IDEAYA Biosciences, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; filed May 9, 2023. IDEAYA is a clinical-stage precision oncology company with no approved products and no product-sales revenue. Financial amounts below are in U.S. dollars.
Financial performance and condition
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Collaboration revenue | $7.9 million | $11.4 million; down 31% year over year |
| Research and development expense | $27.9 million | $19.7 million; up 42% |
| General and administrative expense | $6.3 million | $5.9 million; up 6% |
| Total operating expense | $34.2 million | $25.6 million |
| Loss from operations | $26.3 million | $14.2 million |
| Interest and other income, net | $2.6 million | $0.2 million |
| Net loss | $23.6 million; $0.49 per share | $14.0 million; $0.36 per share |
| Operating cash used | $27.8 million | $19.6 million |
Revenue was entirely from the GSK collaboration; $7.6 million related to WRN research services. Higher R&D spending reflected increased headcount, clinical and preclinical development, and CRO, CMO and consultant costs. Higher interest income, primarily from higher rates, partly offset the larger operating loss. The filing does not report a meaningful gross margin for product sales.
At March 31, 2023, cash and cash equivalents were $67.2 million and marketable securities were $284.0 million, totaling $351.2 million. Total assets were $364.7 million, total liabilities $30.9 million, and stockholders’ equity $333.8 million. No borrowings or funded debt are reported. Current assets were $344.0 million versus current liabilities of $29.8 million. Accumulated deficit was $259.0 million.
Cash, cash equivalents and restricted cash declined $1.4 million during the quarter. Operating cash use was partly offset by $23.5 million net cash from investing activities, primarily securities maturities exceeding purchases, and $2.9 million of financing cash, including ATM proceeds. The company sold 142,160 shares under its ATM program for approximately $2.5 million net proceeds; $61.8 million remained available under the program at quarter-end.
Material changes and developments
- Compared with Q1 2022, collaboration revenue decreased while R&D expense increased substantially; net loss widened by $9.6 million.
- Compared with December 31, 2022, total assets declined from $388.0 million to $364.7 million and total liabilities from $38.5 million to $30.9 million. Contract liabilities fell to $6.3 million from $13.8 million, principally as collaboration revenue was recognized.
- On April 27, 2023, after quarter-end, IDEAYA completed a public offering of common shares and pre-funded warrants. It reported approximately $201.3 million gross proceeds and estimated $188.7 million net proceeds. The offering is an important subsequent liquidity event and entails potential dilution.
- In April 2023, IDEAYA incurred a £750,000 milestone obligation to Cancer Research Technology (CRT) following clinical milestones for IDE161.
Outlook, management commentary and key risks
- Management said quarter-end cash, cash equivalents and marketable securities were expected to fund planned operations for at least 12 months from issuance of the financial statements. The subsequent offering materially increased available funding; the company still expects significant losses and additional capital needs as programs advance.
- Management expected R&D expenses to increase substantially and collaboration revenue to vary and generally decline over the next 12 months as remaining GSK performance obligations are completed. No specific financial guidance for revenue, earnings or cash burn was provided.
- Darovasertib (IDE196): The company planned to initiate a potential registration-enabling Phase 2/3 study with crizotinib in first-line HLA-A-negative metastatic uveal melanoma in Q2 2023, following FDA feedback. April clinical results were preliminary: reported ORR was 45% in 20 evaluable first-line patients and 30% in 63 evaluable any-line patients; median PFS was approximately seven months in each group. These data were based on investigator review and are not final confirmatory evidence. One Grade 5 event occurred; investigators and the sponsor considered it most likely due to disease progression, though the treating investigator assessed a possible relationship to study therapies. Four of 68 patients discontinued either drug due to a drug-related adverse event.
- IDEAYA also reported April proof-of-concept observations for darovasertib in primary uveal melanoma. These are early clinical observations, including small patient numbers, and do not establish efficacy or approval prospects.
- IDE397 was in Phase 1/2 development for MTAP-deleted tumors; IDE161 had entered Phase 1 dose escalation for HRD tumors. The company described plans for IDE397 combination development with Amgen’s AMG 193 and preclinical programs with GSK, including Pol Theta and WRN.
- Principal risks include clinical-trial failure or delay, uncertain regulatory outcomes and patient enrollment, reliance on contract manufacturers/CROs and collaboration partners, potential partner termination, competition, intellectual-property challenges, and the possibility of needing further financing. The company has no approved products and has not completed a clinical trial as an organization.
- Management reported effective disclosure controls as of March 31, 2023, with no material change in internal control over financial reporting identified during the quarter. It reported no material pending litigation and no off-balance-sheet arrangements.
Important facts for investors to verify
- Reconcile the $351.2 million quarter-end liquidity figure with the April offering’s estimated $188.7 million net proceeds and subsequent share and warrant counts.
- Track operating cash burn and whether the stated runway remains adequate as planned clinical trials expand; Q1 operating cash use was $27.8 million.
- Check final, updated darovasertib trial data, safety outcomes, enrollment and the status and regulatory requirements of the planned Phase 2/3 study.
- Monitor IDE397 and IDE161 clinical progress, including combination-study responsibilities and the CRT milestone and other contingent license obligations.
- Assess the variability and sustainability of GSK collaboration revenue: Q1 revenue was $7.9 million, predominantly from WRN services, and remaining contract liabilities were $6.3 million.