Olema Pharmaceuticals, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Amounts below are in U.S. dollars; financial statement figures are in millions unless noted. Olema is a clinical-stage biopharmaceutical company developing targeted therapies for women’s cancers. Its lead candidate, OP-1250, is being evaluated in Phase 1/2 as a single agent and in a Phase 1b combination trial with palbociclib for ER-positive, HER2-negative breast cancer. The company had no approved products and generated no product revenue.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / prior balance-sheet date |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $16.0 | $10.7 |
| General and administrative expense | $7.2 | $4.8 |
| Total operating expenses | $23.3 | $15.5 |
| Net loss | $23.0 | $15.3 |
| Net loss per share, basic and diluted | $0.58 | $0.39 |
| Net cash used in operating activities | $17.9 | $11.1 |
| Cash, cash equivalents and marketable securities | $267.9 | $287.3 at December 31, 2021 |
| Total liabilities | $12.3 | $11.4 at December 31, 2021 |
| Debt outstanding | None | Not applicable |
At March 31, 2022, total assets were $277.4 million, including $21.5 million of cash and cash equivalents and $246.4 million of marketable securities. Stockholders’ equity was $265.1 million, and accumulated deficit was $127.2 million. The company reported no operating margin because it had no revenue. Total comprehensive loss was $24.5 million, including $1.5 million of unrealized losses on available-for-sale securities; management attributed the securities losses to market yields and bid/ask spreads, not credit losses, and recorded no credit-loss allowance.
Changes versus the prior comparable period
- Net loss increased by $7.7 million year over year. Operating expenses rose $7.8 million, with R&D up $5.3 million and G&A up $2.5 million.
- Management attributed higher R&D costs to advancing OP-1250 clinical development, contract manufacturing, other discovery and nonclinical work, and increased headcount. Higher G&A reflected personnel and other corporate costs.
- Operating cash use increased by $6.8 million year over year. Q1 2022 investing cash flow was a net inflow of $25.6 million, mainly reflecting marketable-security maturities net of purchases; financing cash inflow was $0.03 million from stock-option exercises.
- Cash, cash equivalents and marketable securities declined by $19.5 million from year-end 2021. Marketable securities had $1.6 million of unrealized losses recorded in accumulated other comprehensive loss.
Outlook, risks and unusual items
- Management said the existing cash, cash equivalents and marketable securities were expected to fund planned operating expenses and capital expenditures into 2024. The company expects significant and increasing losses and expenses for the foreseeable future and will need substantial additional funding thereafter; financing may dilute shareholders, impose restrictions, or require the company to grant rights to its programs.
- Management expected updated OP-1250 clinical results in 2022. Enrollment continued in the single-agent dose-expansion trial, and a Phase 1b combination trial with palbociclib was underway. Clinical outcomes and timing remain uncertain; early results may not predict later results.
- The filing identifies material business risks including dependence on OP-1250, clinical and regulatory uncertainty, competition, patient-enrollment and COVID-19-related delays, reliance on third-party manufacturers and CROs, and intellectual-property, financing and cybersecurity risks. The company reported prior COVID-related delays in trial setup and site initiation; future effects remained uncertain.
- The financial statements were prepared on a going-concern basis. The risk-factor discussion says accumulated losses and negative operating cash flows raise substantial doubt about the company’s ability to continue as a going concern over the long term, notwithstanding management’s stated runway into 2024.
- In November 2021, Olema reported falsified social-media information relating to a planned OP-1250 clinical poster. A board Special Committee began an investigation in December 2021 with outside counsel, which contacted the SEC. The filing states the poster image was not released or authorized by Olema.
- No material litigation or material contractual commitments outside the ordinary course were reported. Disclosure controls and procedures were deemed effective at a reasonable assurance level, with no material change in internal control over financial reporting reported.
Important facts for investors to verify
- Whether OP-1250 enrollment, safety and efficacy data support the stated development plans, including the expected 2022 clinical update.
- Whether the cash-runway estimate into 2024 remains valid as development spending rises, and what financing may be required.
- The nature and status of the Special Committee’s investigation into the falsified clinical-poster information.
- Whether marketable-security valuation changes, clinical-trial costs, or third-party supply and enrollment issues materially affect liquidity or timelines.
- Potential dilution from equity compensation and future financing; common shares outstanding were 39.9 million at March 31, 2022.