Olema Pharmaceuticals, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Olema is a clinical-stage biopharmaceutical company developing targeted therapies for women’s cancers. Its lead candidate, OP-1250, is being studied for ER-positive, HER2-negative breast cancer. The company has no approved products and has generated no product revenue.
Financial performance and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | No product revenue | No product revenue | No product revenue | No product revenue |
| Research and development expense | $17.6 million | $12.5 million | $60.7 million | $35.1 million |
| General and administrative expense | $5.6 million | $5.2 million | $19.1 million | $14.6 million |
| Net loss | $22.7 million | $17.7 million | $78.6 million | $49.5 million |
| Net loss per share, basic and diluted | $0.57 | $0.45 | $1.97 | $1.25 |
| Cash used in operating activities | Not separately provided | Not separately provided | $62.4 million | $32.1 million |
At September 30, 2022, cash and cash equivalents were $26.8 million and marketable securities were $195.8 million, totaling $222.6 million. Management estimated these resources would fund planned operating expenses and capital expenditures into the second half of 2024. The company reported no debt outstanding. Current assets were $225.1 million and current liabilities were $12.6 million. Stockholders’ equity was $217.7 million; accumulated deficit was $182.8 million.
No meaningful product margins are reported because Olema has no product sales. The filing does not provide a clear operating margin measure.
Changes versus the prior comparable period
- Q3 net loss increased $5.0 million year over year; nine-month net loss increased $29.2 million.
- R&D expense rose $5.1 million in Q3 and $25.6 million for the first nine months, reflecting OP-1250 clinical and manufacturing costs, other discovery work, increased headcount and, year to date, an $8.0 million Aurigene upfront payment.
- G&A expense increased $0.4 million in Q3 and $4.5 million year to date, mainly from personnel and public-company costs.
- Operating cash use nearly doubled year over year for the nine-month period, to $62.4 million. Investing cash flow was a $75.1 million source, primarily reflecting marketable-security maturities net of purchases.
- Cash and marketable securities together declined from $287.3 million at December 31, 2021 to $222.6 million at September 30, 2022. Unrealized losses on marketable securities were $2.7 million; management attributed these to market yields and bid/ask spreads, not credit losses, and recorded no impairment.
Outlook, developments and risks
- Olema selected 120 mg as the recommended Phase 2 dose for OP-1250 in June 2022; the primary Phase 2 monotherapy cohorts were reported fully enrolled. In October 2022, it reported preliminary Phase 1b dose-expansion results. It planned to seek an FDA End-of-Phase-2 meeting and anticipated initiating a pivotal Phase 3 monotherapy study in second- and third-line patients in mid-2023.
- The company initiated a Phase 1b OP-1250/palbociclib study in January 2022 and anticipated preliminary results in Q4 2022. It also initiated a Phase 1b study combining OP-1250 with ribociclib and alpelisib in Q3 2022. FDA granted OP-1250 Fast Track designation in July 2022 for a specified metastatic breast cancer population; this does not assure approval or an expedited review outcome.
- The June 2022 Aurigene license covers inhibitors of an undisclosed oncology target. Terms include an $8.0 million upfront payment, up to $60.0 million in clinical and regulatory milestones, up to $370.0 million in commercial milestones, and tiered royalties from mid-single digits to low double digits.
- Management expects losses and expenses to increase and says substantial additional funding will be needed. The filing warns that financing may be unavailable or dilutive, and that failure to raise funds could require delaying, reducing or ending programs. Risk-factor disclosure also says losses and negative operating cash flows raise substantial doubt about long-term continuation as a going concern, notwithstanding management’s estimated runway into the second half of 2024.
- Key risks include clinical efficacy and safety uncertainty, trial enrollment and execution, regulatory approval, reliance on third-party manufacturers and CROs, competition, intellectual-property protection, and COVID-19, inflation, labor, market and supply-chain disruptions. The filing notes three Phase 1a patients with grade 4 neutropenia attributed to study drug; two had fever and neutropenia.
- No material litigation was reported. Separately, the company disclosed that falsified information about a planned OP-1250 poster circulated on social media in November 2021; a board special committee investigated the matter and its outside counsel contacted the SEC.
Important facts for investors to verify
- Progress, final results and safety profile of OP-1250 trials, including the preliminary expansion data, combination studies and the proposed Phase 3 timeline.
- Whether actual spending and trial costs remain consistent with the stated cash runway into the second half of 2024, and when additional financing may be required.
- Manufacturing capacity, third-party supply reliability and availability of combination drugs for planned trials.
- Full financial and development obligations under the Aurigene license, including future research funding, milestones and royalties.
- Any updates to the social-media falsification investigation and any resulting regulatory, legal or disclosure developments.