Olema Pharmaceuticals, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Olema is a clinical-stage biopharmaceutical company focused on therapies for women’s cancers. It has no approved products and has generated no product revenue. Its lead candidate, OP-1250, is being evaluated in a Phase 1/2 trial for ER-positive, HER2-negative breast cancer.
Financial performance and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $11.9 | $1.9 | $22.6 | $2.7 |
| General and administrative expense | $4.6 | $0.5 | $9.4 | $0.8 |
| Total operating expenses | $16.5 | $2.5 | $32.0 | $3.5 |
| Net loss | $16.4 | $2.5 | $31.7 | $4.1 |
| Net loss per share, basic and diluted | $0.42 | $0.95 | $0.81 | $1.60 |
- Cash and investments: $318.1 million at June 30, 2021, comprising $50.4 million cash and cash equivalents and $267.7 million marketable securities. Total assets were $322.2 million.
- Cash flow, six months: $20.0 million used in operating activities; $268.7 million used in investing activities, primarily purchases of marketable securities; and $0.5 million provided by financing activities. Cash and cash equivalents fell $288.1 million, largely reflecting the shift of cash into marketable securities.
- Debt and liquidity: No debt outstanding at June 30, 2021. Current liabilities were $8.1 million versus current assets of $320.9 million. Management stated cash, cash equivalents and marketable securities were expected to fund planned operations and capital expenditures through the end of 2023; the notes also state resources should cover at least 12 months from filing.
- Margins: Not meaningful because the company had no revenue. No operating margin or gross margin was reported.
- Other items: Accumulated deficit was $64.8 million. Six-month stock-based compensation was $7.1 million, including $4.0 million in R&D and $3.1 million in G&A.
Changes versus the prior comparable period
- Q2 net loss increased to $16.4 million from $2.5 million; six-month net loss increased to $31.7 million from $4.1 million.
- Higher R&D costs reflected advancement of OP-1250 clinical development, associated contract manufacturing, other research and discovery activity, increased personnel, and stock-based compensation.
- Higher G&A costs reflected headcount and executive-team expansion, public-company compliance and consulting costs, and stock-based compensation.
- Six-month other income was $0.2 million, compared with $0.6 million of expense in 2020, primarily because the prior-year period included non-cash interest expense on convertible notes.
- The IPO completed in November 2020 generated $220.6 million of net proceeds; preferred shares converted to common stock at the IPO. In 2021, the company invested substantially in marketable securities.
Outlook, commentary and risks
- Management expects operating expenses and losses to increase as it advances OP-1250, expands research and clinical activity, and supports public-company operations. The company expects significant losses for at least the next several years and does not anticipate meaningful product revenue for the foreseeable future.
- Olema expected to report initial dose-escalation data from the OP-1250 Phase 1/2 trial in Q4 2021. It also described planned combination development with other cancer therapies, including drugs supplied under agreements with Novartis and Pfizer.
- The company reported that COVID-19 had caused some delays in trial setup and site initiation, but had not materially adversely affected operations or development timelines through June 30, 2021. Future effects on enrollment, trial sites, vendors and development plans remained uncertain.
- Key risks include dependence on OP-1250, early-stage clinical and regulatory uncertainty, competition, reliance on third-party manufacturers and CROs, potential trial delays, and the need for substantial additional funding. Management’s runway estimate depends on assumptions and may prove shorter than expected.
- The filing reports no material litigation and no material contractual commitments for R&D arrangements as of June 30, 2021. Facility lease commitments totaled $4.4 million. Management said disclosure controls were effective at a reasonable assurance level; it also expected to lose emerging-growth-company status at year-end 2021 and anticipated additional internal-control assessment and auditor attestation requirements.
Important facts for investors to verify
- Whether OP-1250 trial enrollment, safety and efficacy findings, and the anticipated data timing progressed as planned; early-stage data may not predict later results.
- Whether the stated cash runway through the end of 2023 remains supported by actual spending, clinical plans and capital requirements.
- How rapidly R&D and G&A costs grow, including stock-based compensation and contract manufacturing expenses.
- Whether COVID-19, third-party supply, regulatory or recruitment issues alter clinical timelines or costs.
- The status of internal-control readiness and reporting obligations following the anticipated change in filer status.