IDEAYA Biosciences, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022; filed November 8, 2022. IDEAYA is a clinical-stage precision oncology company with no approved products and no product-sales revenue. Collaboration revenue is from its GSK agreement.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $29.7 million | $9.0 million | $46.9 million | $25.0 million |
| Research and development expense | $22.4 million | $15.5 million | $64.8 million | $42.0 million |
| General and administrative expense | $6.7 million | $5.2 million | $18.1 million | $14.8 million |
| Operating income (loss) | $0.7 million | $(11.7) million | $(36.1) million | $(31.9) million |
| Net income (loss) | $1.6 million | $(11.6) million | $(34.5) million | $(31.6) million |
| Operating cash flow | Not reported for the quarter | Not reported for the quarter | $(63.8) million | $(39.1) million |
Q3 operating margin was approximately 2.2%, but the quarter’s reported profit reflects collaboration revenue and is not indicative of recurring product economics. For the nine-month period, net loss widened 9% year over year as R&D investment increased 54%; higher personnel, clinical, consulting and outside-service costs were cited. Interest and other income rose to $1.6 million for the nine months, mainly from higher investment yields.
At September 30, cash and cash equivalents were $102.0 million and marketable securities were $292.0 million, totaling $393.9 million. Current assets were $393.4 million against current liabilities of $32.7 million. Total liabilities were $42.1 million, including contract liabilities and operating leases; the filing reports no borrowings. Accumulated deficit was $211.2 million. Unrealized losses on marketable securities were $3.3 million for the nine months and reduced comprehensive income.
Operating cash use increased to $63.8 million from $39.1 million. Financing provided $96.8 million, including $86.1 million net proceeds from a September public offering and $9.0 million net proceeds from ATM sales. The offering and ATM activity contributed to common shares outstanding rising from 38.5 million at year-end 2021 to 48.1 million at September 30, 2022.
Material changes and business developments
- Q3 collaboration revenue included $17.4 million recognized after GSK waived its option to license IDE397 and other MAT2A compounds. IDEAYA retains worldwide rights to IDE397 and bears future development costs. GSK also waived its MAT2A combination-trial rights in January 2022, resulting in $2.4 million revenue recognized during the nine-month period.
- A Pol Theta preclinical milestone triggered $3.0 million of consideration; $2.5 million was recognized as revenue in Q3. Revenue is subject to timing of collaboration performance obligations and may fluctuate materially between periods.
- For the nine months, revenue by program was $29.9 million MAT2A, $11.9 million Pol Theta and $5.1 million WRN. The remaining transaction price allocated to Pol Theta and WRN performance obligations was $18.2 million at quarter-end.
- In September, IDEAYA completed an underwritten offering of 8.76 million shares at $10.50 per share, receiving $86.1 million net. Approximately $64.4 million remained available under the ATM facility at September 30.
- IDEAYA entered a July 2022 collaboration with Amgen to evaluate IDE397 with AMG 193; the parties will share external study costs equally. Pfizer supplies crizotinib at no cost for specified darovasertib combination trials.
Outlook, commentary and key risks
- Management expected available cash, cash equivalents and marketable securities to fund planned operations for at least 12 months from issuance of the financial statements. The company expects continuing and increasing operating losses and may need additional capital; financing may dilute shareholders or be unavailable on acceptable terms.
- Subject to FDA feedback, IDEAYA planned a potential registration-enabling darovasertib/crizotinib trial in metastatic uveal melanoma in Q1 2023. It also targeted an IDEAYA-sponsored neoadjuvant/adjuvant uveal melanoma trial in Q4 2022.
- IDE397 was in Phase 1/2 development, including monotherapy expansion and combination cohorts. The Amgen combination study was planned as a Phase 1/2 trial. IDEAYA targeted an IDE161 PARG-inhibitor IND submission in Q4 2022, subject to satisfactory completion of enabling work; it targeted first-in-human evaluation of its GSK-partnered Pol Theta inhibitor with niraparib in H1 2023 and a WRN development-candidate nomination in 2023.
- Management reported preliminary darovasertib/crizotinib Phase 2 results: among 35 evaluable patients, investigator-reviewed response rate was 31% and disease-control rate was 83%; first-line response rate was 50% among eight evaluable patients. Follow-up was limited, and the data were preliminary. A Grade 5 serious adverse event occurred in a patient enrolled after the data cutoff; investigators considered disease progression the most likely cause, while the treating investigator noted a possible relationship to study therapy. The trial continued.
- Principal risks include clinical and regulatory uncertainty, limited patient populations and enrollment delays, reliance on third-party manufacturers and collaborators, companion-diagnostic availability, intellectual-property challenges, and the need for further financing. COVID-19, geopolitical disruption, inflation and interest-rate changes may affect trials, suppliers or capital access. The company reported no litigation expected to have a material adverse effect and no material change in internal control over financial reporting; disclosure controls were deemed effective.
Investor verification priorities
- Review how much of Q3’s collaboration revenue and profit resulted from GSK option waivers and the Pol Theta milestone, and how recurring collaboration revenue may evolve as obligations are completed.
- Confirm cash runway against operating cash use, planned trial spending and the company’s stated 12-month funding assessment.
- Track clinical-trial progress and regulatory feedback against the stated timelines, particularly the proposed darovasertib registration-enabling study and IDE397 combinations.
- Assess the maturity and durability of the preliminary efficacy and safety data, including subsequent follow-up and the investigation of the reported Grade 5 event.
- Monitor dilution from equity financing and any future funding needs, and verify the remaining ATM capacity and share count.