Oric Pharmaceuticals, Inc. — Form 10-Q Summary
Business context and reporting period
Oric Pharmaceuticals is a clinical-stage biopharmaceutical company focused on therapies intended to overcome resistance in cancer. The report covers the quarter and six months ended June 30, 2023, and was filed August 10, 2023. The company has no approved products and has not generated revenue from product sales.
Clinical-stage programs include ORIC-114, targeting EGFR and HER2 exon 20 alterations; ORIC-533, targeting CD73 in multiple myeloma; and ORIC-944, targeting PRC2 in prostate cancer. The company is enrolling Phase 1b trials for all three candidates.
Key financial metrics
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Research and development expense | $18.8 million in 2023; $13.8 million in 2022 | $38.3 million in 2023; $30.7 million in 2022 |
| General and administrative expense | $6.2 million in 2023; $6.9 million in 2022 | $12.4 million in 2023; $13.3 million in 2022 |
| Total operating expenses | $25.0 million in 2023; $20.7 million in 2022 | $50.7 million in 2023; $44.0 million in 2022 |
| Other income, net | $2.0 million in 2023; $0.4 million in 2022 | $3.8 million in 2023; $0.5 million in 2022 |
| Net loss | $22.9 million in 2023; $20.3 million in 2022 | $46.9 million in 2023; $43.4 million in 2022 |
| Net loss per share | $0.50 basic and diluted | $1.03 basic and diluted |
| Net cash used in operating activities | $41.8 million in 2023; $40.5 million in 2022 |
Because the company has no revenue, gross and operating margins are not meaningful. The company reported an accumulated deficit of $381.1 million as of June 30, 2023.
At June 30, 2023, cash and cash equivalents were $103.7 million, short-term investments were $160.5 million, and long-term investments were $9.6 million. Total cash, cash equivalents and investments were approximately $273.7 million. Total liabilities were $23.0 million, and the filing does not report outstanding borrowings or debt financing.
Material changes versus the prior comparable period
- Second-quarter research and development expense increased $5.0 million, or approximately 36%, primarily due to higher external development costs and personnel costs. The increase reflected greater spending on ORIC-114 and ORIC-944, partly offset by lower ORIC-533 manufacturing costs.
- Six-month research and development expense increased $7.6 million, or approximately 25%, to $38.3 million.
- General and administrative expense declined $0.7 million in the quarter and $0.9 million year to date, primarily because of lower professional fees.
- Net loss increased $2.7 million in the quarter and $3.4 million for the six months, despite higher interest income.
- Net cash used in operations increased $1.3 million year to date, while investing cash outflows decreased substantially because the prior-year period included considerably higher net purchases of investments.
- In June 2023, the company completed a private placement of common stock and pre-funded warrants for $85.0 million of gross proceeds and $84.8 million of net proceeds. The transaction included 9.3 million common shares and pre-funded warrants for 2.9 million additional shares, resulting in material dilution potential.
Guidance, outlook, commentary, risks and unusual items
- Management expects current cash, cash equivalents and investments to fund the current operating plan into late 2025, although this estimate is subject to clinical, regulatory, cost and execution risks.
- Initial Phase 1b data for ORIC-114 were expected at the October 2023 ESMO Congress. Initial ORIC-533 data were expected in the fourth quarter of 2023, and initial ORIC-944 data were expected in the first quarter of 2024.
- Management expects research and development expenses and operating losses to increase as programs advance, clinical trials expand, manufacturing activities increase and additional personnel are hired.
- The company expects to require substantial additional capital. Future financing could dilute stockholders, impose debt covenants or require the company to surrender rights through collaborations or licensing arrangements.
- The company relies on contract research organizations, clinical sites and third-party manufacturers. Each current product candidate relies on a single third-party manufacturer, and the company has no long-term supply agreements or alternative manufacturers in place.
- Material development risks include failure to demonstrate safety or efficacy, clinical-trial enrollment delays, adverse events, regulatory delays or denials, manufacturing and supply disruptions, competition, intellectual-property challenges and the need for companion diagnostics.
- The company disclosed a potential intellectual-property dispute: a third party has inquired about a possible breach of a confidentiality agreement relating to the CD73 inhibitor program. No material litigation was pending according to management, but the matter could progress to a claim.
- The company disclosed an SEC civil enforcement action against its Chief Business Officer concerning matters unrelated to Oric. The company states that its Chief Financial Officer’s related SEC investigation concluded without further action being recommended.
- Disclosure controls and procedures were deemed effective at a reasonable assurance level as of June 30, 2023, with no reported material changes in internal control over financial reporting.
Most important facts for investors to verify
- Progress, enrollment, safety findings and data readouts for the ORIC-114, ORIC-533 and ORIC-944 Phase 1b trials.
- Whether the projected cash runway into late 2025 remains valid as clinical and manufacturing spending increases.
- Future financing needs and the dilution from the June private placement, including exercise of the pre-funded warrants.
- Clinical and manufacturing commitments, particularly reliance on single-source third-party manufacturers.
- Status and potential consequences of the disclosed CD73-related confidentiality inquiry and the SEC civil enforcement action involving the Chief Business Officer.
- Regulatory, intellectual-property and competitive developments that could affect the commercial viability of the product candidates.