IDEAYA Biosciences, Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter ended June 30, 2020; financial statements are unaudited. IDEAYA is a clinical-stage oncology precision-medicine company with no approved products and no revenue since inception. Amounts below are in millions of dollars unless stated otherwise.
Financial performance and position
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $8.6 | $8.9 | $17.6 | $16.9 |
| General and administrative expense | $4.0 | $2.4 | $7.4 | $4.5 |
| Total operating expenses | $12.6 | $11.2 | $25.1 | $21.3 |
| Operating loss | $(12.6) | $(11.2) | $(25.1) | $(21.3) |
| Net loss | $(12.4) | $(10.7) | $(24.4) | $(20.2) |
| Basic and diluted loss per share | $(0.59) | $(1.30) | $(1.18) | $(4.32) |
- Q2 operating expenses rose 12% year over year, principally reflecting higher G&A, partly offset by lower R&D. Six-month expenses rose 18%; net loss increased 21%.
- Six-month operating cash use was $23.2 million, compared with $20.1 million in 2019. Investing activities provided $41.9 million, mainly from marketable-security maturities; financing activities provided $94.7 million, primarily from the follow-on offering. Cash, cash equivalents and restricted cash increased $113.5 million to $147.6 million.
- At June 30, cash and cash equivalents were $147.5 million, marketable securities were $24.4 million, and cash, cash equivalents and marketable securities totaled approximately $172.0 million. Current assets were $174.0 million and current liabilities $7.4 million. Total liabilities were $12.5 million, including lease liabilities; the filing reports no material financial debt.
- Accumulated deficit was $116.9 million. The company stated its quarter-end liquidity was expected to fund planned operations for at least 12 months from issuance of the financial statements.
Material developments and outlook
- GSK collaboration: The agreement covers MAT2A, POLQ (Pol Theta) and WRN programs. It became effective July 27, 2020 after antitrust clearance; IDEAYA received a $100 million upfront payment on July 31. GSK may pay a further $50 million if it exercises its MAT2A option. Potential additional milestones and royalties or profit shares are contingent on development, regulatory, commercial and option outcomes and are not assured.
- For POLQ, GSK holds an exclusive global license and pays program R&D costs. For WRN, GSK leads clinical development and IDEAYA is responsible for 20% of global R&D costs. MAT2A early development remains IDEAYA-led; later-stage costs and economics depend on GSK’s option exercise.
- Additional post-quarter financing: IDEAYA received $7.5 million gross from the underwriters’ July 22 overallotment and $20 million gross from a GSK-affiliated private placement that closed August 3. Management reported $127.5 million in aggregate post-quarter gross proceeds from these transactions and the GSK upfront payment. These events occurred after the June 30 balance-sheet date.
- Pipeline outlook: IDEAYA selected IDE397 as a MAT2A development candidate and anticipated an IND filing in Q4 2020, subject to toxicology results, and a Phase 1 start in H1 2021, subject to IND effectiveness. A Pol Theta IND filing was targeted for 2021; a PARG development candidate was targeted for 2021.
- IDE196: The company reported one confirmed partial response among four evaluable cutaneous melanoma patients in its monotherapy basket-trial cohort, with disease control in all four; five patients had been enrolled toward the nine-patient first-stage target as of August 1. The binimetinib combination arm began in June, with three metastatic uveal melanoma patients dosed by August 1. Interim combination data were anticipated in late 2021 or early 2022; monotherapy interim data were planned for H1 2021.
- Management expects operating losses to continue and increase as programs advance. It anticipates collaboration revenue beginning in Q3 2020, but timing and amount may fluctuate with performance obligations, milestones and other payments. No product-sales revenue is expected in the foreseeable future.
Risks, contingencies and unusual items
- COVID-19 had not materially affected operations in Q2, but could delay patient enrollment, trial monitoring, research, suppliers or manufacturing; the extent of future effects was uncertain.
- Clinical and regulatory outcomes remain uncertain: IDEAYA has limited clinical-stage experience, depends on third parties for trials and manufacturing, and IDE196 is its only internally sponsored clinical-stage candidate. The company also relies partly on Novartis trial data for IDE196 development.
- Future capital needs remain significant despite the financing proceeds; funding may be unavailable or dilutive. GSK may decline the MAT2A option or terminate programs, which could reduce future collaboration economics and increase IDEAYA’s costs.
- The company disclosed no material litigation, no material changes in contractual obligations since year-end, and no off-balance-sheet arrangements. Management assessed disclosure controls as effective at the reasonable-assurance level and reported no material change in internal control over financial reporting during the quarter.
Key facts for investors to verify
- Progress and timing of IDE397 toxicology, IND submission and Phase 1 initiation, and whether GSK exercises the MAT2A option.
- Final and updated IDE196 patient counts, response durability, safety, enrollment pace and timing of planned interim disclosures, including potential COVID-19 effects.
- Recognition and accounting for the $100 million GSK upfront payment, and the terms, costs and contingent economics of each collaboration program.
- Cash burn and runway after the quarter-end offering, GSK payment and private placement; distinguish gross proceeds from net proceeds and consider dilution from share issuance.
- The filing’s stated IDE397 timeline: the detailed pipeline discussion says Phase 1 was anticipated in H1 2021, while a later corporate-update passage contains an inconsistent H1 2020 reference.