IDEAYA Biosciences, Inc. — Q3 2021 Form 10-Q
Business context and reporting period. IDEAYA is a clinical-stage precision-medicine oncology company focused on targeted therapeutics. This unaudited filing covers the quarter and nine months ended September 30, 2021. The company had no approved products and no product-sales revenue; reported revenue was from its GSK collaboration.
Financial results and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $9.0 million | $9.0 million | $25.0 million | $9.0 million |
| Research and development | $15.5 million | $10.0 million | $42.0 million | $27.6 million |
| General and administrative | $5.2 million | $3.9 million | $14.8 million | $11.4 million |
| Operating loss | $11.7 million | $5.0 million | $31.9 million | $30.1 million |
| Net loss | $11.6 million | $4.9 million | $31.6 million | $29.4 million |
| Net loss per share, diluted | $0.31 | $0.17 | $0.92 | $1.26 |
Amounts are rounded; expenses and losses are shown as positive amounts in the table for readability. Quarterly net loss widened year over year as operating expenses rose while revenue was nearly unchanged. For the nine-month period, revenue increased because 2020 collaboration revenue began only after the GSK agreement became effective in July 2020. No meaningful product gross margin is reported, as there are no product sales.
- Cash and investments: $385.8 million at September 30, 2021, including $108.4 million of cash and cash equivalents and $277.3 million of marketable securities. Management said this would fund planned operations for at least 12 months from issuance of the financial statements.
- Cash flows, nine months: $39.1 million used in operations, versus $67.1 million provided in 2020; $69.3 million used in investing; and $144.8 million provided by financing. Financing included $86.0 million net from a July follow-on offering and $57.3 million net from ATM stock sales.
- Debt and liabilities: The balance sheet reports no borrowings or debt. Total liabilities were $81.8 million, including $62.2 million of contract liabilities and $5.6 million of lease liabilities. The company disclosed expected lease payments of $6.2 million through July 2024.
- Equity issuance: Common shares outstanding rose to 38.46 million at quarter-end from 29.54 million at December 31, 2020. Approximately $73.8 million remained available under the ATM facility at September 30.
Material changes and operating developments
- Nine-month R&D expense increased 52% year over year, mainly from higher staffing and stock compensation, CRO/CMO and consultant costs, laboratory and facility spending, and clinical-trial costs for IDE397 and darovasertib.
- Nine-month G&A expense increased 30%, principally from higher stock-based compensation, headcount, facility, and software costs.
- Operating cash flow shifted from positive to negative, largely because the prior-year period included GSK’s $100 million upfront payment, recorded as a contract liability and recognized as services were performed. Contract liabilities declined to $62.2 million from $83.8 million at year-end 2020.
- The July 2021 follow-on offering and 2021 ATM sales strengthened liquidity but increased shares outstanding.
Outlook, commentary, risks and contingencies
- IDE397: The company reported active enrollment in Phase 1 dose escalation and, as of November 5, 2021, described the drug as generally well tolerated, with reported drug-related adverse events limited to Grade 1/2 and no reported drug-related serious adverse events. Preliminary activity included plasma SAM reductions and tumor shrinkage in some patients; these early, small-cohort observations are not definitive efficacy results. The company targeted cohort expansion in the first half of 2022 and delivery of a GSK option data package in that period. If GSK exercises its option, IDEAYA would be eligible for a $50 million payment, subject to applicable conditions.
- Darovasertib (IDE196): Phase 1/2 studies continued, including combination arms with Pfizer’s binimetinib and crizotinib. As of November 5, 2021, the company reported 32 patients enrolled in the binimetinib combination and 28 in the crizotinib combination. Management targeted a Q4 2021 data update and planned to seek FDA guidance in the first half of 2022 on a potentially registration-enabling study. Previously disclosed monotherapy results were preliminary and based on an unlocked database with an April 13, 2021 cutoff.
- Other pipeline: PARG remained in preclinical development, with a potential development candidate selected and further toxicology work planned. POLQ and WRN programs were being developed with GSK; IDEAYA planned to select a POLQ small-molecule development candidate in December 2021.
- Collaboration economics: GSK’s MAT2A option had not been exercised as of the filing. Potential milestones, profit shares and royalties are contingent and not guaranteed. GSK may terminate programs or the collaboration under specified terms. Pfizer supplies binimetinib and crizotinib for the relevant trials at no cost to IDEAYA under the collaboration agreement.
- Costs and funding: Management expects substantial losses and higher operating expenses as programs advance. Additional capital may be required; financing may not be available on acceptable terms and equity financing could dilute shareholders. The stated runway is a management estimate, not a guarantee.
- Key risks: Clinical and regulatory uncertainty, patient enrollment and trial execution, reliance on CROs/CMOs and collaborators, companion-diagnostic availability, competition, intellectual-property risks, and potential COVID-19 disruption to trials or suppliers. The company said COVID-19 had not materially affected operations in Q3, but future effects remained uncertain.
- Contingencies and controls: Management reported no litigation expected to have a material adverse effect and no material change in internal control over financial reporting; disclosure controls were considered effective. Indemnification exposure under standard agreements is not quantifiable, though management considered its fair value immaterial.
Most important facts for investors to verify
- Subsequent IDE397 and darovasertib trial data, including sample sizes, follow-up, response criteria, safety, and whether early findings are confirmed.
- Whether IDEAYA delivers the planned IDE397 data package and whether GSK exercises its option, including any required regulatory clearance and resulting payment or cost-sharing obligations.
- Actual operating cash burn and cash runway relative to the company’s plans and the stated minimum 12-month funding estimate.
- Remaining ATM capacity, future share issuance, and the resulting dilution; also reconcile the filing’s period-end shares with later reported outstanding shares.
- Progress, costs, and timing of planned trial expansions and regulatory discussions, including possible COVID-19 or third-party supply impacts.