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

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the transition period from to

Commission File Number: 001-38915

 

IDEAYA Biosciences, Inc.

(Exact name of registrant as specified in its charter)

 

 

Delaware

47-4268251

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

7000 Shoreline Court, Suite 350

South San Francisco, California

94080

(Address of principal executive offices)

(Zip Code)

 

(650) 443-6209

(telephone number, including area code)

 

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

 

IDYA

 

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 May 3, 2024, the registrant had 75,686,628 shares of common stock, $0.0001 par value per share, outstanding.

 

 


 

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described under the sections in this Quarterly Report on Form 10-Q entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. These forward-looking statements are subject to numerous risks, including, without limitation, the following:

the scope, progress, results and costs of developing our product candidates or any other future product candidates, and conducting preclinical studies and clinical trials, including our darovasertib Phase /2/3 clinical trials, IDE397 Phase 1/2 clinical trials, IDE161 Phase 1 clinical trial and our GSK101 (IDE705) clinical trial;
our clinical and regulatory development plans;
the scope, progress, results and costs related to the research and development of our precision medicine target and biomarker discovery platform, including costs related to the development of our proprietary libraries and database of tumor genetic information and specific cancer-target dependency networks;
our expectations about the impact of macroeconomic developments, such as health epidemics or pandemics, macro-economic uncertainties, social unrest, geopolitical hostilities, natural disasters or other catastrophic events, on our business, and operations, including clinical trials, manufacturing suppliers and collaborators, and on our results of operations and financial condition;
the availability of companion diagnostics for biomarkers associated with our product candidates and any future product candidates, or the cost of coordinating and/or collaborating with certain diagnostic companies for the manufacture and supply of companion diagnostics;
the timing of and costs involved in obtaining and maintaining regulatory approval (or certification in certain foreign jurisdictions) for any of current or future product candidates and companion diagnostics, and any related restrictions, limitations, and/or warnings in the label of an approved product candidate;
our expectations regarding the potential market size and size of the potential patient populations for darovasertib, IDE397, IDE161, our other product candidates and any future product candidates, if approved for commercial use;
the timing and amount of any option exercised, milestone, royalty or other payments we may or may not receive pursuant to any current or future collaboration or license agreement, including under the Collaboration, Option and License Agreement with an affiliate of GSK plc, GLAXOSMITHKLINE INTELLECTUAL PROPERTY (NO. 4), Limited (“GSK”);
our ability to maintain existing, and establish new, strategic collaborations, licensing or other arrangements and the financial terms of any such agreements, including our Collaboration, Option and License Agreement with GSK, our Clinical Supply and Collaboration Agreement with Gilead Sciences, Inc., our Clinical Trial Collaboration and Supply Agreement with MSD International Business GmbH, our Clinical

1


 

Trial Collaboration and Supply Agreements with Pfizer Inc., our Clinical Trial Collaboration and Supply Agreement with Amgen Inc., our License Agreement with Novartis and our Option and License Agreement with Cancer Research Technologies Ltd. (“CRT”), and University of Manchester;
the timing of commencement of future nonclinical studies and clinical trials and research and development programs;
our ability to acquire, discover, develop and advance product candidates into, and successfully complete, clinical trials;
our intentions and our ability to establish collaborations and/or partnerships;
the timing or likelihood of regulatory filings and approvals for our product candidates;
our commercialization, marketing and manufacturing capabilities and expectations;
our intentions with respect to the commercialization of our product candidates;
the pricing and reimbursement of our product candidates, if approved;
the implementation of our business model and strategic plans for our business, product candidates and technology platforms, including additional indications for which we may pursue;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, including the projected terms of patent protection;
our potential involvement in lawsuits in connection with enforcing our intellectual property rights;
our potential involvement in third party interference, opposition, derivation or similar proceedings with respect to our patent rights and other challenges to our patent rights and patent infringement claims;
estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;
our future financial performance; and
developments and projections relating to our competitors and our industry, including competing therapies and procedures.

Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties.

 

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not occur or be achieved, and actual results could differ materially from those projected in the forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

2


 

IDEAYA Biosciences, Inc.

Form 10-Q for Quarterly Period Ended March 31, 2024

Table of Contents

 

PART I—FINANCIAL INFORMATION

4

Item 1. Financial Statements (Unaudited)

4

Condensed Balance Sheets

4

Condensed Statements of Operations and Comprehensive Loss

5

Condensed Statements of Stockholders’ Equity

6

Condensed Statements of Cash Flows

7

Notes to Condensed Financial Statements (Unaudited)

8

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

26

Item 3. Quantitative and Qualitative Disclosures About Market Risk

44

Item 4. Controls and Procedures

44

PART II—OTHER INFORMATION

45

Item 1. Legal Proceedings

45

Item 1A. Risk Factors

45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

46

Item 3. Defaults Upon Senior Securities

46

Item 4. Mine Safety Disclosures

46

Item 5. Other information

46

Item 6. Exhibits

47

SIGNATURES

48

 

3


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (UNAUDITED).

IDEAYA Biosciences, Inc.

Condensed Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

March 31,

 

December 31,

 

 

 

2024

 

2023

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

108,345

 

$

157,018

 

Short-term marketable securities

 

 

590,427

 

 

368,096

 

Accounts receivable

 

 

15

 

 

18

 

Prepaid expenses and other current assets

 

 

10,566

 

 

7,500

 

Total current assets

 

 

709,353

 

 

532,632

 

Restricted cash

 

 

757

 

 

757

 

Long-term marketable securities

 

 

242,636

 

 

107,492

 

Property and equipment, net

 

 

6,909

 

 

6,164

 

Right-of-use assets

 

 

1,780

 

 

2,246

 

Other non-current assets

 

 

92

 

 

25

 

Total assets

 

$

961,527

 

$

649,316

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable

 

$

6,290

 

$

6,598

 

Accrued liabilities

 

 

17,519

 

 

18,756

 

Operating lease liabilities, current

 

 

1,151

 

 

1,747

 

Total current liabilities

 

 

24,960

 

 

27,101

 

Long-term operating lease liabilities

 

 

1,256

 

 

1,125

 

Total liabilities

 

 

26,216

 

 

28,226

 

Commitments and contingencies (Note 6)

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized as of
   March 31, 2024 and December 31, 2023;
no 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;
74,764,628 and 65,039,369 
   shares issued and outstanding as of March 31, 2024 and
   December 31, 2023

 

 

7

 

 

7

 

Additional paid-in capital

 

 

1,324,163

 

 

968,885

 

Accumulated other comprehensive (loss) income

 

 

(923

)

 

562

 

Accumulated deficit

 

 

(387,936

)

 

(348,364

)

Total stockholders’ equity

 

 

935,311

 

 

621,090

 

Total liabilities and stockholders’ equity

 

$

961,527

 

$

649,316

 

 

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

4


 

IDEAYA Biosciences, Inc.

Condensed Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

2023

 

Collaboration revenue

 

$

 

$

7,880

 

Total revenue

 

 

 

 

7,880

 

Operating expenses

 

 

 

 

 

Research and development

 

 

42,805

 

 

27,859

 

General and administrative

 

 

8,212

 

 

6,300

 

Total operating expenses

 

 

51,017

 

 

34,159

 

Loss from operations

 

 

(51,017

)

 

(26,279

)

Other income

 

 

 

 

 

Interest income and other income, net

 

 

11,445

 

 

2,639

 

Net loss

 

$

(39,572

)

$

(23,640

)

Unrealized (losses) gains on marketable securities

 

 

(1,485

)

 

1,466

 

Comprehensive loss

 

$

(41,057

)

$

(22,174

)

Net loss per common share, basic and diluted

 

$

(0.53

)

$

(0.49

)

Weighted-average common shares outstanding, basic and diluted

 

 

75,108,484

 

 

48,370,074

 

 

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

5


 

IDEAYA Biosciences, Inc.

Condensed Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

Other

 

 

 

Total

 

 

 

Common Stock

 

Paid-In

 

Comprehensive

 

Accumulated

 

Stockholders'

 

 

 

Shares

 

Amount

 

Capital

 

Income (Loss)

 

Deficit

 

Equity

 

Balances as of December 31, 2023

 

 

65,039,369

 

$

7

 

$

968,885

 

$

562

 

$

(348,364

)

$

621,090

 

Issuance of common stock related to at-the-market offering program, net of issuance costs

 

 

9,260,382

 

 

 

 

343,505

 

 

 

 

 

 

343,505

 

Issuance of common stock upon exercise of stock options

 

 

464,877

 

 

 

 

5,461

 

 

 

 

 

 

5,461

 

Stock-based compensation

 

 

 

 

 

 

6,312

 

 

 

 

 

 

6,312

 

Other comprehensive loss

 

 

 

 

 

 

 

 

(1,485

)

 

 

 

(1,485

)

Net loss

 

 

 

 

 

 

 

 

 

 

(39,572

)

 

(39,572

)

Balances as of March 31, 2024

 

 

74,764,628

 

$

7

 

$

1,324,163

 

$

(923

)

$

(387,936

)

$

935,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances as of December 31, 2022

 

 

48,193,179

 

$

5

 

$

587,724

 

$

(2,871

)

$

(235,403

)

$

349,455

 

Issuance of common stock related to at-the-market offering program, net of issuance costs

 

 

142,160

 

 

 

 

2,504

 

 

 

 

 

 

2,504

 

Issuance of common stock upon exercise of stock options

 

 

55,055

 

 

 

 

366

 

 

 

 

 

 

366

 

Stock-based compensation

 

 

 

 

 

 

3,659

 

 

 

 

 

 

3,659

 

Other comprehensive income

 

 

 

 

 

 

 

 

1,466

 

 

 

 

1,466

 

Net loss

 

 

 

 

 

 

 

 

 

 

(23,640

)

 

(23,640

)

Balances as of March 31, 2023

 

 

48,390,394

 

$

5

 

$

594,253

 

$

(1,405

)

$

(259,043

)

$

333,810

 

 

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

 

 

6


 

IDEAYA Biosciences, Inc.

Condensed Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

2023

 

Cash flows from operating activities

 

 

 

 

 

Net loss

 

$

(39,572

)

$

(23,640

)

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

 

 

 

 

 

Depreciation and amortization

 

 

616

 

 

588

 

Net amortization (accretion) of premiums (discounts) on marketable securities

 

 

(6,314

)

 

(1,557

)

Stock-based compensation

 

 

6,312

 

 

3,659

 

Amortization of right-of-use assets

 

 

466

 

 

372

 

Changes in assets and liabilities

 

 

 

 

 

Accounts receivable

 

 

3

 

 

(257

)

Prepaid expenses and other assets

 

 

(3,133

)

 

1,373

 

Accounts payable

 

 

(453

)

 

(12

)

Accrued and other liabilities

 

 

(1,273

)

 

(419

)

Contract liabilities

 

 

 

 

(7,498

)

Lease liabilities

 

 

(465

)

 

(451

)

Net cash used in operating activities

 

 

(43,813

)

 

(27,842

)

Cash flows from investing activities

 

 

 

 

 

Purchases of property and equipment, net

 

 

(1,325

)

 

(43

)

Purchases of marketable securities

 

 

(475,781

)

 

(72,296

)

Maturities of marketable securities

 

 

123,135

 

 

95,860

 

Net cash (used in) provided by investing activities

 

 

(353,971

)

 

23,521

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from issuance of common stock related to at-the-market offering program, net of issuance costs

 

 

343,650

 

 

2,560

 

Proceeds from exercise of common stock options

 

 

5,461

 

 

366

 

Net cash provided by financing activities

 

 

349,111

 

 

2,926

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(48,673

)

 

(1,395

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

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

 

 

157,775

 

 

68,738

 

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

 

$

109,102

 

$

67,343

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash

 

 

 

 

 

Cash and cash equivalents

 

$

108,345

 

$

67,237

 

Restricted cash

 

 

757

 

 

106

 

Cash, cash equivalents and restricted cash

 

$

109,102

 

$

67,343

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid for interest

 

$

12

 

$

13

 

Supplemental non-cash investing and financing activities:

 

 

 

 

 

Purchases of property and equipment in accounts payable and accrued liabilities

 

$

183

 

$

746

 

Accrued ATM costs

 

$

145

 

$

56

 

 

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

 

7


 

IDEAYA Biosciences, Inc.

Notes to Condensed Financial Statements (Unaudited)

1. Organization

 

Description of the Business

 

IDEAYA Biosciences, Inc. (the “Company”) is a precision medicine oncology company committed to the discovery and development of targeted therapeutics for patient populations selected using molecular diagnostics. The Company is headquartered in South San Francisco, California and was incorporated in the State of Delaware in June 2015. To date, the Company has been primarily engaged in business planning, research, development, recruiting and raising capital.

 

Follow-On Offering

 

On April 27, 2023, the Company completed an underwritten public follow-on offering. The offering consisted of 8,858,121 shares of the Company's common stock, par value $0.0001 per share (“common stock”), at an offering price to the public of $18.50 per share, including 1,418,920 shares of common stock upon the exercise in full of the overallotment option by the underwriters, as well as pre-funded warrants to purchase 2,020,270 shares of common stock at a public offering price of $18.4999 per underlying share, in each case before underwriting discounts and commissions. Pursuant to the offering, the Company received aggregate gross proceeds of approximately $201.3 million, before deducting underwriting discounts and commissions and other offering expenses, resulting in net proceeds of approximately $188.7 million, after deducting underwriting discounts and commissions and other offering expenses.

On October 27, 2023, the Company completed an underwritten public follow-on offering. The offering consisted of 5,797,872 shares of common stock at an offering price to the public of $23.50 per share, including 797,872 shares of common stock upon the exercise in full of the overallotment option by the underwriters, as well as pre-funded warrants to purchase 319,150 shares of common stock at a public offering price of $23.4999 per underlying share, in each case before underwriting discounts and commissions. Pursuant to the offering, the Company received aggregate gross proceeds of approximately $143.7 million, before deducting underwriting discounts and commissions and other offering expenses, resulting in net proceeds of approximately $134.6 million, after deducting underwriting discounts and commissions and other offering expenses.

 

At-the-Market Offering

On June 26, 2023, the Company filed a new Registration Statement on Form S-3 (File No. 333- 272936) under the Securities Act as an automatic shelf registration statement as a “well-known seasoned issuer”, as defined in Rule 405 under the Securities Act. On June 26, 2023, the Company also entered into a new Open Market Sales Agreement, or June 2023 Sales Agreement, with Jefferies LLC (“Jefferies”) relating to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of common stock having aggregate gross proceeds of up to $250.0 million through Jefferies as sales agent.

During the reporting period for the quarter ended March 31, 2024, the Company sold an aggregate of 6,115,516 shares of common stock for aggregate net proceeds of $215.9 million at a weighted average sales price of approximately $36.39 per share under the at-the-market offering pursuant to the June 2023 Sales Agreement with Jefferies as sales agent.

On January 19, 2024, the Company entered into a new Open Market Sales Agreement, or January 2024 Sales Agreement, with Jefferies relating to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of common stock having aggregate gross proceeds of up to $350.0 million through Jefferies as sales agent.

During the reporting period for the quarter ended March 31, 2024, the Company sold an aggregate of 3,144,866 shares of common stock for aggregate net proceeds of $127.6 million at a weighted average sales price of approximately $41.53 per share under the at-the-market offering pursuant to the January 2024 Sales Agreement with Jefferies as sales agent.

8


 


As
of March 31, 2024, $219.4 million of common stock remained available to be sold under the at-the-market facility associated with the January 2024 Sales Agreement.

 

The Company may cancel its at-the-market program at any time upon written notice, pursuant to its terms.

Liquidity

The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit of $387.9 million as of March 31, 2024.

The Company has financed its operations primarily through the sale and issuance of common stock and the upfront payment and certain milestone payments received from GSK.

 

To date, none of the Company’s product candidates have been approved for sale, and the Company has not generated any revenue from commercial products since inception. Management expects operating losses to continue and increase for the foreseeable future, as the Company progresses clinical development activities for its lead product candidates. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry as discussed under Risks and Uncertainties in Note 2. While the Company has been able to raise multiple rounds of financing, 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.

As of March 31, 2024, the Company had cash, cash equivalents and marketable securities of $941.4 million. Management believes that the Company’s current cash, cash equivalents and marketable securities will be sufficient to fund its planned operations for at least 12 months from the date of the issuance of these financial statements.

2. Summary of Significant Accounting Policies

 

Basis of Presentation

These condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim reporting.

 

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, the unaudited condensed financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 20, 2024.

 

Unaudited Condensed Financial Statements

The accompanying financial information for the three months ended March 31, 2024 and March 31, 2023 are unaudited. The unaudited condensed financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2024 and its results of operations for the three months ended March 31, 2024 and March 31, 2023 and cash flows for the three months ended March 31, 2024 and March 31, 2023. The results for interim periods are not necessarily indicative of the results expected for the full fiscal year or any other periods.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates include useful lives of property and equipment, determination of the discount rate for operating leases, accruals for research and development activities, revenue recognition, stock-based

9


 

compensation, and income taxes. On an ongoing basis, management reviews these estimates and assumptions. Changes in facts and circumstances may alter such estimates and actual results could differ from those estimates.

Risks and Uncertainties

 

The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturers, contract research organizations and collaboration partners, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows: ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials and collaboration activities; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth.

 

Products developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that the products will receive the necessary approvals, or that any approved products will be commercially viable. If the Company was denied approval, approval was delayed or the Company was unable to maintain approval, it could have a materially adverse impact on the Company. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.

 

The Company has expended and will continue to expend substantial funds to complete the research, development and clinical testing of product candidates. The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive regulatory approval. The Company may require additional funds to commercialize its products. The Company is unable to entirely fund these efforts with its current financial resources. If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs which would materially and adversely affect its business, financial condition and operations.

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents and marketable securities. Substantially all the Company’s cash is held by two financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits.

The Company’s investment policy addresses credit ratings, diversification, and maturity dates.

 

The Company invests its cash equivalents and marketable securities in money market funds, U.S. government securities, commercial paper, and corporate bonds. The Company limits its credit risk associated with cash equivalents and marketable securities by placing them with banks and institutions it believes are creditworthy and in highly rated investments and, by policy, limits the amount of credit exposure with any one commercial issuer. The Company has not experienced any credit losses on its deposits of cash, cash equivalents or marketable securities.

Summary of Significant Accounting Policies

There have been no material changes in the accounting policies from those disclosed in the financial statements and the related notes included in the Company's Annual Report on Form 10-K, filed with the SEC on February 20, 2024.

10


 

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) under its accounting standard codifications (“ASC”) or other standard setting bodies and adopted by the Company as of the specified effective date, unless otherwise discussed below.

New Accounting Pronouncements, Not yet Adopted:

 

On October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which modifies the disclosure or presentation requirements related to variety of FASB Accounting Standard Codification topics. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K is effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the associated amendment will be removed from the Codification and will not become effective for any entities. The Company is currently evaluating the effect of adopting this ASU.

On December 14, 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends the guidance in ASC 740, Income Taxes. The ASU is intended to improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The ASU’s amendments are effective for public business entities for annual periods beginning after December 15, 2024. Entities are permitted to early adopt the standard “for annual financial statements that have not yet been issued or made available for issuance.” Adoption is either prospectively or retrospectively; the Company will adopt this ASU on a prospective basis. The Company is currently evaluating the impact of the ASU but does not expect any material impacts upon adoption.

3. Fair Value Measurement and Marketable Securities

 

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

 

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3—Unobservable inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

 

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

11


 

As of March 31, 2024, financial assets measured and recognized at fair value are as follows (in thousands):

 

 

 

 

 

March 31, 2024

 

 

 

 

 

Amortized
Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

Assets

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities(1)

 

Level 2

 

$

519,487

 

$

71

 

$

(542

)

$

519,016

 

Corporate bonds

 

Level 2

 

 

151,971

 

 

44

 

 

(396

)

 

151,619

 

Commercial paper(2)

 

Level 2

 

 

232,426

 

 

 

 

(98

)

 

232,328

 

Marketable securities

 

 

 

 

903,884

 

 

115

 

 

(1,036

)

 

902,963

 

Money market funds(3)

 

Level 1

 

 

37,953

 

 

 

 

 

 

37,953

 

Total fair value of assets

 

 

 

$

941,837

 

$

115

 

$

(1,036

)

$

940,916

 

 

(1)
$10.9 million was included in cash and cash equivalents on the condensed balance sheets due to securities with purchase dates within 90 days of maturity dates.
(2)
$59.0 million was included in cash and cash equivalents on the condensed balance sheets due to securities with purchase dates within 90 days of maturity dates.
(3)
Included in cash and cash equivalents on the condensed balance sheets.

As of December 31, 2023, financial assets measured and recognized at fair value are as follows (in thousands):

 

 

 

 

 

December 31, 2023

 

 

 

 

 

Amortized
Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

Assets

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities(1)

 

Level 2

 

$

412,679

 

$

591

 

$

(135

)

$

413,135

 

Corporate bonds

 

Level 2

 

 

53,983

 

 

197

 

 

(32

)

 

54,148

 

Commercial paper(2)

 

Level 2

 

 

126,601

 

 

 

(58

)

 

126,543

 

Marketable securities

 

 

 

 

593,263

 

 

788

 

 

(225

)

 

593,826

 

Money market funds(3)

 

Level 1

 

 

38,300

 

 

 

 

 

 

38,300

 

Total fair value of assets

 

 

 

$

631,563

 

$

788

 

$

(225

)

$

632,126

 

 

(1)
$37.8 million was included in cash and cash equivalents on the condensed balance sheets due to securities with purchase dates within 90 days of maturity dates.
(2)
$80.4 million was included in cash and cash equivalents on the condensed balance sheets due to securities with purchase dates within 90 days of maturity dates.
(3)
Included in cash and cash equivalents on the condensed balance sheets.

As of March 31, 2024 and December 31, 2023, all marketable securities had a remaining maturity of less than three years. There were no financial liabilities measured and recognized at fair value as of March 31, 2024 and December 31, 2023.

The Company considers available evidence in evaluating potential other-than-temporary impairments of its marketable securities, including the duration and extent to which fair value is less than cost, and the Company’s ability and intent to hold the investment. As of March 31, 2024 and December 31, 2023, the Company held certain securities in an unrealized loss position. These unrealized losses were considered to be temporary as the Company expects to recover the entire amortized cost basis on the securities in unrealized loss positions based on the creditworthiness of the underlying issuer, and the Company neither intends to sell these securities nor considers it more likely than not that the Company would be required to sell any such security before its anticipated recovery. As a result, the Company did not consider any of these investments to be other-than-temporarily impaired at March 31, 2024 and December 31, 2023.

12


 

4. Balance Sheet Components

Property and Equipment, Net

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

 

 

Useful Life

 

March 31,

 

December 31,

 

 

(In Years)

 

2024

 

2023

 

Laboratory equipment

5

 

$

11,636

 

$

11,455

 

Computer equipment

3

 

 

261

 

 

261

 

Software

3

 

 

231

 

 

231

 

Leasehold improvements

Shorter of useful life or lease term

 

 

4,115

 

 

3,321

 

Furniture and fixtures

5

 

 

832

 

 

507

 

Total property and equipment

 

 

 

17,075

 

 

15,775

 

Less: Accumulated depreciation and amortization

 

 

 

(10,166

)

 

(9,611

)

Property and equipment, net

 

 

$

6,909

 

$

6,164

 

 

Depreciation and amortization expense was $0.6 million and $0.6 million for the three months ended March 31, 2024 and March 31, 2023, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

 

 

 

March 31,

 

December 31,

 

 

 

2024

 

2023

 

Accrued research and development expenses

 

$

12,220

 

$

10,676

 

Accrued salaries and benefits

 

 

4,260

 

 

6,974

 

Legal and professional fees

 

 

856

 

 

959

 

Other

 

 

183

 

 

147

 

Accrued liabilities

 

$

17,519

 

$

18,756

 

 

13


 

5. Operating Leases

The Company leases its laboratory and office facilities at 7000 Shoreline Court, South San Francisco for approximately 29,000 square feet with an expiration date in September 2024.

In June 2023, the Company entered into a lease agreement for approximately 44,000 square feet of space at 5000 Shoreline Court, South San Francisco, California. The lease term is expected to commence in the third quarter of 2024 and the lease term is one hundred twenty months. The Company has an option to extend the lease term for a total of two consecutive five-year periods.

In November 2023, the Company entered into a lease agreement for approximately 5,700 square feet of space at 11710 El Camino Real, San Diego, California for corporate office space. The lease term commenced in December 2023 and expires in March 2028. The Company has an option to renew the lease for 3 years.

Future minimum lease payments under operating leases included on the Company's condensed balance sheet are as follows:

As of March 31, 2024

 

Operating Leases

 

2024

 

$

1,381

 

2025

 

 

386

 

2026

 

 

398

 

2027

 

 

410

 

2028

 

 

106

 

Total future minimum lease payments

 

 

2,681

 

Less: imputed interest

 

 

(274

)

Total operating lease liabilities

 

$

2,407

 

The following table summarizes other information about the Company's operating leases:

 

 

As of

 

 

 

March 31, 2024

 

 

December 31, 2023

 

Remaining Lease Term

 

 

2.3

 

 

 

2.4

 

Discount Rate

 

 

8.3

%

 

 

8.0

%

 

14


 

Operating lease costs were $0.5 million and $0.4 million for the quarters ended March 31, 2024 and March 31, 2023, respectively. Variable lease costs were $0.4 million for the quarters ended March 31, 2024 and March 31, 2023. Variable lease costs represent additional costs incurred, related to administration, maintenance and property tax costs incurred, which are billed based on both usage and as a percentage of the Company's share of total square footage.

During the quarters ended March 31, 2024 and March 31, 2023, cash paid for amounts included in the measurement of lease liabilities and included within cash used in operating activities in the statement of cash flows was $0.5 million.

6. Commitments and Contingencies

Contingencies

From time to time, the Company may be involved in litigation related to claims that arise in the ordinary course of its business activities. The Company accrues for these matters when it is probable that future expenditures will be made and these expenditures can be reasonably estimated. As of March 31, 2024, the Company does not believe that any such matters, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Indemnification

The Company enters into standard indemnification arrangements in the ordinary course of business with vendors, clinical trial sites and other parties. 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. 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. Accordingly, the Company has not recorded a liability related to such indemnification agreements as of March 31, 2024.

7. Income Taxes

For the three months ended March 31, 2024 and March 31, 2023, the Company did not record a federal or state income tax provision due to its recurring net losses. In addition, the Company has taken a full valuation allowance against its net deferred tax assets as the Company believes it is not more likely than not that the benefit will be realized.

 

The Company is under audit in California for tax years 2020-2021.

8. Common Stock

As of March 31, 2024 and December 31, 2023, the Company’s certificate of incorporation authorized the Company to issue 300,000,000 shares of common stock at a par value of $0.0001 per share. Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors. As of March 31, 2024 and December 31, 2023, no dividends have been declared to date.

 

On April 27, 2023, the Company completed an underwritten public follow-on offering. The offering consisted of 8,858,121 shares of common stock at an offering price to the public of $18.50 per share, including 1,418,920 shares of common stock upon the exercise in full of the overallotment option by the underwriters, as well as pre-funded warrants to purchase 2,020,270 shares of common stock at a public offering price of $18.4999 per underlying share, in each case before underwriting discounts and commissions. Pursuant to the offering, the Company received aggregate gross proceeds of approximately $201.3 million, before deducting underwriting discounts and commissions and other offering expenses, resulting in net proceeds of approximately $188.7 million, after deducting underwriting discounts and commissions and other offering expenses.

 

On October 27, 2023, the Company completed an underwritten public follow-on offering. The offering consisted of 5,797,872 shares of common stock at an offering price to the public of $23.50 per share, including 797,872 shares of common stock upon the exercise in full of the overallotment option by the underwriters, as well as pre-funded warrants to purchase 319,150 shares of common stock at a public offering price of $23.4999 per underlying share, in

15


 

each case before underwriting discounts and commissions. Pursuant to the offering, the Company received aggregate gross proceeds of approximately $143.7 million, before deducting underwriting discounts and commissions and other offering expenses, resulting in net proceeds of approximately $134.6 million, after deducting underwriting discounts and commissions and other offering expenses.

 

As of March 31, 2024, the following aggregate warrants to purchase shares of the Company’s common stock were issued and outstanding:

 

Issue Date

 

Expiration Date

 

Exercise Price per Share

 

Number of Shares subject to Outstanding Warrants

April 27, 2023

 

None

 

$.0001

 

2,020,270

October 27, 2023

 

None

 

$.0001

 

319,150

 

The warrants are classified as a component of Stockholders’ Equity within Additional Paid-in-Capital. The warrants are classified as equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the equity instruments, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, are indexed to the Company’s common stock and meet the equity classification criteria. The warrants will not expire until they are fully exercised. As of March 31, 2024, no shares underlying the warrants had been exercised.

The Company had reserved common stock for future issuance as follows:

 

 

March 31,

 

December 31,

 

 

2024

 

2023

Outstanding options under the 2015, 2019 and 2023 Plans

 

7,874,924

 

6,269,975

Shares available for grant under the 2019 Plan

 

1,638,170

 

964,622

Shares available for grant under the 2023 Inducement Plan

 

382,500

 

524,300

Shares available under the Employee Stock Purchase Plan

 

1,968,367

 

1,317,974

Pre-funded warrants issued and outstanding

 

2,339,420

 

2,339,420

Total

 

14,203,381

 

11,416,291

 

9. Stock-Based Compensation

2023 Inducement Plan

On February 24, 2023, the Company adopted the IDEAYA Biosciences, Inc. 2023 Employment Inducement Award Plan (the “2023 Inducement Plan”), pursuant to which the Company reserved 1,000,000 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The 2023 Inducement Plan was approved by the Company’s board of directors without stockholder approval in accordance with such rule. Options granted under the 2023 Inducement Plan have a term of 10 years and generally vest over a 4-year period with 1-year cliff vesting.

 

As of March 31, 2024, the number of shares available for issuance under the 2023 Inducement Plan was 382,500.

 

2019 Incentive Award Plan

In May 2019, the Company’s board of directors adopted and the Company’s stockholders approved the 2019 Incentive Award Plan (the “2019 Plan”), under which the Company may grant cash and equity-based incentive awards to the Company’s employees, consultants and directors. Following the effectiveness of the 2019 Plan, the Company will not make any further grants under the 2015 Equity Incentive Plan (the “2015 Plan”). However, the 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Shares of common stock subject to awards granted under the 2015 Plan that are forfeited or lapse unexercised and which following the effective date of the 2019 Plan are not issued under the 2015 Plan will be available for issuance under the 2019 Plan.

16


 

Options granted under the 2019 Plan may be either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). ISOs may be granted only to Company employees (including officers and directors who are also employees). NSOs may be granted to Company employees, directors and consultants.

The 2019 Plan is subject to an annual increase on the first day of each year beginning in 2020 and ending in 2029, equal to the lesser of 4% of the shares outstanding on the last day of the immediately preceding fiscal year, and such smaller number of shares as determined by the Company's board of directors. Options granted under the 2019 Plan have a term of 10 years (or five years if granted to a 10% stockholder) and generally vest over a 4-year period with 1-year cliff vesting.

 

As of March 31, 2024, the number of shares available for issuance under the 2019 Plan was 1,638,170.

 

2015 Equity Incentive Plan

In 2015, the Company established its 2015 Plan which provides for the granting of stock options to employees, directors and consultants of the Company. Options granted under the 2015 Plan may be either ISOs or NSOs.

 

2019 Employee Stock Purchase Plan

In May 2019, the Company’s board of directors adopted and the Company’s stockholders approved the 2019 Employee Stock Purchase Plan (the “ESPP”). The ESPP provides eligible employees with the opportunity to acquire an ownership interest in the Company through periodic payroll deductions up to 15% of eligible compensation. The offering period is determined by the Company in its discretion but may not exceed 27 months. The per-share purchase price on the applicable exercise date for an offering period is equal to the lesser of 85% of the fair market value of the common stock at either the first business day or last business day of the offering period, provided that no more than 4,000 shares of common stock may be purchased by any one employee during each offering period.

The ESPP is intended to constitute an “employee stock purchase plan” under Section 423(b) of the Internal Revenue Code of 1986, as amended. A total of 195,000 shares of common stock were initially reserved for issuance under the ESPP, subject to an annual increase on January 1 of each year, beginning on January 1, 2020, equal to the lesser of 1% of the shares outstanding on the last day of the immediately preceding fiscal year and such smaller number of shares as may be determined by the Company's board of directors, provided, however, that no more than 2,500,000 shares may be issued under the ESPP.

As of March 31, 2024, the number of shares available for issuance under the ESPP was 1,968,367. For the quarters ended March 31, 2024 and 2023, the Company recorded $0.1 million and $0.2 million, respectively, of compensation expense related to employee participation in the ESPP.

Stock-Based Compensation Expense

Total stock-based compensation expense recorded related to awards granted to employees and non-employees was as follows (in thousands):

 

 

Three Months Ended March 31,

 

 

 

2024

 

2023

 

Research and development

 

$

3,784

 

$

2,087

 

General and administrative

 

 

2,528

 

 

1,572

 

Total stock-based compensation expense

 

$

6,312

 

$

3,659

 

 

17


 

Stock Options

Activity under the Company’s 2015 and 2019 Plans and 2023 Inducement Plan is set forth below:

 

 

Outstanding Options

 

 

 

 

 

 

Shares

 

Weighted-
Average
Exercise
Price

 

Weighted-
Average
Remaining
Contractual
Term (Years)

 

Aggregate Intrinsic Value (Millions)

 

Balance, January 1, 2024

 

6,269,975

 

$

15.53

 

 

7.82

 

$

128.49

 

Options granted

 

2,195,438

 

$

45.91

 

 

 

 

 

Options exercised

 

(464,877

)

$

11.75

 

 

 

 

 

Options canceled

 

(125,612

)

$

19.29

 

 

 

 

 

Balance, March 31, 2024

 

7,874,924

 

$

24.18

 

 

8.36

 

$

157.56

 

Exercisable as of March 31, 2024

 

2,807,378

 

$

13.34

 

 

6.84

 

$

84.70

 

Vested and expected to vest as of
   March 31, 2024

 

7,874,924

 

$

24.18

 

 

8.36

 

$

157.56

 

 

The weighted-average grant-date fair value of options granted during the three months ended March 31, 2024 and March 31, 2023 was $33.00 and $12.57 per share, respectively. The aggregate intrinsic value of options exercised for the three months ended March 31, 2024 and March 31, 2023 was $14.5 million and $0.6 million, respectively. Intrinsic values are calculated as the difference between the exercise price of the underlying options and the fair value of the common stock on the date of exercise.

As of March 31, 2024 and December 31, 2023, total unrecognized stock-based compensation expense for stock options was $105.8 million and $41.1 million, respectively, which is expected to be recognized over a weighted-average period of 2.92 years and 2.59 years, respectively.

Black-Scholes Assumptions

The fair values of options were calculated using the assumptions set forth below:

 

 

Three Months Ended March 31,

 

 

2024

 

2023

Expected term

 

6.08 years

 

6.08 years

Expected volatility

 

80.2% - 81.3%

 

85.4% - 85.9%

Risk-free interest rate

 

4.0% - 4.3%

 

3.6% - 4.1%

Dividend yield

 

0%

 

0%

 

Expected term. The expected term represents the weighted-average period the stock options are expected to remain outstanding and is based on the options’ vesting terms, contractual terms and industry peers, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.

 

Expected Volatility. The expected volatility is based on the Company's historical stock price volatility. The historical stock price volatility is calculated based on a period of time commensurate with the expected term assumption for each grant.

Risk-Free Interest Rate. The risk-free rate assumption is based on U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options.

Expected Dividend Rate. The Company has not paid and does not anticipate paying any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be zero.

The Company accounts for forfeitures as they occur.

18


 

Fair Value of Common Stock

The fair value of the Company’s common stock is determined based on the market price on the date of grant.

10. Significant Agreements

 

GSK Collaboration, Option and License Agreement

In June 2020, the Company entered into the Collaboration, Option and License Agreement (the “GSK Collaboration Agreement”), with an affiliate of GSK plc, GLAXOSMITHKLINE INTELLECTUAL PROPERTY (NO. 4), Limited (“GSK”), pursuant to which the Company and GSK have entered into a collaboration for its synthetic lethality programs targeting MAT2A, Pol Theta and Werner Helicase. On July 27, 2020, ("the Effective Date"), the Company and GSK received Hart-Scott-Rodino Antitrust Improvements Act clearance, or HSR Clearance, and the GSK Collaboration Agreement became effective.

Pursuant to the GSK Collaboration Agreement, GSK paid the Company $100.0 million on July 31, 2020. As of March 31, 2024, GSK has made aggregate payments in the amount of $13.0 million for the achievement of certain development and regulatory milestones with respect to Pol Theta and WRN products.

 

GSK Collaboration - MAT2A Program

 

Under the MAT2A program, the Company led research and development through early clinical development stage, and GSK had an exclusive option to obtain an exclusive license to continue development of and commercialize MAT2A products arising out of the MAT2A program, or the Option. The Company delivered an Option data package resulting from its conduct of a dose escalation portion of a MAT2A Phase 1 monotherapy clinical trial pursuant to the GSK Collaboration Agreement, following which the Option was exercisable within a specified time period. In August 2022, the Company received notice from GSK waiving its rights to exercise its Option, or the MAT2A Option Waiver, pursuant to the GSK Collaboration Agreement. As such, the Company retains and fully owns all right, title and interest in and to IDE397 and the MAT2A program, including all worldwide commercial rights thereto. The Company will be responsible for the costs of further research and clinical development activities that the Company conduct for the MAT2A program following the MAT2A Option Waiver.

 

GSK Collaboration - Pol Theta Program

Pursuant to the GSK Collaboration Agreement, GSK holds a global, exclusive license to develop and commercialize Pol Theta products arising out of the Pol Theta program. The Company and GSK collaborated on preclinical research for the Pol Theta program, and GSK is leading clinical development for the Pol Theta program. GSK is responsible for all research and development costs for the Pol Theta program.

The Company will be eligible to receive total development and regulatory milestones of up to $485.0 million, with respect to each Pol Theta product, including as applicable, for multiple Pol Theta products that target certain alternative protein domains or are based on alternative modalities. Additionally, the Company will be eligible to receive up to $475.0 million of commercial milestones with respect to each Pol Theta product. The Company is also entitled to receive tiered royalties on global net sales of Pol Theta products by GSK, its affiliates and their sublicensees ranging from high single digit to sub-teen double-digit percentages, subject to certain customary reductions.

In June 2022, the Company announced the nomination of a Pol Theta Helicase Inhibitor development candidate, or DC, and in August 2022, announced the achievement of an initial preclinical development milestone in connection with ongoing IND-enabling studies to support evaluation of Pol Theta Helicase Inhibitor DC, triggering a $3.0 million milestone payment, which the Company received in October 2022.

An IND was submitted and was cleared by the FDA in August 2023 to enable clinical evaluation in combination with niraparib, triggering a $7.0 million milestone payment.

The Company has the potential to achieve an additional $10.0 million development milestone upon initiation of Phase 1 clinical dose expansion, as well as potential further aggregate late-stage development and regulatory milestones of up to $465.0 million.

19


 

GSK Collaboration - Werner Helicase Program

Pursuant to the GSK Collaboration Agreement, GSK holds a global, exclusive license to develop and commercialize WRN products arising out of the WRN program. The Company and GSK are collaborating on ongoing preclinical research for the WRN program, and GSK will lead clinical development for the WRN program, with IDEAYA responsible for 20% and GSK responsible for 80% of such global research and development costs. The cost-sharing percentages will be adjusted based on the actual ratio of U.S. to global profits for WRN products, as measured three and six years after global commercial launch thereof.

The Company will be eligible to receive total development milestones of up to $485.0 million, with respect to each WRN product, including as applicable, for multiple WRN products that are based on alternative modalities. Additionally, the Company will be eligible to receive up to $475.0 million of commercial milestones with respect to each WRN product. The Company will be entitled to receive 50% of U.S. net profits and tiered royalties on global non-U.S. net sales of WRN products by GSK, its affiliates and their sublicensees ranging from high single digit to sub-teen double-digit percentages, subject to certain customary reductions. The Company will have a right to opt-out of the 50% U.S. net profit share and corresponding research and development cost share for the WRN program, and would be eligible to receive tiered royalties on U.S. net sales of WRN products by GSK, its affiliates and their sublicensees at the same royalty rates as for global non-U.S. net sales thereafter, with economic adjustments based on the stage of the WRN program at the time of opt-out.

In October 2023, the Company earned a $3.0 million milestone from GSK in connection with IND-enabling studies for the Werner Helicase Inhibitor DC.

 

GSK Collaboration - General

Under the terms of the GSK Collaboration Agreement, subject to certain exceptions, the Company and GSK will not, directly or through third parties, develop or commercialize other products whose primary and intended mechanism of action is the modulation of WRN or Pol Theta for an agreed upon period of time. The Company and GSK have formed a joint steering committee, joint development committees, and joint commercialization committees responsible for coordinating all activities under the GSK Collaboration Agreement. Ownership of intellectual property developed under the GSK Collaboration Agreement is allocated between or shared by the parties depending on development and subject matter.

GSK’s royalty obligations continue with respect to each country and each product until the later of (i) the date on which such product is no longer covered by certain intellectual property rights in such country and (ii) the 10th anniversary of the first commercial sale of such product in such country.

Each party has the right to sublicense its rights under the GSK Collaboration Agreement subject to certain conditions.

The GSK Collaboration Agreement will continue in effect on a product-by-product and country-by-country basis until the expiration of the obligation to make payments under the GSK Collaboration Agreement with respect to such product in each country, unless earlier terminated by either party pursuant to its terms. Either party may terminate the GSK Collaboration Agreement for the other party’s insolvency or certain uncured breaches. The Company may terminate the GSK Collaboration Agreement if GSK or any of its sublicensees or affiliates challenge certain patents of the Company. GSK may terminate the GSK Collaboration Agreement in its entirety or on a target-by-target basis upon 90-day notice to the Company.

 

Novartis License Agreement

 

In September 2018, the Company entered into a license agreement with Novartis to develop and commercialize Novartis’ LXS196 (also known as IDE196), a Phase 1 PKC inhibitor, for the treatment of cancers having GNAQ and GNA11 mutations. The Company renamed Novartis’ LXS196 oncology as IDE196, and which has a non-proprietary name of darovasertib. Under the license agreement, Novartis granted to us a worldwide, exclusive, sublicensable license to research, develop, manufacture, and commercialize certain defined compounds and

20


 

products, including IDE196 and certain other PKC inhibitors as well as companion diagnostic products, collectively referred to as the licensed products, for any purpose.

The Company paid Novartis an upfront payment of $2.5 million and issued 263,615 shares of its Series B redeemable convertible preferred stock concurrently with the execution of the license agreement. Subject to completion of certain clinical and regulatory development milestones, the Company agreed to make milestone payments in the aggregate of up to $9.0 million, and subject to achievement of certain commercial sales milestones, the Company agreed to make milestone payments in the aggregate of up to $20.0 million. The Company also agreed to pay mid to high single-digit tiered royalty payments based on annual worldwide net sales of licensed products, payable on a licensed product-by-licensed product and country by country basis until the latest of the expiration of the last to expire exclusively licensed patent, the expiration of regulatory exclusivity, and the ten year anniversary of the first commercial sale of such product in such country. The royalty payments are subject to reductions for lack of patent coverage, loss of market exclusivity, and payment obligations for third-party licenses.

 

Pfizer Clinical Trial Collaboration and Supply Agreements

In March 2020, the Company entered into a clinical trial collaboration and supply agreement with Pfizer, Inc., or the Pfizer Agreement, as amended in September 2020, April 2021, September 2021 and May 2023. Pursuant to the Pfizer Agreement, Pfizer supplies the Company with their MEK inhibitor, binimetinib, and their cMET inhibitor, crizotinib, to evaluate combinations of darovasertib independently with each of the Pfizer compounds, in patients with tumors harboring activating GNAQ or GNA11 mutations. Under the Pfizer Agreement, the Company is the sponsor of the combination studies and will provide darovasertib and pay for the costs of the combination studies. Pfizer will provide binimetinib and crizotinib for use in the clinical trial at no cost to the Company. The Pfizer Agreement provides that the Company and Pfizer will jointly own clinical data generated from the clinical trial and will also jointly own inventions, if any, relating to the combined use of darovasertib and binimetinib, or independently, to the combined use of darovasertib and crizotinib. The Company and Pfizer have formed a joint development committee responsible for coordinating all regulatory and other activities under the agreement.

In March 2022, the Company and Pfizer entered into a second clinical trial collaboration and supply agreement, or the Second Pfizer Agreement, pursuant to which the Company is evaluating darovasertib and crizotinib as a combination therapy in MUM in a planned Phase 2/3 potential registration-enabling clinical trial. Pursuant to the Second Pfizer Agreement, the Company is the sponsor of the combination trial and the Company will provide darovasertib and pay for the costs of the combination trial; Pfizer will provide crizotinib for the planned combination trial at no cost to us for up to an agreed-upon number of MUM patients. The Company and Pfizer will jointly own clinical data from the planned combination trial and all inventions relating to the combined use of darovasertib and crizotinib. The Company and Pfizer have formed a joint development committee responsible for coordinating all regulatory and other activities under the Second Pfizer Agreement.

Separately, in March 2022, the Company and Pfizer also entered into a third clinical trial collaboration and supply agreement, or the Third Pfizer Agreement, pursuant to which the Company may, subject to preclinical validation and FDA feedback and guidance, evaluate darovasertib and crizotinib, as a combination therapy in cMET-driven tumors such as NSCLC and/or HCC in a Phase 1 clinical trial. Pursuant to the Third Pfizer Agreement, the Company is the sponsor of the planned combination trial, and the Company will provide darovasertib and pay for the costs of the combination trial; Pfizer will provide crizotinib for the planned combination trial at no cost to us.

 

In May 2023, the Company continued our relationship with Pfizer by entering into Amendment No. 4 to the Pfizer Agreement relating to the supply of crizotinib in support of this Phase 2 clinical trial, pursuant to which Pfizer will continue to provide us with an additional defined quantity of crizotinib at no cost.

The Company also expanded its relationship with Pfizer in May 2023 under an Amendment No. 1 to the Second Pfizer Agreement to support the Phase 2/3 registrational trial to evaluate darovasertib and crizotinib as a combination therapy in MUM. Under the as-amended Second Pfizer Agreement, Pfizer will provide the Company with a first defined quantity of crizotinib at no cost, as well as an additional second defined quantity of crizotinib at a lump-sum cost. Under Amendment No. 1 to the Second Pfizer Agreement, the Company and Pfizer also terminated the Third Pfizer Agreement.

 

21


 

Cancer Research UK and University of Manchester Exclusive Option and License Agreement

In January 2022, the Company exercised its option for an exclusive worldwide license covering a broad class of PARG inhibitors from Cancer Research Technology Ltd. and the University of Manchester, and in connection therewith, paid a one-time option exercise fee of £250,000. The Company will be obligated to make payments to CRT aggregating up to a total of £19.5 million upon the achievement of specific development and regulatory approval events for development of a PARG inhibitor in oncologic diseases. The Company will also pay low single-digit tiered royalties, and potentially also sales-based milestones, to CRT based on net sales of licensed products. In addition, in the event the Company sublicenses the intellectual property, it will also be obligated to pay CRT a specified percentage of any sublicense revenue.

In April 2023, the Company incurred an obligation to pay milestone payments in an aggregate amount of £750,000 to CRT based upon the achievement of certain milestones relating to first and second tumor histologies in connection with the Phase 1 portion of the Phase 1/2 clinical trial in oncologic diseases.

The Company will be obligated to make additional payments to CRT aggregating up to £18.75 million upon the achievement of specific development and regulatory approval events for development of a PARG inhibitor in oncologic diseases, including an aggregate of up to £1.5 million and up to £2.25 for the achievement of certain Phase 2 and Phase 3 development milestones, respectively, in each case as relating to first and second tumor histologies.

Amgen Clinical Trial Collaboration and Supply Agreement

 

In July 2022, the Company entered into a clinical trial collaboration and supply agreement with Amgen Inc., or the Amgen CTCSA, to clinically evaluate IDE397 in combination with AMG 193, the Amgen investigational MTA-cooperative PRMT5 inhibitor, in patients having MTAP-null solid tumors, in a Phase 1/2 clinical trial. Under the mutually non-exclusive Amgen CTCSA, the Company will provide IDE397 drug supply to Amgen, who will be the sponsor of the Phase 1 clinical combination trial evaluating IDE397 and AMG 193. Each party will pay for fifty percent (50%) of the external third-party costs of the combination study. Each party will be responsible for its own internal costs and expenses in support of the combination study. The Company and Amgen will jointly oversee clinical development of the combination therapy through a Joint Oversight Committee responsible for coordinating all regulatory and other activities under the Amgen CTCSA. The parties will jointly own collaboration data and combination-related intellectual property, if any, arising from the combination clinical trial. The Company and Amgen each retain commercial rights to its respective compounds, including with respect to use as a monotherapy agent or combination agent.

 

Gilead Clinical Study Collaboration and Supply Agreement

 

In November 2023, the Company entered into a clinical study collaboration and supply agreement with Gilead Sciences, Inc., or the Gilead CSCSA, to clinically evaluate IDE397 in combination with Trodelvy (sacituzumab-govitecan-hziy), a Trop-2 directed ADC, in patients having MTAP-deletion bladder cancer, in a Phase 1 clinical trial. Under the mutually non-exclusive Gilead CSCSA, the Company will receive Trodelvy drug supply from Gilead and will sponsor the Phase 1 clinical combination trial evaluating ID397 and Trodelvy. Gilead will bear internal or external costs incurred in connection with its supply of Trodelvy. The Company will bear all internal and external costs and expenses associated with the conduct of the combination study. The Company and Gilead will jointly oversee clinical development of the combination therapy through a Joint Steering Committee responsible for coordinating all regulatory and other activities under the Gilead CSCSA. The Company and Gilead each retain commercial rights to its respective compounds, including with respect to use as a monotherapy agent or combination agent.

 

Merck Clinical Trial Collaboration and Supply Agreement

 

In March 2024, the Company entered Clinical Trial Collaboration and Supply Agreement, or the Merck CTCSA, with MSD International Business GmbH, a subsidiary of Merck & Co., Inc., Rahway, NJ, USA, or Merck. The Company is planning to evaluate IDE161 in a combination study with KEYTRUDA® (pembrolizumab), Merck's

22


 

anti-PD-1 therapy, in patients with MSI-high and MSS endometrial cancer. Pursuant to the Merck CTCSA, the Company is the sponsor of the combination study and the Company will provide the IDE161 compound and pay for the costs of the combination study. Merck will provide KEYTRUDA at no cost to the Company. The Company and Merck will jointly own clinical data from the combination. Each party retains commercial rights to its respective compounds, including with respect to use as a monotherapy or combination agent.

11. Revenue Recognition

The Company recognizes revenue in accordance with ASC 606 for the GSK Collaboration Agreement (see Note 10, Significant Agreements).

Disaggregation of Revenue

The Company recognized no revenue for the quarter ended March 31, 2024 and $7.9 million for the quarter ended March 31, 2023. The $7.9 million revenue for the quarter ended March 31, 2023 consisted of $7.6 million, $0.2 million, and $0.1 million related to the WRN, MAT2A & Pol Theta programs, respectively. The Company completed all performance obligations related to the upfront payment under the GSK Collaboration Agreement as of December 31, 2023. Future collaboration revenue recognized under the GSK Collaboration Agreement will be related to future milestone payments as they are earned.

Contract Balances

As of March 31, 2024 and December 31, 2023, the Company had no accounts receivable and no contract liabilities related to the GSK Collaboration Agreement.

 

The Company has identified the following six performance obligations associated with the GSK Collaboration Agreement:

(i)Preclinical and Phase 1 Monotherapy clinical research and development services under the MAT2A program (“MAT2A R&D Services”)

(ii)Preclinical research services and the related license to IDEAYA-owned technology under the Pol Theta program (“Pol Theta R&D Services”)

(iii)Preclinical research services and the related license to IDEAYA-owned technology under the WRN program (“WRN R&D Services”)

(iv)Material right associated with the option to license IDEAYA-owned technology under the MAT2A program (“Option”)

(v)Material right associated with the option to license to IDEAYA-owned technology under the MAT2A program to the extent necessary for preclinical activities in preparation for the MAT2A Combination Trial (“Preclinical MAT2A License”)

(vi)Material right associated with the supply of MAT2A product for the MAT2A Combination Trial (“MAT2A Supply”)

The Company recognizes revenue related to amounts allocated to the MAT2A R&D services as the underlying services are performed over the period through the delivery of the Option data package, which is generated from its conduct of the dose escalation portion of the MAT2A Phase 1 monotherapy clinical trial. The Company uses its internal research and development capability and also engages third-party clinical research organizations, or CROs, for which the Company acts as a principal. The Company has delivered the Option data package to GSK. Accordingly, the performance obligation related to the MAT2A R&D services has been fulfilled.

With respect to the Pol Theta and WRN programs, the Company identified two promises: (1) granting of the license to develop and commercialize Pol Theta and WRN products, respectively, and (2) the preclinical research services. The Company has determined that these two promises are not distinct within the context of the contract.

For the Pol Theta product, the Company achieved and earned a $7.0 million payment for a milestone in August 2023 based on acceptance of the IND by the FDA, payment. An earlier preclinical development $3.0 million milestone

23


 

payment from GSK was achieved in August 2022 in connection with ongoing IND-enabling studies to support evaluation of GSK101. The Company has the potential to receive an additional $10.0 million milestone payment upon initiation of Phase 1 clinical dose expansion.

For the WRN product, the Company achieved and earned a $3.0 million payment for a milestone in October 2023 in connection with IND-enabling studies for the Werner Helicase Inhibitor DC. The Company is, in collaboration with GSK, targeting an IND submission in 2024 to enable first-in-human clinical evaluation of its Werner Helicase Inhibitor DC in high MSI tumors.

The Company recognized revenue related to amounts allocated to the Pol Theta R&D Services and WRN R&D Services as the underlying services are performed over the period through the completion of the Pol Theta and WRN preclinical research programs, respectively. Within 90 days from the end of each calendar quarter, GSK reimbursed the Pol Theta program costs incurred by the Company. Within 75 days from the end of each calendar quarter, the Company and GSK determined the amounts of WRN program costs incurred by both parties and the net amount owed by GSK to the Company or by the Company to GSK, which was paid within 75 days from such determination by a reimbursing party. The Company used its internal research capability and may also engage third-party clinical research organizations, or CROs, in transferring the Pol Theta R&D services and WRN R&D services, for which the Company acts as a principal. The Company completed Pol Theta R&D services during December 2022. Accordingly, the performance obligation related to the Pol Theta R&D services has been fulfilled. The Company completed WRN R&D services during December 2023. Accordingly, the performance obligation related to the WRN R&D services has been fulfilled.

 

As of March 31, 2024, there are no remaining performance obligations related to the WRN, Pol Theta and MAT2A program.

 

Significant judgments

In applying ASC 606 to the GSK Collaboration Agreement, the Company made the following judgments that significantly affect the timing and amount of revenue recognition:

(i) Determination of the transaction price, including whether any variable consideration is included at inception of the contract

The transaction price is the amount of consideration that the Company expects to be entitled to in exchange for transferring promised goods or services to the customer. The transaction price must be determined at inception of a contract and may include amounts of variable consideration. However, there is a constraint on inclusion of variable consideration in the transaction price, if there is uncertainty at inception of the contract as to whether such consideration will be recognized in the future.

The decision as to whether or not it is probable that a significant reversal of revenue will occur in the future, depends on the likelihood and magnitude of the reversal and is highly susceptible to factors outside the Company’s influence (for example, the Company cannot determine the outcome of clinical trials; the Company cannot determine if or when the counterparty will initiate or complete clinical trials; and the Company cannot determine if or when an regulatory agency provides any approval). In addition, the uncertainty is not expected to be resolved for a long period and finally, the Company has limited experience in the field. Therefore, at inception of the GSK Collaboration Agreement, development and regulatory milestones were fully constrained and were not included in the transaction price based on the factors noted above.

The Company constrains estimates of other variable consideration, such as reimbursable program costs, to amounts that are not expected to result in a significant revenue reversal in the future. The Company re-evaluates the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

 

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12. Net Loss Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):

 

 

Three Months Ended
March 31,

 

 

 

2024

 

2023

 

Numerator:

 

 

 

 

 

Net loss attributable to common stockholders

 

$

(39,572

)

$

(23,640

)

Denominator:

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted(1)

 

 

75,108,484

 

 

48,370,074

 

Net loss per share attributable to common stockholders, basic and diluted

 

$

(0.53

)

$

(0.49

)

(1) The shares underlying the pre-funded warrants to purchase shares of the Company's common stock have been included in the calculation of the weighted-average number of shares outstanding, basic and diluted, for the three months ended March 31, 2024.

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:

 

 

As of March 31,

 

 

2024

 

2023

Options to purchase common stock

 

7,874,924

 

6,874,959

Total

 

7,874,924

 

6,874,959

 

 

 

13. Subsequent Events

Subsequent to March 31, 2024, from April 1, 2024 through April 24, 2024, the Company sold an aggregate of 922,000 shares of common stock for aggregate gross proceeds of $37.2 million at a weighted average sales price of approximately $40.40 per share under the at-the-market offering pursuant to the January 2024 Sales Agreement with Jefferies as sales agent, generating net proceeds of approximately $36.5 million, after deducting underwriting discounts and commissions and other estimated offering expense. As of April 24, 2024, approximately $182.1 million of common stock remained available to be sold under the ATM facility.

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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 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. Please also see the section of this Quarterly Report on Form 10-Q titled “Forward-Looking Statements.”

 

Overview

 

We are a precision medicine oncology company committed to the discovery and development of targeted therapeutics for patient populations selected using molecular diagnostics. Our approach integrates small molecule drug discovery with extensive capabilities in identifying and validating translational biomarkers to develop targeted therapies for select patient populations that are most likely to benefit from these targeted therapies. Our small molecule drug discovery expertise includes discovery and development of small molecule therapeutics. We are applying these capabilities to develop a robust pipeline in precision medicine oncology.

Our clinical pipeline includes four potential first-in-class clinical-stage product candidates – darovasertib (PKC), IDE397 (MAT2A), IDE161 (PARG) and GSK101 (Pol Theta Helicase). We own or control all commercial rights of the three most-advanced of these product candidates: darovasertib, IDE397, and IDE161. We are also advancing our Werner Helicase program for which a development candidate has been selected in collaboration with GlaxoSmithKline, or GSK and, subject to investigational new drug-, or IND-, enabling studies, are targeting an IND in 2024. We also have multiple earlier-stage preclinical programs. We have established selective, value-accretive collaborations with leading pharmaceutical companies to support our clinical development activities.

 

Darovasertib PKC Inhibitor Clinical Candidate in Uveal Melanoma and GNAQ/11 Melanomas

Darovasertib (IDE196) is our most advanced clinical-stage product candidate, which we in-licensed from Novartis. Darovasertib is a potent, selective small molecule inhibitor of protein kinase C, or PKC, which we are developing for genetically-defined cancers having GNAQ or GNA11 gene mutations. PKC is a protein kinase that functions downstream of the GTPases GNAQ and GNA11.

We have achieved double-digit patient enrollment and have opened multiple clinical sites, including international sites, in our potential registration-enabling Phase 2/3 clinical trial, designated as IDE196-002. The purpose of the clinical trial is to evaluate darovasertib in combination with crizotinib, Pfizer’s investigational cMET inhibitor, in patients having metastatic uveal melanoma, or MUM, with human leukocyte antigen-, or HLA-A*02:01 negative, or HLA-A2(-), serotype, as part of a second Clinical Trial Collaboration and Supply Agreement, or Second Pfizer agreement, with Pfizer. We are targeting clinical program update(s) in 2024.

We are planning to enroll additional HLA-A*02:01 positive, or HLA-A2(+), patients as an independent clinical strategy to address HLA-A2(+) MUM patients, in our ongoing Phase 2 clinical trial, designated as IDE196-001. We are further evaluating darovasertib in combination with crizotinib in the Phase 2 expansion arm of IDE196-001 in patients with GNAQ/11 melanomas, including metastatic cutaneous melanoma.

We separately initiated and have achieved double-digit patient enrollment in our Phase 2 clinical trial, designated as IDE196-009, evaluating darovasertib as single-agent neoadjuvant and adjuvant therapy in patients having primary uveal melanoma, or UM, with ongoing enrollment and multiple clinical sites open. A clinical efficacy update on over 30 patients and an U.S. Food and Drug Administration, or FDA, regulatory guidance update are both targeted in the second half of 2024.

We are also supporting evaluation of darovasertib as single-agent neoadjuvant and adjuvant therapy in primary UM in an ongoing investigator-sponsored clinical trial, or IST, captioned as “Neoadjuvant / Adjuvant trial of Darovasertib in Ocular Melanoma”, or NADOM, led by St. Vincent’s Hospital in Sydney with the participation of Alfred Health and the Royal Victorian Eye and Ear Hospital in Melbourne. The interim results from the trial have

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been accepted for an oral presentation at the upcoming 2024 American Society of Clinical Oncology, or ASCO, annual meeting in June 2024.

We are pursuing a clinical strategy for darovasertib to broadly address uveal melanoma, alternatively referred to as ocular melanoma, in both primary and metastatic settings. Greater than 90% of uveal melanoma patients have tumors harboring GNAQ or GNA11 mutations. There are no FDA approved systemic therapies for primary UM, as either neoadjuvant or adjuvant therapies. There are likewise no FDA approved therapies for patients having MUM with HLA-A*02:01 negative, or HLA-A2(-), serotype. These primary UM patients and HLA-A2(-) MUM patients collectively represent approximately 85% of all ocular melanoma patients. We have a separate, independent clinical strategy to address HLA-A*02:01 positive, or HLA-A2(+), MUM patients.

The potentially addressable patient population for MUM is estimated to include an annual incidence of approximately 4,500 patients across the United States, or U.S., and Europe, with an estimated total prevalence of approximately 14,000 patients in the U.S. and Europe. (Neo)Adjuvant UM represents a significant expansion opportunity for darovasertib – with a potential annual incidence of approximately 8,700 patients aggregate in U.S. and Europe and with an estimated total prevalence of approximately 100,000 patients in the U.S. and Europe.

We own or control all commercial rights in our darovasertib program in uveal melanoma, including in MUM and in primary UM, subject to certain economic obligations pursuant to our exclusive, worldwide license to darovasertib with Novartis.

 

Darovasertib – Potential Registration-Enabling Clinical Trial in First-Line HLA-A2(-) MUM

The protocol of the Phase 2/3 clinical trial design incorporates guidance and feedback following our Type C meeting with the FDA in March 2023. This protocol includes an integrated Phase 2/3 open-label study-in-study design in first-line MUM patients with an HLA-A2(-) serotype. The clinical trial design employs a Phase 2 portion with median progression free survival, or PFS, as a primary endpoint for potential accelerated approval. Patients enrolled in Phase 2 will continue on treatment within the same study and will be considered, together with additional enrolled patients, to evaluate overall survival, or OS, as the primary endpoint of the Phase 3 portion of the clinical trial to support a potential confirmational approval.

In the Phase 2 portion of the clinical trial, approximately 230 patients will be randomized on a 2:1 basis for treatment with the darovasertib and crizotinib combination in the treatment arm or investigators choice in the control arm, selected from (a) a combination of ipilimumab (ipi) and nivolumab (nivo), (b) PD1-targeted monotherapy or (c) dacarbazine. The treatment arm of the Phase 2 portion of the clinical trial includes a nested study to confirm the move forward combination dose for the integrated Phase 2/3 clinical trial – including cohorts at the Phase 2 expansion doses of (i) darovasertib 300 mg BID + crizotinib 200 mg BID and (ii) darovasertib 200 mg BID + crizotinib 200 mg BID. Under the nested study design, patients enrolled in the cohort at the move forward dose will be included within the Phase 2/3 registrational clinical trial. The Phase 2 portion of the clinical trial contemplates an efficacy and safety data set of approximately 200 patients randomized 2:1 with the treatment arm at the move forward dose to support a potential accelerated approval based on median PFS by blinded independent central review, or BICR, as a primary endpoint. Accelerated approval is intended to allow for earlier approval of drugs that treat serious conditions and fill an unmet medical need based on a demonstration of effectiveness on a surrogate endpoint.

Patients enrolled in Phase 2 at the selected dose would continue on treatment and be included in the Phase 3 study analysis, supplemented by enrollment of approximately 120 additional patients into the Phase 3 portion of the clinical trial, with 2:1 randomization on the same basis as the Phase 2 portion. Efficacy data from the Phase 3 could support potential approval using median OS as a primary endpoint.

In May 2023, we expanded our relationship with Pfizer to support the Phase 2/3 registrational trial to evaluate darovasertib and crizotinib as a combination therapy in MUM by entering into Amendment No. 1 to the Second Pfizer Agreement. Under the as-amended Second Pfizer Agreement, Pfizer will provide us with a first defined quantity of crizotinib at no cost, as well as an additional second defined quantity of crizotinib at a lump-sum cost. We anticipate that the supply of crizotinib under the Second Pfizer Agreement, as amended, will be sufficient to support the planned Phase 2 and Phase 3 portions of the Phase 2/3 potentially registrational clinical trial.

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In parallel, we are continuing to evaluate darovasertib in our ongoing Phase 2 clinical trial, designated as IDE196-001, as a combination therapy with crizotinib in MUM patients. We are the sponsor of this Phase 2 clinical trial and are collaborating with Pfizer on this Phase 2 clinical trial pursuant to the Pfizer Agreement.

 

Prevalence of HLA-A2*02:01 Negative Serotype in MUM

Data from darovasertib clinical trials in MUM demonstrate that approximately 70% of MUM patients with known HLA-A*02:01, or HLA-A2 status were HLA-A2(-). As reported at ESMO 2023, the HLA-A2 status was known in subsets of patients enrolled in clinical trials evaluating darovasertib. Prevalence of HLA-A2(+) and HLA-A2(-) in MUM patients was determined from a first data set of n=149 MUM patients treated with darovasertib as monotherapy or in a combination arm of a clinical trial, and separately in a second data set of n=118 MUM patients treated with the darovasertib and crizotinib combination. These data include 102 of 149 (68%) of patients in the all-treatment subset and 81 of 118 (69%) patients in the darovasertib and crizotinib combination treatment subset.

Darovasertib – Strategy for HLA-A*02:01 Positive MUM

Based on clinical data from the Phase 2 clinical trial evaluating darovasertib and crizotinib in MUM as reported at ESMO 2023, and based on the darovasertib mechanism of action, we anticipate darovasertib will have clinical activity independent of HLA-A2 status in GNAQ/11-mutation cancers.

We are planning to enroll additional HLA-A*02:01 positive, or HLA-A2(+), patients as an independent clinical strategy to address HLA-A2(+) MUM patients, in our ongoing Phase 2 clinical trial, designated as IDE196-001. This strategy demonstrates our commitment to fully address the high unmet medical need in MUM. Such clinical trial data from darovasertib and crizotinib combination treatment in HLA-A2(+) MUM could support publication and potential inclusion in NCCN Clinical Practice Guidelines in Oncology.

Darovasertib – Orphan Drug Designation in UM and Fast Track Designation in MUM

In April 2022, the FDA designated darovasertib as an Orphan Drug in UM, including primary and metastatic disease under 21 C.F.R Part 316. Under an Orphan Drug designation, darovasertib may be entitled to certain tax credits for qualifying clinical trial expenses, exemption from certain user fees and, subject to FDA approval of a New Drug Application, or NDA, for darovasertib in UM, eligibility for seven years of statutory marketing exclusivity. As an FDA-designated Orphan Drug, darovasertib may also be excluded from certain mandatory price negotiation provisions of the 2022 Inflation Reduction Act, if approved.

In November 2022, the FDA granted Fast Track designation to our development program investigating darovasertib in combination with crizotinib in adult patients being treated for MUM. The Fast Track designation makes our darovasertib and crizotinib development program eligible for various expedited regulatory review processes, including generally more frequent FDA interactions, such as meetings and written communications, potential eligibility for rolling review of a future NDA and potential accelerated approval and priority review of an NDA.

Darovasertib - Neoadjuvant and Adjuvant Therapy in Uveal Melanoma (UM)

We are clinically evaluating the potential for darovasertib as neoadjuvant or adjuvant therapy, or both, also referred to as (neo)adjuvant therapy, in primary, non-metastatic UM patients. We previously reported preliminary clinical data in the neoadjuvant setting showing evidence of anti-tumor activity that we believe supports further clinical evaluation of darovasertib to determine its potential as a neoadjuvant therapy to either save the eye by avoiding enucleation, or to reduce the tumor thickness in the eye, enabling treatment with less radiation to preserve vision, and as an adjuvant therapy, to potentially extend relapse free survival.

We have initiated and achieved double-digit patient enrollment in our company-sponsored Phase 2 clinical trial designated as IDE196-009, with ongoing enrollment and multiple clinical sites open. The purpose of the clinical trial is to evaluate single-agent darovasertib as neoadjuvant treatment of primary UM prior to primary interventional treatment of enucleation or radiation therapy and also as adjuvant therapy following the primary treatment. A

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clinical efficacy update on over 30 patients and an FDA regulatory guidance update are both targeted in the second half of 2024.

The IDE196-009 clinical protocol includes neoadjuvant treatment with darovasertib to maximum benefit up to 6 months, primary treatment, then up to 6 months of follow-up adjuvant therapy.

In the neoadjuvant setting, one cohort of UM patients with large tumors will be treated with darovasertib until maximum benefit or six months, at which time they will undergo a primary interventional treatment. The neoadjuvant endpoint for this large-sized tumor cohort is eye preservation. For example, a patient who would otherwise have undergone enucleation would instead be eligible for radiation treatment. Another neoadjuvant cohort of UM patients with small or medium sized tumors will be treated with darovasertib until maximum benefit or six months, at which time they will undergo radiation therapy. Neoadjuvant endpoints for this small- or medium-sized tumor cohort include (i) reducing the radiation dose that the patient receives, relative to the radiation dose they would have otherwise received without the neoadjuvant treatment, and (ii) functional vision preservation.

In the adjuvant setting, each of the two neoadjuvant cohorts will be treated with darovasertib for up to six months as follow-up adjuvant therapy after the primary interventional treatment. The adjuvant endpoints for this portion of the clinical trial include relapse free survival and useful vision.

We are additionally supporting evaluation of darovasertib as (neo)adjuvant therapy in primary UM in the ongoing NADOM IST. Pursuant to an as-amended protocol for the NADOM study, uveal melanoma patients who would otherwise undergo enucleation are instead treated with single agent darovasertib as neoadjuvant treatment for up to six months or maximum benefit. This reflects an increase in potential treatment duration versus the initial approach of one month neoadjuvant therapy, following which these patients will undergo a primary interventional treatment. Patients will subsequently be treated with darovasertib for up to six months as follow-up adjuvant therapy after the primary interventional treatment. The topline results from the trial have been accepted for an oral presentation at the upcoming 2024 ASCO annual meeting.

 

Darovasertib – Expansion Opportunity in GNAQ/11 Melanomas

We have initiated a Phase 2 expansion arm in our IDE196-001 clinical trial evaluating the darovasertib and crizotinib combination in GNAQ/11 melanomas, including metastatic cutaneous melanoma, based on observed preliminary clinical efficacy. There are currently no FDA approved therapies in this indication in this genetically-defined patient population.

The GNAQ/11 prevalence in cutaneous melanoma has been reported at approximately 5% in The Cancer Genome Atlas. The GNAQ/11 cutaneous melanoma estimated annual incidence is approximately 5,000 patients in the United States and 8,000 patients in the EU28, and the estimated total prevalence of GNAQ/11 cutaneous melanoma is approximately 70,000 patients in the United States and 110,000 patients in the EU28. It has been reported that approximately 12.5% to 15% of cutaneous melanoma patients have been reported to develop metastatic disease.

 

IDE397 – MAT2A Inhibitor in Tumors with MTAP Deletion

IDE397 is a clinical-stage