ORIC Pharmaceuticals, Inc. Form 10-Q Summary
Business context and reporting period
ORIC Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on therapies intended to overcome cancer treatment resistance. The filing covers the unaudited quarter and nine months ended September 30, 2021. The company has no approved products and has not generated revenue from product sales.
- Lead candidate: ORIC-101, in Phase 1b combination trials with nab-paclitaxel and enzalutamide.
- Other programs: ORIC-533, ORIC-944 and ORIC-114, in early clinical or preclinical development.
- Common shares outstanding: 39.3 million at September 30, 2021; 39.4 million as of November 3, 2021.
Financial performance and liquidity
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $12.9 million | $40.1 million |
| General and administrative expense | $5.6 million | $16.0 million |
| Total operating expenses | $18.5 million | $56.1 million |
| Net loss | $18.4 million | $55.9 million |
| Net loss per share | $0.47 | $1.49 |
| Net cash used in operating activities | Not separately presented | $43.3 million |
- Cash and cash equivalents were $241.1 million at September 30, 2021. Available-for-sale investments totaled $55.3 million, resulting in cash, cash equivalents and investments of approximately $296.5 million.
- Total assets were $314.2 million and total liabilities were $22.6 million. The filing does not report funded debt; liabilities primarily include accrued expenses and operating lease liabilities.
- Accumulated deficit was $222.3 million.
- Net cash provided by investing activities was $158.1 million, primarily from sales and maturities of investments. Net cash provided by financing activities was $48.3 million.
- The company reported no meaningful operating margin because it has no revenue and continues to incur research and development expenses.
Material changes versus the prior comparable period
- Third-quarter research and development expense increased $4.1 million, or approximately 46%, to $12.9 million, primarily from higher external program costs and personnel-related costs.
- Nine-month research and development expense increased $16.3 million, or approximately 69%, to $40.1 million.
- General and administrative expense increased $1.8 million in the quarter and $6.8 million for the nine-month period, reflecting higher personnel, stock-based compensation and public-company costs.
- Third-quarter net loss decreased by $7.1 million versus the prior year because the 2020 period included a $13.0 million acquired in-process research and development charge related to the Mirati license. Excluding that unusual charge, ongoing expenses increased.
- Nine-month net loss increased $10.5 million to $55.9 million as research and development and corporate expenses rose.
- Stock-based compensation increased to $9.4 million for the nine months from $3.6 million in the prior-year period.
- In July 2021, the company sold 2.6 million shares under its ATM facility for gross proceeds of $50.0 million and net proceeds of approximately $48.1 million.
- Common shares outstanding increased primarily because of the ATM offering and option exercises.
Guidance, outlook, risks and unusual items
- Management expects existing cash, cash equivalents and available-for-sale investments to fund the current operating plan into 2024. This is a forward-looking estimate and may change materially.
- The company expects research and development expenses and operating losses to increase substantially as clinical and preclinical programs advance. Additional capital will likely be required.
- Management planned to use available funds for ORIC-101, ORIC-533, ORIC-944 and ORIC-114 development, including data readouts expected in 2022–2023.
- The FDA cleared the ORIC-533 IND in June 2021, with first-patient enrollment expected in the fourth quarter of 2021. The company expected to file an ORIC-944 IND in the fourth quarter of 2021 and reported filing an ORIC-114 CTA in November 2021, after the reporting date.
- COVID-19 continued to affect clinical-site enrollment, trial operations, supply chains, data collection and regulatory timelines. A shortage of Abraxane beginning in September 2021 caused certain sites to temporarily halt screening for the ORIC-101 combination trial.
- The company relies on third parties for clinical trials, manufacturing and supply, including a single third-party manufacturer for ORIC-101 and no alternative manufacturer currently in place.
- The Voronoi license includes potential development and commercial milestone payments of up to $111.0 million and $225.0 million for the first licensed product, plus up to $272.0 million for a second product, as well as royalties on net sales.
- The company adopted lease accounting under ASC 842 on January 1, 2021, recognizing right-of-use assets and lease liabilities. Total operating lease liabilities were $12.5 million at September 30, 2021.
- Management reported no material pending litigation and concluded that disclosure controls and procedures were effective as of September 30, 2021.
- The filing identifies substantial risks related to clinical failure, regulatory approval, adverse events, competition, intellectual property, third-party manufacturing, COVID-19, dependence on additional financing and stock-price volatility.
Important facts for investors to verify
- Whether clinical data for ORIC-101 demonstrate sufficient efficacy and tolerability to support continued development.
- The timing and results of ORIC-533, ORIC-944 and ORIC-114 clinical and regulatory milestones.
- The impact of the Abraxane shortage and other supply-chain constraints on ORIC-101 trial enrollment and timelines.
- Whether the projected cash runway into 2024 remains valid as program spending increases.
- Future equity financing needs, potential dilution and the remaining capacity under the $150 million ATM facility.
- The financial and strategic implications of milestone, royalty and termination provisions in the Mirati and Voronoi license agreements.
- Changes in the company’s accumulated deficit, operating cash burn, stock-based compensation and lease obligations.