Oric Pharmaceuticals, Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2021; filed August 10, 2021. ORIC is a clinical-stage biopharmaceutical company with no approved products or commercial revenue. Its pipeline includes ORIC-101, ORIC-533, ORIC-944 and ORIC-114.
Financial position and operating results
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $15.5 million | $27.2 million |
| General and administrative expense | $5.5 million | $10.4 million |
| Total operating expenses | $21.1 million | $37.6 million |
| Net loss | $21.0 million | $37.5 million |
| Net loss per share | $0.57 | $1.02 |
| Net cash used in operating activities | Not separately provided | $31.1 million |
- Cash and cash equivalents were $170.1 million and short-term investments were $91.0 million at June 30, 2021, totaling $261.1 million.
- Total assets were $268.2 million, compared with $299.0 million at December 31, 2020. Total liabilities were $9.9 million; the filing does not report material debt.
- Stockholders’ equity was $258.3 million and accumulated deficit was $203.9 million at June 30, 2021.
- Cash increased by $91.6 million during the first six months, primarily because the company sold or received maturities of investments of $148.5 million and purchased $25.2 million of investments.
- Stock-based compensation was $3.2 million in the second quarter and $6.0 million in the first six months.
- Operating margins are not meaningful because the company has no revenue and incurred operating losses.
Material changes versus the prior comparable period
- Second-quarter research and development expense increased $7.8 million, or approximately 101%, from $7.7 million to $15.5 million. The increase reflected higher external development costs, particularly for ORIC-101 and other candidates, and increased personnel costs.
- Six-month research and development expense increased $12.2 million, or approximately 82%, from $15.0 million to $27.2 million.
- Second-quarter general and administrative expense increased $2.1 million, or approximately 63%, to $5.5 million; six-month expense increased $5.1 million, or approximately 95%, to $10.4 million.
- Second-quarter net loss increased $10.0 million from $11.0 million in 2020. Six-month net loss increased $17.6 million from $19.9 million.
- Operating cash burn increased to $31.1 million for the first six months from $17.9 million in the prior-year period.
- Cash and cash equivalents increased from $78.4 million at year-end 2020 to $170.1 million, while short-term investments declined from $215.2 million to $91.0 million as the company repositioned its liquid investments.
Development, outlook and liquidity
- In June 2021, the FDA cleared the IND for ORIC-533. Management expected to file an IND for ORIC-944 and a CTA for ORIC-114 during the second half of 2021.
- Management expected to report interim safety, efficacy and translational data from the ORIC-101/enzalutamide Phase 1b trial in the second half of 2021. Initial data from the ORIC-101/nab-paclitaxel trial were reported in June 2021.
- The company expects research and development expenses and operating losses to increase substantially as programs advance. No formal revenue or earnings guidance was provided.
- Management stated that cash, cash equivalents and short-term investments were expected to fund the current operating plan into 2024, but emphasized that this estimate is subject to significant uncertainty and that additional capital will likely be required.
- On May 6, 2021, ORIC established an at-the-market facility permitting sales of up to $150 million of common stock. On July 8, 2021, after quarter-end, it raised $50.0 million in gross proceeds through the sale of 2,597,402 shares at $19.25 per share.
- COVID-19 continued to affect productivity, clinical-site enrollment, supply-chain activities and the collection and analysis of clinical data, creating potential delays and cost increases.
- The company early adopted lease accounting under ASC 842 and recorded right-of-use assets of approximately $1.7 million and lease liabilities of approximately $2.5 million on January 1, 2021.
Risks, contingencies and unusual items
- ORIC has no approved products, has never generated product revenue and remains dependent on successful clinical development and regulatory approval, particularly for lead candidate ORIC-101.
- In the ORIC-101/nab-paclitaxel trial, one patient experienced Grade 4 neutropenia and thrombocytopenia and Grade 5 hepatic failure in the setting of rapid disease progression and died. The company stated that the observed toxicities are well-described for nab-paclitaxel; the protocol was amended after the initial dose exceeded the combination’s maximum tolerated dose.
- The company relies on third parties for clinical trials and manufacturing. ORIC-101 was sourced from a single third-party manufacturer, with no alternative manufacturer in place at the reporting date.
- The Voronoi license 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 milestones of up to $272.0 million for a second product, and royalties on net sales.
- The company disclosed that its Chief Financial Officer and Chief Business Officer received SEC subpoenas in 2020 relating to an investigation concerning trading in securities of other companies. The filing states that the inquiry is non-public and unrelated to ORIC, but its outcome and potential impact cannot be predicted.
- A third party has inquired about a potential breach of a confidentiality agreement involving the CD73 inhibitor program. The company had not reported material litigation arising from the inquiry as of the filing date.
- Management reported no pending legal proceedings expected to have a material adverse effect and concluded that disclosure controls were effective at June 30, 2021.
Investor verification checklist
- Verify subsequent-period cash, investment balances, operating burn and the net proceeds and dilution from the July 2021 ATM financing.
- Review updated clinical data for ORIC-101, including safety findings, dose selection, enrollment and efficacy endpoints.
- Confirm whether the planned ORIC-533 IND, ORIC-944 IND and ORIC-114 CTA filings occurred and assess regulatory feedback.
- Reassess the stated cash runway into 2024 against actual spending growth and the need for additional financing.
- Monitor the SEC subpoenas involving two officers and any developments concerning the CD73 confidentiality inquiry.
- Evaluate manufacturing, supply-chain and clinical-site risks related to COVID-19 and the company’s reliance on single-source or third-party providers.
- Review potential milestone, royalty and license-termination obligations under the Mirati and Voronoi agreements.