IDEAYA Biosciences, Inc. — Q3 2019 Form 10-Q
Reporting period: Three and nine months ended September 30, 2019. IDEAYA is a development-stage, oncology-focused precision-medicine company with no approved products and no revenue to date. The financial statements are unaudited.
Financial performance and liquidity
| Metric | Q3 2019 / September 30, 2019 | Comparable period / prior year-end |
|---|---|---|
| Revenue | None | None |
| Operating expenses | $11.6 million for Q3; $33.0 million for nine months | $13.6 million and $27.3 million, respectively, in 2018 |
| Net loss | $11.0 million for Q3; $31.2 million for nine months | $13.1 million and $25.8 million, respectively, in 2018 |
| Net loss per share | $0.54 for Q3; $3.15 for nine months | $13.06 and $27.94, respectively, in 2018 |
| Cash, cash equivalents and short-term marketable securities | $109.4 million | $90.0 million at December 31, 2018 |
| Operating cash flow | $(30.6) million for nine months | $(20.1) million in 2018 |
| Total assets / liabilities | $122.3 million / $11.9 million | $96.5 million / $7.1 million at December 31, 2018 |
As a pre-revenue biotech, profit margins are not meaningful. The filing reports no interest-bearing debt; it does report $7.0 million of operating lease liabilities. Management expects existing cash and securities to fund planned operations for at least 12 months from issuance of the financial statements, but anticipates continuing losses and needing additional capital over time.
Changes versus prior periods and notable items
- Q3 operating expenses fell 15% year over year and net loss narrowed 16%. R&D declined 29%, chiefly because 2018 included $6.3 million of Novartis license-related expense; higher trial, contractor and personnel costs partly offset the decline.
- For the first nine months, operating expenses rose 21% and net loss rose 21%. R&D increased 7% as clinical, contractor and personnel costs grew; G&A increased 131%, including higher public-company, staffing and insurance costs.
- May 2019 IPO: 5.75 million shares issued at $10 per share, producing approximately $50.2 million in net proceeds. Preferred stock converted into 13.14 million common shares. The resulting share-count increase makes year-over-year per-share loss comparisons less informative.
- Operating cash use increased to $30.6 million. Financing cash flow was $50.6 million, principally IPO proceeds; investing cash use was $1.6 million, largely reflecting securities purchases and maturities.
- Adoption of lease accounting in January 2019 resulted in recognition of right-of-use assets and lease liabilities. At September 30, the company reported $5.3 million of right-of-use assets and $7.0 million of lease liabilities.
Outlook, business developments and risks
- IDE196: The company completed Phase 1 dose escalation in its Phase 1/2 trial and expected to select a regimen and begin Phase 2 by year-end 2019. It targeted interim clinical data in Q2 or Q3 2020 and a tablet-formulation pharmacokinetic substudy in Q1 2020.
- Following an FDA end-of-Phase 1 meeting, management said a proposed single-arm Phase 2 trial in metastatic uveal melanoma might support an NDA seeking accelerated approval. The planned study targets 60 evaluable patients; management anticipated an NDA filing in Q4 2021 or Q1 2022, subject to trial and development progress.
- The company planned to select a MAT2A development candidate in the first half of 2020 and file an IND in the second half of 2020. A potential IDE196/MEK-inhibitor clinical combination evaluation was targeted for mid-2020, subject to preclinical results. These are forward-looking plans, not assurances.
- Risks include clinical-trial efficacy, safety and enrollment; regulatory approval and reliance on Novartis trial data; dependence on CROs, manufacturers and diagnostic collaborators; intellectual-property and licensing risks; and the need for future financing. Management expects operating losses to continue and increase.
- The San Diego lease was terminated September 30, 2019; a South San Francisco lease amendment added approximately 5,500 square feet, with a termination option for part of the expansion. Management said neither materially changed reported contractual obligations at quarter-end.
- The company reported no material litigation and concluded disclosure controls were effective as of September 30, 2019. It reported no material change in internal control over financial reporting during the quarter.
Investor verification priorities
- Verify IDE196 trial enrollment, dose selection, interim results, safety profile and the FDA’s eventual position on the proposed accelerated-approval pathway.
- Track cash burn, investment balances, and whether the stated 12-month runway remains adequate as clinical and preclinical spending grows.
- Monitor execution and timing of the MAT2A program, IDE196 combination studies, and associated IND or trial milestones.
- Review future financing, dilution, and any material license, collaboration, manufacturing or lease commitments.
- Compare subsequent clinical disclosures with the filing’s stated plans; the filing cautions that preliminary or interim results may differ from final data.