Olema Pharmaceuticals, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022; filed August 9, 2022. Amounts below are in U.S. dollars. Olema is a clinical-stage biopharmaceutical company developing targeted therapies for women’s cancers. Its lead candidate, OP-1250, is being studied for ER-positive/HER2-negative breast cancer. The company has no approved products and has generated no product revenue.
Financial results and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $27.1m | $11.9m | $43.1m | $22.6m |
| General and administrative expense | $6.2m | $4.6m | $13.5m | $9.4m |
| Total operating expenses | $33.3m | $16.5m | $56.5m | $32.0m |
| Net loss | $32.9m | $16.4m | $55.9m | $31.7m |
| Net loss per share, basic and diluted | $0.82 | $0.42 | $1.40 | $0.81 |
| Operating cash used | Not separately presented | Not separately presented | $44.4m | $20.0m |
At June 30, 2022, cash and cash equivalents were $24.5m and marketable securities were $216.2m, totaling $240.7m. Current assets were $243.0m and current liabilities $12.3m. Olema reported no debt outstanding; operating lease liabilities totaled $3.1m. Accumulated deficit was $160.1m. Gross margins are not applicable because the company had no product sales.
For the six months, investing activities provided $55.0m, mainly reflecting maturities of marketable securities net of purchases; financing activities provided $0.1m. Cash and cash equivalents increased $10.7m, but operating cash burn rose versus the prior-year period. Marketable securities had $2.4m of unrealized losses recorded in other comprehensive loss; management attributed these to market yields and bid/ask spreads, not credit losses.
Material changes versus prior periods
- Q2 net loss increased $16.5m year over year; six-month net loss increased $24.1m.
- R&D expense increased $15.1m in Q2 and $20.5m for the first half, reflecting OP-1250 clinical and manufacturing costs, increased discovery work, headcount, and an $8.0m Aurigene upfront payment.
- G&A expense increased $1.6m in Q2 and $4.1m for the first half, mainly from personnel and public-company compliance costs.
- Cash, cash equivalents and marketable securities declined from $287.3m at December 31, 2021 to $240.7m at June 30, 2022.
Outlook, developments and risks
- Olema selected 120 mg as the recommended Phase 2 dose for OP-1250 in June 2022. Phase 2 enrollment began, with planned measurable-disease, non-measurable-disease and CNS-metastasis cohorts of 50, 15 and 15 patients, respectively. A Phase 1b combination study with palbociclib began in January 2022.
- Management expects updated monotherapy and initial combination data in Q4 2022. It estimates current cash and investments will fund planned operating expenses and capital expenditures into the second half of 2024, subject to assumptions and changing circumstances.
- The June 2022 Aurigene license covers inhibitors of an undisclosed oncology target. Terms include an $8.0m upfront payment, up to $60.0m in clinical and regulatory milestones, up to $370.0m in commercial milestones, royalties from mid-single digits to low double digits, and research funding by Olema.
- Olema expects increasing expenses and operating losses for the foreseeable future and will need substantial additional funding thereafter. The filing notes that 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 estimate.
- Key risks include OP-1250’s early clinical stage, uncertain trial outcomes and regulatory approval, patient enrollment and potential COVID-19-related disruption, reliance on third-party manufacturers and CROs, competition, intellectual-property risks, and the possibility that additional capital may be unavailable on acceptable terms. The company disclosed three Phase 1a patients with investigator-attributed grade 4 neutropenia; two also had fever and neutropenia.
- Olema reported no material litigation and said disclosure controls were effective at a reasonable assurance level. It also disclosed an investigation, initiated by a board special committee, into falsified social-media information about a planned 2021 OP-1250 poster presentation; the poster image was not authorized by the company.
Important facts for investors to verify
- Whether OP-1250 Phase 2 enrollment, safety and efficacy data, and the anticipated Q4 2022 updates meet development expectations.
- Whether the stated cash runway into the second half of 2024 remains realistic as trial, manufacturing and discovery spending grows, and when financing may be needed.
- The full Aurigene agreement economics, including research funding, milestone triggers, royalty terms and potential obligations beyond the upfront payment.
- How clinical-site enrollment, third-party supply and manufacturing capacity, and COVID-19 or other disruptions affect development timelines.
- How management’s long-term going-concern warning relates to its near-term cash-runway estimate and future funding assumptions.