Olema Pharmaceuticals, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Olema is a clinical-stage biopharmaceutical company developing therapies for women’s cancers. Its lead candidate, OP-1250, is in a Phase 1/2 trial for ER-positive, HER2-negative breast cancer. The company had no approved products and generated no product revenue.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $10.7 million | $0.8 million |
| General and administrative expense | $4.8 million | $0.2 million |
| Total operating expenses | $15.5 million | $1.0 million |
| Net loss | $15.3 million | $1.7 million |
| Net loss per share | $0.39 | $0.65 |
| Net cash used in operating activities | $11.1 million | $2.1 million |
At March 31, 2021, cash and cash equivalents were $47.9 million, marketable securities were $279.1 million, and total cash, cash equivalents and marketable securities were approximately $327.0 million. Total current liabilities were $5.3 million; the company reported no debt. Total assets were $331.3 million and stockholders’ equity was $326.0 million. No meaningful operating margin comparison applies because the company had no revenue.
Investing cash outflow was $279.6 million, primarily reflecting purchases of marketable securities, rather than operating cash use. There were no financing cash flows in Q1 2021. Stock-based compensation was $3.2 million, including $1.7 million in R&D and $1.5 million in G&A.
Changes versus the prior comparable period
- Operating expenses rose by $14.4 million year over year, largely as OP-1250 clinical and manufacturing activity, discovery work, staffing, public-company costs and stock compensation increased.
- Net loss increased by $13.6 million. Q1 2020 included $0.7 million of interest expense, including non-cash expense related to convertible notes; Q1 2021 had $0.1 million of interest income and no interest expense.
- Cash and cash equivalents fell from $338.5 million at December 31, 2020, while the company built a $279.1 million marketable-securities portfolio.
- Accumulated deficit reached $48.4 million. Common shares outstanding at March 31 were 39.3 million.
Outlook, commentary and risks
- Management expected initial dose-escalation data from the OP-1250 Phase 1/2 trial in the second half of 2021. The filing describes planned combination studies involving Novartis drugs and a Pfizer-supplied drug; these collaborations do not establish trial outcomes.
- Management’s MD&A states existing cash, equivalents and marketable securities were expected to fund planned operating expenses and capital expenditures through the end of 2023. A note to the financial statements separately says liquidity was sufficient for at least 12 months from issuance; investors should note the difference in wording.
- Olema expects significant and increasing losses and expenses for the foreseeable future and will need substantial additional funding to continue development. It may need to delay, reduce or end programs if financing is unavailable on acceptable terms.
- COVID-19 had caused some delays in trial setup and site initiation, although the company said operations and development timelines had not been materially adversely affected through March 31, 2021. Future effects remained uncertain.
- Key risks include OP-1250’s early clinical stage and dependence as the company’s sole product candidate; clinical, regulatory, safety and enrollment uncertainty; competition; reliance on third-party manufacturers, CROs and suppliers; intellectual-property challenges; and potential dilution or unfavorable financing terms.
- Contractual obligations and commitments were reported at $6.8 million, with most scheduled from 2021 through 2025. The company reported no material pending litigation and no off-balance-sheet arrangements.
- Management concluded disclosure controls were effective at a reasonable assurance level as of March 31, 2021. Previously identified material weaknesses were reported as remediated as of December 31, 2020.
Important facts for investors to verify
- Whether OP-1250 trial enrollment, safety and efficacy data, and the stated second-half 2021 initial-data timing progressed as planned.
- The basis and assumptions supporting the projected cash runway through end-2023, and how the separate “at least 12 months” liquidity statement is reconciled.
- Quarterly cash burn, clinical and manufacturing commitments, and the composition, liquidity and valuation of marketable securities.
- Whether rising R&D, G&A and stock-based compensation affect the expected funding runway or create additional financing needs.
- Any material trial delays, collaboration changes, supply constraints, regulatory developments or intellectual-property disputes.