10-Q 1 bmea-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40335

 

Biomea Fusion, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

82-2520134

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

900 Middlefield Road, 4th Floor

Redwood City, California

94063

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 980-9099

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value

 

BMEA

 

The Nasdaq Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of April 26, 2024, the registrant had 35,944,584 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

1

Condensed Balance Sheets

1

Condensed Statements of Operations and Comprehensive Loss

2

Condensed Statements of Stockholders’ Equity

3

Condensed Statements of Cash Flows

4

Notes to Unaudited Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.

Controls and Procedures

20

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

73

Item 3.

Defaults Upon Senior Securities

74

Item 4.

Mine Safety Disclosures

74

Item 5.

Other Information

74

Item 6.

Exhibits

75

Signatures

76

 

i


 

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

our financial performance;
the sufficiency of our existing cash, and cash equivalents to fund our future operating expenses and capital expenditure requirements;
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
our anticipated use of our existing cash, and cash equivalents;
the implementation of our strategic plans for our business and product candidates;
the size of the market opportunity for our product candidates and our ability to maximize those opportunities;
the initiation, timing, progress and results of our research and development programs, preclinical studies, clinical trials and investigational new drug applications (INDs) and other regulatory submissions;
the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates and the ability of our FUSION™ System to generate additional product candidates with such characteristics;
the timing, progress and focus of our ongoing and future clinical trials, and the reporting of data from those trials;
the ability of our clinical trials to demonstrate safety and efficacy of our product candidates, and other favorable results;
our plans relating to the clinical development of our product candidates, including the disease areas to be evaluated;
our ability to obtain and maintain regulatory approval of our product candidates;
our plans relating to commercializing our product candidates, if approved;
our estimates of the patient populations addressable by our product candidates, if approved, and the number of participants that will enroll in our ongoing and planned clinical trials;
the expected benefits of potential future strategic collaborations with third parties and our ability to attract collaborators with development, regulatory and commercialization expertise;
the success of competing therapies that are or may become available;
the timing or likelihood of regulatory filings and approvals, including our expectation to seek special designations, such as orphan drug designation, for our product candidates;
our plans relating to the further development and manufacturing of our product candidates, including for additional indications that we may pursue;
existing regulations and regulatory developments in the United States and other jurisdictions;
our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;
our plan to rely on third parties to conduct and support preclinical and clinical development;
our ability to retain the continued service of our key personnel and to identify, hire and then retain additional qualified personnel;
the impact of any pandemics or other related disruptions on our business;
unfavorable global economic conditions, including inflationary pressures, market volatility, acts of war and civil and political unrest; and
our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012, as amended.

ii


 

We have based these forward-looking statements largely on our current expectations, estimates, forecasts and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report on Form 10-Q, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the section titled “Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. We qualify all of the forward-looking statements in this Quarterly Report on Form 10-Q by these cautionary statements.

 

Biomea Fusion, Inc., the Biomea logo and our other registered or common law trademarks, trade names or service marks appearing in this Quarterly Report on Form 10-Q are owned by us. This Quarterly Report on Form 10-Q contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this Quarterly Report on Form 10-Q, including logos, artwork and other visual displays, generally appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

Summary Risk Factors

 

The following is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address every aspect of our risk factors, all of the risks that we face, or other factors not presently known to us or that we currently believe are immaterial. Additional discussion of the risks summarized in these summary risk factors, and other risks that we face, can be found under the heading “Risk Factors” in this Quarterly Report on Form 10-Q and should be carefully considered, together with other information in this Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission, or SEC, before making investment decisions regarding our common stock.

We have a limited operating history, have not completed the clinical development of any product candidates, have no products approved for commercial sale, and have not generated any revenue, which may make it difficult for you to evaluate our current business and likelihood of success and viability.
We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and product development programs or future commercialization efforts.
Our discovery and development activities are focused on the development of novel covalent small-molecule therapies, initially targeted at menin, to treat patients with genetically-defined cancers and metabolic diseases, and the approach we are taking to discover and develop such binders is novel, may never lead to marketable products and may not ultimately represent a significant market.
Our novel approach to the discovery and development of our current and future product candidates is unproven, and we may not be successful in our efforts to use and expand our FUSIONTM System to build a pipeline of product candidates with commercial value.
We are early in our development efforts and are substantially dependent on our product candidates, BMF-219 and BMF-500. If we are unable to advance BMF-219, BMF-500 or any of our future product candidates through clinical development, obtain regulatory approval and ultimately commercialize BMF-219, BMF-500 or any of our future product candidates, or experience significant delays in doing so, our business, financial condition and results of operations will be materially adversely affected.
Preclinical and clinical drug development is a lengthy and expensive process, with an uncertain outcome. Our preclinical and clinical programs may experience delays or may never be initiated or completed, which would adversely affect our ability to obtain regulatory approvals or commercialize our product candidates on a timely basis or at all, which could have an adverse effect on our business.
The results of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and the results of our clinical trials may not satisfy the requirements of the FDA or other comparable foreign regulatory authorities. Successful preclinical studies and clinical trials cannot provide assurance of successful commercialization. We have a limited operating history, have not completed any clinical trials, have no products approved for commercial sale, and have not generated any revenue, which may make it difficult for you to evaluate our current business and likelihood of success and viability.

iii


 

We have limited experience as a company in conducting clinical trials and have not successfully completed the clinical development of any product candidates to date.
Adverse global economic conditions, including supply chain issues, and inflationary pressures could materially adversely impact our business, results of operations, and financial condition, including our preclinical studies and clinical trials.
The regulatory approval processes of the FDA and other comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired.
The price of our stock has been and is likely to continue to be volatile, and you may not be able to resell shares of our common stock at or above the price you paid.

iv


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Biomea Fusion, Inc.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

144,918

 

 

$

176,866

 

Prepaid expenses and other current assets

 

 

2,648

 

 

 

2,315

 

Total current assets

 

 

147,566

 

 

 

179,181

 

Property and equipment, net

 

 

4,806

 

 

 

5,159

 

Operating lease right-of-use assets

 

 

9,013

 

 

 

9,714

 

Restricted cash

 

 

369

 

 

 

370

 

Other assets

 

 

6,740

 

 

 

5,503

 

Total assets

 

$

168,494

 

 

$

199,927

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

4,709

 

 

$

6,851

 

Accrued expenses and other current liabilities

 

 

17,379

 

 

 

13,543

 

Operating lease liabilities, current

 

 

3,166

 

 

 

2,466

 

Total current liabilities

 

 

25,254

 

 

 

22,860

 

Operating lease liabilities, non-current

 

 

7,926

 

 

 

7,830

 

Total liabilities

 

 

33,180

 

 

 

30,690

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 10,000,000 authorized as of March 31, 2024
   and December 31, 2023;
0 shares issued and outstanding as of March 31, 2024
   and December 31, 2023

 

 

 

 

 

 

Common stock, $0.0001 par value; 300,000,000 shares authorized as of
   March 31, 2024 and December 31, 2023;
35,933,586 and 35,866,610 
   shares issued and outstanding as of March 31, 2024 and
   December 31, 2023, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

423,196

 

 

 

418,058

 

Accumulated other comprehensive income

 

 

 

 

 

 

Accumulated deficit

 

 

(287,886

)

 

 

(248,825

)

Total stockholders' equity

 

 

135,314

 

 

 

169,237

 

Total liabilities and stockholders' equity

 

$

168,494

 

 

$

199,927

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

1


 

Biomea Fusion, Inc.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

33,776

 

 

$

24,395

 

General and administrative

 

 

7,283

 

 

 

5,636

 

Total operating expenses

 

 

41,059

 

 

 

30,031

 

Loss from operations

 

 

(41,059

)

 

 

(30,031

)

Interest and other income, net

 

 

1,998

 

 

 

980

 

Net loss

 

$

(39,061

)

 

$

(29,051

)

Other comprehensive loss:

 

 

 

 

 

 

Unrealized gain (loss) on investments, net

 

 

 

 

 

1

 

Comprehensive loss

 

$

(39,061

)

 

$

(29,050

)

Net loss per common share, basic and diluted

 

$

(1.09

)

 

$

(0.98

)

Weighted-average number of common shares used to
   compute basic and diluted net loss per common share

 

 

35,890,370

 

 

 

29,586,468

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

2


 

Biomea Fusion, Inc.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2023

 

 

35,866,610

 

 

$

4

 

 

$

418,058

 

 

$

 

 

$

(248,825

)

 

$

169,237

 

Issuance of restricted stock

 

 

44,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

22,750

 

 

 

 

 

 

116

 

 

 

 

 

 

 

 

 

116

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,022

 

 

 

 

 

 

 

 

 

5,022

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39,061

)

 

 

(39,061

)

Balance at March 31, 2024

 

 

35,933,586

 

 

$

4

 

 

$

423,196

 

 

$

 

 

$

(287,886

)

 

$

135,314

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Gain (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2022

 

 

29,561,554

 

 

$

3

 

 

$

240,107

 

 

$

(1

)

 

$

(131,570

)

 

$

108,539

 

Exercise of stock options

 

 

44,501

 

 

 

 

 

 

407

 

 

 

 

 

 

 

 

 

407

 

Issuance of restricted stock

 

 

45,079

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

3,233

 

 

 

 

 

 

 

 

 

3,233

 

Unrealized gain (loss) on
   investments, net

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,051

)

 

 

(29,051

)

Balance at March 31, 2023

 

 

29,651,134

 

 

$

3

 

 

$

243,747

 

 

$

 

 

$

(160,621

)

 

$

83,129

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

3


 

Biomea Fusion, Inc.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Operating Activities

 

 

 

 

 

 

Net loss

 

$

(39,061

)

 

$

(29,051

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

Depreciation expense

 

 

420

 

 

 

293

 

Non-cash operating lease expense

 

 

999

 

 

 

612

 

Stock-based compensation expense

 

 

5,022

 

 

 

3,233

 

Net amortization of premiums and accretion of discounts on investments

 

 

 

 

 

1

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(333

)

 

 

2,345

 

Other assets

 

 

(1,236

)

 

 

(744

)

Accounts payable

 

 

(2,176

)

 

 

665

 

Accrued expenses and other current liabilities

 

 

3,836

 

 

 

(823

)

Operating lease liabilities

 

 

499

 

 

 

(575

)

Net cash used in operating activities

 

 

(32,030

)

 

 

(24,044

)

Investing Activities

 

 

 

 

 

 

Purchase of property and equipment

 

 

(35

)

 

 

(2,906

)

Maturities of investments

 

 

 

 

 

1,150

 

Net cash used in investing activities

 

 

(35

)

 

 

(1,756

)

Financing Activities

 

 

 

 

 

 

Proceeds from stock option exercise

 

 

116

 

 

 

201

 

Net cash provided by financing activities

 

 

116

 

 

 

201

 

Net decrease in cash, cash equivalents, and restricted cash

 

 

(31,949

)

 

 

(25,599

)

Cash, cash equivalents, and restricted cash at the beginning of the period

 

 

177,236

 

 

 

112,250

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

145,287

 

 

$

86,651

 

 

 

 

 

 

 

 

Non-cash financing and investing activities:

 

 

 

 

 

 

Acquisition of operating lease right-of-use assets

 

$

 

 

$

11,639

 

Acquisition of property and equipment in accounts payable
   and accrued liabilities

 

$

34

 

 

$

375

 

 

 

 

 

 

 

 

Reconciliation of cash and cash equivalents, and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

144,918

 

 

$

86,300

 

Restricted cash

 

 

369

 

 

 

351

 

Total cash and cash equivalents, and restricted cash

 

$

145,287

 

 

$

86,651

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

4


 

 

Biomea Fusion, Inc.

Notes to Unaudited Condensed Financial Statements

Note 1. Organization

Organization

 

Biomea Fusion, Inc., (the Company), was established in the state of Delaware in August 2017 as Biomea Fusion, LLC. In December 2020, all outstanding membership interests in Biomea Fusion, LLC were converted into equity interests in the Company. The capitalization information included in these unaudited condensed financial statements is consistently presented as if it is that of Biomea Fusion, Inc., even during the prior period when investors held their equity interests in Biomea Fusion, LLC.

 

The Company is a clinical-stage biopharmaceutical company dedicated to discovering and developing novel covalent small molecules to treat and improve the lives of patients with genetically defined cancers and metabolic diseases. Since its inception in 2017, the Company has built its proprietary FUSIONTM System platform to design and develop a pipeline of novel covalent product candidates.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2023 has been derived from the audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments which are necessary for a fair statement of the Company’s financial information. The unaudited interim results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other interim period or for any other future year.

The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024.

Liquidity and Capital Resources

The Company has incurred net operating losses and negative cash flows from operations since its inception and had an accumulated deficit of $287.9 million at March 31, 2024. As of March 31, 2024, the Company had cash, cash equivalents, and restricted cash of $145.3 million. Management believes that the existing financial resources are not sufficient to continue operating activities for at least one year past the issuance date of these unaudited condensed financial statements. The Company’s ability to continue as a going concern will require the Company to raise additional capital to fund the Company's operations through public or private equity offering, debt financings, collaborations and licensing arrangements or other sources. There can be no assurance that additional financing will be available to the Company or that such financing, if available, will be available on terms acceptable to the Company. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.

The Company has historically financed its operations primarily through the sale of convertible preferred stock and common stock and the issuance of unsecured promissory notes. To date, none of the Company’s product candidates have been approved for sale, and the Company has not generated any revenue since inception. Management expects operating losses to continue and increase for the foreseeable future, as the Company continues clinical development activities for its lead product candidate and advances the preclinical and clinical development of other product candidates. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry as discussed below. There can be no assurance that in the event the Company requires additional financing, such financing will be available on terms which are favorable or at all. Failure to generate sufficient cash flows from operations, raise additional capital or reduce certain discretionary spending would have a material adverse effect on the Company’s ability to achieve its intended business objectives.

 

Note 2. Summary of Significant Accounting Policies

 

There have been no significant changes to the significant accounting policies during the three months ended March 31, 2024, as compared to those included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024.

5


 

 


Recent Accounting Pronouncements - Not Yet Adopted

 

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”) which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses, including for single reportable segment entities. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the disclosure requirements related to the new standard.

 

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impact of the adoption of this standard on the Company’s financial statements and related disclosures.

Note 3. Fair Value Measurement

 

The Company measures and reports certain financial instruments as assets and liabilities at fair value on a recurring basis. The following tables set forth the fair value of the Company’s financial assets, which consist of cash equivalents and marketable securities measured and recognized at fair value (in thousands):

 

 

 

 

 

 

March 31, 2024

 

 

 

Fair Value
Hierarchy
Level

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Financial assets included in cash and cash
   equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

142,998

 

 

$

 

 

$

 

 

$

142,998

 

Total

 

 

 

$

142,998

 

 

$

 

 

$

 

 

$

142,998

 

 

 

 

 

 

December 31, 2023

 

 

 

Fair Value
Hierarchy
Level

 

Amortized
Cost

 

 

Gross
Unrealized
Gains

 

 

Gross
Unrealized
Losses

 

 

Fair
Value

 

Financial assets included in cash and cash
   equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

174,429

 

 

$

 

 

$

 

 

$

174,429

 

Total

 

 

 

$

174,429

 

 

$

 

 

$

 

 

$

174,429

 

 

The Company evaluates transfers between levels at the end of each reporting period. There were no transfers between Levels 1, 2 and 3 during the three months ended March 31, 2024 and 2023. As of March 31, 2024 and December 31, 2023, there were no financial instruments classified as Level 2 or Level 3. There have been no realized gains or losses recognized for the periods presented. Unrealized gains and losses are included in accumulated other comprehensive loss within stockholders' equity on the balance sheet.

There were no investments as of March 31, 2024 and December 31, 2023, as such, no allowance for credit losses has been recognized as of March 31, 2024. During the three months ended March 31, 2024 and 2023, the Company did not recognize any impairment losses related to investments.

6


 

 

Note 4. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net consists of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Laboratory equipment

 

$

3,902

 

 

$

3,852

 

Leasehold improvements

 

 

3,195

 

 

 

3,195

 

Computer equipment

 

 

146

 

 

 

130

 

Furniture and fixtures

 

 

409

 

 

 

409

 

Construction in progress

 

 

6

 

 

 

4

 

Total property and equipment, gross

 

 

7,658

 

 

 

7,590

 

Less: accumulated depreciation

 

 

(2,852

)

 

 

(2,431

)

Total property and equipment, net

 

$

4,806

 

 

$

5,159

 

 

Depreciation expense for the three months ended March 31, 2024 was $0.4 million. Depreciation expense for the three months ended March 31, 2023 was $0.3 million.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Accrued research and development materials and services

 

$

14,054

 

 

$

6,952

 

Accrued personnel expenses

 

 

2,430

 

 

 

5,956

 

Accrued professional services

 

 

669

 

 

 

443

 

Other

 

 

226

 

 

 

192

 

Total accrued expenses and other current liabilities

 

$

17,379

 

 

$

13,543

 

 

Note 5. Leases

Operating Leases

The Company leases its headquarters with its main offices and laboratory facilities in Redwood City and San Carlos, California, pursuant to leases which expire in 2025 and 2027, respectively. The San Carlos lease includes a renewal option for an additional five years until January 2032, which has been included in the determination of the right-of-use as of March 31, 2024.

 

In November 2023, the Company submitted a claim of approximately $1.5 million against tenant improvement allowance reimbursement in connection with its operating lease for lab space located at 1585 Industrial Road, San Carlos, California which was received in January 2024. Of the total reimbursement, approximately $0.4 million constitutes a loan required to be repaid in the form of additional lease payments over the remaining original lease term at an annual interest rate of 7%. Upon receipt of the reimbursement, the Company remeasured the lease liability and related right-of-use asset.

 

The following table summarizes the lease costs and cash paid for the Company’s leases (in thousands):

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2024

 

 

2023

 

 

Cash paid for operating lease liabilities

 

$

640

 

 

$

840

 

 

Operating lease costs

 

 

990

 

 

 

980

 

 

Short-term lease cost

 

 

 

 

 

 

 

Variable lease costs

 

 

381

 

 

 

245

 

 

 

7


 

 

The maturities of lease liabilities as of March 31, 2024 were as follows (in thousands):

 

 

 

Operating Lease

 

Year Ending December 31,

 

Commitments

 

2024 (remaining nine months)

 

$

3,154

 

2025

 

 

2,903

 

2026

 

 

1,525

 

2027

 

 

1,443

 

2028

 

 

1,474

 

Thereafter

 

 

4,827

 

Total future undiscounted lease payments

 

 

15,326

 

Less: Imputed interest

 

 

(4,234

)

Total operating lease liabilities

 

$

11,092

 

Operating lease liabilities, current

 

 

3,166

 

Operating lease liabilities, non-current

 

 

7,926

 

Total operating lease liabilities

 

$

11,092

 

 

Supplemental balance sheet information related to leases was as follows:

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Weighted-average remaining lease term (in years) - operating leases

 

 

5.9

 

 

 

6.1

 

Weighted-average discount rate - operating leases

 

 

11.42

%

 

 

11.43

%

 

Note 6. Capital Structure

Common Stock

The Company’s amended and restated certificate of incorporation authorizes the Company to issue up to 300,000,000 shares of common stock with a par value of $0.0001 per share and 10,000,000 shares of preferred stock with a par value of $0.0001 per share.

Common stockholders are entitled to dividends when and if declared by the Company’s Board of Directors and after any preferred share dividends are fully paid. The holder of each share of common stock is entitled to one vote. As of March 31, 2024, no dividends have been declared.
 

Public Offering

In April 2023, pursuant to a registration statement on Form S-3, the Company issued and sold 5,750,000 shares of common stock at a public offering price of $30.00 per share in an underwritten public offering. The net proceeds to the Company from the offering were approximately $161.8 million, after deducting underwriting discounts and commissions and offering costs of approximately $11.0 million.

Note 7. Stock-Based Compensation

Effective January 1, 2024, the number of shares of common stock available under the 2021 Equity Incentive (the “2021 Plan”) Plan increased by 1,798,926 shares pursuant to the evergreen provision. As of March 31, 2024, 770,983 shares of common stock remained available for issuance under the 2021 Plan. Effective January 1, 2024, the number of shares of common stock available under the 2021 Employee Stock Purchase Plan (the "ESPP") increased by 359,785 shares pursuant to the evergreen provision of the ESPP. As of

8


 

 

March 31, 2024, 811,671 shares of common stock remained available for issuance under the ESPP. As of March 31, 2024, 1,993,000 shares of common stock remained available for issuance under the 2023 Inducement Equity Plan as adopted in November 2023.

Stock-Based Compensation Expense

Total stock-based compensation expense related to the Company’s equity incentive plan and employee stock purchase plan was recorded in the statements of operations and allocated as follows (in thousands):

 

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2024

 

 

2023

 

 

Research and development

 

$

2,546

 

 

$

1,474

 

 

General and administrative

 

 

2,476

 

 

 

1,759

 

 

Total stock-based compensation expense

 

$

5,022

 

 

$

3,233

 

 

As of March 31, 2024, there was $42.9 million of total unrecognized stock-based compensation expense which is expected to be recognized over a weighted-average period of 2.6 years.

Stock Options

The following table summarizes stock option activity:

 

 

 

Outstanding Options

 

 

 

Shares

 

 

Weighted-
Average
Exercise

 

 

Weighted-
Average
Remaining
Contractual
Term
(Years)

 

Balance, December 31, 2023

 

 

7,357,607

 

 

$

9.34

 

 

 

8.1

 

Granted

 

 

1,838,510

 

 

 

14.60

 

 

 

 

Exercised

 

 

(22,750

)

 

 

5.09

 

 

 

 

Cancelled

 

 

(4,082

)

 

 

9.61

 

 

 

 

Balance, March 31, 2024

 

 

9,169,285

 

 

 

10.40

 

 

 

8.3

 

Exercisable, March 31, 2024

 

 

4,020,182

 

 

$

9.08

 

 

 

7.6

 

 

Restricted Stock

The following table summarizes the restricted stock activity:

 

 

 

Number of
Restricted
Stock Awards

 

 

Weighted-Average
Grant Date
Fair Value

 

Balance, December 31, 2023

 

 

111,920

 

 

$

4.06

 

Granted

 

 

 

 

 

 

Released

 

 

(44,226

)

 

 

4.03

 

Forfeited

 

 

(2,564

)

 

 

3.96

 

Balance, March 31, 2024

 

 

65,130

 

 

$

4.09

 

 

Note 8. Commitments and Contingencies

Legal Proceedings

The Company, from time to time, may be party to litigation arising in the ordinary course of business. The Company records a liability for such matters when it is probable that future losses will be incurred and that such losses can be reasonably estimated. Significant

9


 

 

judgment by the Company is required to determine both probability and the estimated amount. Management is currently not aware of any legal matters that could have a material adverse effect on its financial position, results of operations or cash flows.

Indemnification

The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these arrangements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is not material.

The Company has also entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers to the fullest extent permitted by Delaware corporate law. The Company currently has directors’ and officers’ insurance.

Note 9. Net Loss Per Share

 

Basic and diluted net loss per share is computed by dividing net loss by the weighted-average number of common stock outstanding for the period. For periods in which the Company generated a net loss, the Company does not include the potential impact of dilutive securities in diluted net loss per share, as the impact of these items is anti-dilutive.

The following equity instruments were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Stock options, issued and outstanding

 

 

9,169,285

 

 

 

6,949,081

 

Estimated shares issuable under the employee stock purchase plan

 

 

114,511

 

 

 

105,062

 

Restricted stock, issued and outstanding

 

 

65,130

 

 

 

247,157

 

Total

 

 

9,348,926

 

 

 

7,301,300

 

 

10


 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described, in or implied, by these forward-looking statements.

Overview

 

We are a clinical-stage biopharmaceutical company focused on the discovery and development of novel oral covalent small molecule drugs to treat patients with metabolic diseases and genetically defined cancers. A covalent small molecule drug is a synthetic compound that forms a permanent bond to its target protein and offers a number of potential advantages over conventional non-covalent drugs, including greater target selectivity, lower drug exposure, and the ability to drive a deeper, more durable response. Leveraging our extensive expertise in covalent binding chemistry and development, we built our proprietary FUSION™ System discovery platform to advance a pipeline of novel covalent small molecule product candidates. Our goal is to utilize our capabilities and FUSIONTM System to become the leader in developing covalent small molecules to maximize the depth and durability of clinical benefit when treating various diseases. To date we have announced two clinical development candidates, BMF-219 and BMF-500.

BMF-219

 

Our lead product candidate, BMF-219, is designed to be an orally bioavailable, potent, and selective covalent inhibitor of menin, a ubiquitously expressed scaffold protein that functions in histone modification and epigenetic gene regulation to impact multiple cellular processes including cell cycle control, apoptosis, and DNA damage repair. Menin plays a key role in beta-cell proliferation and function, as previously demonstrated through increased beta-cell mass generation in Men1 knockout mice (Ja et al., 2021). We are developing BMF-219 for the treatment of menin regulated or dependent diseases such as type 1 and type 2 diabetes as well as subtypes of liquid and solid tumors.

 

BMF-219 in Diabetes

We are currently investigating BMF-219 in diabetes in our ongoing Phase 1/2 clinical trial COVALENT-111 (patients with type 2 diabetes) and our ongoing Phase 2 clinical trial COVALENT-112 (patients with type 1 diabetes).

Loss of functional beta cell mass is a core component of the natural history in both types of diabetes – type 1 diabetes (mediated by autoimmune dysfunction) and type 2 diabetes (mediated by metabolic dysfunction). Beta cells are found in the pancreas and are responsible for the synthesis and secretion of insulin, a hormone that helps regulate the body’s capacity to absorb, metabolize, and convert glucose for energy. In patients with diabetes, beta cell mass and function are diminished over time, leading to insufficient insulin secretion and hyperglycemia. Menin is thought to act as a brake on beta cell turnover / beta cell growth, supporting the notion that inhibition of menin could lead to the regeneration of normal healthy beta cells. Based on these and other scientific findings, we are exploring the potential for menin inhibition as a possible therapeutic approach to improve beta cell health and mass, and thus potentially treat an underlying driver of diabetes.

In October 2022, we announced completion of the Phase 1 portion of COVALENT-111, a Phase 1/2 clinical trial of BMF-219 in healthy volunteers and adults with type 2 diabetes in Canada. In December 2022, we announced FDA clearance of the IND for BMF-219 in type 2 diabetes, allowing us to expand the COVALENT-111 study to sites in the United States. In September 2023, we announced FDA and Health Canada clearance of the expansion cohorts of COVALENT-111, allowing us to evaluate BMF-219, administered at 100 mg and 200 mg, with dosing durations up to 12 weeks in adult type 2 diabetes patients. The expansion portion will consist of approximately 300 patients with 54 subjects treated with BMF-219 and 18 treated with placebo in each arm.

We have reported several positive clinical data readouts from the escalation portion of Phase 2 study (COVALENT-111) in type 2 diabetes patients, supporting the disease-modifying potential of BMF-219 to address a root cause of diabetes: loss of healthy, insulin-producing beta cells. In March 2024, we reported clinical data from the dose escalation phase of COVALENT-111. After just a 4-week treatment period in type 2 diabetes patients who had previously failed standard of care (HbA1c ≥7.0% and ≤10.5%), BMF-219 demonstrated continued glycemic control at 26 weeks, or five months, after cessation of dosing. A general dose response was observed from BMF-219 in type 2 diabetes patients supported by dose-dependent PK response. The 50 mg cohort had the lowest placebo adjusted mean percent change of A1c (-0.04%) while 200 mg with food cohorts achieved the highest change of A1c (-1.4%). A higher proportion of patients treated with once daily (QD) 200 mg (36%) achieved a durable glycemic response (≥1.0% HbA1c reduction) compared to 100 mg QD cohorts (20%) at Week 26 (22 weeks off treatment). Patients with >7 years duration of diabetes

11


 

 

and failing dual- or triple-agent therapy (including GLP1 RA and/or SGLT2i) (n=2) also demonstrated improved glycemic control (HbA1c -0.4%, -1.1%, and -1.1% at Weeks 4, 12, and 26, respectively) with BMF-219 dosed at 200 mg with food. An increase in HOMA-B and C-peptide generally correlated with glycemic control, consistent with BMF-219's core mechanism of action: beta-cell proliferation and improved beta-cell function. Dose levels of 100 mg and 200 mg have been selected for the first 3 Arms of the Expansion Phase, which will dose patients up to 12 weeks (compared to 4 weeks in the Escalation Phase) and extended follow-up to Week 52. BMF-219 was generally well tolerated with no serious adverse events and no adverse event-related study discontinuations, and no symptomatic or clinically significant hypoglycemia. The dose expansion cohorts of COVALENT-111 are currently enrolling and initial 26-week data is expected to be announced in the second half of 2024.

In December 2023, we presented data from preclinical ex-vivo human islet experiments of BMF-219. Dependent on dose concentration and also dependent on dose duration, BMF-219 was observed to increase beta cell mass and function, as well as promote controlled proliferation and enhance insulin content in beta cells. Proliferation was observed only under elevated glucose conditions, which mimics diabetic levels, and with continuous drug exposure.

In October 2023, we announced FDA clearance of the IND for BMF-219 in type 1 diabetes mellitus, allowing us to initiate a Phase 2 clinical trial in approximately 150 patients with stage 3 type 1 diabetes (COVALENT-112) at two oral dose levels (50 subjects treated with BMF-219 and 25 treated with placebo for each dose level), 100 mg and 200 mg, for 12-weeks of treatment followed by a 40 week off-treatment period. The trial will also include an open label portion (n=40), enrolling participants in the U.S. and Canada with type 1 diabetes up to 15 years since diagnosis. In December 2023, we announced Health Canada clearance of Clinical Trial Application (CTA) for BMF-219 in type 1 diabetes.

In April 2024, we highlighted initial data from the first two Stage 3 type 1 diabetes patients dosed with BMF-219 in COVALENT-112, where both patients demonstrated early signs of clinical activity with improved measures correlated with beta-cell function. BMF-219 has been well tolerated by both patients. A 26-week follow-up data of the open label portion of Phase 2 COVALENT-112 study of 40 patients with type 1 diabetes dosed for 12 weeks with BMF-219 is expected in the second half of 2024.

BMF-219 in Oncology

We are currently investigating BMF-219 in oncology in our ongoing Phase 1 clinical trial COVALENT-101 (patients with subtypes of leukemia and lymphoma) and our ongoing Phase 1/1b clinical trial COVALENT-102 (patients with KRAS solid tumors).

In January 2022, we announced that we had initiated dosing in COVALENT-101, a Phase 1 clinical trial to explore the safety and efficacy of BMF-219 in patients with relapsed/refractory AML and acute lymphoblastic leukemia (ALL), including those with MLL/KMT2A gene arrangements or NPM1 mutations. In 2022, we amended the IND to initiate additional cohorts in the COVALENT-101 study to explore the potential utility of BMF-219 across a range of menin-dependent hematologic malignancies including MM, DLBCL, and CLL. In October 2022, we announced the initiation of a Phase 1/1b clinical trial of BMF-219 (COVALENT-102) in patients with unresectable, locally advanced, or metastatic non-small cell lung cancer (NSCLC), colorectal cancer (CRC) and pancreatic ductal adenocarcinoma (PDAC) with an activating KRAS mutation. Dose escalation completion and selection of the recommended Phase 2 dose are expected in 2024.

In July 2023, we also reported initial topline data from ongoing Phase 1 clinical trial (COVALENT-101) showcasing initial responses in relapsed/refractory AML patients with menin-dependent mutations. New data revealed two Complete Responses (CRs) (1 CR, 1 CRi) out of five relapsed/refractory AML patients carrying menin-dependent mutations treated at Dose Level 4. BMF-219, the first and only investigational covalent small-molecule menin inhibitor in clinical development to our knowledge, was generally well tolerated with no dose-limiting toxicities observed, and no QTc prolongation reported. Dose Level 4 exposure correlates with initial activity seen in BMF-219’s preclinical studies. We believe that this data supports further dose escalation. In December 2023, we reported the achievement of minimal residual disease negativity (MRD-neg) in first complete responder in a patient with AML. Within the total of 7 patients selected as evaluable for efficacy, 2 CRs were observed with a mean time to response of 1.8 months. We believe that pharmacodynamic data from a case study of an AML patient containing NUP98-NSD1 mutation further supports the proposed mechanism of action of BMF-219 as a menin inhibitor; in-line with preclinical models, BMF-219 downregulated key leukemogenic genes (e.g. HOXA9, MEIS1) as well as MEN1. BMF-219 was generally well tolerated with no dose-limiting toxicities observed and without adverse event (AE) related treatment discontinuations. Four participants experienced Differentiation Syndrome (DS) ≤ Grade 3, managed by cytoreductive therapy (hydroxyurea and steroids). Two participants recovered without dose modification or interruption, and none of the participants discontinued due to DS. Clinical data to date support protocol enhancements to COVALENT-101 to include focusing exclusively on patients with menin sensitive mutations such as MLL-r and NPM1 mutant acute leukemias and higher dose levels for CYP3A4 inhibitor Arm (Arm B). Dose escalation completion and selection of the recommended Phase 2 dose are expected in 2024.

12


 

 

BMF-500

Including the discovery and development of BMF-219, we are utilizing our novel FUSIONTM System to pioneer covalent treatments against other high-value genetic drivers of disease. In May 2022, we announced the nomination of our second development candidate, BMF-500, a third-generation oral covalent small molecule inhibitor of activating mutations of the FMS-like tyrosine kinase 3 (FLT3), which are the most frequent genetic alteration in AML and are associated with poor prognosis. We believe that, despite available therapies, the treatment of patients with FLT3-mutated AML continues to be considered a significant unmet medical need. In December 2022, we presented initial preclinical data at the American Society of Hematology Annual Meeting (ASH) demonstrating BMF-500’s picomolar affinity to activating FLT3 mutations including FLT3-ITD and various tyrosine kinase domain (TKD) mutations, multi-fold higher potency and increased cytotoxicity than commercially available non-covalent FLT3 inhibitor gilteritinib, as well as complete tumor regression in mouse models of FLT3-ITD acute myeloid leukemia (AML) and maintenance of effect without the need for continued exposure. In May 2023, we announced FDA clearance of our IND to study BMF-500 in a Phase 1 study (COVALENT-103) examining safety and efficacy in patients with relapsed or refractory acute leukemia with FLT3 wild-type and FLT3 mutations, including those with MLLr/NPM1 mutations. In October 2023, we announced the first patient has been dosed with BMF-500 in relapsed or refractory acute leukemia. Dose escalation completion and selection of the recommended Phase 2 dose are expected in 2024.

Since commencing operations in 2017, we have devoted substantially all of our efforts and financial resources to conducting research and development activities, including drug discovery and preclinical studies, establishing and maintaining our intellectual property portfolio, the manufacturing of clinical and research material, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. We have not generated any revenue from product sales and, as a result, we have never been profitable and have incurred net losses since commencement of our operations.

As of March 31, 2024, we had an accumulated deficit of $287.9 million. We incurred net losses of $39.1 million and $29.1 million for the three months ended March 31, 2024 and 2023, respectively. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future, and our net losses may fluctuate significantly from period to period, depending on the timing of and expenditures on our planned research and development activities.

We do not expect to generate revenue from product sales unless and until we obtain regulatory approval for and commercialize a product candidate, and we cannot assure you that we will ever generate significant revenue or profits. We expect that our expenses will continue to increase for the foreseeable future. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase substantially if and as we:

continue our research and development efforts and submit additional INDs;
conduct our ongoing preclinical studies and Phase 1 clinical trial of BMF-219 in various types of liquid tumors, our planned Phase 1/1b clinical trial of BMF-219 in solid tumors with KRAS mutations, our Phase 1/2 clinical trial of BMF-219 in type 2 diabetes and our Phase 2 clinical trial of BMF-219 in type 1 diabetes;
conduct preclinical studies and initiate and conduct clinical trials;
seek marketing approvals for any product candidates that successfully complete clinical trials;
experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges;
establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities, whether alone or with third parties, to commercialize any product candidates for which we may obtain regulatory approval, if any;
obtain, expand, maintain, enforce and protect our intellectual property portfolio;
hire additional clinical, regulatory and scientific personnel; and
operate as a public company.

We may need to raise additional capital in the future to fund our operations, including to conduct and complete clinical trials for any product candidates. If sufficient funds on acceptable terms are not available when needed, we could be required to significantly reduce our operating expenses and delay, reduce the scope of, or eliminate one or more of our development programs.

We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates. All of our product candidates are small molecules and are manufactured in synthetic processes from available or custom synthesized starting materials. The chemistry is scalable and uses commonly available pharmaceutical equipment in the manufacturing process. We expect to continue to develop product candidates that can be produced cost-effectively at contract manufacturing facilities. In addition, we do

13


 

 

not yet have a marketing or sales organization or commercial infrastructure. Accordingly, we will incur significant expenses to develop a marketing and sales organization and commercial infrastructure in advance of generating any product sales.

Components of Operating Results

Revenue

To date, we have not generated any revenue and do not expect to generate any revenue from the sale of products in the near future.

Operating Expenses

Research and Development

Our research and development expenses consist primarily of external and internal costs incurred in connection with the research and development of our research programs and product candidates.

External costs include:

expenses incurred under agreements with third-party CMOs, CROs, research and development service providers, academic research institutions and consulting costs; and
laboratory expenses, including supplies and services.

Internal costs include:

personnel-related expenses, including salaries, benefits and stock-based compensation for personnel in research and product development roles; and
facilities and other allocated expenses, including expenses for rent and facilities maintenance, and depreciation.

We expense research and development costs in the periods in which they are incurred. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and as services are performed. We track direct costs by stage of program, clinical or preclinical. However, we do not track indirect costs on a program specific or stage of program basis because these costs are deployed across multiple programs and, as such, are not separately classified.

We expect our research and development expenses to increase substantially during the next few years as we seek to initiate and complete clinical trials, pursue regulatory approval of BMF-219 and BMF-500, and advance our other programs through preclinical and clinical development. Predicting the timing or the final cost to complete our clinical program or validation of our manufacturing and supply processes is difficult and delays may occur because of many factors. The process of conducting the necessary preclinical and clinical research to obtain regulatory approval is costly and time-consuming. To the extent that our product candidates continue to advance into clinical trials, as well as advance into larger and later stage clinical trials, our expenses will increase substantially and may become more variable.

Our future research and development costs may vary significantly based on a wide variety of factors, such as:

the scope, rate of progress, expense and results of our ongoing preclinical development activities and clinical trials of BMF-219 and BMF-500 in various types of cancer and metabolic diseases, of any future preclinical development and clinical trials of our product candidates and other research and development activities we may conduct, such as our Phase 1/2 clinical trial of BMF-219 in type 2 diabetes and Phase 2 clinical trial of BMF-219 in type 1 diabetes;
uncertainties in clinical trial design and the interpretation of clinical trial data;
per patient trial costs;
the duration, scope and number of trials required for approval;
the number of sites included in the trials;
the number of patients who participate in the trials;
the countries in which the trials are conducted;
the length of time required to enroll eligible patients;
the drop-out or discontinuation rates of patients;
the safety and efficacy profiles of our product candidates;

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the timing receipt, and terms of any approvals from applicable regulatory authorities including the FDA and non-U.S. regulators;
maintaining a continued acceptable safety profile of our product candidates following approval, if any, of any of our product candidates;
significant and changing government regulation and regulatory guidance;
establishing clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party manufacturers are able to make product successfully;
the impact of any business interruptions to our operations or to those of the third parties with whom we work in light of adverse global market conditions; and
the extent to which we establish additional strategic collaborations or other arrangements.

A change in the outcome of any of these variables with respect to the development of any or our product candidates could significantly change the costs and timing associated with the development of that product candidate. The actual probability of success for our product candidates may be affected by a variety of factors, including the safety and efficacy of our product candidates, investment in our clinical programs, manufacturing capability and competition with other products and product candidates. As a result of these variables, we are unable to determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale of our product candidates. We may never succeed in achieving regulatory approval for any of our product candidates.

General and Administrative

General and administrative expenses consist principally of personnel-related costs including payroll and stock-based compensation expense for personnel in executive, finance, human resources, business and corporate development, and other administrative functions, professional fees for legal, consulting, and accounting services, rent and other facilities costs, depreciation, and other general operating expenses not otherwise classified as research and development expenses.

We anticipate that our general and administrative expenses will increase substantially during the next few years as a result of staff expansion and additional occupancy costs, as well as costs associated with being a public company, including compliance with the rules and regulations of the SEC and those of any national securities exchange on which our securities are traded, higher legal and auditing fees, investor relations costs, higher insurance premiums and other compliance costs associated with being a public company. We also expect that our future intellectual property expenses may increase as we expand our product portfolio of product candidates due to advances in our research and development programs.

 

Interest and Other Income, Net

 

Interest and other income, net consists primarily of interest earned on our investments and non-cash interest income (loss) related to accretion (amortization) of the discount (premium) on marketable securities.

Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the periods indicated (in thousands):

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

$ Change

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

$

33,776

 

 

$

24,395

 

 

$

9,381

 

General and administrative

 

 

7,283

 

 

 

5,636

 

 

 

1,647

 

Total operating expenses

 

 

41,059

 

 

 

30,031

 

 

 

11,028

 

Loss from operations

 

 

(41,059

)

 

 

(30,031

)

 

 

(11,028

)

Interest and other income, net

 

 

1,998

 

 

 

980

 

 

 

1,018

 

Net loss

 

$

(39,061

)

 

$

(29,051

)

 

$

(10,010

)

 

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Research and Development Expenses

 

The following table summarizes our research and development expenses incurred during the periods indicated (in thousands):

 

 

 

Three Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

$ Change

 

External costs

 

$

22,240

 

 

$

16,161

 

 

$

6,079

 

Internal costs:

 

 

 

 

 

 

 

 

 

Personnel-related expenses (including
   stock-based compensation)

 

 

9,507

 

 

 

6,377

 

 

 

3,130

 

Facilities and other allocated expenses

 

 

2,029

 

 

 

1,857

 

 

 

172

 

Total research and development expenses

 

$

33,776

 

 

$

24,395

 

 

$

9,381

 

Research and development expenses increased by $9.4 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase of $6.1 million in external costs was primarily driven by an increase of $4.5 million related to clinical activities, an increase of $0.7 million in expenses related to consultants and an increase of $0.6 million related to preclinical activities primarily due to timing variations in execution of these activities. Personnel-related expenses, including stock-based compensation, increased by $3.1 million due to an increase in headcount. Depreciation and facilities increased by $0.2 million primarily due to new lease agreements for additional office and laboratory space in Redwood City and San Carlos which commenced in 2023.

General and Administrative Expenses

General and administrative expenses increased by $1.6 million during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is primarily due to increase in personnel-related expenses, including stock-based compensation of $1.1 million, resulting from an increase in headcount, increase in legal costs of $0.4 million related to intellectual property related matters and increase in general external consultants cost.

Liquidity and Capital Resources

Liquidity

We have funded our operations primarily through the sale and issuance of shares of our common and convertible preferred stock and the issuance of unsecured promissory notes from inception through December 2020. In April 2021, we completed our initial public offering (IPO), to date, we have used all of the net proceeds from the IPO, and there was no material change in our actual use of the net proceeds from the IPO from that described in the final prospectus for our IPO.

On October 14, 2022, we filed a shelf registration statement on Form S-3 (the Shelf Registration Statement) with the SEC relating to the registration of up to an aggregate of $350.0 million in shares of our common stock, preferred stock, debt securities, warrants and units or any combination thereof. The Shelf Registration Statement was declared effective by the SEC on October 24, 2022. In April 2023, pursuant to the Shelf Registration Statement, we sold an aggregate of 5,750,000 shares of common stock at a price of $30.00 per share in an underwritten public offering for gross proceeds of $172.5 million, resulting in net proceeds of $161.8 million after deducting underwriting discounts, commissions, and offering costs.

As of March 31, 2024, we had cash, cash equivalents, and restricted cash of $145.3 million and an accumulated deficit of $287.9 million. We have incurred substantial operating losses and have used cash in our operating activities since inception. Without any future financing, the current operating plan under the existing cash and cash equivalents, and restricted cash as of March 31, 2024, will not be sufficient for us to fund our operating expenses and capital expenditure requirements for at least twelve months following the issuance date of the unaudited condensed financial statements. Our ability to continue as a going concern will require us to obtain additional financing to fund our operations and there can be no assurance that additional financing will be available to us or that such financing, if available, will be available on terms acceptable to us. Accordingly, there is substantial doubt about our ability to continue as a going concern.

Future Funding Requirements

We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future. We may seek to raise capital through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources. Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and

16


 

 

when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. We anticipate that we will need to raise substantial additional capital, the requirements of which will depend on many factors, including:

the scope, timing, progress, duration, costs and results of our clinical trials, drug discovery, preclinical development activities, and laboratory testing and clinical trials for our product candidates;
the number and scope of clinical programs we decide to pursue;
the scope and costs of manufacturing development and commercial manufacturing activities;
the extent to which we discover and develop additional product candidates;
the cost, timing and outcome of regulatory review of our product candidates;
the cost and timing of establishing sales and marketing capabilities, if any of our product candidates receive marketing approval;
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
our ability to establish and maintain collaborations on favorable terms, if at all;
licensing, or other arrangements into which we may enter in the future, including the timing of receipt of any milestone or royalty payments under these agreements;
the timing, receipt and amount of sales from our potential products;
our need and ability to hire additional management, scientific and medical personnel;
our need to implement additional internal systems and infrastructure, including financial and reporting systems;
our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates;
the costs associated with being a public company;
the cost associated with commercializing our product candidates, if they receive regulatory approval;
our ability to establish and maintain strategic collaborations and other similar partnerships for the development and commercialization of our product candidates; and
the impact of the COVID-19 pandemic and adverse global economic conditions on our business, which may exacerbate the magnitude of the factors discussed above.

If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license to third parties rights to our product candidates in certain territories or indications that we would prefer to develop and commercialize ourselves.

See the section of this Quarterly Report on Form 10-Q titled “Risk Factors” for additional risks associated with our substantial capital requirements.

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Summary Statement of Cash Flows

The following table sets forth the primary sources and uses of cash, cash equivalents, and restricted cash for each of the periods presented below (in thousands):

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Net cash (used in) provided by:

 

 

 

 

 

 

Operating activities

 

$

(32,030

)

 

$

(24,044

)

Investing activities

 

 

(35

)

 

 

(1,756

)

Financing activities

 

 

116

 

 

 

201

 

Net decrease in cash, cash equivalents, and restricted cash

 

$

(31,949

)

 

 

(25,599

)

Net Cash Used in Operating Activities

Net cash used in operating activities was $32.0 million during the three months ended March 31, 2024 and consisted of a net loss of $39.1 million, offset by an increase in net assets of $0.6 million and non-cash adjustments of $6.4 million. The increase in net assets consisted primarily of an increase in prepaid expenses and other current assets of $0.3 million, an increase in other assets of $1.2 million, a decrease in accounts payable of $2.2 million offset by an increase in accrued expenses and other current liabilities of $3.8 million, and an increase in operating lease liabilities of $0.5 million. Non-cash adjustments consisted primarily of stock-based compensation expense of $5.0 million and operating lease expense of $1.0 million.
 

Net cash used in operating activities was $24.0 million during the three months ended March 31, 2023 and consisted of a net loss of $29.1 million, offset by an increase in net assets of $0.9 million and non-cash adjustments of $4.1 million. The increase in net assets consisted primarily of a decrease in prepaid expenses and other current assets of $2.3 million, an increase in other assets of $0.7 million, an increase in accounts payable of $0.7 million, and a decrease in accrued liabilities of $0.8 million. Non-cash adjustments consisted primarily of stock-based compensation expense of $3.2 million.

Net Cash Provided by (Used in) Investing Activities

Net cash used in investing activities was $0.03 million during the three months ended March 31, 2024 and was primarily related to the purchase of property and equipment.
 

Net cash used in investing activities was $1.8 million for the three months ended March 31, 2023 and was primarily related to the purchase of property and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $0.1 million during the three months ended March 31, 2024 and relates to proceeds received from stock option exercises.
 

Net cash provided by financing activities was $0.2 million for the three months ended March 31, 2023. Cash provided by financing activities was related to proceeds received from stock option exercises.

Contractual Obligations

As of March 31, 2024, there have been no material changes from the contractual obligations and commitments as of December 31, 2023 previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 28, 2024.

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Critical Accounting Policies, Significant Judgments and Use of Estimates

Our financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these unaudited condensed financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements, as well as expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe that the accounting policies discussed below are critical to

18


 

 

understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Our critical accounting policies are described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in our Annual Report on Form 10-K filed with the SEC on March 28, 2024 and the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. During the three months ended March 31, 2024, except as described in Note 2 to the unaudited condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there were no material changes to our critical accounting policies from those discussed in our Annual Report on Form 10-K filed with the SEC on March 28, 2024.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The primary objectives of our investment activities are to ensure liquidity and to preserve capital. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities. There was no material foreign currency risk for the quarter ended March 31, 2024. We held $145.3 million in cash, cash equivalents, and restricted cash as of March 31, 2024. Cash equivalents consisted of money market funds. Restricted cash consisted of two stand-by letters of credit issued to our landlord in connection with the lab leases. We held no interest-bearing liabilities as of March 31, 2024. Historical fluctuations in interest rates have not been significant for us. Due to the short-term maturities of our cash equivalents, an immediate 10% relative change in interest rates would not have a material effect on the fair market value of our cash equivalents.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our principal executive officer and principal financial officer, respectively, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of such date our disclosure controls and procedures were effective at a reasonable assurance level (a) to ensure that information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (b) to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting during the quarter ended March 31, 2024 identified in connection with the evaluation required by Rules 13a‑15(d) and 15d‑15(d) of the Exchange Act that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

 

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PART II—OTHER INFORMATION

From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently a party to any material legal proceedings. Regardless of outcome, litigation can have an adverse impact on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.

Item 1A. Risk Factors.

Our business is subject to various risks and uncertainties, including those described below, that we believe apply to our business and the industry in which we operate. You should carefully consider these risks, as well as the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events or developments described below could have a material adverse effect on our business, results of operations, financial condition, prospects and stock price. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business.

Risks Related to Our Limited Operating History, Business, Financial Condition, Results of Operations, and Need for Additional Capital

 

We have a limited operating history, have not completed any clinical trials, have no products approved for commercial sale, and have not generated any revenue, which may make it difficult for you to evaluate our current business and likelihood of success and viability.

We are a clinical-stage biotechnology company with a limited operating history with which investors can evaluate our business and prospects. We commenced operations in August 2017, have not completed any clinical trials, have no products approved for commercial sale and have never generated any revenue, and our operations to date have been primarily limited to organizing and staffing our company, business planning, raising capital, conducting discovery and research activities, filing patent applications, identifying potential product candidates, undertaking preclinical studies, preparing for and initiating our first clinical trial, and establishing arrangements with third parties for the manufacture of initial quantities of product candidates. We currently have two product candidates, BMF-219 and BMF-500, under investigation in clinical trials, with the first patient dosed with BMF-500 in October 2023. Our remaining product candidates are in the discovery or preclinical development stage.

We have limited experience as a company in conducting clinical trials and have not successfully completed the clinical development of any product candidates to date. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history.

In addition, as a company with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays, and other known and unknown factors. We will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities. We have not yet demonstrated an ability to successfully overcome such risks and difficulties, or to make such a transition. If we do not adequately address these risks and difficulties or successfully make such a transition, our business will suffer.

 

We expect our financial condition and results of operations to continue to fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance.

 

We have incurred significant net losses in each period since our inception, and we expect to incur significant net losses for the foreseeable future.

Investment in biopharmaceutical product development is a highly speculative undertaking and entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval, and become commercially viable. We are early in our development efforts and have not yet completed the development of any of our product candidates. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. Even if we succeed in receiving marketing approval for and commercializing one or more of our product candidates, we expect that we will continue to incur substantial research and development and other expenses in order to discover, develop and market additional potential products. We have financed our operations primarily through sales of our common stock and convertible preferred stock.

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We have incurred significant net losses in each reporting period since we commenced operations in August 2017. Our net losses were $39.1 million and $29.1 million, for the three months ended March 31, 2024 and 2023 ,respectively. As of March 31, 2024, we had an accumulated deficit of $287.9 million. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase substantially if and as we:

continue our research and development efforts and submit additional INDs;
continue the clinical development of BMF-219 for the treatment of patients with liquid and solid tumors, as well as patients with type 1 and type 2 diabetes mellitus;
explore the potential clinical utility of BMF-219 in other diabetic patient populations, including pre-diabetes;
continue the clinical development of BMF-500, a covalent inhibitor of FLT3;
continue our efforts to develop product candidates from our FUSIONTM System discovery platform;
conduct preclinical studies and initiate and conduct clinical trials;
seek marketing approvals for any product candidates that successfully complete clinical trials;
experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues, or other regulatory challenges;
establish a sales, marketing, and distribution infrastructure and scale-up manufacturing capabilities, whether alone or with third parties, to commercialize any product candidates for which we may obtain regulatory approval, if any;
obtain, expand, maintain, enforce, and protect our intellectual property portfolio;
hire additional clinical, regulatory, and scientific personnel; and
operate as a public company.

 

Because of the numerous risks and uncertainties associated with biopharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses we will incur or when, if ever, we will be able to achieve profitability. Even if we succeed in commercializing one or more of our product candidates, we will continue to incur substantial research and development and other expenditures to develop, seek regulatory approval for and market additional product candidates. We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

 

We have not generated any revenue from our product candidates and may never generate revenue or be profitable. Our ability to generate revenue and achieve profitability depends significantly on our ability to achieve several objectives relating to the discovery and development of our product candidates.

Our ability to become profitable depends upon our ability to generate revenue. We have not received marketing approval for any product candidate, and we have not generated any revenue from any product sales or other sources since our inception. We do not expect to generate revenue unless or until we successfully complete preclinical and clinical development and obtain regulatory approval of, and then successfully commercialize, at least one product candidate. BMF-219, our lead product candidate, is in the early stage of clinical development. As such, we face significant translational risk as our product candidates advance further in clinical development, and promising results in preclinical studies or early clinical trials may not be replicated in later-stage clinical trials. All of our current and future product candidates will require preclinical and clinical development, regulatory review and approval, substantial investment, access to sufficient commercial manufacturing capacity, and significant marketing efforts before we can generate any revenue from product sales. Our ability to generate revenue depends on a number of factors, including, but not limited to:

timely initiation and completion of our preclinical studies and clinical trials for BMF-219, BMF-500 and our future product candidates, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors;
establishing and maintaining relationships with contract research organizations (CROs) and clinical sites for the ongoing clinical development of BMF-219 and BMF-500 and any future product candidates;

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our ability to complete IND-enabling studies and successfully submit and receive authorization to proceed under INDs or comparable applications;
whether we are required by the FDA or other comparable foreign regulatory authorities to conduct additional clinical trials or other studies beyond those planned to support the approval and commercialization of our product candidates or any future product candidates;
our ability to demonstrate to the satisfaction of the FDA and comparable foreign regulatory authorities the safety, efficacy, consistent manufacturing quality, and acceptable risk-benefit profile of our small molecule product candidates or any future product candidates;
the prevalence, duration, and severity of potential side effects or other safety issues experienced with our product candidates or future product candidates, if any;
the timely receipt of necessary regulatory approvals from the FDA and comparable foreign regulatory authorities;
the willingness of physicians, operators of clinics, and patients to utilize or adopt any of our product candidates or future product candidates over alternative or more conventional therapies, such as chemotherapy, to treat various types of cancer;
the actual and perceived availability, cost, risk profile and side effects and efficacy of our product candidates, if approved, relative to existing and future alternative therapies in our target indications, including cancer and metabolic diseases, and competitive product candidates and technologies;
our ability and the ability of third parties with whom we contract to manufacture adequate clinical and commercial supplies of our product candidates or any future product candidates, remain in good standing with regulatory authorities and develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP;
our ability to successfully develop a commercial strategy and thereafter commercialize our product candidates or any future product candidates in the United States and internationally, if approved for marketing, reimbursement, sale and distribution in such countries and territories, whether alone or in collaboration with others;
patient demand for our current product candidates and any future product candidates, if approved;
our ability to establish and enforce intellectual property rights in and to our product candidates or any future product candidates;
obtaining coverage and adequate reimbursement by third-party payors for our product candidates;
addressing any competing therapies and technological and market developments; and
attracting, hiring, and retaining qualified personnel.

Many of the factors listed above are beyond our control and could cause us to experience significant delays or prevent us from obtaining regulatory approvals or commercializing our product candidates. Even if we are able to commercialize our product candidates, we may not achieve profitability soon after generating product sales, if ever. If we are unable to generate sufficient revenue through the sale of our product candidates or any future product candidates, we may be unable to continue operations without continued funding.

Due to the significant resources required for the development of our product candidates, we must prioritize development of certain product candidates and/or certain indications. We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

We are currently focused on the discovery and development of novel covalent small molecules to treat patients with genetically defined cancers and metabolic diseases. We seek to maintain a process of prioritization and resource allocation among our programs to maintain a balance between advancing our lead product candidate, BMF-219, as well as developing BMF-500 and any future product candidates.

Our decisions concerning the allocation of research, development, collaboration, management, and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial product and may divert resources away from better opportunities with other therapeutic platforms or product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through future

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collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights. In addition, if we make incorrect determinations regarding the viability or market potential of any of our programs or product candidates or misread trends in the cancer or metabolic disease treatment landscape or in the pharmaceutical, biopharmaceutical or biotechnology industry more generally, our business, financial condition and results of operations could be materially adversely affected.

 

We will require substantial additional capital to finance our operations. If we are unable to raise such capital when needed, or on acceptable terms, we may be forced to delay, reduce and/or eliminate one or more of our research and product development programs or future commercialization efforts.

Since our inception, we have used substantial amounts of cash to fund our operations, and our expenses will increase substantially in the foreseeable future in connection with our ongoing activities, particularly as we continue the research and development of, initiate and conduct clinical trials of, and seek marketing approval for our product candidates. Developing biopharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Our operations have consumed significant amounts of cash since inception, and we expect our expenses to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek marketing approval for, BMF-219 and BMF-500, and advance our future product candidates. Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated with sales, marketing, manufacturing, and distribution activities. Our expenses could increase beyond expectations if we are required by the FDA or other regulatory agencies to perform preclinical studies or clinical trials in addition to those that we currently anticipate. Other unanticipated costs may also arise. Because the design and outcome of our ongoing and planned clinical trials are highly uncertain, we cannot reasonably estimate the actual amount of resources and funding that will be necessary to successfully complete the development and commercialization of any product candidate we develop. We also expect to incur additional costs associated with our continuing operation as a public company. Accordingly, we will need to obtain substantial additional funding in order to continue our operations.

As of March 31, 2024, we had $145.3 million in cash, cash equivalents, and restricted cash. Based on our current operating plan, we believe that our existing cash and cash equivalents, and restricted cash as of March 31, 2024, without any future financing, will not be sufficient for the Company to continue as a going concern for at least one year from the issuance date of the unaudited condensed financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. Our estimate as to how long we expect our existing capital resources to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. Changing circumstances, some of which may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned through public or private equity offerings, debt financings, collaborations and licensing arrangements or other sources. Such financing may dilute our stockholders or restrict our operating activities. To the extent we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation, or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license other rights to our product candidates in certain territories or indications that we would prefer to develop and commercialize ourselves. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. If we raise additional funds through upfront payments or milestone payments pursuant to strategic collaborations with third parties, we may have to relinquish valuable rights to our product candidates or grant licenses on terms that are not favorable to us. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

 

Our future capital requirements depend on many factors, including but not limited to:

the scope, timing, progress, duration, costs and results of our clinical trials, drug discovery, preclinical development activities, and laboratory testing for our product candidates;
the number and scope of clinical programs we decide to pursue;
the scope and costs of manufacturing development and commercial manufacturing activities;
the extent to which we discover and develop additional product candidates;
the cost, timing, and outcome of regulatory review of our product candidates;
the cost and timing of establishing sales and marketing capabilities, if any of our product candidates receive marketing approval;

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the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending intellectual property-related claims;
our ability to establish and maintain collaborations on favorable terms, if at all;
licensing, or other arrangements into which we may enter in the future, including the timing of receipt of any milestone or royalty payments under these agreements;
the timing, receipt, and amount of sales from our potential products;
our need and ability to hire additional management, scientific, and medical personnel;
our need to implement additional internal systems and infrastructure, including financial and reporting systems;
our efforts to enhance operational systems and our ability to attract, hire, and retain qualified personnel, including personnel to support the development of our product candidates;
the costs associated with being a public company;
the cost associated with commercializing our product candidates, if they receive regulatory approval;
our ability to establish and maintain strategic collaborations and other similar partnerships for the development and commercialization of our product candidates; and
the impact of adverse global economic conditions on our business, which may exacerbate the magnitude of the factors discussed above.

 

We do not have any committed external source of funds and adequate additional financing may not be available to us on acceptable terms, or at all. In addition, our ability to raise additional capital may be adversely impacted by potential worsening global economic and political conditions, inflationary pressures, increases in interest rates and disruptions to and volatility in the credit and financial markets in the United States and worldwide or other factors.

 

There is substantial doubt about our ability to continue as a going concern.

To date, we have not generated any revenues from product sales and have incurred significant operating losses in each year since our inception and we anticipate that losses may continue for the next several years or until such time as we can generate substantial revenues and achieve profitability. In connection with the preparation of this quarterly report for the period ended March 31, 2024, our management has concluded that there is substantial doubt as to whether we can continue as a going concern for the twelve months following the issuance of this quarterly report. Our ability to continue as a going concern is dependent upon raising capital to maintain current operations and continue research and development efforts. We plan to raise additional capital to fund our operations through public or private equity offerings, debt financings, and/or potential collaborations and license arrangement or other sources. There is no assurance, however, that any additional financing or any revenue-generating collaboration will be available when needed or that we will be able to obtain financing or enter into a collaboration on terms acceptable to us.

Based on our current operating plan, we will not be able to continue as a going concern over the next twelve months unless we raise additional capital by other means. These factors raise substantial doubt about our ability to continue as a going concern.

 

Recent volatility in capital markets and lower market prices for many securities may affect our ability to access new capital through sales of shares of our common stock or issuance of indebtedness, which may harm our liquidity, limit our ability to grow our business, pursue acquisitions or improve our operating infrastructure and restrict our ability to compete in our markets.

Our operations consume substantial amounts of cash, and we intend to continue to make significant investments to support our business growth, pursue the preclinical and clinical development of our product candidates, respond to business challenges or opportunities, retain or expand our current levels of personnel, enhance our operating infrastructure, and potentially acquire complementary businesses and technologies. Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including the need to:

finance unanticipated working capital requirements;
develop or enhance our technological infrastructure and our existing research and development capabilities;
pursue acquisitions or other strategic relationships; and
respond to competitive pressures.

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Accordingly, we may need to pursue equity or debt financings to meet our capital needs. With uncertainty in the capital markets and other factors, such financing may not be available on terms favorable to us or at all. If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. Any debt financing secured by us in the future could require us to pay significant interest on borrowings or involve additional restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Our inability to obtain adequate financing or financing on terms satisfactory to us could have a negative impact on our financial condition and we could face significant limitations on our ability to pursue our business strategies, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our research-stage programs, clinical trials or future commercialization efforts.

 

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect the Company’s current and projected business operations and its financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature Bank or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder. If any of our suppliers or other parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. In this regard, counterparties to SVB credit agreements and arrangements, and third parties such as beneficiaries of letters of credit (among others), may experience direct impacts from the closure of SVB and uncertainty remains over liquidity concerns in the broader financial services industry. Similar impacts have occurred in the past, such as during the 2008-2010 financial crisis.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the capacity of such program. Additionally, there is no guarantee that the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.

Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have or may enter into credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions with which we have or may enter into financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

The results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations. These could include, but may not be limited to, the following:

Delayed access to deposits or other financial assets or the uninsured loss of deposits or other financial assets;

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Delayed or lost access to working capital sources and/or delays, inability or reductions in our ability to enter into new credit facilities or access other working capital resources;
Potential or actual breach of contractual obligations that require us to maintain letters of credit or other credit support arrangements; or
Potential or actual breach of financial covenants in any credit agreements or credit arrangements.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws and otherwise have a material adverse impact on our business.

Risks Related to Product Development

 

Our discovery and development activities are focused on the development of novel covalent small molecule therapies, initially targeted at menin, to treat patients with genetically-defined cancers and metabolic diseases, and the approach we are taking to discover and develop such binders is novel, may never lead to marketable products and may not ultimately represent a significant market.

The discovery and development of covalent small molecule therapies for patients with genetically-defined cancers and metabolic diseases, with a particular focus on menin, is an emerging field. While there is scientific evidence to support the feasibility of developing covalent therapies, the significant complexity and potential safety and toxicity concerns associated with poorly designed covalent binders have historically discouraged drug developers from pursuing this drug class. In particular, a significant risk for toxicity is posed by these small-molecule covalent binders if they demonstrate a more promiscuous binding profile than intended, which can potentially cause unacceptable levels of off-target interactions. While we believe the significant expertise, foundational knowledge and capabilities that our management team members have accumulated over their extensive careers and that we have expanded and refined since our inception positions us to overcome such challenges, there can be no assurance that we will be successful. Even if we are able to limit off-target interaction, there can be no assurance that treatment with any of our novel covalent small molecule product candidates will demonstrate the deep inactivation of their targets or offer greater therapeutic windows than conventional non-covalent drugs. It is possible that the targets we select, such as menin, could be effectively and safely treated by more frequent dosing of non-covalent drugs, which could limit the potential advantages or perceived benefits of our covalent inhibitor product candidates.

Furthermore, although we believe, based on our preclinical work and research on covalent binders generally, that highly selective covalent inhibitors of certain critically important oncogenic drivers, such as menin, known to impact cellular processes have potential as precision oncology targets, clinical results may not confirm this hypothesis or may only confirm it for certain inhibitors or certain tumor types.

In addition, our lead product candidate, BMF-219, is in clinical development, and we dosed the first patient with our second product candidate, BMF-500, in October 2023, following clearance of our IND by the FDA in May 2023. Our current data is primarily limited to clinical data in a relatively small patient population for BMF-219, as well as animal models and preclinical cell lines for BMF-219 and BMF-500. These results may not be replicated in larger clinical trials, or, in the case of preclinical data, translate into humans. As such, even if we are able to develop small-molecule therapy candidates that demonstrate positive results in preclinical studies or early-stage clinical trials, there can be no assurance that such product candidates will subsequently demonstrate significant clinical benefit in vivo or in larger trials or will be well-tolerated.

 

Further, even if our approach is successful in demonstrating the clinical benefit of using our lead product candidate, BMF-219, which is designed to be a highly active and selective covalent inhibitor of menin, in certain menin-driven cancers and/or metabolic diseases, we may never successfully identify additional covalent binding product candidates to validated oncology or other targets through our FUSIONTM System. Therefore, we do not know if our approach of treating patients with genetically-defined cancers and metabolic diseases will be successful, and if our approach is unsuccessful, our business will be materially adversely affected.

 

Our novel approach to the discovery and development of our current and future product candidates is unproven, and we may not be successful in our efforts to use and expand our FUSIONTM System to build a pipeline of product candidates with commercial value.

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A key element of our strategy is to utilize our FUSIONTM System to build a pipeline of novel covalent small molecule product candidates and progress these product candidates through clinical development for the treatment of various cancers and metabolic diseases. Although our research and development efforts to date have resulted in our discovery and preclinical development of BMF-219, BMF-500 and other programs, BMF-219, BMF-500 and such other programs may not be safe or effective in our target indications, and we may not be able to further develop BMF-219, BMF-500 or any future product candidates. Our FUSIONTM System is unproven and may not enable us to build a pipeline of product candidates. For example, we may not be successful in identifying validated and novel targets that are amenable to direct intervention with a covalent binder, we may not succeed in creating novel chemical scaffolds to exploit target proteins and we may not be able to maximize the selectivity, potency and safety of our covalent small molecules. There can be no assurance that any development problems we experience in the future related to our platform will not cause significant delays or unanticipated costs or that such development problems can be solved. Even if we are successful in building our pipeline of product candidates, the potential product candidates that we identify may not be suitable for clinical development or generate acceptable clinical data, including as a result of being shown to have unacceptable toxicity or other characteristics that indicate that they are unlikely to be products that will receive marketing approval from the FDA or other regulatory authorities or achieve market acceptance. Furthermore, if one or more of our covalent small molecule product candidates generally proves to be ineffective, unsafe or commercially unviable, the development of our entire platform and pipeline utilizing our FUSIONTM System could be delayed, potentially permanently.

Even if our product candidates are successful in inhibiting certain protein binding, such success would not provide a guarantee of the effectiveness of such product candidate in total tumor regression in vivo. For example, even if BMF-219 demonstrates an ability to inhibit menin in vivo, there can be no assurance that such inhibition will provide significant clinical benefit when evaluated in humans.

In addition, development of covalent small molecules is highly complex and we may experience delays in developing a sustainable, reproducible and scalable manufacturing process or transferring that process to manufacturing partners, which may prevent us from initiating or completing our planned clinical trials or commercializing any products we develop on a timely or profitable basis, if at all. In addition, since we have not yet entered clinical development, we do not know the specific doses that may be effective in the clinic or, if approved, commercially. Finding a suitable dose may delay our anticipated clinical development timelines.

If we do not successfully develop and commercialize product candidates, we will not be able to generate product revenue which could materially adversely affect our business, financial condition and results of operations.

 

We are early in our development efforts and are substantially dependent on our product candidates, BMF-219 and BMF-500. If we are unable to advance BMF-219, BMF-500 or any other product candidates through clinical development, obtain regulatory approval and ultimately commercialize BMF-219, BMF-500 or any other product candidates, or experience significant delays in doing so, our business, financial condition and results of operations will be materially adversely affected.

We are early in our development efforts. We have not yet successfully completed clinical testing of our lead product candidate, BMF-219, in human subjects for various types of solid tumors or liquid tumors or type 2 diabetes or type 1 diabetes, or our second product candidate, BMF-500, in human subjects for relapsed or refractory acute leukemia with FLT3 wild-type and FLT3 mutations, including those with MLLr/NPM1 mutations. Our ability to generate product revenue, which we do not expect will occur for many years, if ever, will depend heavily on the successful clinical development and eventual commercialization of BMF-219, BMF-500, and one or more of our future product candidates. The success of our product candidates will depend on several factors, including the following:

our ability to continue our business operations and product candidate research and development, and adapt to any changes in the regulatory approval process, manufacturing supply or clinical trial requirements and timing due to a continued and prolonged public health emergencies such as the COVID-19 pandemic;
successful completion of preclinical studies;
receipt of authorization to proceed under INDs for our planned clinical trials or future clinical trials;