What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-12 compared with 2021-05-11 · 63 added, 32 removed, 167 unchanged (36% of the section changed)

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Since our inception in 2016, we have received clearance from the U.S.

Food and Drug Administration, or the FDA, for four investigational new drug applications, or INDs, and successfully advanced three of these programs into clinical development, with the fourth expected to begin clinical development in the coming months.

Food and Drug Administration, or the FDA, for four investigational new drug applications, or INDs, and successfully advanced these programs into clinical development.

In addition, we have three unique programs in various stages of preclinical development that we plan to advance into clinical development beginning in 2021.

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We will need to enroll and demonstrate objective responses in additional patients to support further development and potential approval by the FDA or other regulatory authorities, and while such approval is not guaranteed, we are encouraged by the clinical activity as of the date of this Quarterly Report on Form 10-Q.

Patient enrollment is complete in the adenoid cystic carcinoma expansion cohort of the Phase 1 trial, and enrollment is underway in additional expansion cohorts of solid tumors and hematological malignancies.

We anticipate presenting initial clinical data from the Phase 1 trial at medical meetings in the second half of 2021.

Patient enrollment is continuing in multiple biomarker-selected solid tumor and hematologic malignancy expansion cohorts.

We anticipate presenting data from the dose escalation portion of the Phase 1 trial in unselected patient populations, including safety, PK and PD data and markers of target engagement, at the AACR-NCI-EORTC Annual Meeting in October 2021 and data from the expansion cohorts of the trial at medical meetings throughout 2022.

We are also advancing PRT811, a second PRMT5 inhibitor that we have optimized for high brain exposure, in a Phase 1 clinical trial in solid tumors, including GBM.

As of the date of this Quarterly Report on Form 10-Q, the trial has demonstrated early signs of clinical activity and tolerability.

The previously disclosed refractory GBM patient whose tumor had demonstrated a 66% reduction on monotherapy PRT811 subsequently underwent a follow-up MRI at week 18 and the regression has improved to 77% from baseline, confirming a partial response, or PR, per RANO (response assessment in neuro-oncology) criteria.

We expect to begin enrolling patients in the expansion portion of the Phase 1 clinical trial by mid-2021 and anticipate obtaining initial clinical data from this trial by the end of 2021.

The previously disclosed refractory GBM patient whose tumor had demonstrated a 66% reduction on monotherapy PRT811 subsequently underwent a follow-up MRI at week 18 and the regression improved to 77% from baseline, confirming a partial response, or PR, per RANO (response assessment in neuro-oncology) criteria.

We will present data from the dose escalation portion of the Phase 1 trial in unselected patient populations, including safety, PK and PD data and markers of target engagement, at the AACR-NCI-EORTC Annual Meeting in October 2021.

We anticipate beginning the dose expansion portion of the Phase 1 trial in the third quarter of 2021 in selected patients with central nervous system cancers, including high grade gliomas and CNS metastatic cancers.

We expect to present data from these expansion cohorts at medical meetings throughout 2022.

PRT1419, our third clinical candidate, is designed to be a potent and selective inhibitor of the anti-apoptotic protein, MCL1.

The potency and selectivity of PRT1419 is supported by preclinical data demonstrating nanomolar inhibition of MCL1 and no inhibition of related enzymes at 200 times higher concentration of our product candidate.

We have begun enrolling patients with hematologic malignancies, including patients with myelodysplastic syndrome, or MDS, acute myeloid leukemia, or AML, non-Hodgkin’s lymphoma, or NHL, and multiple myeloma, or MM, into the Phase 1 open-label, multicenter clinical trial for the oral formulation of PRT1419.

We expect to add dose expansion and combination cohorts to this Phase 1 clinical trial in the second half of 2021.

We have begun enrolling patients with hematologic malignancies, including patients with myelodysplastic syndrome, or MDS, acute myeloid leukemia, or AML, non-Hodgkin’s lymphoma, or NHL, and multiple myeloma, or MM, into the dose escalation portion of a Phase 1 open-label, multicenter clinical trial for the oral formulation of PRT1419.

We expect to add dose expansion and combination cohorts to the Phase 1 clinical trial in the second half of 2021.

Additionally, in March 2021, the FDA cleared our IND for an intravenous (IV) formulation of PRT1419.

A Phase 1 trial of the IV formulation, which leverages the optimized physicochemical properties of MRT1419, is expected to commence in the coming months.

The Phase 1 trial of the IV formulation of PRT1419, which leverages the optimized physicochemical properties of PRT1419, is now underway in patients with solid tumors .

We were incorporated in February 2016 under the laws of the State of Delaware.

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We have funded our operations primarily through the sale of convertible preferred stock and common stock.

Our net loss was $21.3 million for the three months ended March 31, 2021 as compared to $9.5 million for the three months ended March 31, 2020, and as of March 31, 2021, we had an accumulated deficit of $128.7 million.

Our net loss was $48.2 million for the six months ended June 30, 2021 as compared to $20.9 million for the six months ended June 30, 2020, and as of June 30, 2021, we had an accumulated deficit of $155.6 million.

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

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If we are unable to secure adequate additional funding, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more product candidates or delay our pursuit of potential in-licenses or acquisitions.

As of March 31, 2021, we had $363.0 million in cash and cash equivalents.

We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditures into 2023.

As of June 30, 2021, we had $343.1 million in cash and cash equivalents.

We expect our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditures into mid-2023.

COVID-19 Impact

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To date, we have not recognized any revenue from any sources, including from product sales, and we do not expect to generate any revenue from the sale of products in the foreseeable future.

If our development efforts for our product candidates are successful

and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales.

If our development efforts for our product candidates are successful and result in regulatory approval, or license agreements with third parties, we may generate revenue in the future from product sales.

However, there can be no assurance as to when we will generate such revenue, if at all.

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Results of Operations

Comparison of the Three Months Ended March 31, 2021 and 2020

The following table sets forth our results of operations for the three months ended March 31, 2021 and 2020.

Comparison of the Three Months Ended June 30, 2021 and 2020

The following table sets forth our results of operations for the three months ended June 30, 2021 and 2020.

Three months ended

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Research and Development Expenses

Research and development expenses increased by $7.9 million to $16.5 million for the three months ended March 31, 2021 from $8.5 million for the three months ended March 31, 2020.

The increase was mainly due to increased clinical research costs for the PRT543 and PRT811 clinical trials and increased costs associated with the initiation of the clinical trial for oral PRT1419, as well as preparation for the anticipated initiation of the Phase 1 trial for IV PRT1419 in the coming months.

We also incurred an increase in chemistry, manufacturing and other costs for those trials.

Research and development expenses increased by $12.6 million to $22.4 million for the three months ended June 30, 2021 from $9.8 million for the three months ended June 30, 2020.

The increase was mainly due to increased clinical research costs for the PRT543, PRT811 and PRT1419 (Oral and IV).

Our chemistry, manufacturing and other costs for those trials also increased.

We track our external research and development expenses on a program-by-program basis, such as fees paid to CROs, CMOs and research laboratories in connection with our pre-clinical development, process development, manufacturing and clinical development activities.

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(in thousands)

PRT1419 (Oral and IV)

Discovery programs

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General and Administrative Expenses

General and administrative expenses increased by $4.3 million to $5.5 million for the three months ended March 31, 2021 from $1.2 million for the three months ended March 31, 2020.

General and administrative expenses increased by $3.9 million to $5.5 million for the three months ended June 30, 2021 from $1.6 million for the three months ended June 30, 2020.

The increase was primarily due to an increase in personnel related expense due to an increase in employee headcount and an increase in our professional fees as we expanded our operations to support our research and development efforts and incurred additional costs to operate as a public company.

Other Income, net

Other income, net increased by $1.0 million primarily due to the receipt and recognition of a research and development tax credit from the State of Delaware in the second quarter of 2021.

Results of Operations

Comparison of the Six Months Ended June 30, 2021 and 2020

The following table sets forth our results of operations for the six months ended June 30, 2021 and 2020.

Six months ended

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income, net

Research and Development Expenses

Research and development expenses increased by $20.6 million to $38.9 million for the six months ended June 30, 2021 from $18.3 million for the six months ended June 30, 2020.

The increase was mainly due to increased clinical research costs for the PRT543 and PRT811.

Our chemistry, manufacturing and other costs for those trials also increased.

However, we do not track our internal research and development expenses on a program-by-program basis as they primarily relate to compensation, early research and other costs which are deployed across multiple projects under development.

Research and development expenses by program are summarized in the table below:

Six months ended

(in thousands)

PRT1419 (Oral and IV)

Discovery programs

Internal costs, including personnel related

General and Administrative Expenses

General and administrative expenses increased by $8.1 million to $11.0 million for the six months ended June 30, 2021 from $2.9 million for the six months ended June 30, 2020.

The increase was primarily due to an increase in personnel related expense due to increases in employee headcount and an increase in our professional fees as we expanded our operations to support our research and development efforts and incurred additional costs to operate as a public company.

Other Income, net

Other income, net increased by $0.4 million primarily due to the receipt and recognition of a research and development tax credit from the State of Delaware in the first quarter of 2021.

Other income, net increased by $1.5 million primarily due to the receipt and recognition of a research and development tax credit from the State of Delaware in the first and second quarter of 2021.

Liquidity and Capital Resources

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Since our inception, we have funded our operations through the sale of convertible preferred stock and common stock .

As of March 31, 2021, we had $363.0 million in cash and cash equivalents and had an accumulated deficit of $128.7 million.

We expect our existing cash and cash equivalents to enable us to fund our operating expenses and capital expenditure requirements into 2023.

As of June 30, 2021, we had $343.1 million in cash and cash equivalents and had an accumulated deficit of $155.6 million.

We expect our existing cash and cash equivalents to enable us to fund our operating expenses and capital expenditure requirements into mid-2023.

We have based these estimates on assumptions that may prove to be imprecise, and we could utilize our available capital resources sooner than we expect.

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

Three months ended

Six months ended

(in thousands)

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Operating Activities

During the three months ended March 31, 2021, we used $16.1 million of cash in operating activities.

Cash used in operating activities reflected our net loss of $21.3 million, offset by a $0.8 million net decrease in our operating assets and liabilities and noncash charges of $4.3 million, which consisted of $0.2 million in depreciation and $3.9 million in stock-based compensation.

During the six months ended June 30, 2021, we used $36.1 million of cash in operating activities.

Cash used in operating activities reflected our net loss of $48.2 million, offset by a $3.1 million net decrease in our operating assets and liabilities and noncash charges of $9.1 million, which consisted of $0.4 million in depreciation, $0.6 million noncash lease expense and $8.1 million in stock-based compensation.

The primary use of cash was to fund our operations related to the development of our product candidates.

During the three months ended March 31, 2020, we used $9.9 million of cash in operating activities.

Cash used in operating activities reflected our net loss of $9.5 million and a net increase of $0.9 million in our operating assets and liabilities, offset by $0.5 million of noncash charges, which consisted of $0.1 million in depreciation and amortization and $0.4 million in stock-based compensation.

During the six months ended June 30, 2020, we used $18.8 million of cash in operating activities.

Cash used in operating activities reflected our net loss of $20.9 million, offset by a $0.8 million net decrease in our operating assets and liabilities and noncash charges of $1.3 million, which consisted of $0.3 million in depreciation and $1.0 million in stock-based compensation.

The primary use of cash was to fund our operations related to the development of our product candidates.

Investing Activities

During the three months ended March 31, 2021 and 2020, we used $1.0 million and $0.1 million of cash, respectively, for the purchase of property and equipment.

During the six months ended June 30, 2021 and 2020, we used $1.4 million and $0.1 million of cash, respectively, for the purchase of property and equipment.

Financing Activities

During the three months ended March 31, 2021, financing activities provided $161.8 million, which reflected the receipt of net cash of $161.4 million from the sale of common stock as well as the receipt of $0.4 million from the exercise of stock options.

During the three months ended March 31, 2020 net cash provided by financing activities consisted of $29.8 million from the sale of our Series B convertible preferred stock, offset by payments of $95,000 for our capital lease obligation.

During the six months ended June 30, 2021, financing activities provided $162.2 million, which reflected the receipt of net cash of $161.4 million from the sale of common stock as well as the receipt of $0.8 million from the exercise of stock options.

During the six months ended June 30, 2020, financing activities provided $29.8 million of cash.

Net cash provided by financing activities for the six months ended June 30, 2020 consisted of $29.9 million from the sale of our Series B convertible preferred stock and $31,000 of proceeds received from the exercise of stock options, offset by payments of $0.2 million for our capital lease obligation.

Off-Balance Sheet Arrangements

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Critical Accounting Policies

During the three months ended March 31, 2021, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” on our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2021.

During the three months ended June 30, 2021, there were no material changes to our critical accounting policies and estimates from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” on our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2021.

JOBS Act Accounting Election

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Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Quantitative and Qualitati ve Disclosures About Market Risk.

Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis