ORIC Pharmaceuticals, Inc. — Form 10-K Summary
Business context and reporting period
ORIC Pharmaceuticals is a clinical-stage biopharmaceutical company focused on therapies designed to overcome cancer treatment resistance. The filing covers the fiscal year ended December 31, 2022, not a standalone fourth quarter. The company has no approved products, has generated no product revenue, and operates in a single segment.
- Clinical-stage programs: ORIC-533 for CD73 inhibition and multiple myeloma; ORIC-114, a brain-penetrant EGFR/HER2 inhibitor for exon 20 alterations and HER2 amplifications; and ORIC-944, an EED-directed PRC2 inhibitor for advanced prostate cancer.
- All three programs were in Phase 1b development, with initial data expected in the second half of 2023.
- As of December 31, 2022, the company had 86 full-time employees, including 62 in research and development.
Financial performance and liquidity
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No product revenue |
| Research and development expense | $61.7 million | $56.9 million | +$4.8 million |
| General and administrative expense | $25.1 million | $22.0 million | +$3.1 million |
| Acquired in-process research and development | $5.0 million | $0 | +$5.0 million |
| Total operating expenses | $91.8 million | $78.9 million | +$12.9 million |
| Interest and other income | $2.6 million | $0.2 million | +$2.5 million |
| Net loss | $89.1 million | $78.7 million | Loss increased $10.4 million |
| Basic and diluted loss per share | $2.25 | $2.07 | Loss per share increased |
| Net cash used in operating activities | $75.1 million | $59.5 million | Use increased $15.6 million |
At December 31, 2022, cash and cash equivalents were $66.8 million, short-term investments were $139.4 million, and long-term investments were $22.0 million, for total cash, cash equivalents and investments of approximately $228.2 million. Total liabilities were $24.8 million, including $12.1 million of operating lease liabilities. The filing does not identify material debt financing.
Net cash used in investing activities was $109.2 million, primarily reflecting purchases of investments net of maturities. Net cash provided by financing activities was $25.2 million, primarily from the Pfizer registered direct offering. Stock-based compensation was $14.5 million, compared with $12.9 million in 2021.
Material changes versus the prior comparable period
- Research and development spending increased 8.5% to $61.7 million. ORIC-114 and ORIC-944 program costs increased, while ORIC-101 costs declined after its discontinuation and ORIC-533 manufacturing costs decreased due to timing.
- General and administrative expenses increased 14.0% to $25.1 million, primarily due to higher personnel costs and stock-based compensation.
- The company recorded a $5.0 million acquired in-process research and development expense for a development milestone paid to Voronoi related to ORIC-114.
- In March 2022, ORIC discontinued ORIC-101 after interim analyses indicated that the combination regimens were generally tolerated but lacked sufficient clinical activity to justify further development.
- In December 2022, ORIC entered into a clinical development collaboration with Pfizer for a potential Phase 2 combination study of ORIC-533 with elranatamab. ORIC retains full economic ownership and control of ORIC-533.
- Concurrent with the Pfizer collaboration, ORIC sold Pfizer 5,376,344 shares at $4.65 per share for gross proceeds of $25.0 million and net proceeds of $24.6 million.
- Shares outstanding increased to 45.1 million at December 31, 2022, from 39.4 million at December 31, 2021, primarily reflecting the Pfizer financing and equity compensation activity.
Guidance, outlook, commentary, risks and unusual items
Management expects substantial losses and operating expenses to continue increasing as the company advances its clinical programs, develops additional candidates, expands manufacturing activities, protects its intellectual property and hires personnel. Management estimates that existing cash, cash equivalents and investments will fund the current operating plan into the first half of 2025, but notes that this estimate is subject to significant assumptions and uncertainty.
- ORIC expects to report initial Phase 1b data for ORIC-533, ORIC-114 and ORIC-944 in the second half of 2023. These are forward-looking expectations, not assured milestones.
- The company will require additional capital to fund development and potential commercialization. It has no committed external source of additional funds, and future equity financing could dilute existing holders.
- ORIC relies on third parties for clinical research, manufacturing, packaging and distribution. Each principal product candidate currently relies on a single third-party manufacturer, creating supply-continuity risk.
- Clinical, regulatory and commercial risks include failure to demonstrate safety or efficacy, patient enrollment delays, adverse events, regulatory holds or non-approval, companion-diagnostic requirements, competition and reimbursement uncertainty.
- The company licenses ORIC-114 from Voronoi and ORIC-944 from Mirati. The Voronoi agreement includes potential development and regulatory milestones of up to $111.0 million for the first licensed product, commercial milestones of up to $225.0 million, additional potential milestones for a second product, and royalties on net sales.
- On March 10, 2023, Silicon Valley Bank was placed into receivership. ORIC disclosed $9.2 million of assets held in SVB deposit and money market accounts, which it accessed in full on March 13, 2023. Management did not expect a material operational impact.
- The filing identifies an inquiry regarding a potential breach of a confidentiality agreement related to the CD73 program. No material litigation was pending in management’s view at filing.
- Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022. The independent auditor was not required to, and did not, provide an internal-control attestation because ORIC qualifies as an emerging growth company.
Important facts for investors to verify
- Whether Phase 1b data for ORIC-533, ORIC-114 and ORIC-944 support continued development and demonstrate acceptable safety, tolerability, pharmacokinetics and clinical activity.
- Whether the projected cash runway into the first half of 2025 remains valid after incorporating clinical-trial spending, manufacturing costs, milestone obligations and any changes in operating plans.
- The timing, size and terms of any future financing and the resulting dilution to common stockholders.
- The status and financial terms of the Pfizer collaboration and the potential Phase 2 ORIC-533/elranatamab study.
- Progress toward redundant manufacturing capacity and any supply-chain disruptions affecting clinical trials.
- The status and potential consequences of the CD73-related confidentiality inquiry and any other intellectual-property claims.
- Patent scope, expiration dates, license obligations and territory restrictions for ORIC-114 and ORIC-944.
- Clinical-trial enrollment, regulatory feedback, competitive developments and the potential need for companion diagnostics.