IDEAYA Biosciences, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Financial statements are unaudited. IDEAYA is a clinical-stage oncology biotech focused on precision medicine and synthetic-lethality therapeutics. It had no approved products and no product-sales revenue; reported revenue came from its GSK collaboration.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $8.8m | $0 | $16.0m | $0 |
| Research and development | $15.0m | $8.6m | $26.5m | $17.6m |
| General and administrative | $4.8m | $4.0m | $9.6m | $7.4m |
| Operating loss | $11.1m | $12.6m | $20.2m | $25.1m |
| Net loss | $10.9m | $12.4m | $20.0m | $24.4m |
| Basic and diluted loss per share | $0.33 | $0.59 | $0.62 | $1.18 |
Amounts are in U.S. dollars; losses and loss per share are shown as negative in the filing. Operating margins are not a meaningful profitability measure for this pre-commercial company. The six-month improvement in operating and net loss reflects collaboration revenue recognized under GSK; R&D and G&A expenses both increased.
- Cash flow, six months: operating cash used was $26.7m, investing cash used was $12.9m, and financing provided $58.0m. Net increase in cash, cash equivalents and restricted cash was $18.4m.
- Liquidity at June 30: cash and cash equivalents were $90.4m and marketable securities were $222.0m, totaling $312.4m; management said this would fund planned operations for at least 12 months from issuance of the statements. Total current assets were $279.8m and current liabilities $35.8m.
- Liabilities and debt: total liabilities were $88.1m, including $70.1m in current and long-term contract liabilities and approximately $6.0m in lease liabilities. The filing reports no borrowings or financial debt.
- Equity financing: ATM sales generated $57.3m net during the first half, with 3.4m shares sold. On July 12, 2021, the company issued 5.33m shares in a public offering at $17.25 per share, for $86.5m net proceeds after underwriting discounts and commissions but before other offering expenses.
Material changes and operating developments
- Q2 collaboration revenue rose 21% from Q1 2021 to $8.8m, attributed to the timing of services performed. First-half revenue was entirely new relative to 2020 and arose under the GSK agreement.
- Year-over-year first-half R&D expense increased 51%, chiefly from higher staffing, CRO/CMO and consultant fees, IDE397 clinical startup and manufacturing, and research infrastructure. G&A increased 30%, mainly from personnel and public-company costs.
- IDE397, a MAT2A inhibitor for MTAP-deleted tumors, was in Phase 1 dose escalation. As of June 25, management reported it was generally well tolerated, with only grade 1 drug-related events and no drug-related serious adverse events reported; plasma SAM reductions supported the planned tumor-biopsy cohort.
- Darovasertib (IDE196) was being evaluated in Phase 1/2 trials for GNAQ/GNA11-mutated tumors, including metastatic uveal melanoma. Combination arms with binimetinib and crizotinib were enrolling. Management reported preliminary tumor responses, but these analyses were based on unlocked databases and small patient groups. Serious adverse events, including liver toxicity, syncope and hypotension, were reported in combination studies.
Outlook, risks and unusual items
- Management expected losses and R&D spending to continue and increase as programs advance. It stated that June 30 liquidity supported at least 12 months of planned operations, while also noting the business will require substantial capital over time and additional financing may not be available on acceptable terms.
- Company-stated objectives included initiating IDE397 tumor biopsies in Q3 2021 and obtaining tumor pharmacodynamic data in Q4; a darovasertib combination data update in Q4; seeking FDA guidance on darovasertib monotherapy in the second half of 2021 and potential combination-trial design in the first half of 2022; and selecting PARG and POLQ development candidates in Q4 2021. These are plans, not guarantees.
- GSK’s $50m MAT2A option exercise payment and potential milestone, profit-share and royalty payments are contingent; GSK had not exercised the option as of the filing. GSK may terminate programs under the agreement. Pfizer supplied binimetinib and crizotinib for darovasertib combination trials at no cost to IDEAYA under the collaboration agreement.
- Principal risks include clinical and regulatory failure or delay, limited patient availability, dependence on collaborators and outsourced manufacturers/CROs, companion-diagnostic development, potential dilution or difficulty raising capital, and uncertain effects of COVID-19 on enrollment, suppliers and trial operations. Management said the pandemic had not materially affected operations in Q2, but future effects remained uncertain.
- The company reported no material litigation and no material adverse effect from ordinary-course contingencies. It had an accumulated deficit of $147.0m and expected continued operating losses. The July 2021 public offering was a material post-quarter financing event.
Important facts for investors to verify
- Whether subsequent, fully reviewed clinical data confirm the preliminary IDE397 and darovasertib findings, including response durability and safety.
- Whether IDE397 achieves the planned tumor pharmacodynamic results and whether GSK exercises its MAT2A option; assess the resulting development-cost and economics implications.
- Actual cash burn, collaboration reimbursements and revenue recognition against the $312.4m June 30 liquidity figure, including the effect of the July offering and ongoing program spending.
- Progress against stated clinical and preclinical timelines, and any effects of COVID-19, enrollment, manufacturing or third-party service disruptions.
- Share-count and dilution impact: the filing reported 33.0m shares outstanding at June 30 and 38.4m at August 2, following the July offering and other share activity.