What changed in this filing

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Item 1. Financial Statements

2023-11-07 compared with 2023-08-08 · 159 added, 100 removed, 410 unchanged (39% of the section changed)

3 unchanged sentences

(Amounts in thousands, except for share amounts)

September 30,

Current assets:

17 unchanged sentences

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

no shares issued and outstanding as of June 30, 2023 and December 31, 2022.

10,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

no shares issued and outstanding as of September 30, 2023 and December 31, 2022.

Common stock, $ 0.0001 par value;

490,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

41,324,416 and 40,601,648 shares issued as of June 30, 2023 and December 31, 2022, respectively;

41,122,482 and 40,287,097 shares outstanding as of June 30, 2023 and December 31, 2022, respectively.

490,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

54,749,472 and 40,601,648 shares issued as of September 30, 2023 and December 31, 2022, respectively;

54,601,516 and 40,287,097 shares outstanding as of September 30, 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Operating expenses:

5 unchanged sentences

Interest income

Other (expense) income

Other expense

Total other income

1 unchanged sentence

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive loss:

7 unchanged sentences

Stockholders'

Balances at March 31, 2023

Balances at June 30, 2023

Vesting of early exercised stock options

1 unchanged sentence

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Issuance of shares under equity private placement, net of issuance costs of $ 240

Stock-based compensation expense

1 unchanged sentence

Net unrealized gain on marketable securities

Balances at June 30, 2023

Balances at September 30, 2023

Comprehensive

4 unchanged sentences

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Issuance of shares under employee stock purchase plan

Issuance of shares under equity private placement, net of issuance costs of $ 240

Stock-based compensation expense

1 unchanged sentence

Net unrealized gain on marketable securities

Balances at June 30, 2023

Balances at September 30, 2023

Comprehensive

Stockholders'

Balances at March 31, 2022

Balances at June 30, 2022

Vesting of early exercised stock options

1 unchanged sentence

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Stock-based compensation expense

1 unchanged sentence

Net unrealized loss on marketable securities

Balances at June 30, 2022

Balances at September 30, 2022

Comprehensive

4 unchanged sentences

Exercise of stock options

Issuance of shares under the employee stock purchase plan

Issuance of shares under employee stock purchase plan

Stock-based compensation expense

1 unchanged sentence

Net unrealized loss on marketable securities

Balances at June 30, 2022

Balances at September 30, 2022

See accompanying notes to the condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

16 unchanged sentences

Purchases of marketable securities

Disposal of fixed assets

Net cash provided by investing activities

2 unchanged sentences

Proceeds from issuance of common stock under employee stock purchase plan

Proceeds from equity private placement, net of issuance costs of $ 240

Net cash provided by financing activities

10 unchanged sentences

The Company’s wholly-owned, lead product candidate, palazestrant (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 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.

We expect to initiate in the fourth quarter of 2023 Olema’s first pivotal Phase 3 clinical trial, called OPERA-01, testing palazestrant as a monotherapy in second- and third-line metastatic breast cancer.

We expect to enroll the first patient in our proposed Phase 3 monotherapy clinical trial for the treatment of advanced or metastatic breast cancer (OPERA-01) in the fourth quarter of 2023.

Palazestrant is also currently being evaluated 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.

Furthermore, we announced new preclinical data regarding the discovery of novel compounds targeting KAT6, an epigenetic target that is dysregulated in breast and other cancers.

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

and on March 25, 2009, was renamed Olema Pharmaceuticals, Inc.

The Company’s principal operations are based in San Francisco, California, and has operations in Cambridge, Massachusetts.

The Company’s principal operations are based in San Francisco, California, and it has operations in Cambridge, Massachusetts.

Olema Oncology Australia Pty Ltd was incorporated on January 6, 2021, and is a wholly-owned subsidiary of the Company (collectively with Olema Pharmaceuticals, Inc., referred to as “Olema” or the “Company” herein).

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 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.

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 discussed in further detail below, the ability to secure additional capital to fund operations and commercial success of its product candidates.

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

1 unchanged sentence

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 $ 167.4 million of cash, cash equivalents and marketable securities at June 30, 2023, which management believes is sufficient to fund its operating expenses and capital expenditure requirements into the second quarter of 2025.

Private Placement

On September 5, 2023, the Company entered into a securities purchase agreement with institutional and accredited investors for the private placement of 13,211,381 shares of the Company’s common stock (the “Private Placement”) at a price of $ 9.84 per share, resulting in gross proceeds of approximately $ 130.0 million.

After deducting offering expenses related to the Private Placement of approximately $ 0.2 million, the net proceeds to the Company from the Private Placement were approximately $ 129.8 million.

The Private Placement closed on September 12, 2023 .

The Company had $ 276.9 million of cash, cash equivalents and marketable securities at September 30, 2023, in addition to an available balance of $ 25.0 million under the Loan and Security Agreement (the “Loan Agreement”), by and between the Company, as borrower, and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (the “Bank”).

Management believes that the Company’s cash, cash equivalents,

marketable securities, and the amounts available under the Loan Agreement will be sufficient to fund the Company’s current operating plan into 2027.

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.

Global economic and business activities continue to face widespread geopolitical and macroeconomic uncertainties, including labor shortages, inflation rates and the responses by central banking authorities to control such inflation, monetary supply shifts and related financial market risks and instability, risk of a U.S.

government shutdown, recession risks, as well as potential disruptions from the Russia-Ukraine conflict and armed conflict between Israel and groups based in surrounding regions, all of which have resulted in volatility in the U.S.

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

The extent of the impact of these factors on the Company’s operational and financial performance, including its ability to execute its 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 the Company’s business.

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 geopolitical and macroeconomic factors on its results of operations, financial condition and cash flows.

7 unchanged sentences

Unaudited Interim Financial Information

The interim condensed consolidated balance sheet as of June 30, 2023, and the statements of operations and comprehensive loss, and stockholders’ equity for the three and six months ended June 30, 2023 and 2022, and the statements of cash flows for the six months ended June 30, 2023 and 2022 are unaudited.

The interim condensed consolidated balance sheet as of September 30, 2023, and the statements of operations and comprehensive loss, and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and the statements of cash flows for the nine months ended September 30, 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 six-month periods are also unaudited.

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 presented in these unaudited condensed consolidated financial statements 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.

3 unchanged sentences

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.

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.

2 unchanged sentences

Cash and Cash Equivalents

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 as of June 30, 2023, and December 31, 2022.

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

Cash deposits are all in reputable financial institutions in the United States as of September 30, 2023, and December 31, 2022.

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

23 unchanged sentences

The Company’s cash, cash equivalents, and marketable securities are held by financial institutions in the United States that management believes are of high credit quality.

Amounts on deposit with individual banking institutions may at times exceed the limits insured by the Federal Deposit Insurance Corporation (“FDIC”);

Amounts on deposit with individual banking

institutions may at times exceed the limits insured by the Federal Deposit Insurance Corporation (“FDIC”);

however, the Company has not experienced any losses on such deposits.

29 unchanged sentences

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 contract research organizations (“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.

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.

14 unchanged sentences

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, 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.

For purpose of this calculation, outstanding stock options, including unvested early exercised options, unvested restricted stock awards, unvested performance-based restricted stock unit 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 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

There were no new accounting pronouncements that were relevant to the Company as of and for the six months ended June 30, 2023.

There were no new accounting pronouncements that were relevant to the Company as of and for the nine months ended September 30, 2023.

Fair Value Measurement

6 unchanged sentences

● 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.

June 30, 2023

September 30, 2023

(in thousands)

2 unchanged sentences

Commercial paper

Corporate bonds

government treasury bills

Government-sponsored enterprise securities

June 30, 2023

September 30, 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 June 30, 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.

1 unchanged sentence

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 were 14 marketable securities that have been in a consecutive loss position for more than 12 months as of June 30, 2023.

These marketable securities had $ 0.5 million unrealized losses with a fair value of $ 39.0 million as of June 30, 2023.

The Company does not believe that the total unrealized losses of $ 0.5 million as of June 30, 2023 are credit-related but are rather a reflection of current market yields and/or current marketplace bid/ask spreads.

During the three and six months ended June 30, 2023, the Company did not recognize any other-than-temporary impairment loss.

As of June 30, 2023, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

As of June 30, 2023, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S.

There were seven marketable securities that have been in a consecutive loss position for more than 12 months as of September 30, 2023.

These marketable securities had $ 0.1 million unrealized losses with a fair value of $ 19.4 million as of September 30, 2023.

The Company does not believe that the total unrealized losses of $ 0.3 million as of September 30, 2023 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, 2023, the Company did not recognize any other-than-temporary impairment loss.

As of September 30, 2023, there was no allowance for losses on available-for-sale debt securities attributable to credit risk.

As of September 30, 2023, all of the Company’s cash and cash equivalents consisted of cash on deposit with U.S.

banks denominated in U.

2 unchanged sentences

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

September 30,

Lab equipment

5 unchanged sentences

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

September 30,

Reimbursable research and development costs from a collaboration partner

Prepaid clinical development costs

Prepaid insurance

Interest receivable

Research and development tax incentive credit receivable

Prepaid subscriptions and licenses

Prepaid clinical development costs

Interest receivable

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):

September 30,

Accrued research and development related costs

11 unchanged sentences

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

The maximum number of shares of common stock that may be issued under the 2020 Plan will not exceed 6,494,510 shares of the Company’s common stock, which is the sum of (i) 2,152,080 new shares, plus (ii) an additional number of shares not to exceed 4,342,430 shares, consisting of any shares of the Company’s common stock subject to outstanding stock options or other stock awards granted under the 2014 Plan that, on or after the 2020 Plan becomes effective, terminate or expire prior to exercise or settlement;

are not issued because the award is settled in cash;

are forfeited because of the failure to vest;

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

The maximum number of shares of common stock that initially issuable under the 2020 Plan was a number not to exceed 6,494,510 shares of the Company’s common stock, which is the sum of (i) 2,152,080 new shares, plus (ii) an additional number of shares not to exceed 4,342,430 shares, consisting of any shares of the Company’s common stock subject to outstanding stock options or other stock awards granted under the 2014 Plan that, on or after the date on which the 2020 Plan became effective, terminated or expired prior to exercise or settlement;

were not issued because the award was settled in cash;

were forfeited because of the failure to vest;

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

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.

15 unchanged sentences

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:

Six Months Ended June 30,

Nine Months Ended September 30,

Risk-free interest rate

7 unchanged sentences

Outstanding as of December 31, 2022

Outstanding as of June 30, 2023(2)

Options vested and exercisable as of June 30, 2023

Options expected to vest as of June 30, 2023

( 1,064,318 )

Outstanding as of September 30, 2023

Options vested and exercisable as of September 30, 2023

Options expected to vest as of September 30, 2023

(1) Exercised amount includes vesting of early-exercised options and shares returned for taxes withheld for exercise and net transactions.

(2) Balance as of June 30, 2023 includes 4,660 unvested early-exercised stock options.

Early Exercise of Stock Options

2 unchanged sentences

Shares issued as a result of early exercise that have not vested are subject to repurchase by the Company upon termination of the purchaser’s employment, at the price paid by the purchaser.

Such shares are not deemed to be outstanding for accounting purposes until they vest and are therefore excluded from shares outstanding and from basic and diluted net loss per share until the repurchase right lapses and the shares are no longer subject to the repurchase feature.

Such shares are not deemed to be outstanding for accounting purposes until they vest and are

therefore excluded from shares outstanding and from basic and diluted net loss per share until the repurchase right lapses and the shares are no longer subject to the repurchase feature.

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 less than $ 0.1 million in other current liabilities as of June 30, 2023.

All early exercised options are vested as of September 30, 2023.

Restricted Stock Awards

The following table summarizes the restricted stock activity under the 2014 Plan during the six months ended June 30, 2023:

The following table summarizes the restricted stock activity under the 2014 Plan during the nine months ended September 30, 2023:

Number of Shares

1 unchanged sentence

Unvested restricted stock as of December 31, 2022

Unvested restricted stock as of June 30, 2023

Unvested restricted stock as of September 30, 2023

Performance-Based Restricted Stock Unit Awards

1 unchanged sentence

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 June 30, 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 and six months ended June 30, 2023.

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

As of September 30, 2023, the performance goals were not yet met, and therefore, the Company recorded zero stock-based compensation expense related to the PSUs for the three and nine months ended September 30, 2023.

2020 Employee Stock Purchase Plan

4 unchanged sentences

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 Board in the offering.

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.

Subsequently, the number of shares of the Company’s common stock reserved for issuance under the ESPP automatically increases on January 1 of each year for a period of up to ten years , commencing on January 1, 2021 and continuing through January 1, 2030, in amount equal to the lesser of (i) 1 % of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (ii) 860,832 shares of common stock, or (iii) a lesser number of shares determined by the Company’s Board of Directors no later than December 31 of the preceding calendar year.

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 $ 0.2 million for the three and six months ended June 30, 2023, respectively.

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, 2023, respectively.

Stock-Based Compensation Expense

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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

3 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

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

1 unchanged sentence

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,

Unvested restricted stock awards outstanding

2 unchanged sentences

Employee stock purchase plan contingently issuable

Included in the potentially dilutive options to purchase common stock for the three and six months ended June 30, 2023 and June 30, 2022 are 4,660 unvested stock options that were early exercised 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 six months ended June 30, 2023 and 2022.

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

5 unchanged sentences

On August 27, 2020, the Company entered into a lease agreement with 512 2nd Street LLC to lease approximately 3,500 square feet of office space in San Francisco, California (the “Office Space Lease Agreement”).

The Office Space Lease Agreement is for a period of two years commencing on September 1, 2020 and ending August 31, 2022.

In April 2022, the Company extended the Office Space Lease Agreement up to August 31, 2023 and has one year renewal option to extend the term up to August 31, 2024 .

The Company decided not to exercise the one-year renewal option at the end of the lease term.

The Office Space Lease Agreement was for a period of two years commencing on September 1, 2020 and ending August 31, 2022.

In April 2022, the Company extended the Office Space Lease Agreement up to August 31, 2023 and had one year renewal option to extend the term up to August 31, 2024 .

The Company decided not to exercise the one-year renewal option at the end of the lease term (i.e., August 31, 2023).

According to the terms of the Office Space Lease Agreement, the Company paid a $ 0.1 million security deposit and is required to pay monthly rent and common area charges.

The extension of the lease term was accounted for as a modification under Topic 842 and the Company recorded additional ROU asset and lease liability of $ 0.3 million and $ 0.3 million, respectively, in the condensed consolidated financial statements.

As of September 30, 2023, this security deposit is recorded as prepaid expenses and other current assets in the accompanying condensed consolidated financial statements due to expiration of the lease on August 31, 2023 and expected return of the deposit within 12 months.

On December 15, 2020, the Company entered into a lease agreement with Tennieh LLC to lease approximately 9,800 square feet of office space in San Francisco, California (the “Laboratory Lease Agreement”).

1 unchanged sentence

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 six months ended June 30, 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

On August 17, 2023, the Company entered into a sublease agreement with Dropbox, Inc.

to sublease approximately 6,713 square feet of office space in San Francisco, California (the “Dropbox Sublease Agreement”).

The Dropbox Sublease Agreement is for a period of two years commencing on September 5, 2023 and ending December 31, 2025.

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

The sublease was accounted for under Topic 842 and the Company recorded ROU asset and lease liability of $ 0.2 million and $ 0.2 million, respectively, in the accompanying condensed consolidated financial statements.

On August 23, 2023, the Company entered into a lease agreement with The Cambridge Redevelopment Authority to lease approximately 4,020 square feet of office space in Cambridge, Massachusetts (the “Cambridge Lease Agreement”).

The Cambridge Lease Agreement is for a period of three years commencing on September 15, 2023 and ending September 14, 2026.

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

The lease was accounted for under Topic 842 and the Company recorded ROU asset and lease liability of $ 0.7 million and $ 0.7 million, respectively, in the accompanying condensed consolidated financial statements.

The following table summarizes total lease expense during the three and nine months ended September 30, 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Straight-line operating lease expense

2 unchanged sentences

Total operating lease expense

The following table summarizes supplemental cash flow information during the three and six months ended June 30, 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The following table summarizes supplemental cash flow information during the three and nine months ended September 30, 2023 (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Cash paid for amounts included measurement of lease liabilities:

Operating cash flows from operating leases

The following table summarizes the Company’s future minimum lease payments and reconciliation of lease liabilities as of June 30, 2023 (in thousands):

Supplemental noncash information on lease liabilities arising from obtaining right-use-assets

The following table summarizes the Company’s future minimum lease payments and reconciliation of lease liabilities as of September 30, 2023 (in thousands):

Years Ending December 31,

2023 (from July 2023)

2023 (from October 2023)

Total future minimum lease payments

2 unchanged sentences

Lease liabilities, non-current

The following table summarizes lease term and discount rate as of June 30, 2023:

The following table summarizes lease term and discount rate as of September 30, 2023:

September 30,

Weighted-average remaining lease term (years)

1 unchanged sentence

Commitments and Contingencies

Loan Agreement

On September 5, 2023, the Company entered into the Loan Agreement by and between the Company and the Bank.

The Loan Agreement provides for a four-year senior secured credit facility in an aggregate principal amount of up to $ 50.0 million (the “Credit Facility”), of which $ 25.0 million became available upon the closing of the Private Placement, and the remaining $ 25.0 million may be made available upon approval of the Bank in its discretion.

The Credit Facility will mature on August 1, 2027 (the “Maturity Date”).

As of September 30, 2023, the Company had not drawn down from the Credit Facility.

The obligations under the Loan Agreement are secured by substantially all of the assets of the Company, subject to limited exceptions.

During the term of the Credit Facility, interest will accrue on any outstanding balance due under the Credit Facility at a floating rate per annum equal to the higher of (i) 8.0 % and (ii) the prime rate.

During an event of default, any outstanding amount under the Credit Facility will bear interest at a rate of 3.0 % in excess of the otherwise applicable rate of interest.

The Company will pay certain fees with respect to the Credit Facility, including a prepayment fee on any amount advanced under the Credit Facility to the extent paid prior to the Maturity Date, a final payment fee on the amount advanced under the Credit Facility, and an unused commitment fee of 1.5 % on the portion of Credit Facility that remains undrawn as of June 30, 2024, as well as certain other fees and expenses of the Bank.

The Loan Agreement contains customary events of default, including, but not limited to, nonpayment of principal, interest, fees or other amounts;

material inaccuracy of a representation or warranty;

failure to perform or observe covenants;

cross-defaults with certain other indebtedness;

bankruptcy and insolvency events;

material monetary judgment defaults;

material adverse change occurs;

and a material impairment in the Bank’s security interest.

Upon the occurrence of an event of default (subject, in certain cases, to notice and grace periods), obligations under the Loan Agreement may be accelerated.

The Loan Agreement also contains a number of customary representations, warranties and covenants that, among other things, limit the ability of the Company to (subject to certain qualifications and exceptions):

create liens and encumbrances;

incur additional indebtedness;

merge, dissolve, liquidate or consolidate;

make acquisitions, investments, advances or loans;

dispose of or transfer assets;

pay dividends or make other payments in respect of its capital stock;

amend certain material documents;

redeem or repurchase certain debt;

make payments on subordinated debt;

and engage in certain transactions with affiliates.

Clinical Collaboration and Supply Agreement

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

(“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 palazestrant 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 palazestrant in patients with metastatic estrogen receptor-positive breast cancer.

(“Novartis”).

On January 13, 2022, the Company entered into the amended and restated clinical collaboration and supply agreement with Novartis, and on October 9, 2023, the Company and Novartis entered into the amendment no.

1 (the “Novartis Amendment”) to amended and restated clinical collaboration and supply agreement (as amended, the “Novartis Agreement”).

The collaboration is focused on the evaluation of the safety, tolerability and efficacy of palazestrant 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 Phase 1b/2 clinical study of palazestrant in patients with metastatic estrogen receptor-positive breast cancer.

The Novartis Amendment, among other things, expanded our clinical collaboration with Novartis , increasing the size of the ongoing Phase 1/2 clinical study testing palazestrant in combination with ribociclib to approximately 60 patients.

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

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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 six months ended June 30, 2023, costs reimbursable from Novartis were $ 0.8 million and $ 1.4 million, respectively.

As of June 30, 2023, the receivable due from Novartis was $ 1.8 million, which is recorded under prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

For the three and nine months ended September 30, 2023, costs reimbursable from Novartis were $ 0.6 million and $ 2.0 million, respectively.

As of September 30, 2023, the Company had incurred the full agreed-upon reimbursement amount.

The receivable due from Novartis was $ 2.5 million, which is recorded under prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

Clinical Trial Agreement

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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 accompanying condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2023, and 2022.

License Agreement

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

During the research term, the Company will contribute funding to Aurigene to facilitate Aurigene’s ongoing discovery efforts.

During the research term, the Company will contribute funding to Aurigene to facilitate

Aurigene’s ongoing discovery efforts.

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.

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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 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 accompanying condensed consolidated statements of operations and comprehensive loss.

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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 June 30, 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 and six months ended June 30, 2023.

As of September 30, 2023, it was determined that it is not probable to achieve any of the milestone targets, and therefore, the Company recorded zero expense related to the milestone for the three and nine months ended September 30, 2023.

Management Services Agreements

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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 June 30, 2023, the Company did not have material contractual commitments with respect to these arrangements.

As of September 30, 2023, the Company did not have material contractual commitments with respect to these arrangements.

Contingencies

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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 June 30, 2023, and December 31, 2022, the Company had not incurred any material costs as a result of such indemnifications.

As of September 30, 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