Olema Pharmaceuticals, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Olema is a clinical-stage biopharmaceutical company developing treatments for women’s cancers, initially focused on breast cancer. Its lead candidate, OP-1250, is being evaluated in a Phase 1/2 trial for ER-positive, HER2-negative breast cancer. The company has no approved products and has generated no product revenue.
Financial position and results
Amounts below are in U.S. dollars; financial statement amounts are rounded to millions unless stated otherwise.
| Metric | Q3 / September 30, 2021 | Comparable period / prior balance |
|---|---|---|
| Revenue | None | None |
| Research and development expense | Q3: $12.5 million; nine months: $35.1 million | Q3 2020: $4.7 million; nine months 2020: $7.4 million |
| General and administrative expense | Q3: $5.2 million; nine months: $14.6 million | Q3 2020: $3.2 million; nine months 2020: $4.0 million |
| Net loss | Q3: $17.7 million; nine months: $49.5 million | Q3 2020: $7.8 million; nine months 2020: $12.0 million |
| Net loss per share, basic and diluted | Q3: $0.45; nine months: $1.25 | Q3 2020: $3.71; nine months 2020: $5.29 |
| Cash, cash equivalents and marketable securities | $306.0 million | $338.5 million cash and equivalents at December 31, 2020; no marketable securities |
| Accumulated deficit | $82.6 million | $33.1 million at December 31, 2020 |
| Debt | None outstanding | — |
No meaningful revenue or profit margins were reported. Operating expenses rose as the company advanced OP-1250 clinical work and manufacturing, expanded discovery and nonclinical programs, increased headcount, and incurred higher public-company and stock-based compensation costs. Stock-based compensation was $11.3 million for the first nine months of 2021, versus $0.7 million in the comparable 2020 period.
- Cash flow, nine months: $32.1 million used in operating activities, $281.4 million used in investing activities, and $0.6 million provided by financing activities. Investing outflows mainly reflect purchases of marketable securities, partly offset by maturities—not operating expenditure alone.
- Liquidity: Management said existing funds were expected to support planned operating expenses and capital expenditures through the end of 2023. The financial-statement note also states funds were sufficient for at least 12 months from the filing date. The company expects to need substantial additional funding thereafter and had no financing commitments such as a line of credit.
- Other balance-sheet items: Total liabilities were $8.9 million at September 30, 2021, compared with $4.6 million at year-end 2020. Facility lease commitments totaled $4.1 million.
Material changes and developments
- For the first nine months, R&D expense increased $27.7 million and G&A expense increased $10.6 million year over year; net loss increased $37.5 million.
- The company held $280.4 million in marketable securities at September 30, 2021, reflecting investment of available funds; cash and equivalents alone fell to $25.6 million from $338.5 million at year-end 2020.
- Olema expected to report initial data from the dose-escalation portion of its OP-1250 Phase 1/2 trial in Q4 2021. It also described planned combination studies, including collaborations involving Novartis study drugs and Pfizer-supplied IBRANCE.
- The company completed implementation of a new ERP system during Q3 and migrated general-ledger and consolidation processes. Management said related control changes were validated and disclosure controls were effective at a reasonable assurance level.
Outlook, risks and contingencies
- Management expects operating losses and expenses to increase as it advances OP-1250, conducts clinical and nonclinical work, expands staffing and public-company functions, and prepares for potential future commercialization. The filing does not provide specific expense or earnings guidance.
- Olema is substantially dependent on OP-1250, which remains in early clinical development. Trial outcomes, regulatory approval, patient enrollment, manufacturing and market acceptance are uncertain; earlier results may not predict later outcomes.
- COVID-19 had caused some delays in trial setup and site initiation, including recruitment of investigators and site staff. The company said its business and development timelines had not been materially adversely affected through September 30, 2021, but future effects remained uncertain.
- Additional funding may be required earlier than projected. Equity financing could dilute shareholders; debt, collaborations or licensing arrangements could impose restrictions or require the company to relinquish rights.
- Olema relies on third parties for clinical research and manufacturing; some raw materials have single-source suppliers, and the company reported no long-term OP-1250 supply agreements. Collaboration or supplier disruption could delay development or raise costs.
- No material litigation was pending, and the company reported no material contractual commitments beyond ordinary-course arrangements. It disclosed lease obligations and standard indemnification agreements, with no material indemnification costs incurred.
- The filing says Olema expected to lose emerging-growth-company status and qualify as a large accelerated filer at year-end 2021, potentially requiring management assessment and auditor attestation of internal control over financial reporting. The company previously identified control material weaknesses, which it said were remediated as of December 31, 2020.
Important facts for investors to verify
- Whether OP-1250 trial data were reported as expected, and what the full results show about safety, tolerability, efficacy and enrollment.
- Whether the projected runway through the end of 2023 remains supportable given the pace of R&D spending, cash use and planned programs.
- The composition, maturity profile and liquidity of marketable securities, and any changes in cash, operating burn or financing needs after quarter-end.
- Progress and costs of planned combination trials, including continued access to collaborator-supplied drugs and third-party manufacturing capacity.
- Completion and results of the year-end internal-control assessment and auditor attestation following the expected filer-status change.