Biomea Fusion, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Financial statements are unaudited. Biomea Fusion is a preclinical-stage biopharmaceutical company developing irreversible small molecules for genetically defined cancers; it has generated no revenue from product sales.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $3.798 million | $0.334 million |
| General and administrative expense | $2.059 million | $0.064 million |
| Total operating expenses | $5.857 million | $0.398 million |
| Net loss | $5.852 million | $0.398 million |
| Basic and diluted loss per share | $0.49 | $0.05 |
| Net cash used in operating activities | $4.075 million | $0.252 million |
| Cash, cash equivalents and restricted cash | $19.107 million | $61.695 million at Dec. 31, 2020 |
| Investments | $38.429 million | None at Dec. 31, 2020 |
| Total liabilities | $3.919 million | $1.619 million at Dec. 31, 2020 |
| Accumulated deficit | $14.027 million | $8.175 million at Dec. 31, 2020 |
At March 31, cash, cash equivalents, restricted cash and investments totaled approximately $57.5 million. Q1 investing cash outflow was $38.510 million, primarily for purchases of securities; the $42.588 million decrease in cash and restricted cash should not be read as operating cash burn alone. The company reported no revenue, so operating margins are not meaningful. It reported no interest-bearing liabilities in its market-risk discussion; the balance sheet included a $36,000 PPP loan payable at quarter-end, which the company says it repaid in Q2 2021.
Material changes and notable items
- Operating expenses rose $5.459 million year over year. R&D increased primarily due to BMF-219 preclinical development, IND-enabling manufacturing and external consulting; G&A increased with personnel, facilities and professional services.
- Stock-based compensation was $919,000 in Q1 2021, versus none in Q1 2020. The company recorded a $15,000 unrealized investment loss in other comprehensive loss.
- In April 2021, the company completed its IPO, issuing 9 million shares at $17 per share and reporting approximately $152.8 million in net proceeds. It also reported that underwriters partially exercised their option for an additional 823,532 shares within 30 days. Preferred shares converted into 7,064,925 common shares at the IPO closing.
- An 8.84-for-1 forward stock split took effect April 12, 2021; share and per-share data in the financial statements were retrospectively adjusted.
- Total current assets were $47.522 million and current liabilities were $3.919 million at March 31. The company reported stockholders’ equity of $221,000; preferred stock was presented outside stockholders’ equity.
Outlook, commentary and risks
- Management expected to submit an IND for lead candidate BMF-219 in the second half of 2021 and nominate a second development candidate in the first half of 2022. These are forward-looking plans, not reported achievements.
- The company expected operating losses and R&D spending to increase as programs move toward clinical development. It stated that Q1 cash and investments were expected to fund at least 12 months of needs; it also said the IPO proceeds would extend funding. Additional capital will be needed to develop candidates, and financing may be unavailable or dilutive.
- BMF-219 remained preclinical and had not been tested in humans; the company had not initiated clinical trials. Preclinical results may not predict human safety or efficacy, and the novel irreversible-inhibitor approach carries potential selectivity and toxicity risks.
- The company relies on third parties for manufacturing and research services, and identifies clinical, regulatory, supply, intellectual-property, competition, staffing and financing risks. It reported no COVID-19-related development delays to date but cautioned that future disruption was possible.
- The company signed a five-year lease for new lab space, expected to begin in May 2021, with monthly payments of $57,638 and annual increases of 3%. Management said disclosure controls were effective at a reasonable assurance level and reported no material Q1 change in internal control over financial reporting.
Investor verification points
- Confirm the IPO’s final proceeds, including the timing and net proceeds from the underwriters’ partial option exercise, and assess the resulting cash runway against updated spending plans.
- Track whether BMF-219’s IND was filed and accepted, and whether subsequent clinical plans, timelines and safety data support management’s development assumptions.
- Monitor quarterly R&D and operating cash use separately from investment purchases, and reconcile available cash and investments with committed lease and development costs.
- Review the company’s dependence on third-party manufacturers and service providers, and any disclosures of supply disruption, clinical delays, or changes in the key scientific and regulatory risks.
- Check subsequent filings for material changes in financing needs, share count, stock-based compensation, and the status of the PPP loan repayment.