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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 September 30, 2023

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: 001-40602

 

ERASCA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

83-1217027

(State or other jurisdiction of

incorporation or organization)

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

3115 Merryfield Row, Suite 300

San Diego, CA

92121

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (858) 465-6511

 

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 per share

 

ERAS

 

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 November 2, 2023, the registrant had 151,087,038 shares of common stock outstanding.

 

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022

2

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022

3

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

5

Notes to Condensed Consolidated Financial Statements

6

Item 2.

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

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

34

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

35

Item 1A.

Risk Factors

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3.

Defaults Upon Senior Securities

35

Item 4.

Mine Safety Disclosures

35

Item 5.

Other Information

35

Item 6.

Exhibits

36

Signatures

37

 

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Erasca, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and par value amounts)

(Unaudited)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

 

$

112,862

 

 

$

284,217

 

Short-term marketable securities

 

 

183,806

 

 

 

151,403

 

Prepaid expenses and other current assets

 

 

9,298

 

 

 

8,876

 

Total current assets

 

 

305,966

 

 

 

444,496

 

Long-term marketable securities

 

 

46,891

 

 

 

 

Property and equipment, net

 

 

23,229

 

 

 

24,815

 

Operating lease assets

 

 

38,524

 

 

 

40,418

 

Restricted cash

 

 

408

 

 

 

408

 

Other assets

 

 

4,388

 

 

 

4,772

 

Total assets

 

$

419,406

 

 

$

514,909

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,701

 

 

$

23,049

 

Accrued expenses and other current liabilities

 

 

19,211

 

 

 

24,336

 

Operating lease liabilities

 

 

3,818

 

 

 

1,305

 

Total current liabilities

 

 

26,730

 

 

 

48,690

 

Operating lease liabilities, net of current portion

 

 

52,940

 

 

 

53,793

 

Other liabilities

 

 

761

 

 

 

573

 

Total liabilities

 

 

80,431

 

 

 

103,056

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 80,000,000 shares authorized at September 30, 2023 and December 31, 2022; no shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.0001 par value; 800,000,000 shares authorized at September 30, 2023 and December 31, 2022; 151,053,118 and 150,448,363 shares issued at September 30, 2023 and December 31, 2022, respectively; 150,537,752 and 149,333,258 shares outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

15

 

 

 

15

 

Additional paid-in capital

 

 

915,847

 

 

 

893,850

 

Accumulated other comprehensive loss

 

 

(575

)

 

 

(1,041

)

Accumulated deficit

 

 

(576,312

)

 

 

(480,971

)

Total stockholders' equity

 

 

338,975

 

 

 

411,853

 

Total liabilities and stockholders' equity

 

$

419,406

 

 

$

514,909

 

 

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

 

1


 

Erasca, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

$

25,213

 

 

$

28,184

 

 

$

79,016

 

 

$

83,101

 

In-process research and development

 

 

 

 

 

 

 

 

 

 

 

2,000

 

General and administrative

 

 

9,445

 

 

 

8,778

 

 

 

28,637

 

 

 

24,271

 

Total operating expenses

 

 

34,658

 

 

 

36,962

 

 

 

107,653

 

 

 

109,372

 

Loss from operations

 

 

(34,658

)

 

 

(36,962

)

 

 

(107,653

)

 

 

(109,372

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

4,346

 

 

 

1,522

 

 

 

12,474

 

 

 

2,024

 

Other expense

 

 

(49

)

 

 

(49

)

 

 

(162

)

 

 

(207

)

Total other income (expense), net

 

 

4,297

 

 

 

1,473

 

 

 

12,312

 

 

 

1,817

 

Net loss

 

$

(30,361

)

 

$

(35,489

)

 

$

(95,341

)

 

$

(107,555

)

Net loss per share, basic and diluted

 

$

(0.20

)

 

$

(0.29

)

 

$

(0.64

)

 

$

(0.90

)

Weighted-average shares of common stock used in computing net loss per share, basic and diluted

 

 

150,450,201

 

 

 

120,798,322

 

 

 

150,000,613

 

 

 

120,166,023

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities, net

 

 

218

 

 

 

(156

)

 

 

466

 

 

 

(1,217

)

Comprehensive loss

 

$

(30,143

)

 

$

(35,645

)

 

$

(94,875

)

 

$

(108,772

)

 

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

 

2


 

Erasca, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2022

 

 

150,448,363

 

 

$

15

 

 

$

893,850

 

 

$

(1,041

)

 

$

(480,971

)

 

$

411,853

 

Exercise of stock options

 

 

199,344

 

 

 

 

 

 

183

 

 

 

 

 

 

 

 

 

183

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

243

 

 

 

 

 

 

 

 

 

243

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

6,845

 

 

 

 

 

 

 

 

 

6,845

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(33,199

)

 

 

(33,199

)

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

 

527

 

 

 

 

 

 

527

 

Balance at March 31, 2023

 

 

150,647,707

 

 

$

15

 

 

$

901,121

 

 

$

(514

)

 

$

(514,170

)

 

$

386,452

 

Exercise of stock options

 

 

170,715

 

 

 

 

 

 

122

 

 

 

 

 

 

 

 

 

122

 

Issuance of common stock under the Employee Stock Purchase Plan

 

 

223,696

 

 

 

 

 

 

527

 

 

 

 

 

 

 

 

 

527

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

652

 

 

 

 

 

 

 

 

 

652

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

7,012

 

 

 

 

 

 

 

 

 

7,012

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,781

)

 

 

(31,781

)

Unrealized loss on marketable securities, net

 

 

 

 

 

 

 

 

 

 

 

(279

)

 

 

 

 

 

(279

)

Balance at June 30, 2023

 

 

151,042,118

 

 

$

15

 

 

$

909,434

 

 

$

(793

)

 

$

(545,951

)

 

$

362,705

 

Exercise of stock options

 

 

11,000

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

7

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

168

 

 

 

 

 

 

 

 

 

168

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

6,238

 

 

 

 

 

 

 

 

 

6,238

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,361

)

 

 

(30,361

)

Unrealized gain on marketable securities, net

 

 

 

 

 

 

 

 

 

 

 

218

 

 

 

 

 

 

218

 

Balance at September 30, 2023

 

 

151,053,118

 

 

$

15

 

 

$

915,847

 

 

$

(575

)

 

$

(576,312

)

 

$

338,975

 

 

 

3


 

Erasca, Inc.

Condensed Consolidated Statements of Stockholders’ Equity - Continued

(In thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

121,382,547

 

 

$

12

 

 

$

694,844

 

 

$

(162

)

 

$

(238,166

)

 

$

456,528

 

Exercise of stock options

 

 

357,244

 

 

 

 

 

 

460

 

 

 

 

 

 

 

 

 

460

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

479

 

 

 

 

 

 

 

 

 

479

 

Repurchases of restricted stock

 

 

(6,945

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,442

 

 

 

 

 

 

 

 

 

4,442

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36,458

)

 

 

(36,458

)

Unrealized loss on marketable securities, net

 

 

 

 

 

 

 

 

 

 

 

(789

)

 

 

 

 

 

(789

)

Balance at March 31, 2022

 

 

121,732,846

 

 

$

12

 

 

$

700,225

 

 

$

(951

)

 

$

(274,624

)

 

$

424,662

 

Exercise of stock options

 

 

179,985

 

 

 

 

 

 

375

 

 

 

 

 

 

 

 

 

375

 

Issuance of common stock under the Employee Stock Purchase Plan

 

 

150,642

 

 

 

 

 

 

617

 

 

 

 

 

 

 

 

 

617

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

238

 

 

 

 

 

 

 

 

 

238

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,055

 

 

 

 

 

 

 

 

 

5,055

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,608

)

 

 

(35,608

)

Unrealized loss on marketable securities, net

 

 

 

 

 

 

 

 

 

 

 

(272

)

 

 

 

 

 

(272

)

Balance at June 30, 2022

 

 

122,063,473

 

 

$

12

 

 

$

706,510

 

 

$

(1,223

)

 

$

(310,232

)

 

$

395,067

 

Exercise of stock options

 

 

243,496

 

 

 

 

 

 

427

 

 

 

 

 

 

 

 

 

427

 

Vesting of early exercised stock options

 

 

 

 

 

 

 

 

238

 

 

 

 

 

 

 

 

 

238

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

5,232

 

 

 

 

 

 

 

 

 

5,232

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,489

)

 

 

(35,489

)

Unrealized loss on marketable securities, net

 

 

 

 

 

 

 

 

 

 

 

(156

)

 

 

 

 

 

(156

)

Balance at September 30, 2022

 

 

122,306,969

 

 

$

12

 

 

$

712,407

 

 

$

(1,379

)

 

$

(345,721

)

 

$

365,319

 

 

 

 

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

 

4


 

Erasca, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(95,341

)

 

$

(107,555

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

2,790

 

 

 

1,708

 

Stock-based compensation expense

 

 

20,095

 

 

 

14,729

 

In-process research and development expenses

 

 

 

 

 

2,000

 

Accretion on marketable securities, net

 

 

(4,756

)

 

 

(169

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

      Prepaid expenses and other current and long-term assets

 

 

(38

)

 

 

(4,512

)

      Accounts payable

 

 

777

 

 

 

1,540

 

      Accrued expenses and other current and long-term liabilities

 

 

(3,253

)

 

 

2,936

 

      Operating lease assets and liabilities, net

 

 

3,297

 

 

 

12,431

 

Net cash used in operating activities

 

 

(76,429

)

 

 

(76,892

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of marketable securities

 

 

(253,272

)

 

 

(94,427

)

Maturities of marketable securities

 

 

179,200

 

 

 

45,900

 

In-process research and development

 

 

(20,000

)

 

 

(2,000

)

Payment made for investment in equity securities

 

 

 

 

 

(2,000

)

Purchases of property and equipment

 

 

(1,693

)

 

 

(13,687

)

Net cash used in investing activities

 

 

(95,765

)

 

 

(66,214

)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from the exercise of stock options

 

 

312

 

 

 

1,262

 

Proceeds from issuance of common stock under the Employee Stock Purchase Plan

 

 

527

 

 

 

617

 

Net cash provided by financing activities

 

 

839

 

 

 

1,879

 

 

 

 

 

 

 

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(171,355

)

 

 

(141,227

)

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

 

 

284,625

 

 

 

360,895

 

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

 

$

113,270

 

 

$

219,668

 

 

 

 

 

 

 

 

Supplemental disclosure of noncash investing and financing activities: