance as of March 31, 2023 includes 11,650 unvested early exercised stock options.

Early Exercise of Stock Options

In September 2020, one employee and one non-employee paid $ 0.6 million to early exercise 135,525 options with exercise prices ranging from $ 4.406 per share to $ 4.824 per share.

As of September 30, 2022, 109,896 of such shares had vested with the remaining shares vesting over their respective terms.

The terms of the 2014 Plan permit certain option holders to exercise options before their options are vested, subject to certain limitations.

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A liability is recognized related to the cash proceeds of the unvested options and is reclassified into common stock and additional paid-in capital as the shares vest and the repurchase right lapses.

Accordingly, the Company has recorded the unvested portion of the exercise proceeds of $ 0.1 million in other current liabilities as of September 30, 2022.

Accordingly, the Company has recorded the unvested portion of the exercise proceeds of $ 0.1 million in other current liabilities as of March 31, 2023.

Restricted Stock Awards

In June 2020, the Company granted to certain employees 789,095 shares of restricted common stock (the “RSAs”) under the 2014 Plan as consideration for services with a deemed value of $ 2.40 per share, or $ 1.9 million.

The following table summarizes the restricted stock activity under the Plan during the nine months ended September 30, 2022:

The following table summarizes the restricted stock activity under the 2014 Plan during the three months ended March 31, 2023:

Number of Shares

1 unchanged sentence

Unvested restricted stock as of December 31, 2022

Unvested restricted stock as of September 30, 2022

Unvested restricted stock as of March 31, 2023

Performance-Based Restricted Stock Unit Awards

In November 2022, the Company granted to certain employees 710,000 shares of performance-based restricted stock unit awards (the “PSUs”) under the 2020 Plan as consideration for services subject to performance conditions with a fair value based on the closing price of the underlying common stock on the date of grant.

Pursuant to the terms of the PSUs, 65 % of each PSU vests upon certification by the Compensation Committee of the Company of achieving a pre-determined performance goal by June 30, 2024, and 35 % of each PSU vests upon certification by the Compensation Committee of the Company of achieving a pre-determined performance goal by June 30, 2024.

Expense recognition for PSUs commences when it is determined that attainment of the performance goal is probable or met.

As of March 31, 2023, it was determined that the performance goals were not yet met, and therefore, the Company recorded zero stock-based compensation expense related to the PSUs for the three months ended March 31, 2023.

2020 Employee Stock Purchase Plan

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Each offering period is not to exceed 27 months and will include one or more purchase periods (each a “Purchase Period”) as approved by the Company’s Board of Directors in the offering.

The current offering period will consist of two (2) six month purchase periods (each a “Purchase Period”) during which payroll deductions of the participants are accumulated under the ESPP.

The last business day of each Purchase Period is referred to as the “Purchase Date.” A total of 430,416 shares of common stock were initially reserved for issuance pursuant to the ESPP.

The current offering period will consist of two (2) six-month Purchase Periods during which payroll deductions of the participants are accumulated under the ESPP.

A total of 430,416 shares of common stock were initially reserved for issuance pursuant to the ESPP.

The ESPP is a compensatory plan as defined by the authoritative guidance for stock-based compensation.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock offered under the ESPP.

Stock-based compensation expense related to the ESPP was $ 0.1 million and $ 0.3 million for the three and nine months ended September 30, 2022, respectively.

Stock-based compensation expense related to the ESPP was $ 0.1 million and $ 0.1 million for the three months ended March 31, 2023 and 2022, respectively.

Stock-Based Compensation Expense

Stock-based compensation expense related to awards granted under the 2014 Plan, the 2020 Plan, the 2020 ESPP Plan and the 2022 Inducement Plan was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Stock-based compensation expense related to awards granted under the 2014 Plan, the 2020 Plan, the ESPP and the 2022 Inducement Plan was classified in the condensed consolidated statements of operations and comprehensive loss as follows (in thousands):

Three Months Ended March 31,

Research and development

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Basic and diluted net loss per share was calculated as follows (in thousands, except share and per share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted average shares used to compute net loss per share, basic and diluted

Net loss per share, basic and diluted

Three Months Ended March 31,

Weighted average shares used to compute net loss per share attributable to common stockholders, basic and diluted

Net loss per share attributable to common stockholders, basic and diluted

The potentially dilutive shares that were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented are as follows:

September 30,

Three Months Ended March 31,

Unvested restricted common stock

Unvested performance-based restricted stock unit awards outstanding

Options to purchase common stock

Employee stock purchase plan contingently issuable

Included in the potentially dilutive options to purchase common stock noted above are 211,621 shares issued upon exercise of options under non-recourse notes receivable during 2015 (see Note 7, “Stock-Based Compensation” in the Company’s Form 10-K as filed with the SEC on February 28, 2022).

The Company determined the purchase of the stock to be non-substantive, and as such, the shares subject to the promissory notes will not be deemed outstanding until such time as the promissory notes have been repaid.

As of December 31, 2020, all outstanding principal and accrued interest relating to the Non-Recourse Notes were settled in full by the two noteholders, and as a result, the Company issued 211,621 shares of common stock to the noteholders and included these shares in the basic and diluted net loss per share for three and nine months ended September 30, 2021.

Also included in the potentially dilutive options to purchase common stock are 25,629 unvested stock options that were early exercised by an employee and a non-employee in September 2020 (see Note 7, “Stock-Based Compensation”).

Included in the potentially dilutive options to purchase common stock are 11,650 unvested stock options that were early exercised by an employee and a non-employee in September 2020 (see Note 7, “Stock-Based Compensation”).

The Company determined the early exercises to be non-substantive as the shares were subject to repurchase rights.

Accordingly, the Company has excluded these shares from the calculation of basic and diluted net loss per share for the three and nine months ended September 30, 2022 and 2021.

Accordingly, the Company has excluded these shares from the calculation of basic and diluted net loss per share for the three months ended March 31, 2023 and 2022.

The Company leases certain of its facilities under non-cancellable operating leases expiring at various dates through 2026.

On June 1, 2013, the Company entered into a management services agreement with MandalMed, Inc.

(“MandalMed”) (the “MandalMed Services Agreement”) to have access to and use a portion of approximately 5,762 square feet of space for the use of laboratory benches, lab equipment, office space, and administrative and facilities services.

The Company subsequently entered into six amendments to extend the lease term to November 2023.

As part of the sixth amendment, the Company leased additional space of approximately 2,130 square feet (the “Additional Space”) for a three year period commencing on December 1, 2020 and ending on November 30, 2023.

(“MandalMed”) (the “MandalMed Services Agreement”) to have access to and use a portion of approximately

5,762 square feet of space for the use of laboratory benches, lab equipment, office space, and administrative and facilities services.

The Company subsequently entered into six amendments to extend the agreement term to November 2023.

As part of the sixth amendment, the Company gained access to use additional space of approximately 2,130 square feet (the “Additional Space”) for a three year period commencing on December 1, 2020 and ending on November 30, 2023.

According to the terms of the MandalMed Services Agreement, the Company paid a security deposit of less than $ 0.1 million and is required to pay monthly rent and common area charges.

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According to the terms of the Laboratory Lease Agreement, the Company paid a $ 0.4 million security deposit and is required to pay monthly rent and common area charges.

The following table summarizes total lease expense during the three and nine months ended September 30, 2022 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The following table summarizes total lease expense during the three months ended March 31, 2023 and 2022, respectively (in thousands):

Three Months Ended March 31

Straight-line operating lease expense

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Total operating lease expense

The following table summarizes supplemental cash flow information during the three and nine months ended September 30, 2022 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

The following table summarizes supplemental cash flow information during the three months ended March 31, 2023 and 2022, respectively (in thousands):

Three Months Ended March 31

Cash paid for amounts included measurement of lease liabilities:

Operating cash flows from operating leases

Supplemental noncash information on lease liability arising from obtaining a right-of-use asset

The following table summarizes the Company’s future minimum lease payments and reconciliation of lease liabilities as of September 30, 2022 (in thousands):

Years Ending December 31,

2022 (from October 2022)

The following table summarizes the Company’s future minimum lease payments and reconciliation of lease liabilities as of March 31, 2023 (in thousands):

Years Ended December 31,

2023 (from April 2023)

Total future minimum lease payments

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Lease liabilities, non-current

The following table summarizes lease term and discount rate as of September 30, 2022:

September 30,

The following table summarizes lease term and discount rate as of March 31, 2023:

Three Months Ended March 31

Weighted-average remaining lease term (years)

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On July 22, 2020, the Company entered into a non-exclusive clinical collaboration and supply agreement with Novartis Institutes for BioMedical Research, Inc.

(“Novartis”) (the “Novartis Agreement”).

The collaboration is focused on the evaluation of the safety, tolerability and efficacy of OP-1250 in combination with Novartis’ proprietary CDK4/6 inhibitor Kisqali® (ribociclib) and/or Novartis’ proprietary phosphatidylinositol 3-kinase inhibitor Piqray® (alpelisib) (collectively the “Novartis Study Drugs”) as part of the Company’s planned Phase 1b clinical trial of OP-1250 in patients with metastatic estrogen receptor-positive breast cancer.

will be responsible for the conduct of the clinical trials for the combined therapies in accordance with a mutually agreed development plan.

(“Novartis”) and on January 13, 2022, the Company entered into the amended and restated clinical collaboration and supply agreement with Novartis (as amended and restated, the “Novartis Agreement”).

The collaboration is focused on the evaluation of the safety, tolerability and efficacy of OP-1250 in combination with Novartis’ proprietary CDK4/6 inhibitor Kisqali® (ribociclib) and/or Novartis’ proprietary phosphatidylinositol 3-kinase (“PI3K a ”) Inhibitor Piqray® (alpelisib) (collectively the “Novartis Study Drugs”) as part of the Company’s planned Phase 1b clinical study of OP-1250 in patients with metastatic estrogen receptor-positive breast cancer.

The Company will be responsible for the conduct of the clinical trials for the combined therapies in accordance with a mutually agreed development plan.

As part of the collaboration, the parties granted to each other a non-exclusive, royalty- free license under certain of the parties’ respective background patent rights and other technology to use the parties’ respective study drugs in research and development, solely to the extent reasonably needed for the other party’s activities in the collaboration.

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The Novartis Agreement will terminate upon completion of all activities outlined in the development plan and the relevant protocols.

Either party may terminate the Novartis Agreement for the uncured material breach or insolvency of the other party, if it reasonably deems it necessary in order to protect the safety, health or welfare of subjects enrolled in the clinical trials for the combined therapies due to the existence of a material safety issue, or in certain circumstances for an unresolved clinical hold with respect to either the Novartis Study Drugs or OP-1250.

In addition, Novartis may terminate the Novartis Agreement if certain disputes between the parties are not resolved after following the applicable dispute resolution procedures, and the Company may terminate the Novartis Agreement in the event the Company terminates all clinical trials of the combined therapies other than due to a material safety issue or upon a clinical hold.

Costs associated with research activities performed under the agreement are included in research and development expenses in the accompanying condensed consolidated financial statements, with any reimbursable costs from Novartis reflected as a reduction of such expenses.

For the three and nine months ended September 30, 2022, costs reimbursable from Novartis were $ 0.5 million and $ 1.1 million, respectively.

As of September 30, 2020, the receivable due from Novartis was $ 1.1 million, which is recorded under prepaid expenses and other current assets in the accompanying condensed consolidated financial statements.

For the three months ended March 31, 2023 and 2022, costs reimbursable from Novartis were $ 0.5 million and $ 0 million, respectively.

As of March 31, 2023, the receivable due from Novartis was $ 1.0 million, which is recorded under prepaid expenses and other current assets in the accompanying condensed consolidated financial statements.

Clinical Trial Agreement

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Under the terms of the non-exclusive agreement, the Company will be responsible for conducting the clinical trial for the combined therapies and Pfizer is responsible for supplying IBRANCE® to the Company at no cost to the Company.

As part of the collaboration, the parties granted to each other a non-exclusive, royalty-free license under certain of the parties’ respective patent rights in the combination of IBRANCE® and OP-1250 to use the parties’ respective study drugs in research and development, solely to the extent reasonably needed for the other party’s activities in the collaboration.

All inventions and data developed in the performance of the clinical trials for the combined therapies (other than those specific to each component study drug), will be jointly owned by the parties.

The Company is responsible for manufacturing, packaging and labeling OP-1250, and for packaging and labeling all drugs used in the clinical trials for the combined therapies (other than IBRANCE® (palbociclib)).

2 unchanged sentences

Either party may terminate the Pfizer Agreement for the uncured material breach or insolvency of the other party, if it reasonably deems it necessary in order to protect the safety, health or welfare of subjects enrolled in the clinical trials for the combined therapies due to the existence of a material safety issue, or in certain circumstances for an unresolved clinical hold with respect to either the IBRANCE® (palbociclib) or OP-1250.

In addition, either party may terminate the Pfizer Agreement if certain disputes between the parties

are not resolved after following the applicable dispute resolution procedures or if either party determines to discontinue clinical development for medical, scientific, legal or other reasons.

In addition, either party may terminate the Pfizer Agreement if certain disputes between the parties are not resolved after following the applicable dispute resolution procedures or if either party determines to discontinue clinical development for medical, scientific, legal or other reasons.

The Pfizer Agreement does not grant any right of first negotiation to participate in future clinical trials, and each of the parties retains all rights and ability to evaluate their respective compounds.

Costs incurred in connection to the Pfizer Agreement are included in the research and development expense in the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021.

Costs incurred in connection to the Pfizer Agreement are included in the research and development expense in the accompanying condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023, and 2022.

License Agreement

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Under the terms of the Aurigene Agreement, Aurigene will provide to the Company an exclusive license to its portfolio of novel small molecule inhibitors of the target.

Financial terms of the Aurigene Agreement include a $ 8.0 million upfront payment for rights to a pre-existing Aurigene program and potential future milestone payments of up to $ 60.0 million in clinical development and regulatory milestones, and up to $ 370.0 million in commercial milestones.

Financial terms of the Aurigene Agreement include a

$ 8.0 million upfront payment for rights to a pre-existing Aurigene program and potential future milestone payments of up to $ 60.0 million in clinical development and regulatory milestones, and up to $ 370.0 million in commercial milestones.

Aurigene is also eligible to receive mid-single digits to the low double digits royalties on product sales, if any.

1 unchanged sentence

The Company and Aurigene will jointly direct further preclinical work and, if successful, the Company will lead clinical development as well as regulatory and commercial activities.

The Company and Aurigene jointly own collaboration compounds and rights to any inventions made during the research term.

The term of the Aurigene Agreement will continue until the expiration of the last-to-expire of all payment obligations with respect to all licensed products thereunder, unless terminated earlier in accordance with the terms of the Aurigene Agreement.

The Aurigene Agreement may be terminated (a) by the Company for convenience, in its sole discretion, upon prior written notice to Aurigene, (b) by either the Company or Aurigene in connection with the other party’s uncured material breach or (c) by either the Company or Aurigene in connection with the insolvency of the other party.

The $ 8.0 million upfront payment was incurred in June 2022 and recorded as research and development expense in the condensed consolidated statements of operations and comprehensive loss.

The $ 8.0 million upfront payment was incurred in June 2022 and recorded as research and development expense in the accompanying condensed consolidated statements of operations and comprehensive loss.

Costs incurred and milestones payments due to Aurigene prior to regulatory approval are recognized as research and development expenses in the period incurred.

Payments due to Aurigene upon or subsequent to regulatory approval will be accrued as a provision to cost of sales in the period when achievement of respective milestone target is probable.

As of March 31, 2023, it was determined that it is not probable to achieve any of the milestone target, and therefore, the Company recorded zero expense related to the milestone for the three months ended March 31, 2023.

Management Services Agreements

2 unchanged sentences

In addition, these agreements may, from time to time, be subjected to amendments as a result of any change orders executed by the parties.

As of September 30, 2022, the Company did not have material contractual commitments with respect to these arrangements.

As of March 31, 2023, the Company did not have material contractual commitments with respect to these arrangements.

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business.

The Company accrues a liability for such matters when it is probable that future expenditures will be

made, and such expenditures can be reasonably estimated.

The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated.

For all periods presented, the Company was not a party to any pending material litigation or other material legal proceedings.

3 unchanged sentences

The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited.

As of September 30, 2022 and December 31, 2021, the Company had not incurred any material costs as a result of such indemnifications.

As of March 31, 2023 and December 31, 2022, the Company had not incurred any material costs as a result of such indemnifications.

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 1. Financial Statements